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.

I enjoyed participating in the most recent home improvement webinar on lead generation and appreciate the opportunity to answer many of the questions on canvassing that we received in this format.

Q: What is the best way to pay the marketers in the field – by the lead or by the sale or both?

A: A base salary (per hour) incentivized by issued appointments or presentations (provided minimum goals are met), further incentivized by the number of hours taken to produce those results. The team leader’s compensation should be similar based on the average of the team.  There are typically additional bonuses paid on gross numbers but are conditional to certain “hours to demo or issue” being met first. Additionally you can create a “pool” of funds which are based on the percentage below budget. (i.e.  canvass marketing budget – 14%, actual expenditures – 12%, equals 2% of net volume generated. And you can distribute a portion of this (i.e. 20%) to individuals within the group on a “per” performance basis if warranted.

Q: Lead generation for mid to high end remodeling – what works?

A: I’d start with your database.  Leads you’ve had in the past which you have not had an opportunity to present, those to whom you proposed and did not sell and those prospects you sold who could not get financing – then examine your previous customers, solicit them for additional work, ask them for referrals and don’t hesitate to use the methods we recommend for sunrooms, basement refinishing, cabinet re-facing and bath rehab.

Q: How do I convert more of the leads I currently get into appointments?

A: I recommend to give the webinar another listen.  A great deal of the information that you need is contained in that 90 minute program.  On our website there are also numerous home improvement articles on this topic that I advise you to download at no cost.

Q: When are the best hours of the day to canvass?

A: In most markets (some differ) the best hours during the week are 4-8pm. Generally, there are more people home on weekends. Saturday and Sunday are good all year due to sunlight and temperature. 3 out of 4 of our clients experience their best days on Sundays (noon – 5pm). Saturdays usually start at 10am.

Q: How many man hours to produce a lead?  How many man hours to produce a presentation?

A: There are lots of variables, starting with your definition of a lead. No matter the client, we always begin with “budgeting by the demo” since this is a demo business (although the “issued appointment” is our preferred unit of measurement and compensation since it’s easier to define and avoids time-wasting discussions and arguments.)  Once we’ve identified the amount of money we can budget for and compensate for a demo, we work backwards to the issued appointment. The key issues are what it’s costing you, the average sale and the close rate at which your sales force is capable. Here are some safe averages. If your average sale falls in the $8,000 to $12,000 arena, you can probably make a profit up to 15 hours to a demo although you will likely be over budget. Most of our clients need to fall under 12 hours to a demo although we personally never want them over 10 hours to a demonstration. The sweet spot is when you can manage your entire canvassing operation under eight hours to a demo.

Q: What should the sit (presentation) rate be for canvass leads if you have a 65% sit rate for conventional leads?

A: Sorry, your sit rate should be higher than 65% for any lead including canvass. And I’m unsure if your defined sit rate includes a full demo. We typically define a sit rate as all parties being present with an understanding (and agreement) to a certain amount of time set aside and with consent again to those terms at the door allowing us to proceed to the walk-around. Typically, our goal is to attain a 90% or better sit rate. Demo rates should be in the 80’s. Anything under 75% probably indicates that you’re inefficient in multiple areas, starting with how the initial appointment is set.

If you have any further questions on canvassing please e-mail me at david@davidyoho.com and don’t forget to check out the earlier blog posts reviewing questions from our last webinar.

Finally, our next home improvement webinar will take place on September 13th so make sure to register today!

On last month’s home improvement webinar we had the pleasure of welcoming Mark Berch on the program.

Mark is Chairman & President of Service Finance Company, a nationally licensed FHA Title I Lender.  They are a third party servicer with the ability to conduct business in all 50 states and the District of Columbia. He has spent the majority of his adult life in and around the home improvement industry.  He was co-founder and president of an HVAC company with 42 locations in 17 states. He was also founder of a home security company which operated in California, Georgia and Illinois.  His background and experience enables him to effectively marry his in-depth knowledge of the home improvement industry with his expertise in financing, thus creating the best financing options for both the home improvement retailer and the consumer.

There were a number of questions directed towards Mr. Berch on the webinar which he did not have time to address; consequently they will be answered here.

