Improving Your Business
Is Our Business

Our latest home improvement webinar on leads brought together over 900 companies to help turn leads into sales in the year 2012.

As is the case with most of our programs, we have an abundance of questions that were not able to be addressed on the webinar. We will also answer many of these in our monthly e-newsletter (you can sign up today on our website).

Questions on Shows, Events, and Showrooms:

1.  How do I keep my full-time people busy? There aren’t enough events.

Full time people can also work mall displays — radiate around recent installations – work on Quality Control programs that provide referrals (business now and later). There’s lots of prep, legwork and maintenance work for them too, especially as your department grows.

2.  In your seminars I’ve heard you say “no chairs” in the work area. Our people get tired and they sneak them in – - what should I do?

You have to check on them yourself frequently, or through a small group of mystery shoppers.  Hire part time men or women who can complete an 8-10 point survey after visiting your booth/display – also let your promoters know that they are being shopped – (it’s like putting a radar sign on the highway – most cars will slow down even if no actual radar is present).  I know this rule may be difficult to enforce, but it is a key ingredient to make your presence at a show more profitable.

3.  How do you avoid giving a price when they walk over to our window sample and ask “How much is this one”?

Usually the prospect does that when they’ve already asked for a “ballpark figure” and were given an explanation about why the price would be delivered in person after evaluating their project.

You could paraphrase the original “depends” response as follows:

“The price of (your product) would depend on the options you chose along with the quantity, sizes and colors – of course – once our representative sees the condition of your (current product), he’ll know what we need to do to order the proper (your product) and install it properly, meeting the conditions existing in your home.  In addition, he’ll be able to deliver a price in writing and as I have mentioned- that price will be good for one full year – may I make a suggestion? (Take control – get to the next step—search for the best time and circumstances to visit – set appointment.)

Questions on Canvassing:

1.  How do I find good canvassers?

A: Recruit and hire regularly using 5-10 sources with a well planned sequence enabling you to identify fearless optimists or manageable mavericks whose current lifestyle is congruent with earning fairly good money in only a few hours daily.  It is the kind of job that will appeal to many different circumstances.

Many of our clients hire college students as canvassers and those individuals who need a second income.  They also hire retired or semi-retired people – in short “people with available time”.  But don’t forget, we suggest the use of a behavioral profile to determine whether the canvasser being hired has a behavior adapt able to this sales support role.  Many of our clients hire canvassers who then become highly successful in that role and they find it good basic training for an actual sales position.

2.  Can I pay canvassers on straight commission?

Yes, but statistically – employee retention is better when paying a base salary PLUS incentives. There are very few stable individuals who can use their own car, work alone despite the weather then deal with the face-to-face “turn down” rate, which is common in this role, even when they are paid a high commission rate. Reminder: strong management (supervision) is the key.

3.  Vans are expensive. It’s a lot less money to send them out in their own cars. Why can’t I do that?

A: They don’t show up or they arrive late or get lost, leave early and give up easier. Sometimes they have friends accompany them. That could jeopardize your plan, create insurance risks for your company and other problematic exposures.

Check out reliable used vans.  They are less expensive than you think.

We will address more of your questions in the next blog posting, and we invite you to give the home improvement webinar another listen. The material that was covered takes constant reinforcement.

Happiness is – positive cash flow – or as a humorist once stated, “the problem is too much month at the end of the money.”  A common problem affecting small to moderate size businesses is cash flow.  If you are expanding or doing less business, it will be a major factor.

Good cash management depends on a business plan and a marketing model which aids in the regulation of cash.  For example, a successful company may employ various forms of lead development, all of which require cash outlay.  Marketing dollars are spent; sales are made then processed, followed by an installation (which may be weeks or months later) – this creates an investment in your backlog.  If you advance your salespeople on sales made and approved, you have increased your investment, both of which could represent 10 to 20% (minimally) of the sales being processed.

For the latter reason alone you need controlled policies for taking deposits on all contracts; as an example, require deposits on all sales (usually 40% of or more).  For corporations, they are (mostly) treated as liabilities and represent no tax consequences until a contract is completed. (Deposits on sales made to homeowners are regulated in some states. Progressive payments on larger contracts or those with multiple products or services including payments upon delivery or partial completion also speed up the collection process and enhance cash flow.

