Sales Techniques and Business Model Insight - Home Improvement Companies

I thought about the experience that I've had in home improvements and how they affect my business model and here's the overview of how I got my small company to perform better and produce a better living and quality of life overall.

I worked for Pacesetter Corporation from 1989 to 1999. They were the largest home improvement company in the country for a good deal of that time with an estimated sales of 100 million dollars annually and locations across the country. I met more than 10,000 people and traveled across a dozen states while watching the evolution of "the one call close".

This was developed long ago but perfected and implemented by Sears, AMRE (American Remodelers) and Pacesetter Corportation in the late 70's and 80's. This business model allowed for extensive advertising budgets to attract leads and strong sales tactics once in the home. The premise is that a good business model will spend at least 15% on lead generation.

At the time that was telemarketing and specifically to outlying rural areas headquartered in a nearby metopolitan area to get staff, and eventually to offer financing and financial services, sometimes self financed by the home improvement entity itself. This created over $100 million in wealth to two brothers named Schrager. Towards the end of their careers they had millions in loans out at very high interest rates secured by home leins across the country. While some would find fault with this, I didn't once I understood the model itself. It wasn't one that would work for me because I'm just not that agressive, but the breakdown is impressive just the same.

They sold a window that they produced in Omaha across the country in their own trucks and eventually lease trucks for about $800 to $1000 each.  Fifteen percent and down to eight percent went to sales commission. Overhead and operation of an office with telemarketing call center, installation team, warehouse for sotring and shipping of materials etc. This would include Office Staff, Phone Bank Employees, Management Staff, Installation Management and Personelle.

The Dallas Texas office we often ran $500,000 in monthly sales while many offices did millions. An office had to do about $250K monthly to support the weight of the machine itself.

Two fifty being a good average, 30K went to lease space of at least three to four thousand feet of space. Materials ran 25% at 62,500. Four office staff 7K monthly, Phone support and telemarketers, related advertising costs 20% at 50K. Installation costs industry wide ca run as little as 8% (my brother would know this one as he was an installation manager for a large home improvement company after his apprenticeship with me.) and as much as 15% depending on the market.  Using the latter number we'd see an expense of 37,500 here.  Sales commissions will run at an average 10% of gross sales at $25,000. At this point we're left with one upper management six figure General Manager and a Sales Manager that will be looking for $16,000 or so between them, (Do your own math here, these are both very tough jobs as I'll break down at some point. And with these expenses we see a total of $221,000 and a gross profit of $29,000 or just at 12%.

This is a bit oversimplified but I hope you get the idea. Surely some of these numbers are off by a bit but surely the electric bill is $2000 at that point as well.  Postage and office supplies are necessary as is signage. Over the years the telemarketing angle fell out of favor and use with the Do Not Call List requirement from the FCC and so this outreach too has had to evolve to social media, radio and television, mailers, canvassing neighborhoods, SEO is organic advertising that requires no money but a website does not promote itself except on rare occasions. Most websites need PPC (pay per click) promotion and placement to reach the desired prospect.

.At the time this was part of my life they determined that a good qualified lead cost about $250 to produce. This was 10 years ago and that number has jumped to $350 per lead. Most great salesmen can close about 50% of the time.  Most sales calls for a one call close type company last about 3 to 4 hours. While this sounds unbearably long, when broken down it seems understandable if you know the Ten Steps To A Sale and how they are timed and utilized.

This approach allows a salesman 10 leads a week and counts on close monitoring and encouragement to increase the close rate. Sometimes some strong handed encouragement. This is what inspires the urgency of the one call close to the salesman as his job is often on the line.  As a point of reference, I've listed the ten steps as I recalled them and at one point had revamped them for my own company. While I confess to not using them all the time or even half the time at this point, I always know what steps I did poorly on as soon as I leave a home. Cutting corners doesn't help you do your job or be the professional you're supposed to be. In my case, I firmly believe I am the best choice due to value overall, not being the cheapest option on the table but the best value. Low cancellation rates mean you aren't getting the close calls to do business with you. If you really think you're the best option you're letting others fail by not winning their business and doing your job the way you're supposed to do it.