Q: Dave mentioned a company (without identifying them) that sent in 44 applications and received 35 approvals — that’s approximately 80% — with sales of over $496,000.  Were those applications submitted to your company – and – over what period of time?

A: They were submitted to our company over a 4 week period

Q: During your presentation on the webinar, you gave us an example showing an ad giving payments at $99 a month (I think).  You also mentioned the payments related to a contract of an average size, etc.  Could you repeat that and tell me if this is the disclosure that Dave spoke about?

A:  The $99 monthly payment was based on a $7500 amount financed at 9.99% with a 10 year term. You must disclose the term, APR and amount financed in your advertising. You must seek legal advice prior to publishing an ad as each state may have different disclosure requirements.

Q:  We get over 50% of our business through canvassing, shows and events.  Do your clients use a handout, a reprint of an ad or a blown up ad? Can you provide some examples?

A:  Current clients print up an 8 1/2 X 11 color ad and use that as a handout. There are several examples available on our website.

Q:  Is the enrollment process for this program very complicated (how long does it take)?

A: It will take you about an hour to fill out the enrollment forms. We will approve within 48 hours if all materials have been submitted.

Q:  Can I submit an application which was recently turned down by our current provider of finance service?  We believe our customer had fair to good credit, but the amount of the contract was simply too large.  What are the credit limits to this plan?

A: Yes, we will look at your declines to help you get started. Our maximum loan is $25,000.

Q:  How long does it take to get the average approval?

A: 5 Minutes

Q:  One of the gentlemen on the webinar who represented a manufacturer stated that one of his dealer’s customers applied online with a credit application that your company provided.  He said that many prospects don’t call  because they fear that “declined credit” will show up on their credit report later.  How does this work?

A:  It will show up as an inquiry — not a decline. The inquiry could result in an approval or a decline, but that information does not show up on a credit report.  If a consumer applies online using our private label web application which resides on the “dealer’s” website, the consumer’s credit report will show an inquiry. There will be no indication of a final credit decision, i.e. approved or declined.

In the next blog posting we will address the remaining questions from last month’s home improvement webinar.

Our last home improvement webinar elicited more questions than we have ever received, and we will continue to answer them now.

If you have not read it, make sure to review our last blog posting for more questions that were answered from the webinar.

Q: We get internet leads and we call every day and email letters and newsletters with coupons and still we get no response.  What can we do to get to talk to homeowners?

A: A prospect’s response to advertising (a lead) is an indication of interest.  The level of interest may vary from curious to various levels of need.  The Internet lead is someone responding to your homepage – or – something within your posting which intrigues them.

First, acknowledge all inquiries with a simple thank you, then provide them with the information they requested and let them know (professionally) that someone will call them within the next day or so to answer specific questions and give them additional information which may include job sites or things of that nature.  The latter is not necessarily what they want, but it responds to their urge for contact.  The person calling them should be scripted and ask questions rather than starting to sell.  Questions such as:

• “How long have you lived in your home?”
• “What is the age of the particular product you have now (roof, siding, kitchen, bathroom)?”
• “What is your goal?”

Most companies respond with personnel callers who talk about themselves or use inane introductions such as “My name is Mary Smith.  I’m with XYZ company – how are you today?” These are ‘worthless words’ and that’s why you need a script.

Usually the Internet lead (prospect) has also examined the websites of others and they may have information and misinformation about the product or service you are offering.  Structured dialogue (scripting) will usually get you to the core of what their needs might be.

Also, you indicated in your question that you call every day – and – you may be long past the perception of an information provider to that of a pest.
Your last sentence indicates you probably need a lot of work on scripting.

Q: We use your “Leads, Leads, Leads” program.  The amount of information seemed overwhelming at first, but since using the scripts properly, we doubled our issue rate.  The problem is, the salespeople claim they want a more qualified lead to create a better sit rate.

A: We are glad you are using “Leads, Leads, Leads” and continue to review this material; it will help with the next part.

What you stated remains an on-going problem – the salesperson wants a more qualified lead which brings down the issue rate.  The owner wants more “bang for the buck”, so he wants the sit rate increased.

