The following are a list of questions that we received during our recent tele-conference – which were not answered during the call. All names have been kept anonymous per your request and should you have any additional questions feel free to e-mail us at firstname.lastname@example.org.
Q: Are we required to provide the customer with an accompanying and separate notice of cancellation if we have addressed their legal rights explicitly and it is properly posted on the front of our contracts? Some companies only post the notice on their contract while others post it and also provide a triplicate form for the customer to mail in if they should decide to cancel.
A: Yes – the law requires printed notification with specific type size and each person who signs the contract or other supporting documents is to receive 2 copies.
Q: How effective is social media for lead generation?
A: Social media can be highly effective for lead generation; however the key is that it has to be used in combination with other marketing methods. Don’t expect to use social media by itself to drive business, and don’t spend more than 4-5 hours a week participating in these channels. Any more than this, and its value will start to deteriorate as it will be taking time away from more traditional marketing methods.
Q: What are the FTC rules on using the word “sale” in print or offering sale prices or giving discounts in the home?
A: These are actually called FTC Guides Against Deceptive Pricing. They detail guidelines – some in existence since 1967. They effectively define what is and what is not acceptable. I suggest you review the FTC guides against deceptive pricing, specifically Section 233.1 (price comparisons) and 233.2 (retail price comparisons). These are neither hard to understand nor are they difficult to incorporate into your marketing plan.
Q: Doesn’t it seem unlikely that just because the Washington State Attorney General came down hard on a few companies this that it is a national issue?
A: We and our attorneys have been made aware of numerous investigations in other states. The following is but one example we received during our conference (the participant’s name is protected).
We’ve been issued an AVC (Assurance of Voluntary Compliance) by the State of Illinois. We’ve been fined $2500 and ordered to change our advertising. We are changing our price drops and advertising to a more “reasonable” standard (List is equal to what we “ideally” like to get for our product installed). Example: $550.
Our TV advertising will change to 10 and 15% discounts. We will be taking a non-negotiation stance, with “coupons” to help close on 1st time consultations.
I suggest you check within your own state to determine which actions are being taken by the Attorney General and/or other governmental agencies which may be modeled after those actions taken in Washington state.
Q: Could you speak to the practice of low price window advertising that serves the purpose of creating a low price figure with the clear intent to up sell? In addition, in certain parts of the country (especially the North East and Upper Midwest) that have a large percentage of their homes built prior to 1978, companies must install following the EPA’s LRRP rules; this creates an even bigger disparity.
A: Beyond the FTC guidelines governing the use of low prices to attract prospects, there are other references for constructive pricing in the FTC guidelines. It is not my province to advise the Attorney General or others about what is perceived as improper. However, despite this method being used, the more successful companies are the ones that start out with an upscale product then use this as a means to attract, then sell “up-scale” products.
If there are those who are violating FTC guidelines or other legislation, they will invite investigation without my (or your) help.
Q: Was the tele-seminar recorded? If so, how can I re-listen to it?
A: We are making the contents of this program available for a limited time. Click here to download it and listen.
Q: It appears that these issues are relevant to the one call close. If we do not engage in this type of selling I am assuming we have no problem. Is that right?
A: No – companies will be held responsible for: what they say in their sales presentation, what they imply in their advertising, misuse (or lack of) providing proper notice of rescission, meeting EPA standards for houses build prior to 1978 (the fine for not providing the proper pamphlet alone is $37,500 per incident) – and there’s more. However, the use of the “one-call close” is not the culprit. The concept of reducing the sales cycle (without fraudulent practices) is one that every home improvement contractor should learn. Asking for the order is not fraudulent. Asking for the order “now” rather than “later” may be good business. It’s important you know how to do this while meeting the needs of your customers.
Q: Direct sales companies often have rehash programs which could compromise the typical sales price. What are your thoughts on that?
A: Re-hash (representing and attempting to sell someone who wasn’t sold on the first call) is not illegal. It simply is done improperly and creates mistrust and frequently legal sanctions.