Ten Steps To The Sale

1. ENTRY

“Mr./Mrs.____________? Hi, I’m __________ from The Window Connection. How are you today? Break eye contact, reach down, pick up kit, and step forward.
Go to the couch or the dining room table.  Table is best.  Take control of the television to avoid distractions.  (Looking disconcerted and having trouble concentrating are great reasons for your customer to turn down or off the television)

2.  WARM-UP       NON-business 20-30 MINUTES

Home, Kids, Work, neighbors, neighborhood, sports, family interests, look over the pictures and books and get a feel for the home and things you may have in common. Being able to relate to someone helps you buy from them.

“Thank you for taking time to get to know each other, but I’m supposed to be working. Let’s move to the kitchen table.  John you sit here, Mary you there.    I’m here to give you enough information, so that when you are ready, you can make an informed and intelligent decision for your family”  “Let me tell you a little bit about my company.”  (warm up is important.  The time spent here is equal to the amount of time you will have for the close.  If you spend 10 minutes of warm up, you’ll be comfortable spending 10 minutes on the close.  Twenty minutes is better as you know the customer better and can really assert the great reasons to do business today.

3.  COMPANY PRESENTATION…10-15 MINUTES
J, M     Do you have any Q’s about my company?
J          What impressed you most about The Window Connection? 
M         What did you really like about The Window Connection?
J, M     Could you TRUST The Window Connection to do EXCELLENT work and serve your needs for FUTURE WORK.

COMPANY OBJECTIONS
Insurance?
Bonded?
References
Other estimates
Available products/manufacturers
Variety of services

4.  CUSTOMER NEEDS  30 to 45 minutes
Look for dominant buying motives
Ask questions to move ideas to genuine concerns
Get customer’s “drive-thru order”
Health -       Drafts lead to colds and flu, bronchitis and pneumonia.
Moisture causes mold and related bacteria build up and infiltration.
Allergies are inflamed due to pollen and dust infiltration.
Comfort -      Drafts limit how much of our home is useable.
Drafts cause some rooms to be warmer or colder than others.
Drafts move the curtains and keep us from sitting by the windows and doors.
Convenience -        Being able to clean ones windows.
Being able to see through the clean windows.
Screens to ventilate and air out the house at will.
Safety -                     Locks prevent intruders and keep our homes safe.
Night latches allow safety even when allowing ventilation.
Windows that operate properly assure means of escape in case of fire.
Security -                  Keeps our personal possessions in our possession.
The appearance of new windows makes crooks move on to the neighbor’s house.
Double locks on insulated glass are the most secure windows money can buy.
Peace of Mind -    Knowing that our home is airtight and not in need of repair.
Knowing that our home is safe and secure.
Pride of Ownership -      Nothing says, “I love my home” like new windows.
Very few things in life are truly wonderful and truly attainable… windows are both.
Property Value Added - Windows add 109% of their cost to a homes property value on the day they are installed.
Aesthetic Value – The beautiful appearance of new windows is like a facelift on your home.  Windows are our homes eyes to the world. What we see and what the world sees.
Energy Savings - Windows built today are 30% more efficient than windows built just 10 years ago.
New windows are up to 40% more efficient than single paned windows.

 

**** Quick Inspection Time  *******

            “Quick glance”  “familiarize yourself with the house.”  “Get a feel for what you have” look for the problem spots and highest concerns

J, M ? Do you agree that your home needs some work?
J. ?                  What’s most urgent?
M.?                  What do you loose sleep over?
J, M ? WANTS, NEEDS, What’s your #1 priority?
Close Step 4…Does the customer need it?  Establish if there is a real need for our product.

