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!

After another exciting profitability summit wrapped up yesterday in Baltimore we would like to take the time to thank all of the people who were involved in making it a success.

First of all, we would like to thank the attendees for taking time out of their busy schedule to come to our program. The feedback we received was tremendous and we look forward to interacting with you in the future.

We would also like to thank our sponsors for all their participation. Without them the program would not be possible.

Finally, we would like to thank Hanley Wood for partnering with us in this program. The people in the organization that we dealt with, from Paul Treanor to Amy Allen were first class, and we encourage those of you who are still in Baltimore to support their efforts at The Remodeling Show.

For those of you who were not able to make it – - you were missed. We had over 120 companies in attendance at the management portion, and an additional 90 salespeople for the sales session conducted by training experts Brian Smith and David Yoho.

Be on the lookout for new content from the program on the blog as well as on our YouTube channel – and – if you want to make sure that you make our next live seminar visit our website.

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.

This is not an easy question to answer, particularly when our economy is so turbulent. However, contrary to popular belief, the economy is not the biggest factor in the decline of entrepreneurial selling organizations.

It is extremely complicated for most business owners to make the transition from an environment where they are at the heart of everything that goes on within the company to one where there are multiple levels of organizational structure.

Within the home improvement industry, this becomes even more complex as many companies that are looking to grow consist of no more than a few employees, and the principal owner of the business may be responsible for the majority of the “selling” that takes place.

As you are looking to take that next step to grow your business, keep these points in mind:

Hiring the right people and avoiding the wrong ones is the first step you need to take before you can undertake significant growth

As I stated in the last blog posting, “Turnover is the death knell of any small to moderately sized selling organization.” You need to decide what positions are most critical that you hire for first. Do not make the mistake of attempting to grow your business by hiring extra sales personnel, a canvassing crew and a marketing manager all at once.

Once you determine what position(s) you want to start out with, you need to invest the time and resources in hiring the right people. I have yet to meet a manager who was perfect at pinpointing the right person for every job. This is why we recommend the use of tests and behavioral profiles during the process. The test determines whether the individual can do the job that they will be assigned to (i.e. if they have the skill sets). The profile will determine whether the individual’s behavior matches the job. Behavior is neither right nor wrong, it just is, and we have identified specific behavioral types that fit best in certain job roles.

Stop thinking like a salesman

Easier said than done right? In all likelihood, if you are reading this blog entry, then you have been a salesperson (or someone in a selling role) for most of your professional life. The problem is that when you make the transition from a “salesperson” to a business owner you need to change the way you think. It takes a different mindset to manage sales than it does to manage people and you will frequently find yourself struggling to relate to your employees if you do not abandon some of the behavioral traits that made you a sales superstar.

Plan more structure

Some of your employees may like structure, others may hate it, but the truth of the matter is that all of them need it.

Without clearly defined boundaries and goals in place, there is too much freelancing and your employees will have a tendency to abandon reason in the face of personal priorities.

Furthermore, there needs to be organizational checks on this structure or it will be changed and altered within weeks of their training.

System selling

A common question we get when conducting a client observation is: “How many steps do you recommend in your sales system?” My response is that the steps aren’t as important as “sticking to the system”.

Too many people get hung up on a number, when that is not the key in closing a prospect. The key is a scripted sales methodology that you are comfortable with and becomes part of the organizational philosophy.

Structured price (formula – application)

I recently covered this is another blog posting. Too many companies arrive at a price based on what their competition is doing, what will give them a “competitive advantage”, or some other arbitrary number.

The fact is that in order to achieve a healthy profit margin, there is a formula we developed that is foolproof. No matter your product/service, by sticking to the numbers you will assure that you don’t miscalculate your profitability.

Log and track every lead

Yes – it is important to qualify your leads, but it is also a huge mistake to not log and track every single lead that comes into your business (by any form of communication).