It is not uncommon to examine the operating statement of successful companies and find that despite the fact that they are profitable, they don’t have sufficient capital to pay their bills on time, pay adequate compensation to the owner(s) or to expand their business.

Learn how to read a balance sheet (your accountant can show you how).  Have your bookkeeper prepare a “cash report” weekly.  Understanding these two bookkeeping assets will help you avoid making mistakes in spending.

If you haven’t done so already, convert from weekly to biweekly payroll. This will increase your cash on hand by the value of one week’s payroll and reduce bookkeeping entries from 52 to 26 times annually.  Modern companies no longer pay weekly (you will need a plan to introduce this to your employees if they are used to being paid weekly).

Here are some additional suggestions to aid you/your company in creating positive cash flow.

1. Spend less money than you take in (good economics) – If you have a monthly, quarterly or annual budget based on anticipated business and anticipated net profit, spending less than what you earn enables you to accumulate cash.
2. Decrease your “turn time” – This is the amount of time it takes you to complete and collect a contract once it has been approved.  Here is an example: If it takes 6 weeks to complete a “job,” 48 weeks* divided by 6 weeks equals 8 turns per year. So, the more times you can turn your money in a given year will reduce the amount of cash necessary to operate your business. (* 52 wks less “lost” time and holidays).
3. Pay your bills on time (and attempt to get a discount for prompt payments) - A 2% discount for prompt payment on the 10^th of each month will earn you 37% when compounded annually.  You could actually borrow money at 6 to 8% to pay your bills on time and that loan would earn you big dollars in return.
4. Utilize “Cut-off dates” on purchasing. If you purchase from a vendor/supplier who offers 30 days (terms), and sends a statement at the beginning of a new month for all shipments made through the 27^th day of the preceding month, place large orders after the 27^th and/or in the first week of the new month.  Use a credit card and extend the payment due date by another 30 days.
5. Don’t employ checkbook management – Do not make purchases based on the amount of money in the checking account.  Use your balance sheet or a cash flow statement to determine cash availability.
6. Reduce your accounts receivables – Collect all balances on the day the work is substantially completed and collect for all change orders or extras when they are executed.
7. Give discounts for prompt payment – On cash contracts create a phrase such as – “The balance of $xxx is due on the day the specified work is substantially completed.  If paid on the date of invoice, which shall be considered the day of completion, the customer shall be entitled to a discount of x%.  Balances paid after that date are subject to interest at the rate of x%.
8. Cost avoidance – Postpone spending whenever possible, but not if the postponement would cause an increase later. (i.e. equipment maintenance).
9. Cost elimination – Do away with operations that aren’t profitable or are only marginally productive (i.e. products or outmoded procedures).  Every company has a few “sleepers” and “sacred cows”.  Get rid of them.
10. Cost reduction – Set measurable goals and monitor them.  The worst mistake you can make is to enforce an across-the-board percentage cut in costs.  It’s unfair, impractical, and in the long run, ineffective.

These changes are not complicated, but they do require thought and discipline, and they represent the keys to increasing cash flow.

For complete information on this and a wealth of other business management material, check out our recorded package How to Run a Profitable (or More Profitable) Business.

Closing the sale is not something that happens at the end of a sales presentation or after you’ve given the price.  It is an ongoing process which is established with your first contact with a prospect.

If you knew what the prospect was really thinking, what their planning strategies were or even the extent of your competition, imagine how much better your sales presentation would proceed. Much of this information is available with proper in-home sales basics.

The “walk around” to evaluate the project is better named a “needs assessment”.

• When did the prospect first consider the project?
• What prompted them to call you?
• What other options have they considered?
• How long have they owned the home?
• What other home improvement projects have they completed?  What were the outcomes?
• What do they really know about products such as yours and how closely have they examined the conditions which prompt them to call you for replacement?

Becoming privy to this information is largely a matter of good in-home sales training.  Having this knowledge enables you to present your products/services in a manner consistent with their values.  If you haven’t allotted fifteen to twenty minutes minimally to the walk around and needs assessment, I guarantee the delivery of your company story or product presentation does not address itself to the needs of your prospect. This makes you a “generalist” whereas you are seeking to be perceived as a “specialist”.

