Countertops Magazine Archive

Small Sales

IN SALES, SMALL CHANGES CAN EQUAL BIG PROFITS

Imagine making a few minor changes in your showroom and sales process and increasing your profit by 50 percent. It’s possible. Small changes in the right areas can mean huge payoffs. There are some simple steps you can take to go from mildly profitable to wildly profitable.

The Biggest Breakthroughs
Most people look to their trade for what to do and how to do it, which is exactly the opposite of what the most savvy business people do. If you listen to the most successful people in business – Richard Branson, Bill Gates, Guy Kawasaki – they’ll tell you that in business, in every industry, the biggest breakthroughs and successes don’t come from looking at your business and your industry to see what’s working, or what’s fine, but in discovering what’s missing.

Starbucks wasn’t successful because people needed more coffee. In fact, the company will tell you it doesn’t even sell coffee; Starbucks sells an experience. What was missing in the industry wasn’t coffee, but an experience, a feeling.

Winning doesn’t come from making massive changes, but rather simple, small changes that tap into deeply felt customer desires that are going unmet in an industry. This is where the best and brightest focus to find solutions to problems their competitors don’t even realize exist.

Think about intermittent windshield wipers, air conditioning in automobiles or even the iPad. Nobody knew these things were missing. These were small additions to existing industries that made global impact and massive profits. In the same way, small changes in how you do what you do every day can make a massive change to your bottom line.

Take Dell vs. Apple for example. Dell computers have about a 30 percent market share. Apple has only about 6 percent. A recent news article stated that while Dell has five times more market share, Apple has more than 20 times the profits. In one quarter alone Dell posted profits of about $5 million to Apple’s $97 million.

How do they do that? Apple knows its customers. It works to fill those customers’ unspoken, even unknown, needs. Apple addresses issues nobody else notices and delivers value in the process. Learn the lesson from Apple. Success is not about gaining greater market share; it’s about profitability.

The Secret to Greater Profits
So how do you ask for and get more money for what you do? By knowing how customers make their buying decisions. People make their purchasing decisions based on emotions. They compare products and companies, looking at value vs. cost. You do it every time you make a purchase. Think about the last time you shopped for anything.

So how do shoppers determine value? They do so through perception and information. They look to compare the quality of products, trustworthiness of the company, safety of their purchase, social proofs, Internet reviews on both companies and products, warranty and much more.

They’re looking to answer two questions: 1) “What product is right for me?” and 2) “Which company should I choose?” Frequently, they need to determine the product first. Once they feel safe in their product selection and color choice, then they look to compare which company is best to go with.

Believe it or not, most of the time after meeting with several companies there is very little clarity in the mind of the customer as to the distinct differences between them.

If you wish to charge more for what you do, your first mission is to help them determine the right product and color. Your second step is to make clear why you are a better choice. This should be done from the moment they drive up through the signing of a contract with you.

The Big “If”
Studies have shown that the average American is willing to pay up to 50 percent more for an item “if” they see a value difference. That’s your challenge. You must give them a clear, perceivable difference in the value you bring to the project. It’s called your value proposition. What are you promising that others aren’t?

Find the right value proposition and you can easily double the profit of every sale. Most companies do not lose the sale over a 5 or 10 percent price difference. Let’s say three companies quote the job. Company A’s price is $2,300, Company B’s price $2,530, and Company C’s price $2,760.

What is the perception of a product or service when there is a $460 spread between prices? Which one do you think they will perceive is the quality company? What might they assume about the lowest priced company?

The average company doing granite countertops nets about a 10 percent profit. The difference in the previous example between company A and company B is exactly 10 percent. That means if you raised your price from $2,300 to $2,530 you would be doubling your profit. I know, you’re probably asking, “Won’t I sell fewer jobs if I do that?” Maybe not.