My recommendation is that you first focus on improving the issue rate while utilizing scripts, which ensure (1) all interested parties, (2) a specific time, (3) interest created in the product or service .  Next, sales management has to realize that the issued lead today is very costly and salespeople have to be better prepared to “sell their way in”.  I’m not talking about “foot in the door”.  Rather being prepared for some of the minor resistance that frequently occurs.  I also suggest that someone in your marketing department listen to The Science of Successful In-Home Selling and that likewise your sales managers listen to the CDs in the Leads, Leads, Leads package you have.

Q: We are in the gutter business, which isn’t good right now.  We also sell handyman services, and our average contract is between $2 – 3,000.  Is there financing available?

A: Contracts of the size you mentioned do not require conventional financing.  Use credit cards (which also may be offered on a 3 or 4 payment basis with an individual contract stipulation authorizing you to charge their credit card once a month for 3 months). However, this is not the reason you may not be getting as much business as you want. Adding this as a “benefeature” enables you to provide a solution for the customer who really doesn’t’ have the cash to buy now.

Incidentally, who told you the gutter business was bad now?  Remember, it is either good or bad, depending on the way you run your business and the success you achieve.

Q: How many people still use the “free no obligation estimate” phrase??

A: The phrase “free estimate” is outdated language.  We suggest a phrase that goes something like this:

“We will examine what you want to have done and need to have done and if we can offer a service which fits your needs we will give you an accurate written proposal on what your investment would be.”

Q: Are the ads which feature average payments directed at low income customers?

A: To our knowledge, these ads attract responses from a broad range of prospects – - some of whom have saved a portion of the costs and need to finance the balance and haven’t found banking sources which will accommodate them.  This includes prospects who were rejected when they sought credit in an earlier application for reasons that may no longer exist.  It attracts people who have a “big ticket” project of necessity – roofing, HVAC, and similar and haven’t been successful with their local bank.  Of course, it also attracts low income prospects.

We will continue to answer questions from our last webinar in the next blog posting so be on the lookout.

Thank you to everyone who was on last week’s home improvement webinar on leads and obtaining financing. We received an abundance of questions, many of which we were not able to answer during the program. As such, we are going to address many of them in this forum.

Q: Can you provide us with “slicks” of the ads you showed?

A: While we do not provide “slicks”, you will have pictures of the ads on the MP3 and can arrange your own from these examples.

A caution – be sure you check with some authority in your state (or your attorney) regarding the disclosure needed in these ads – regarding the size of the contract, the APR, etc.

Q: How does the advertising you’ve shown work with canvassing, shows or events?

A: Think about it – one of the most common reasons your canvassers or presenters can’t build a lead is because the prospect says “we can’t afford it now”. Have a pamphlet or brochure available to explain how you make this type of financing available.

Q: Is print media dead? If not, what are the most cost effective ways of using print media?

A: Print media is not dead, but it is in trouble. Circulation is dying.  Many people in the age range from 30-50 get their news via the Internet and don’t read the paper.  Many dealers are buying print media on a P.I. (per inquiry) or similar.  This takes knowledge of how advertising is sold, but it’s worth a try in any market.

The form of advertising mentioned in our recent webinar (utilizing financing/payments) is working a lot better than most.  Check the ad samples from the recent webinar.

A reminder – we have an abundance of free articles on this topic and others on our website.

Q: Do you hold new salespeople responsible for generating leads?  If so, how do you recommend they procure them?

A: Create a job description defining their responsibilities – and policies – then train the new hires on “how to self-generate leads”.  It is a great idea to make lead generation part of a new salesperson’s responsibility.  If nothing else, have them work around your completed jobs that were sold by veteran salespeople who won’t work around the job.  These are an excellent base in which to develop new leads.

Incidentally – you asked the question regarding “new salespeople”.  It probably fits all salespeople if lead intake lessens self-generated leads.  If you don’t have a database recovery system – have them start with old (recycled) leads from “no sit” – “no demo” or “no sale”.

12.  Q: Is direct mail around the house we are working on a good source of leads?

A: Direct mail is one of the options for using the job under construction or just completed.  Have someone visit 5 houses on each side of the new job and 10 houses across the street on every installation you do.  Make sure they are using door hangers. You can usually get the names of the people from the owner of the house where your current job is being done.  All actions such as this have a learning curve.  The more you do it, the better you will get.