Next, consider the issue of rapport which is actually a state of mind; it starts with feelings.  Prospects listen more to people who in turn listen to them.  Prospects like people who seem to have the same values or seem to agree with them.  And most of all, prospects like people who seem to be like them.  This is not a call to be an actor or to lie about your political, religious or ethnic leanings.  Rapport stems from gathering information and then presenting your product in a manner which makes others feel comfortable and to listen more accurately to what you are saying.  A noted psychologist states it this way: “when you take the representational information that someone hands you and feed it back to them it tends to rapidly create rapport.”

Remember, closing the sale is the natural conclusion to the satisfactory completion of each step in the sound selling system.  Don’t miss the basics.

The following are 10 power statements that can be utilized in sales meetings and sales management training.  The concept behind these 10 ideas was originated by Michael “Mickey” Madden of U.S. Home Systems.

These ideas are being published in memory of William “Bill” Sherwood who passed away in early December 2011.  Bill exemplified these disciplines and made them a part of his everyday business life. He has impacted hundreds of  sales trainees by being an example of what he taught.

1. Accepting total responsibility for the results: Success is in your hands.
2. A commitment to excellence: Be available; follow the methodology and the milestones on each and every sales call.
3. An expectant attitude: Expect to make a sale every day.
4. Establishing goals: In accordance with effective goal setting techniques.
5. A specific plan of action: A goal without a plan is like a destination without a map.
6. A commitment to self: The successful sales representative is eager to work all resources and disciplined to develop their knowledge, understanding of buyers habits and skill of delivery.
7. Insulation from the common sales cold “ Negativism”: A negative attitude is the most fatal illness of a sales person
8. Flexibility in thinking: Acceptance of new ideas.
9. Maximize creativity: Doing what it takes everyday to maximize earnings.
10. Belief: Belief in yourself, your family, your products and your effort. If you don’t no-one else ever will.

It’s never too late to effectuate change in your personal or business life – start today.

We will now continue answering questions from our latest home improvement webinar. If you haven’t done so already, make sure to read our last blog posting where we address more of the questions that were asked during the program.

Q: You mentioned “lead control”.  How does that relate to giving salespeople the freedom to handle the lead in the best way because they are experienced to do so?

A: A reminder – if a lead is any inquiry coming into your business, it then has to be structured into an “appointment” (which usually requires scripting).  A properly scripted “lead to appointment” has created information beneficial to the salesperson and anticipation on the part of the prospect.

Now let’s assume the lead is issued to the salesperson.  Most efficient sales organizations have policies where salespeople are required to turn in their leads immediately after the presentation. Unsold leads were rehashed along with “no-sits”, often producing an increase of 12-14% of the volume extracted from the same leads.

Incidentally, in well managed sales organizations, once the lead is given to the salesperson as an appointment, the salesperson is not permitted to call and requalify the lead. If that process is elected, you will immediately determine a lower sit (presentation) rate.  Some leads are easier to work than others, yet a good prospect, inefficiently handled is often categorized by the salesperson as a weak or poor lead. That constitutes a break down in the marketing to sales program and will usually lead to higher marketing costs.  Leads retain dominant value for about 48 hours. While they are not dead after that, they lose the strength of the impulse which created the contact.  When you receive a lead, act on it ASAP.  Confirm that you are interested in it and don’t set conditions about whether it is worthy of a sales call.  The chances are that you and your salespeople may need training on how to handle leads of this nature.  Most of our clients confirm leads (irrespective of the source) within minutes.  They have computers set to verify their interest in the prospect immediately.  Any delay diminishes the prospect’s value in your eyes and it diminishes your value in theirs.

Q: How do the most successful companies handle lead intake and lead distribution to their salespeople?

A: Many confirm their leads within 5 minutes of their receipt (via email).  Lead intake, confirmation and rehash personnel are rescripted and highly supervised.  Salespeople are required to return a confirming sheet from all prospect contacts, enabling telephone follow-up in conformity with the “Do Not Call” laws.  Sales managers frequent “ride-alongs” to observe and enforce methodology.  In a recent survey, we were able to measure the success of the companies who had diversified lead development and strong controls in place.  In most cases these controls produced an increase in sales.  Many saw their 2009 sales exceeding those of 2008.  Many also require a quota of self-generated leads by their salespeople to achieve monthly bonuses.