Just as important is what you are using to track your leads. Without a strong system in place to manage, organize and follow up with your prospects, you are increasing your administrative time and costs exponentially.

Delegate, delegate, delegate

Staying involved in all facets of the business is critical for all business owners, but just as important is delegation.

As your business grows, so should the number of tasks that you assign to other employees.

What? You say that you don’t have faith in them? Go back to step 1 and get your hiring system up to speed to make sure that you have a team in place that you can count on to do the tasks that you simply don’t have time to do anymore.

Before you lay too much blame on the economy and the government (I’m not saying they aren’t responsible), you need to examine your internal processes, because unless you are sticking to these guidelines you are setting yourself up for failure.

Contrary to popular belief, the call center is not dead. Some of the methods used to ascertain prospects may be outdated, but we have a number of clients who still effectively produce business through their call center.

First, you have to hire the right people for the job. To assure maximum success we recommend the use of a behavioral profile. From our experience they can decrease turnover by 50% or more, and turnover is the death knell of any small to moderately sized selling organization.

Second, you need to train these people effectively, and my son David, who is also one of our Senior Account Executives, endorses a 4-step process:

• Focus on the customer’s welfare
• Control the direction of the conversation
• Create an adviser’s position
• Base your appeals to action on emotion

Does that sound complicated?

In most cases it is easy to enforce at the outset of call center training, but it falls by the wayside as representatives slip into their bad habits and begin to go off script.

Because of this the final step is a strong call center manager who can enforce these rules and replace personnel who are not willing to “stick to the system”.

What are the key factors affecting the home improvement industry? From our experience, what our clients present as their primary problem(s) typically end up being far different from what they actually are.

Here are some of the notable issues that our clients reported that they are facing:

• Leads are down, but the “cost per lead” is up
• The demand on one’s time seems overwhelming
• Interested parties are harder to get together (leading to one-leggers)
• Keeping up with home improvement regulations is difficult
• Hard to find workers without “baggage”
• Higher turnover in sales force
• Customers seem to complain more than ever

This is a wide array of issues that paints a picture far worse than what may actually be occurring. After conducting a client observation, we typically find that:

• Selling methods are incongruent with the customer’s decision making process
• Improper training is taking place, stemming from a lack of coaching
• Salespeople are being hired with the wrong criteria
• Business owners spend their time managing instead of leading
• Improper compensation methods are in place

So what are the keys to improvement? Here are just a few that we stress our clients to abide by:

• For every ¼ HOUR spent in planning – 1 hour is saved in operations
• Find the right people and systems to improve the bottom line
• Balance the amount of time spent on calculating the cost of your home improvement leads, the type of products/services being offered, the potential profitability of each, maintaining cash flow, and lowering the turnaround time of production. Putting these things in the order of importance is key for the company to prosper.
• Remember the 4 P’s: Pricing – People – Products – Production

Contrary to what you might hear or believe, these elements do not change depending upon what geographical market you operate in or what products/services you offer. There is a proven formula for success within the home improvement industry, and by following specific guidelines you increase the likelihood that your company will flourish for years to come.

The following case study was conducted as an outgrowth of a turnaround effort by one of our Account Executives, Brian Smith.

More than anything, what this shows is that a few minor tweaks in the sales and marketing system can have a dramatic effect on your bottom line.

For more case studies from Dave Yoho Associates or information on how we can do this for you – - feel free to contact us at (703) 591-2490.

Revenue is up. Your marketing costs are down. Employee morale is at an all time high. Despite all this, your business is barely staying afloat. How is this possible?

Frequently, it has to do with a miscalculation in the pricing formula.

From our experience, many business owners set their prices based upon arbitrary formulas, what the competition is pricing, or frequently they simply arrive at a number in their head that they believe will yield a strong profit. None of these methods are effective, and frequently they can have a disastrous effect on your bottom line.

Over our 45+ years of industry experience, many things have changed about the way businesses should be run; however, one thing that remains the same is the pricing formula.

