A common question asked by builders today is: “Should I lower my prices to stay competitive in a tough market – even if this means my business won’t grow as I want it to?” Cecelia Haddad reports.

There’s no denying that when quoting for new business, price is an important element that can heavily influence a customer’s decision on whether or not to use your services. Yet there are number of other important factors that you should be considering in order to effectively win new projects, beyond price.

How your customers make their decisions

Effective marketing is achieved through understanding the core phases that customers go through when deciding whether or not to engage with your company.

The consumer decision-making process is basically a series of stages that any consumer goes through when deciding whether to buy something, or in your case, whether to commit to contracting your services. There is a standard five step model (developed by Engel, Blackwell and Kollat, 1968) used today which consists of: recognising the problem, information search, evaluation of choices, the purchase decision and finally, post-purchase behaviour.

It is worth noting here is that while the ‘purchase’ might be the only visible step to you, it is just one of many factors in your customers’ decision making. By fully understanding each step in the process, you can begin to identify ways to influence your customers beyond your price point.

What drives a purchase decision?

Let’s go through this buying process model in more detail, and see how it relates to the building industry.

Step 1:  Problem recognition/ Need recognition

This recognition comes about when your customer realises that their current state differs from their desired one.

Needs will often come about due to problems, such as a water damaged garage; or a functional change in circumstances, such as the birth of a new child and requiring a third bedroom; or simply a desire to improve, for instance renovating the exterior of a house.

Step 2: Information search

The customer has begun to search for solutions to their needs and problems, investigating the various choices and options available to them, such as product research or relying on recommendations from colleagues and friends. They might seek information through various media – home and garden magazines, TV renovation shows or builder classifieds local newspapers, or search the internet for useful articles and supplier websites. They may also choose to contact a supplier they have used in the past and had a good experience with for further advice.

Step 3: Evaluation of choices

At this point, your customer knows what they are after and are now evaluating and comparing their options, for example the features and benefits of various building products, the reputations of a shortlist of builders, or points of difference between companies.

Step 4: Purchase decision

This is the stage where your customer will sign on your services. Their decision may have been influenced by factors related to how quickly they can receive what they need, or how appealing the contract details are. For example, they may have chosen a particular builder because they were available to start work immediately, or perhaps they offered a completion guarantee or more agreeable payment term.

Step 5: Post-purchase evaluation.

Here is where your customer will evaluate how happy they are with their decision to hire you. Their evaluation will play a large role in ongoing loyalty to your company, and whether they share positive or negative feedback about you to their friends and family.

The six stages of pitching and closing a deal

Mastering good negotiation skills is vital to the success of your business. Prepare every step of your pitch as a means to close the deal and should also constantly review and critique your approach, and look to identify ways to improve it.

1. Preparation

Find out as much as you can about your customers so you can better understand what will appeal to them when negotiating. Ask lots of questions such as what their interests are, what they are looking for in a builder, what their family situation is, what benefits appeal to them. You could consider developing a choice of options and packages that will increase your offering.

2. Setting up the meeting

Never negotiate with your customers over email – it must always be face to face, however you can follow this meeting up with a phone call.

3. First impressions

Presenting yourself as a professional instils confidence in the customer and provides them with peace-of-mind. To do this, consider the following:

• Show up on time when quoting
• Ensure your uniform and work vehicle are clean
• Use your company letterhead and check your spelling and punctuation in quoting documents
• Set out the quote in a clear and logical structure

4. Create a positive atmosphere

When people trust you they will want to work with you and will be more likely to accept the deal you are offering. Always be positive, confident and clear when meeting with a customer. If you are sincere and show enthusiasm, you will start to build a good relationship.

5. Know your value and benefits

Make time in your meeting to articulate your points of difference and share your track record. Remember to focus on selling the benefits you can deliver and not your price. Be clear in your mind on your value threshold for the job before you begin.

6. Close the deal

When asking for the sale you need to be tactful and respectful. A verbal commitment needs to be put into writing as soon as possible. Be comfortable with walking away if it isn’t right for your company, but always thank your customer for the opportunity to quote.

Effectively marketing your company to remove the focus on price

By marketing yourself well, you can essentially differentiate your company from your competitors and allow price to take a back seat in your negotiating.

Stand Out From the Crowd

Distinguish yourself from other businesses when quoting. To do this, you will need to build trust and convince customers that you’re a recognised and trusted builder. Credibility comes from a number of sources; including personal credibility, where you can highlight your building qualifications and memberships; and business credibility, where you can demonstrate that your business and team are renowned for high quality work, such as through your awards. Provide your customers with testimonials and references from previous work as well as any brochures which contain stunning photos of your work. You could also run through images of previous work on your tablet or laptop to demonstrate that you’ve undertaken this type of job before and were able to do it well. As a way of staying front of mind with the customer, you could provide fridge magnets or stubby holders for customers to keep after the quoting process.

Play up the weaknesses of your opposition

During the quoting process, it’s important to highlight the specific benefits the customer will enjoy. If you’re offering over and above what your competitors are providing, ensure you run through these with your customer and reinforce their value. This can be done by focusing on the benefits they will see, rather than the features.

Add value

Customers tend to get at least three quotes when considering using a service. To raise your company’s chances, work out your unique selling proposition (USP). Your USP is the marketing statement you use to sell your services to prospective customers. To establish your USP, you firstly need to establish what is unique about your business and what you do that no one else does. You then need to establish what your customers want and why they would choose your service. Answering these questions will help you to establish your competitive advantage. Your USP should be focused on your customers’ needs and wants – the first step of the customer decision making process – so tell them the main benefit they get from doing business with you and how what you offer is different from what your competitors offer. For example, if you sand and polish floors and your equipment vacuums the dust while sanding, market this fact and also highlight that you can do the job in half the time and the customer doesn’t have to worry about dust floating into other rooms of the home.

Happy quoting!