It's interesting how things happen in 'themes'. I had three separate discussions over the last couple of weeks with builders concerned their work isn't appreciated by their target market, and they're wondering if they should be looking for a 'higher end' market.
Of course, that may be one solution...but it may be premature to simply say "if my clients had more money, they'll wouldn't be arguing about price, value, etc." Take in mind a client of mine that used to build $250,000 homes (and still does, on occasion) and now does multi-million dollar renovations. He is, obviously, working with high-end clients, but constantly compared with lower-priced competitors and, as such, is still asked to bid his price down.
$100,000 or One Million -- It's All the Same
Granted, most builders and renovators aren't doing multi-million dollar additions, but this just highlights that the problems exist at all levels.
Why?
Because we all deal with human beings...and human beings want to know what they're getting for their money. But, in the absence of any perceived difference between two or more competitors, the easiest measuring stick is the cost. So, is your market not willing to appreciate your work and the cost that goes with it, or is it they simply can't appreciate it?
I would tend to argue, when someone talks about building 'above their market', there's actually three potential reasons why their prospects are going elsewhere:
1) the owner doesn't see the value difference between you and your competition, therefore goes with the lower-price, even though you deliver more
2) you're adding cost to the project the owner doesn't value (and, therefore, doesn't want to pay for); and/or
3) (tied in with #2) yes, you ARE over-qualified for that market, and you need to re-focus on a more suitable niche.
Let's look at each reason in detail...
#1 -- Do Your Prospects Really Know the Extra Value You Bring?
If the prospect doesn't know the difference between you and the other guy, they'll perceive there is no difference and, just like buying two of anything to same, why would you pay more?
But you're not the same, are you? And, therefore, if you're going to win the work, you must make sure you're communicating the "why pay more" reasons.
Don't just go with the stand-by "we build quality" or "we have great service" -- if I called all of your competitors and asked "do you build good quality? do you have great service?" how many are going to say "No, we don't do that?" Not too many.
Instead, be specific.
"We're available between 10am and 2pm Mon. to Fri. to deal with client calls ONLY."
We guarantee ________ for ___ years...___ years longer than most of the competition. (Being specific is great...but when you can compare your strengths and innovations against the norm, that's a powerful combination.)
The secret is knowing what your market wants, and communicate it to them in specific terms, so they can compare apples-to-oranges (that is, how you're different from, not the same as, your competition)...and not just dollars-to-dollars.
#2 -- Are You Adding Costs Your Clients Don't Want to Pay For?
I'm not talking about doing change requests the client later 'forgets' they wanted (that's another articles). Rather, this falls under knowing what your market wants, and values.
If you're laying a 2x6 where a 2x4 will do (and you're not breaking code) and the client could care less, you're giving them more than they want...and, when that happens, guess who pays for it? The client won't want to. Why would anyone want more then they need if the value: a) hasn't been explained; and b) is justified?
You wouldn't add, and expect to be paid for, an in-shower TV for a bathroom renovation unless the client specified it, would you? Then why would you add extra value that: a) isn't needed; and b) isn't wanted? Not only are you adding time and expense to the project, you won't recoup the cost...let alone profit.
It's important to remember, you're building a home for them...not you. Obviously know what code is, and build at least to that level (and obviously above-code in other areas), but going beyond what's 'necessary' and into 'perfection' where it's not needed nor valued means lost profits for you.
#3 -- You're Actually Over-Qualified for the Market You're Targeting
Finally, if #1 and #2 don't solve the problem (and I'd bet for the majority of builders and renovators it does!), then, yes, you may be focused on the wrong market. Find who does value what you're selling (or, conversely, what your current market really values), and give it to them (again, using the techniques described in #1 and #2 above).
But, remember, it's easier to sell what someone wants, then find someone who wants what you're selling. Chances are, you're on the right track...you just have to make sure your market:
1) knows the value your delivering, and why; and
2) isn't getting what they don't want, or value.
Brett Martinson is a professional coach and consultant to the home building and renovation industry. Builders and renovators can sign up for a FREE subscription to his Successful Home Builders' Newsletter AND receive his free, bonus 5-Part eBook, "5 Profit-Draining Mistakes Builders and Renovators Make...and How to Fix Them" at http://www.SuccessfulHomeBuilders.com. |
No comments:
Post a Comment