Q: We were inundated with questions regarding less qualified leads.  Some requesting “information only”, others coming from 3^rd party sources which had incurred delay on reception.  While these leads require laborious techniques, they often bear fruit.

A: We call these “nebulous leads”.  Nebulous meaning not clearly defined.  These leads are frequently developed through “3^rd party” sources who run elaborate promotions or lead development campaigns.  When companies receive these leads and try to bring them to a point where a product and a price proposal can be presented, they experience a great level of frustration largely because their organization at all levels (1) call intake, (2) lead setting, (3) lead issuance is not on the same page and what follows is chaotic lead “mismanagement”.

Here is some thought on how to identify this kind of lead which was acquired by the means explained above.  Individuals that we classify as “nebulous” are usually prospects who haven’t committed themselves – yet would be open to listen and look.  The lead, once received, requires finessing beyond that of the prospect who says “give us a price” or “an estimate”.  Nonetheless, this prospect is identifying themselves as a potential customer.

Add them to your database and continue to follow up with them on a semi-regular basis. However, here is the caution, follow up too often and you may risk them opting out of your marketing, but if you don’t follow up enough they may forget about you entirely. As such, you need to continually strive to achieve the perfect mix.

Q: We hear the word “prospect” “lead” and “inquiry” used interchangeably at many seminars.  Are these all the same?

A: No, and here’s why.  A prospect is someone who can use your product or service. If you have found a way to get someone to respond to your marketing devices thereby acknowledging their need, you have a prospect which you can identify for lead purposes. If they do not respond to your marketing devices or that of others they are nonetheless a prospect and will remain so until someone gets them to acknowledge their need and sells them.

Q: Doesn’t this kind of lead represent a real challenge for salespeople who have never had to use them before?

A: A prospect requesting an estimate, responding to direct mail or registering at your booth at a show may openly declare “need.”  However, often the need may be deeply hidden in a prospect’s response for information, such as “send me some information”.  To add complexity, the prospect may say “we’re not going to buy now.”  This is complicated by the perception that the prospect hasn’t stated their need and the lead gets labeled as weak or poor.

The more sophisticated companies don’t try to force the “information only” lead upon the salesperson who had no respect for this kind of lead or doesn’t understand it.  It still requires marketing skills to turn that into an issued appointment.  One of our clients in a Midwestern city makes the following comment regarding this kind of lead after he developed a marketing technique with a series of “follow ups” which ultimately produced an issued lead (appointment).

“Most companies – don’t – or – won’t follow-up on an “information only” lead – we do.  Over a period of 6 years we sold $1,900,000 business with leads such as these.”

Q: What techniques work the best with unsold or unissued leads?

A: In our experience, a system that uses scripting, which in turn encourages a prospect who, in the past, hasn’t seen the demonstration, to view it now. This process is called rehash.

Take an example of a prospect who received a presentation that wasn’t sold, but later agrees to have someone come to their home and review the original presentation and price proposal (in well-run companies this also includes sales which were cancelled or were credit rejected).  Rehash requires a “refined” technique that starts with a scripted phone call that contains no risk or threat to the prospect – in fact, implies a “benefit”. This task is never allocated to the original salesperson.  It is, for the most part, a call center issue made by a marketer, not a salesperson.  The rehash lead is seldom, if ever, issued to the original salesperson (for obvious reasons). He/she didn’t’ sell it the first time and the no-sale or cancellation may have been created by a malfunction in the presentation.

All leads which do not turn into issued appointments or remain unsold, or those cancelled or credit rejected should be accumulated into a database.  We call the use of this database to manufacture sales asset recovery. The company has an investment in these leads and any sale made from the database has very few costs related to “reissuance”.  Most successful companies acquire 20% or more of their revenue annually from their database and their customer solicited referrals.