With the right system in place, specialty home improvement companies can earn 10-15 (and sometimes) 20% pre-tax net profit. Full-line home improvers (including design and build) can earn 5-8% pre-tax net.  It’s all in the formula and the control(s).

In most cases, direct costs are not clearly defined, and fully loaded marketing costs are not defined, allocated or managed. Because of this, a company’s profitability may appear to be in better shape than it actually is. The first step is to make sure you are classifying all of your costs properly; for example, even if you are the only individual who sells business in your company you still need to separate all of the costs that are attributed to the selling process.

Once this is accomplished there is a formula to assist you in calculating your selling price (all of the numbers are estimates based on an average home improvement company that sells replacement windows):

Sales Costs (fully loaded)                               13%
Marketing Costs (fully loaded)                        15%
G & A Operating Expenses (overhead)         20%
Anticipated Net Profit                                        10%
TOTAL                                                                  58%

As you can see, the goal is to achieve a 10% net profit. Once you have performed this calculation, the total percentage (in this case 58%) is subtracted from 100% to arrive at your direct cost calculation.

Direct (L&M) Costs    =  42%

The final step is to apply this percentage to the cost of your product/service (again all costs are estimates):

Cost of window (incl. shipping)                  $150.00
Trim and Miscellaneous                              $  15.00
Labor to install (incl. re-measure)             $  70.00
(Direct Cost) Total labor & material  =      $235.00 = (42%)

Next, divide 42% into $235 = $560.00

The $560 represents the minimum selling price of your product/service that is necessary to achieve a 10% anticipated net profit.

A couple things to keep in mind:

• There are always unanticipated factors that come into play that will affect your bottom line (we call them G.O.K. – God Only Knows).
• Depending upon what business/market you are in there may be a slight variation that is necessary; however, the basic calculation will remain the same

By using this formula to arrive at a selling price you are taking all of the guess work out of the equation and assuring that high revenue will equal high profitability in your business.

We developed a package that delves into this formula further along with all of the other elements you need to know to run a profitable business. As you may guess, the package is called: How to Run a More Profitable Business. If you have any questions about how to implement this in your organization, call me directly at (703) 591-2490 or e-mail me at dave@daveyoho.com.

In continuation from my last blog posting we will examine the most common errors made by home improvement companies. Incredibly, the most common error that we find when we do a client observation is the lack of a business plan and operational model.

Now, this is not to say that the company did not draw up some sort of a document stating their “corporate purpose and direction”, but frequently it has very little if any structure and as a result the employees rarely adhere to it.

The below slides are examples of what a typical home improvement business plan might entail. Keep in mind that depending upon the nature of your business, things may differ greatly for you.

Take a look at your overall business operations. Things may not be running as smoothly as you thought. Frequently this is due to elements that are missing on either the front end or the back end of the business.

In the next blog posting I will cover how incorrect pricing formulas dramatically affect your bottom line.

One of the topics that we covered at our recent home improvement program was the most common errors that we see companies make when we do client visits or conduct a business analysis.

In most cases, these errors are easily fixed and can result in a major boost in both cost savings and profitability.

In no particular order:

1. Lack of business plan and operational model
2. Improper pricing formulas
3. Direct costs not clearly defined
4. Fully loaded marketing costs not defined, allocated or managed
5. Insufficient safeguards to ensure net profitability on each contract performed
6. Lack of cash flow management
7. Poor distribution and control of leads
8. Failure to maintain adequate internal records and accounting
9. Failure to understand personal exposure (liability) in ongoing business transactions
10. Outmoded (often risky) sales compensation methods
11. Lack of information regarding federal and state laws (Frequent failure to conform)
12. Failure to examine the law of “cause and effect”

In forthcoming blog postings I will go into further detail about each of these; however, if you have any questions in the interim feel free to contact our office at admin@daveyoho.com.