Q: We just regrouped our canvassing program.  The trouble we always have is getting canvassers in the door.  The ones we get in the door show up for the interview but never return.

A: I would probably need to know a lot more about your company and operation before I could answer you completely.  It may have to do with the ad you’re placing or the kind and style of job you are offering (good canvassers in many markets make upwards of $60,000 a year).  Today’s great canvasser isn’t just “looking for prospects”, he or she is hired based on having some sales acumen. They are tested and profiled, and only the best are selected. They are trained and supervised by someone in the field with them.  They work on tight scripting.  The leads they make are relayed into a call center.  Someone else sets the appointment.

A behavioral profile can aid you in determining (1) adaptability to the sales role, (2) how the individual will respond to the stress, (3) manageability.

You probably have to rethink your program and see what you are missing.  In all probability, you may have to change the “model” you set up for this (the canvassers’) job.

You also may need help in your process regarding interviewing salespeople.

Q: We are in the roofing business. When it rains our prospects need a solution (usually they have a leak).  When it isn’t raining, we have trouble getting leads and closing.

A: You are in the same ballpark as those in basement waterproofing.  You are waiting for “nature” to help deliver a prospect that has a “high need”.  The truth is that the roof has a weak condition when it isn’t raining as does the basement.  Your job is to develop leads on an inspection basis, detect the weaknesses and convince the people to consider before it rains.

In your business (roofing), if the roof reaches a certain age, it’s time to think about replacing it before it leaks.  An analogy: when your tires start to lose their tread, you don’t wait for them to blow before you replace them.

There are many studies on why roofs are leaking (or will eventually leak) and the same is true of waterproofing.  If you can get a prospect before the roof leaks, you are ahead of the game and the competition.

Q: What are the best headline grabbing words and phrases to have in a magazine ad and where should they be located in the ad?

A: A couple of reminders first.  People don’t read ads.  They read what interests them and sometimes it’s an ad.  Your prospects aren’t looking for your product for the most part.  They’re looking for what your product does: protects their home – saves them money – avoids/eliminates maintenance – increases the value of their home.

The eye reads from left to right and top to bottom.  The headline captures the attention, the bottom line tells them what to do: “Call today” – “Visit our showroom” – etc.

Think of the words that relate to those issues and think of how best to get their attention.  An ad in any printed format is in competition with other reading matter on the same page (frequently another ad).  So you have to work at your headlines: “Save ___% today” – “Sale” – “Free” – “Low or no cost” – and, of course — how you will make it affordable for them.

We will answer more of your questions in the next blog posting.

For those of you waiting for the remaining Q & A from our latest home improvement webinar, we appreciate your patience. Now that all of our Spring programs have wrapped up, here is a summary of questions that were asked which we did not have time to address:

Q: Where do you find potentially high performing salespeople? (Robert,  Mr. Sunroom Professional Remodeling)

A: I’m glad you added the word “potentially”, Robert.  Some companies spend too much time trying to hire their competitors’ salespeople (usually a big mistake).  A behavioral profile (or similar) taken accurately will usually determine whether an individual has strong sales traits (behavioral).  Once defined, a strong interview process is suggested and then a training regimen, which assures the newly hired salesperson is selling via a successful (proven) sales methodology.  Think about this, Robert – a great sales manager takes an ordinary person with sales/behavioral traits and trains him or her to be an extraordinary salesperson.

Q: What interviewing questions do you suggest to weed out the less qualified salespeople? (Kevin, Evergreen Window & Door)

A:  Similar to the last question, Kevin.  If you’d like to see part of the process in action, we have a video that demonstrates many sales interview tips.

Q: How do I pay salespeople on commission if they bring in a GPM of 40%. The problem I have always had is they want 10%. (Jim, Murphy Window & Sunrooms) and What percentage of the sale should I pay in commission? (James, Heartland Exteriors)

A: Directing my answer, Jim and James, to both of you – If you have a 40% (gross profit margin) there’s no reason not to pay 10% since your G & A and marketing costs should be allowing for a fair net pretax profit – however – the formula has to be regulated so the job is sold correctly.  It is wise to combine it with a control so that if the salesperson doesn’t sell it, when the lead is turned back, it goes through a rehash by a third party.