5.  CUSTOM SOLUTIONS       30 - 45 minutes per product
Product Presentation  (Present the window sample)

J, M?               Do you have any Q’s about my __________?
J.?                   What impressed you the most?
M.?                  What did you like?
J, M?   Where did we over-do-it? Is there anything we don’t need?  
When and if you ever decide to put ______ on your home is this the product you’d like?
Many of my customers tell me that they feel like their windows are custom-made for them.  Isn’t this exactly the window you want to solve your problems?

FEED THEM HAMBURGERS, “Parts and Pieces”
Feature,      (Jargon)…which means to you…Benefits…
CONDIMENTS    “Toothpick” (senses) Do you feel like.  Do you think that…..can you see that……

6.  PRE-CLOSE… Establish mutual need for doing business TODAY.  Control the TEMPO of the conversation.  Going slowly will help this transpire well.

Let’s take a minute to review.  I told you about my company. Have you thought of any questions?  You still feel comfortable doing business with us.   Like the window?

J, M I know you agree that your home needs work, It’s not a matter of WHETHER you’ll have it done, but WHEN you’re going to GET IT DONE.
We need and want your business, too.  Most importantly, installers to keep busy.  WE NEED YOUR BUSINESS TODAY.

7.  MEASURE

            Let’s go outside and measure it up and we can see exactly what we’re looking at.  You want to measure? Or do you want to write?

8.  PAPERWORK

            Figure (min,max) and Addendum for all openings for whole home.

9.  CLOSE   

Time here can't be more than the warm up time so this is why warm ups have to be long.

Handling Objections

(Sofa)… so you say you FEEL_____, I have FELT_______, my customers have FOUND________.

“that’s exactly the reason you should do the work…”

Is that the ONLY reason…?  I’m not saying I can, but if  ___ were solved, would you be doing this work with me?

John let me be candid, if I have to see everyone who calls me two times, I can only see half as many people.  I see about three people a day when all is going well.  Obviously I can’t see everyone twice and see half as many people.  Anyone who calls me tomorrow and is ready to go, I will go see, but I may have to cancel or reset and inconvenience some other potential customer.  That may be a lost job, because I wasn’t thorough enough with that person, so my job is to be very thorough here with you right now.  While I’m here with you folks I have a 50-50 chance of winning your business, but I know that statistically, when I leave, I only have a one in five chance of winning your business.  That makes me pretty motivated to do everything I can for you right here and now.

ADD – SUBTRACT – MULTIPLY - DIVIDE

+   Added value from doing the project

-   “We could leave off…….to stay more affordable”
X   The YOU factor (people will do business with you if they like and trust you)
/    Reduce to the ridiculous (only $.02/day!!!).  Downsize the project to become more budget friendly.  (good warm-up and the ability to ask their budgeting number can be a great tool)

Ask for the order, Six times. 6 of 10

Would you be writing a check or using a CC for the deposit?

Can I get to work for you?

Can I get your approval right here? 

Are we good to go?

Do you see the X? Sign here.

Can I welcome you to The Window Connection family?

Are we gonna get this done? 

Are we ready to do this?

Are we done thinking about it, and it’s time to do it?

Are we ready to put this thing down on paper?

Signing Contract

10.  WARM-DOWN    10 to 15 minutes

Now J/M remind me again why you spent 7000 dollars with the Window Connection today.  Or....
Tell me again why it is we didn’t do business today?
Just to help me to become a better servant of the next family I go see…………..
Do you have any friends that you think might benefit from the windows that you’ve seen here today? 
Maybe a Christmas card list that has someone who may need my help?

.

It's a pretty burley pitch for sure. I'm just too nice to get agressive with sales I suppose but never having cancellations, never pushing people towards what I know is really a better solution and making them do it now so they don't screw it up is a tough job. I tend to be patient and let the ones come to me that really want me as opposed to fishing for a bunch of idiots. My customers tend to be the smartest folks in the country and I can see it because they have to do extensive research and still end up at my door. I think I attract the customers that I really want so the hard pitch isn't necessary. I hope you found this piece informative in some way. If you did share it with your network! But not my competition, don't tell them.