If we did not get to your question, please email us directly at admin@daveyoho.com and someone will get back to you shortly – - and don’t forget, part two of this home improvement webinar series will be held on Decmeber 13th.

Last week’s home improvement webinar on lead generation was a rousing success. There were over 950 companies on the program and we received numerous questions. As is frequently the case, we did not have enough time to answer them all on the webinar so we took the opportunity to respond on our blog (the first series of questions and answers are covered in our latest e-newsletter – to receive a copy e-mail admin@daveyoho.com).

Here is a sampling of the questions we received:

Q: You give the impression that many home improvement companies have tried canvassing, yet few have been successful at making it work “long term” within a practical budget.

A: As we pointed out in the webinar, it is not uncommon for companies with a canvassing program to issue as little as 30% of their canvass leads as appointments. In addition to that, they may only gain entry into 40-50% of these homes for a presentation.  They experience a closing ratio lower than they do for other leads (some of this is attributed to the salesperson’s dislike of that lead). Then top this off with marketing costs that sometimes exceed 20% (some even much higher).  Not a practical way to do business.

Q: Has your company made a study of effective canvassing programs?

A: You bet, and here are some of the basics:

Unless companies subscribe to a plan that includes territory and time selections (by management) for canvassing in middle income neighborhoods, they’re off to a poor start.

It is human nature to try to find the path of least resistance. Better neighborhoods with higher income families frequently represent better education and more well-informed prospects and in turn represent more complications in developing a lead.

But there’s more to it than that.  Actually, there are about 51 components for an effective program. The script language is extremely important.  Intelligent people with money to buy the products you offer have to receive information which they see as beneficial.  Many canvassing groups use a mini-presentation book at the door.  One company we studied has canvassers earning $40-60,000 annually with a fully loaded marketing budget of approximately 9.6%.

Q: What kind of results can be effective with a well-managed canvassing program?

A: The better managed companies have a 50-60% issue rate, a 60-80% sit rate and marketing costs below 15% (fully loaded).

Here is an actual case study of a very efficient program:  Canvassers working (average) 4 to 5 hours daily produce ½ lead per hour set with the homeowners by the canvasser (via cell phone) with their office. This translates into a 60% (minimum) presentation (sit) rate and a minimum of 1 presentation (sit) produced in less than 8 hours of the canvasser’s effort.

One of the keys in this last case study is the “canvass manager” who makes everyone (including himself) adhere to the “model” of the program.

Is it easy? No. Is it successful? Yes. Is it cost prohibitive? This particular company operates with overall marketing costs at 13% and their canvass program (fully loaded) is slightly over 12%.

Q: We are considering hiring a company to do our canvassing.  What are some of the cautions?

A: We received the same question from 12 companies who participated in the home improvement webinar.  If you tried canvassing on your own and couldn’t make it work, or it was too costly, you may succumb to someone who encourages you to let them do the canvassing and provide you with the leads.  There are several smaller companies who provide this service – however – be cautious of “canvassing companies” who want to sell you leads. Several larger companies who provide this service do not appear to have “long term” success stories.

Q: Our salespeople don’t like the canvass leads, so we haven’t been successful with closing many.  Apparently our canvass program “stinks”.

A: Your question probably contains the answer.  You hired salespeople, promised them bona fide leads and they expect to get them. However, if you are allowing your salespeople to determine the source of leads you will never get a canvassing program to work, and since this is but one form of face-to-face lead solicitation (which also includes “shows” and “events” and “SFI programs”) the failure is not in the lead, but in the method of adapting a salesperson on how a face-to-face lead has to be handled to obtain results. Unfortunately this is a management failure.

Management frequently “succumbs” to the complaint of the salespeople that these are “weak leads”.  When the sales department convinces management this is the case, the marketing department is told to get a stronger lead. Ergo: the number of leads decrease and management is unhappy because they don’t have enough leads for the salespeople.  Weak canvassing methods include “looking for”.  Successful canvassing programs treat the canvassing department as part of the sales methodology. At the risk of being repetitious, modern techniques require that the canvasser be hired with a behavioral profile indicating sales “traits” and the ability to follow special scripting devices which often includes a mini presentation book. The appointments were set via cell phone from the canvasser and the prospect to the call center.