Another however – to James – 10% commission should not be the standard for big ticket items (i.e. $25K to $50K and up).  The commission should be worked out versus a sales goal which permits better than average earnings for the salesperson, but not sufficient to destroy their initiative. For example, a salesperson selling windows, cabinet facing or similar where the average sale is $8-$10,000, being paid 8-10%, has to be disciplined to sell 1 to 2 transactions a week minimally.  The salesperson who is given leads to sell sunrooms, metal roofing or basement refinishing sells a $40-$60,000 transaction, so they should have a commission in the range of 6-8%.

Q: Should salespeople be compensated by salary or by  commission? (James, J&A Associates)

A: When salespeople become truly accomplished, they tend to want an incentive system which compensates them for extra effort.  In many organizations when a salesperson is hired, they are given a training compensation for 1 or 2 weeks (which is termed a draw) the intent of which is to make them feel secure during the training period.  However, James, it all comes down to performance.  If you have a specific percentage built into your pricing formula for commission, salespeople should understand they have to operate within the parameters to produce enough profitable revenue to cover the cost of what they are paid, no matter what you call it – salary – commission – or draw.

Q: What are your thoughts on paying overages to salespeople? (Gary, AA Home Improvements)

A: Usually a bad idea, Gary. Reason 1: an overly aggressive salesperson may overprice a contract purely to earn additional commission.  Ultimately this is not good for customer satisfaction, which brings me to reason #2.  An attorney general (any enforcement agency) will often single out a company and publicize the fact that salespeople in the company are incentivized to charge more to one company than to another.  We have numerous case histories to support this, which show companies that have been driven out of business.  Reason 3: if a salesperson makes more on one transaction it could incentivize them to sell fewer transactions earning higher commissions for fewer sales.  The solution (except in extreme cases, where there are what we deem “God only knows” factors in price development) is that salespeople should be trained to use standard estimating practices, and if they run into special situations, they should call the office for a supporting price change.

Q: How do we successfully vet applicants? (Cheryl, Alcher Interiors, Inc.)

A: Each applicant should be subject to 2 kinds (forms) of job application.  The first is a pre-employment application where you get specific information enabling you to ask interview questions which are pertinent to the information received.  The other is an employment application.  Here is where the applicant is under serious consideration.  References should be checked and a background check drawn on the individual.  To do so requires a release by the applicant giving you permission to seek out this information and draw such a report.

Q: Do I really want a salesman to do a HARD close? (Gary, Ferguson Industries)

A: I’m not sure what you mean by hard close.  No one bearing the title of a salesperson should ever proceed into an attempt to get a sale without asking for it properly.  This can be done without using tactics you might consider “high pressure”.  The most common reason salespeople do not get an order is because they don’t ask for it – or – they don’t ask for it properly.  Salespeople are not estimators (estimates are part of their job role).  Salespeople have to do more than hand out written pamphlets and allow people to see samples, they have to be taught a sound sales methodology.

Q:  How can a small company (1-2 employees) hire great salespeople?  Most of them want to work for a larger company (at least 8-10 and up)? (Jim, Manley Enterprises)

A: This is more of a statement than a question, Jim and the statement may be colored by your history/experience.  Great salespeople want to work for companies that have a good product, a sufficient supply of leads and a fairness in dealing with them.  We have dozens of clients who have as little as 3 salespeople – all of whom sell over $1 million a year for these small companies with a strong local reputation and a smart selling system.  Their incomes range form $80-100,000 a year and to say they have satisfactory employment is an understatement.  You may be equating larger companies with more leads and that might make the company seem more attractive.  Yet smaller companies can develop a satisfactory lead getting and sales program in which their employed salespeople do extremely well financially.

Q: What do you do when you have a great (your best) salesperson but their arrogance and personality continue to rub others the wrong way? (Nathan)

A: Nathan, we intentionally excluded your company name in case someone should see your response.  However we received at least 3 or 4 similar questions.