For example, if you present a price and satisfy the customer’s “value system” and in an effort to avoid procrastination, you offer a “first night sale – incentive” – and do not sell, you can re-hash, but you cannot offer the same product/service at the same price which was constructed for the incentive offer. You can offer a different product that performs a similar function, you can reconstruct your proposal (the project). The thing to avoid is having your original price or sales price construed as bogus because your actions on a re-hash establish that your original offer was not valid.
Q: Is the use of “shopping contractors” by state agencies common?
A: In our perception, yes. Those attempting to enforce laws not only “shop” those who sell in the home (as well as retail stores) they frequently make use of recording devices. While I applaud and support consumer protection and have been active in promoting “best practices” nationally, I have seen the misuse of this premise not only by those who are given authority in the regulatory process, but others as well. Notably, there are investigative reporters, consumer protection advocates and similar who badly misuse their pulpits. It so happens at the moment the home improvement industry is a convenient target.
Q: Is your company working with clients to implement sales and marketing practices that are in compliance with the issues in Washington state (i.e. advertising, discounting structures, rehash)?
A: We review the practices for advertising and other forms of solicitation, methods (scripts for appointment setting) in an effort to avoid violations. We review sales methods, canvassing scripts and those utilized at events. We review pricing and selling methods which give the impression of bogus pricing and advocate a structure which sells price (validly) while using sales methods which create strong “customer satisfaction”
However – we do not give legal advice. We render opinions. We are or have represented companies in every state in the US who have to deal with these regulatory issues. We look for methods which are workable, appealing to customers/prospects and keep most companies “out of trouble”.
Q: Since most salespeople are paid on commission, if the salesperson decides to compromise his own commission to create urgency, is that illegal?
A: Again – refer to FTC guidelines. If a valid price can be supported (one which you normally sell your products for), it might be possible to use a compromise of the commission as a potential incentive. All such actions should be (1) structured properly (reviewed by a competent attorney), (2) documented by an internal memo and one issuing authorization to the salesperson and then (3) be able to prove that this is an incidental incident (the compromise of commission), not standard on all transactions. Incidentally, this is my opinion and does not imply legality.
Q: What advice do you have for windows not installed by year end for homeowners who want to take advantage of the tax credit?
A: This is the most common question we have received this month. The “tax credit” which expires on December 31st is structured to cover products approved by distinction and permits the resident (owner) of a property in which the product was installed to apply for a tax credit varying by product (example – windows installation, etc. max $1500). This credit is for product only and does not cover installation. Most pundits believed that this would be extended. At the moment it isn’t.
If your selling price permits, nothing stops you from making the same offer if you can’t complete installation by December 31st. Obviously this has to be a structured plan – run it by your attorney or competent advisor. Also – and purely an opinion – this year will end with some companies having been delivered their customers’ windows, which are sitting in their warehouse and are unable to install them (example – the snow in the Midwest). Hopefully the difference in an installation by January 15th will not incur the wrath of the IRS – remember, this is purely an opinion.
Q: Were these Washington state circumstances brought about mostly by rogue salespeople?
A: Not really. I don’t believe most companies intentionally structure fraudulent practices and the same is true of their salespeople.
However – much of the sales training used in home improvement selling today for large and small companies is outdated and lends itself to the creative imagination of the salesperson/contractor presenting the information. We did a 17 year study on buyers’ habits, intentions and expectations prior to producing our recorded series The Science of Successful In-Home Selling. Here is a quote from that series:
“The prospect/customer is the key ingredient in a sound sales methodology. How the prospect thinks and feels has to be the major consideration in the development of a sales system – or that system will eventually fail.” – Dave Yoho
Managers, owners, contractors, salespeople really need to know more about what works and what doesn’t and what is proper and what isn’t.
We hope that this answered the lion’s share of your questions from the call – – and don’t forget to sign up for next year’s complimentary home improvement webinar series.