I used to work in sales and installation for a hardscape and masonry company in California. The company’s main salesperson had been with them for years. He was always complaining to the owner that their prices were too high. He wanted to be able to lower the prices so he could sell more. He would consistently close about 20 percent of his bids.

Finally, the owner allowed him to drop the price by 10 percent. After the price drop, he continued to close about 20 percent. In response, the owner decided not just to return to the old pricing, but raised his prices an additional 10 percent. Guess what? The salesman still closed 20 percent.

The moral? Dropping price doesn’t always mean you will sell more. Sometimes being slightly higher priced and giving them reasons to pay a bit more helps you win the sale. Here’s the point: People equate value to price. However, if you don’t demonstrate clearly how you are different and why that’s worth the cost difference, they might as well save the money and go with the lowest-priced company.

The Three Bid Rule
Remember the three bid rule? Today the average shopper looking for a new kitchen is getting six quotes, according to recent studies. So what do you do with that? Here’s what.

Let the customer know that most legitimate companies in your field are within 5 or 10 percent in cost, but where they differentiate is on _____, and fill in the blank with your value proposition. Tell them, “Here’s why this matters to you.” Then make clear why this is important.

Next, let them know that there are a few fly-by-night or disreputable companies out there, and it’s best to play it safe by getting several quotes and throwing the lowest bid in the garbage. When someone is the very lowest price, there’s probably a good reason.

When I did this a few years back, my competitors were actually afraid to be the lowest price. It’s important to help customers understand that all things are not equal. Differences can be seen from service, to warranty, to being trustworthy and staying in business so that your warranty is there to be honored if something were to happen. People will do more from fear than they will to gain a benefit. Are you the best option? Make it clear that you are the best option and why.

I’ve seen companies charging $33 per sq. ft. for Uba Tuba granite while a competitor is at full capacity selling the exact same product at $60 per sq. ft. How can that be? It’s because people choose based on perceived value.

The amazing thing is that value is invisible. Sales is the one area where making small changes in the right areas can mean huge differences in profits.

If you’re struggling to be more profitable, the easiest way to do that is not to sell more, and do more. It’s to make more profit per sale, and you do that by the small things that matter most to the client.

Meeting unspoken needs is where the profits are. The difference between winning and losing comes down to this: How can you create such a meaningful difference to the consumer that they are willing to pay you more for what you offer?

Be Noticeably Different
Years ago my company did this in several different ways. We were the first to offer 3cm slabs in our region while everyone else had 2cm. We offered the first written lifetime warranty in the area. We brought in granites nobody else offered. We outfitted our showrooms with revolutionary displays that helped clients visualize better.

One powerful way to create a much higher profit is to have products people want, in colors no one else has in stock. Scarcity is a powerful marketing edge and allows you to get a lot more profit than just selling a commodity.

But it can be simpler than that. It can be as simple as changing what you say to potential customers. Making small changes in how you explain why they should choose you will allow you to charge more and increase your profit.

The answer is tapping into what I call the “Invisible Factors.” These are the small things that matter most to customers. People don’t buy things. They pay to solve problems, satisfy needs and fulfill desires. And they look for value differences.

Making tons of sales is great. Making greater profit on each sale is better. What you do in your sales process can have the single biggest effect on both.

Every product or service has a value. Value is invisible. It exists in the mind of your customer and it’s created through a few simple elements: perception, communication and emotion.

I would tell my potential countertop customer that I couldn’t guarantee to be the lowest price, because that would involve using the cheapest materials and hiring the lowest skilled, lowest priced employees. I would say, “But what I can promise is to bring the very best quality product to the project and do the best job possible.” A pretty simple promise, but it worked – and it worked powerfully.

Consider educating your clients. Educated customers make better decisions. What knowledge can you provide that helps make the process easier for them while tipping the scales of their decision in your favor? Make sure to it’s interesting. Being different is what counts. Stand out of the crowd. Touch on things that matter to your customer, not necessarily to you.