If this is your best salesperson it says something about how the customer perceives that person.  Great salespeople are frequently enjoyed and appreciated by their customers and disliked by their managers, those in production or even the office staff.  The reason stems from what is known as “behavioral use”.  Salespeople like this are often charismatic and articulate.  They “light up” the conversation in the prospect’s home.  They are loaded with anecdotes, stories about life and simple “chatter” that intrigues their prospects/customers.

Frequently they are the top producers.  Management doesn’t have to love, admire or become social “bosom buddies” with them – they have to understand them.

I suggest you have this person behaviorally profiled to get an insight as to why there is such an appeal to the customer base while frequently a lack of appeal to management.  They are not necessarily role models to other salespeople, but some aspects of their behavior, if replicable, are beneficial.

As long as this salesperson sells profitable contracts and doesn’t offend customers, you have to find a way to understand and deal with the behavior.  I used to tell a funny story that went like this:

A client called me and said, “We have a salesperson who is constantly late for meetings, interrupts the sales manager when he’s talking, doesn’t get his paperwork in on time, makes outlandish statements about his ability and treats the production crews as if they were his personal ‘hired hands’.”  He ended by saying, “What can I do about this?” My answer was, “Get rid of him!” He responded quickly by saying, “I can’t! He’s our best salesman!”

If there was a question which we did not address please e-mail our office at admin@daveyoho.com, and we invite those of you who haven’t already to sign up for our home improvement webinar series.

Last week’s 2-day Home Improvement Profitability Summit took place at the Embassy Suites in Las Vegas and was a rousing success.

Over 130 people were in attendance representing 98 companies. The event was sponsored by 18 manufacturers and service providers. 18 panelists presented on a wide array of topics including (but not limited to):

• Lead procurement
• Lead management
• Canvassing tactics
• Sales management
• Internet marketing trends
• Recruiting and hiring sales personnel
• Product diversification

As an aftermath of the Summit, here is a sampling of comments from attendees:

“Good afternoon. I wanted to let you know that Ron and I thoroughly enjoyed the seminar last week! We met some great companies that we are currently networking with. We look forward to the next one.”

- Matt L., Little Rock, AR

“Thanks for allowing us to participate. It was an excellent program as usual. Thanks for all you do!”

- George F., Indianapolis, IN

Thank you for allowing me to participate as a sponsor. It was a wonderful learning experience and will certainly be mutually beneficial. Your partnership is very much appreciated!

- Mark B., Boca Raton, FL

Wow – there was a tremendous amount of topics covered over the two days. I thought the most important part of the seminar was the sales portion on the second half of day two. I did purchase some of your training material and I plan on starting to learn today. Thanks!

- Mario G., Rancho Cordova, CA

For those of you who missed the event – - or for those of you who attended and are looking for another takeaway, we invite you to view the slides from the 2-day presentation.

Also, we will be holding our next management summit in conjunction with the Remodeling Show in Chicago in early October. Stay tuned for updates…

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 admin@daveyoho.com.

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 31^st 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 31^st.  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 15^th 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.

Many of you have e-mailed us, asking when we were going to post answers to your questions from our latest home improvement webinar. We appreciate your patience in bearing with us in the production of our latest package as well as the program we put on in Baltimore.

In no particular order, here are answers to some of the questions we received that day, but did not have time to address while on the webinar.

Q: What is the best rebuttal for the objection: “You are our first estimate. We need to get more so we can compare.”?

A: All presentations should be made with a request for an order.  This statement by a prospect is frequently just “jargon” and may mean little.  Unfortunately, it frequently tends to derail the presenter/salesperson from making a complete presentation or asking for the order. A high percentage of the time when the company and product is properly presented, they get the order anyhow.

Q: I’m having trouble getting back in the house or just talking to the customer if I don’t close on the first call.

A: We call this a “rehash” call.  When making an appointment for such, you have to have a credible reason which benefits the customer as to why they should give you more time. If you (the same person) are going back on the call, you might simply say:

“I believe I overlooked 2 items which I think could benefit you and an option which might reduce the cost slightly.  I need to review the project with you and go over these.”

or

“Since we last met, there is a new product option which differs slightly from the one we discussed, which incidentally might include a cost savings.”