Again, at the risk of being repetitious, The successful companies measure not only the number of leads which are produced by hourly effort, they measure the hours it takes to produce a sales presentation from the leads acquired with a marketing budget of 12% to 15%.  In short, the entire process is treated as a science – not – an art form.

Q: We received numerous questions on “diversified lead sources”.

A: Today’s marketing techniques, whether for a small company trying to stay alive or a large company attempting to expand, have to include diversification. Smaller companies may have 10 or 12 sources for lead development; larger companies 30 to 50 sources.  Companies who choose not to diversify their home improvement marketing typically tell us:

• The majority of their leads are referred to them through a satisfied customer.
• We are a recognized name in our territory, so we don’t do much advertising.
• We invested heavily in print ads – yellow pages – web design – or similar and couldn’t make it profitable.

Here is what you have to remember.  In every market and for every product or service sold in that market, there are a certain number of prospects who develop a “need” for most of the products sold.  The trick is how to identify and find these prospects then sell them without resorting to being the “lowest price” in town.

The next “trick” is to find ways to identify and attract prospects who haven’t yet met the explicit need level, but could be convinced to “take a look”.  That requires a good marketing technique which then has to be balanced with a strong sales technique.

This is not being critical of those who get “referred” as a good contract or source, because referral leads are great; most salespeople love them. The reason they don’t get more of them is usually determined by their lack of “asking for them”. If you can develop enough business without advertising or spending promotional dollars, I applaud you. However, keep in mind that past customers should be solicited for referrals with a plan that meets the requirements of your local state laws.

We will answer more questions on our next blog posting so make sure to subscribe so you can receive updates as they happen!

They responded to your marketing message.  They became prospects, customers (hopefully satisfied) and they can be the source for quality inexpensive leads. The term proximo marketing is used to define any type of marketing around completed jobs or jobs under construction

For siding, roofing, gutters, windows, cabinet facing as well as other products we recommend a marketing method called “hang em.”  This is a door hanger which briefly describes the product(s) being installed on a neighbor’s house.  It requests phone, email or fax responses.  In this format you extend the range to a larger number of neighbors, perhaps an entire development.  “Hang em” is phase one, which can be followed by direct mail, direct solicitation or both.

The next step (beyond direct mail) would be personal contact.  Here the salesperson (or canvasser) makes a house call to get a specific appointment.  If your salespeople seem loath to take on this task, hire canvassers to do the job instead.

Don’t give up after the first pass through this neighborhood.  Thirty days later repeat the process with another “hang em” and a direct mail postcard a few days later.

David Alan Yoho makes the following recommendation to all of our clients: Mail the radiation letter upon approved status using the customer’s name and address (with approval). Mail a postcard the week before the installation. Knock during the job and hang ‘em then – in conjunction with obtaining referrals, etc by visiting the customer.

The wise home improvement marketer takes advantage of the completed job and utilizes it as a center for proximo marketing. Working around the job isn’t complicated.  Mostly it just isn’t done wisely.  If your product is a sunroom, kitchen, deck, bath or similar, these lend easily to an open house format.  The agreement to do so is structured during the sales presentation and invitations are sent out to neighbors over your new customer’s signature. The RSVP invitation can extend to ten neighbors on either side of the completed job and to twenty on the other side of the street plus those in the general neighborhood who are friendly with your customer.

A continental breakfast, lunch, brunch, or snack paid for by your company and hosted by one of your staff becomes an inexpensive “lead potential” and contact.  Each attendee signs a guest book page giving name, address, telephone and email address, as well as permission to re-contact by phone for product changes, special offers, etc. Remember, you will need the latter to meet the qualifications of the “Do Not Call List” (check your state for specific qualifications).  A power point presentation with before and after pictures and a lead form can make these neighbors ideal prospects.

During the “open house” provide an inexpensive gift (i.e., gift card from gas stations, supermarket, or fast food restaurant) as a thank you for their attendance.  The presentation on your company and product should be limited to general information.  You are not selling the job. That remains an aftermath responsibility of the salesperson that will get the lead.

In the case of those who attended your open house, and you have their phone number and email address together with permission to call, you are now in a position to glean additional prospects as an aftermath of the installed job.  If your sales presentation to all prospects and a follow up includes solicitation for referrals you will find that proximo marketing pays off with low cost leads.

