More Q&A from our January 2013 Webinar

As promised, we will continue to answer questions from our most recent home improvement webinar:

Q: When raising prices, how do you create acceptance from your sales staff versus the complaining and whining that frequently occurs?  They believe are prices are too high already.

A: Yours is a common concern and your question has two issues.

1. You need to establish on a continuing basis the validity of the price you are already getting.  Though the complaint is common in organizations selling high quality products, it is also common for those with mid-range prices and even the “low bidder.”  In short, there will always be price objections, there will always be price comparison and there will always be someone with a lower price.  Your job is to establish value.
2. The second issue regards how you condition your salespeople when it is necessary to raise prices.  Without knowing the structure of your business, take a look at some of the increased costs which you are now experiencing.  As an example:

• Removing job connected debris is more costly depending upon whether you’re using a dumpster or going directly to a landfill.
• Municipal fees for permits and licenses have increased and the time necessary to pick up permits or licenses has increased.
• Worker’s compensation, public liability insurance and general liability insurance rates have risen, and there are numerous other expenses within your company that have increased.  Talk about these increases openly in a meeting and condition your salespeople to the fact that you will have to employ some form of a price increase shortly.

Q: How do we improve getting paid and avoid the difficulty in collecting the balance at completion?

A: Beyond establishing a price, it is important to establish pricing/payment/collection policies.  As an example, require a down payment with each cash contract you take in (Caution: In some states they place maximums on the amount that you can require as a deposit, and in some cases, they require an estimated start date to go inside with a deposit). Beyond that, think about accepting progressive payments on large jobs (i.e. when the job is delivered, or when distinct portions of the contract are completed).  Collect for all “change orders” and if possible arrange for a credit card payment for all completed work.

Some additional ideas include:

• Sending an invoice to coincide with the day of completion together with an envelope asking them to place their check in it and give it to the crew chief.  Smaller companies, should be on site (at completion) to collect the balance themselves.
• Instead of referring to it as “payment upon completion”, refer to it as “substantial completion.”
• When possible (depending on the state in which you operate) inserting a clause stating “Payment in full is due on the day of completion. After ten days, interest will be added to the unpaid balance at the rate of xx%”.
• Having your retail contracts reviewed by a competent attorney who understands this business.

Q: Do companies still advertise effectively in the telephone directory?  And if so, how does the return compare with print and direct mail advertising?

A: The telephone directory is essentially not an advertising medium.  Many companies use only the directory listing, sometimes embellishing this with increased type size or bold lettering.  Much depends on the market you are in.  As your market broadens, telephone books enlarge as do the pricing for those ads.  Evaluate the leads you receive from ads in the telephone directory.

Frequently, the prospect calls 3 or 4 listed companies at the same time.  You may note that many of the large ads in the telephone directory are from smaller companies.  Your lead will force you to compete with people who have lower overhead and similar which keep their prices much lower than yours.  Remember, in any format in which your advertising is done, check your lead results. You want to be sure you’re getting a return on investment for dollars spent.

Direct mail has increased in cost, but good direct mail pieces are still effective.  Be sure you know/understand the demographics of those to whom you are mailing. More than ever, it is vital that you create a mailing that “stands out from the pack”  Print ads  continue to have a diminishing subscription and readership.  However, there are still many ways to negotiate for ad placement that go beyond the rate chart.  For more, check out the abundant articles on this topic that we provide on our website.

Q: You wrote a book called “Selling Replacement Windows”. Is that still available at bookstores? And do you recommend using this or a similar item as a lead generation tool?

A: The book you are referring to was written for consumers (homeowners) and is entitled “Why Buy Replacement Windows.” It is an excellent support for those companies who sell replacement windows to homeowners.  It is available through Amazon.com or you can go to www.WindowHelpBook.com and download it as an e-book free of charge.

We continue to see strong results from companies that offer a free informational device for homeowners. Many companies are using similar products to:

• Capture prospect information on their website
• Give homeowners additional information when selling in the home
• Gain referrals as a leave behind once the presentation is finished

Thank you again for the excellent questions you sent in.  We will have one more blog post pertaining to these, and then be on the lookout for more information on our next home improvement webinar.