When a rehash appointment is set for a different salesperson/presenter to go back, you might use the following:

“Thank you, Mrs. Jones, for giving us the opportunity to review your project, etc.  Our representative has turned in the paperwork and we would like one of our managers to review this.  We believe there may be a more cost effective way to do this project, etc.”

Q: In order to give a price up front, even a guesstimate, how do you balance between low-balling (and ending up with an angry customer) and over-estimating, in which case you may lose the prospect from the beginning?  And if you don’t give them an approximate price in the beginning how do you keep them interested even if they have to wait for that price?

A: First, a “low-ball” price is not a good way to build customer satisfaction and over-estimating is simply poor judgment.

In the second part of your question, you refer to an approximate price for the project.  This is also a mistake, since it could be either high or low and in any case, leave you with an unhappy customer.  We mentioned in the webinar – - first build rapport and second do a concentrated needs assessment and project review prior to any cost estimation. You may want to review the webinar (also see the next question and answer).

Q: How do you feel about price conditioning at the beginning of the sale?

A: Price conditioning can take place in the early stages of a presentation – but – only after you have gotten some needs assessment information.

For example, let’s consider counter tops (which is the product offering of the individual who submitted this question). There are numerous options.  There are builder grades which seldom meet the needs of those who are remodeling.  Then there are a whole range of laminates (you might want to show photos or samples here) and then when it comes to granite and silestone, there are different grades and thicknesses. So in terms of laminates or builder grades to the most up-scale range of prices assuming you want this to be a one-time replacement, here the grades may vary from ___ per square foot to ____.  Now let’s see what fits your project the best.

Q: Will you explain the total offer concept in more detail?

A: The total offer concept is based on having the customer understand all the components of the final price you quote. If your proposal contains special trims, moldings, finishes, warrantees, attachments, and/or options, they all represent a component of your price.  Worker’s compensation and public liability insurance are all presented as a component. To better understand this, I suggest that you listen to the webinar one more time and particularly focus on the Total Offer Concept slide. If you have any further questions, you can call us at (703) 591-2490 and someone will be happy to assist you.

Q: Why is it so important to have both the husband and wife present when you do a needs assessment?

A: Consider the fact that they probably own the house jointly; it will probably be a major expenditure, so in most cases one will not make the final decision without consulting the other.  The needs assessment (reviewing the project by walking around) is the ideal time to understand the values of both parties. To review a glaring example of when it is important, check out this video where Dave presents on “Trying to Buy a Car”.  It’s funny, but it’s also to the point.

Q: My older brother handles the selling in our business, and frankly, when I’m with him, I am uncomfortable in the way he frequently convinces customers to “buy now”.  Am I wrong, or will I get over this?

A: Since I haven’t heard or seen your brother in action, I can’t tell you if it’s wrong. I also can’t respond to your “feelings” about this.  If you have little experience in selling, it’s probably not uncommon to lack an understanding of why sales methodology works.

The sales process can make many people uncomfortable, but ask yourself this: If your product/service is of benefit to the customer, then what is the problem with getting them to make a concrete decision?

For more information on our sales methodology, I suggest you download (without charge) our MP3 on “The Seven Myths of In-Home Selling”.

If we did not get to your question, please send us an e-mail at admin@daveyoho.com and we will respond directly.

We look forward to your participation on our next webinar!

To those who were on the webinar on Tuesday, I wanted to thank you personally for joining us online for another successful home improvement program.

Over 1000 companies were registered for the event and nearly 85% of them were present – a remarkable amount for an online event.

Also, huge kudos are in order to Hanley Wood and Marketsharp who were our valued Sponsors and also helped to facilitate the event.

In the coming weeks we will be posting answers to a number of questions that we did not have time to address on the webinar. Make sure you sign up to receive e-mail updates regarding a new blog posting so you don’t miss any of them.

If you were not able to make the call, then we hope that you will be able to sign up for one of our future programs. We are planning on holding another webinar before the end of the calendar year, and registration fills up quickly so make sure to sign up ASAP.

If you have any suggestions for an upcoming home improvement webinar that you would like us to hold, please let us know by clicking here.