Let me preface this post by saying that this is not an assault on those within the home improvement industry who use a price drop as an incentive to close a deal.  The issue is the “big drop”.

Historically this practice dates back to the late 40’s and early 50’s when in an effort to sell roofing, siding and storm windows, sellers would offer a discount, maybe 10% of the quoted retail price to get the order.  In those days the average roof sold for $350 to $500 and siding ranged from $1200 to $2000. Accordingly, the discounts used were believable and represented a reasonable incentive. A siding job quoted at $1600 representing a $160 (10%) discount was equal to more than an individual was paid for a week.

By today’s standards, the $35,000 sunroom or basement, the $15,000 siding job or $10,000 window replacement (where there are multiple discounts ranging from $3,000 to $8,000 and more) start to resemble the way automobiles are sold – - with little or no credibility to the quoted price. If you are a proponent of this selling style, you need only review the manner in which you get rescission. The majority of respondents cite price as the reason.  If the customer believes your net price is too high, they certainly didn’t believe the list price was reliable.  Consider the number of people you don’t close because the abundant discounts don’t seem credible.

When the list price is validated and the customer sees value in the product versus the price, the incentive offered has reliability.  Often salespeople rely on that “big drop” to get the sale, because value was not sold. If you offer a bonus or discount as an incentive in your advertising, this price reduction is dealt with soon after you quote the list price.  The net sales price is then validated by your prospect.  Then the “buy tonight discount”, which can be anywhere from 3% to 5%, will make sense.

This is a call for home improvement companies to review the manner in which their in home presentations are made and how the value of their product is being established.  Once this happens, “big drop” is replaced with an initial presentation incentive, which will increase your closes and diminish your rescissions.

Thanks to everyone who made our fall summit in Chicago possible – from all 150+ attendees to all of our sponsors.

While it is always challenging to hold our programs in facilities such as the McCormick Place, the feedback we got was tremendous and it encourages us to revisit such sites in the future.

This was our final live seminar of 2011, but we are already underway planning our schedule for next year – - so if you have any suggestions please e-mail admin@daveyoho.com or respond to this blog entry. Also, we will be holding our next complimentary webinar on the 15th of November so keep your eyes peeled for more information.

Finally, we have included a picture from the end of the program on day two. See if you can spot who doesn’t belong!

This is a critical time for the home improvement industry as recent laws are making it more and more complex to do business as many retailers have done in the past.

With that in mind here are eight critical issues that the industry is facing:

The inherent risk in using “share of profit” compensation for salespeople.

Despite it having been “industry practice” for many years, government agencies continue to crack down on retailers and levy exorbitant fines in an attempt to curb these practices.

The co-mingling of 1099 and W-2 employees in your installation department.

Frequently, this will lead to an IRS audit or citation for misclassification.

The use of a “price drop” for a one night close if followed by a rehash using the same product at the same or lower price.

Consumer protection legislation that has been enacted over the past few years leaves this issue open to interpretation and has proven to have disastrous results for many home improvement retailers.

Improper (or lack of) compliance with EPA regulations/requirements concerning lead paint.

If you perform work on houses built in 1978 or prior are you providing correct documentation (whether the job is sold or not)?

Providing the proper notice of rescission as required by federal and frequently state law.

There is a required format and number of copies of the notice of rescission required for each sale made at other than the seller’s place of business.  Many retailers leave an incorrect number and are in violation.

Operating with a retail contract that doesn’t provide sufficient protection.

Collection practices may be difficult. Clear definition regarding limits of liability should include arbitration in the event of disagreements.

Failing to protect your intellectual property and proprietary information.

Your logo, brand, motto, customer/employee list and presentation material can be at risk without proper protection.

The use of a “non-compete” provision for salespeople.

May be a mistake if you don’t have one  – - and in some states a worse mistake if you do.

To hear us expound upon these issues, make sure to join us in Chicago at the 2-Day Home Improvement Profitability Summit where you will hear expert analysis from our legal counsel D.S. Berenson while also being exposed to the top trainers in the home improvement industry.