Here are some key elements that create value in a buyer’s mind:

• Scarcity – When things are in limited supply they have a higher value.
• Perceivable Quality – They need to be able to see a discernible difference.
• Warranty – How does yours compare? Is it the same as every other competitor?
• Uniqueness – How are you different?
• Less maintenance (i.e. never needs sealer, easier cleaning, etc.)
• Higher value raw materials (top quality or mid-grade vs. commercial grade)

What Customers Want
So what really matters to customers? According to a Harvard Business study, it’s one thing: “Decision Simplicity.” Anything you can do to help them solve their greatest challenges makes you not only different, but better.

Everyone in our industry thinks they’re special and unique. However, the truth is that most are pretty much the same. From their showrooms to their sales process, most are mediocre.

It’s in the differences that you set yourself apart. The small things, the little extras, mean a lot.

Brian Tracy, one of the world’s top sales gurus says, “In selling, everything counts. Everything either builds up or takes away.” From your parking lot, to your restroom being clean, from your sales literature to your sales dialogue, it all matters.

The good news is, most people who do what you do pay little attention to the simple success elements we’re about to discuss. And because they do, your attention is even more important if you want to win in sales.

Understanding the Because Factor
A good friend told me the most important word in the English language is “because.”

It is the “why” behind every single motivation, action and decision. When you grab hold of this concept, you realize that customers choose companies not because of realities, but perceptions – perceptions of safety, value and certainty.

It’s why they will pay more for something or not. Without a “because,” they won’t reach deeper into their wallet to help you increase profits. With it, you can charge more and profit more.

People will justify paying more by saying in their mind, “I paid more for it because …” People decide to buy based on emotions in the right brain, then justify their decision with the left, logical side. The “because” allows them to do both. It gives them a reason to desire the higher value item then a logical reason to justify paying more.

The Simplest Path to Profits
Improving the buying process is probably the simplest and most profitable way to increase profits. While every one of your competitors is talking price, nobody’s talking about time. The time it takes to select the right product. To many buyers today, time is more valuable than money.

Almost no one is making the selection process easy from the customer’s standpoint. Chips and chunks are not the smartest way to help them visualize their project. Design firms create complete renderings to help them sell their kitchen design because it helps a customer to see their project.

I knew one kitchen designer who said that when he could take the time to hand draw their kitchen, he would close 100 percent of those jobs. Why? Because he helped them visualize. Visualization is your customer’s greatest challenge when shopping for new countertops. They want to see how their preferred product combinations will look together. Solving this one problem could skyrocket your sales and profits.

So what are you doing to help potential clients to visualize? This is an area of almost zero competition. In the book The Art of War, Sun Tzu puts forth that you always want to choose the place of battle for your advantage. This is an area that almost nobody is using to win the client over.

Here are 10 simple ways to increase your profits:

1. Upgrade your sales language; understand and use the “Because Factor.”
2. Notice which portions of your sales dialogue customers respond to most.
3. Offer a better warranty.
4. Give them something extra (that may actually cost you very little).
5. Offer more of a one-stop service. For example, offer to coordinate the plumber.
6. Clean your parking lot, showroom and restrooms frequently.
7. Carry products your competition doesn’t offer.
8. Presentation is everything. Create better, more compelling communication tools and better brochures. Make your samples just a little nicer than everyone else, and have your company logo, name and phone number on them.
9. Create a more customer-centered showroom. Help customers visualize their product combinations through displays and digital technology.
10. Make it crystal clear why you are worth more money, in ways that matter.

Everything communicates – your showroom, your attire, the first words you say and the points you make or don’t make. These communications establish value and allow you to ask for more. And in sales, he who communicates best, wins.

About the Author
Kirk Heiner is an author, speaker and sales coach with more than 30 years in the kitchen, bath and construction industries who helps companies accelerate their sales. He is founder of KB Interactive Showrooms (KBInteractiveShowrooms.com) and can be contacted at [email protected]