By Sean Wimble
With the intensity of the bidding process increasing, and the tight turnarounds for bids in our current economy, many contractors are experiencing a reduction in overall profits.
I’ve observed contractors bidding a job based solely on the number of zones a project might require. Overlooking site-specific conditions, however, can lead to unexpected, often expensive add-ons, dramatically decreasing the overall profitability of your project. Along with a dramatic rise in pricing pressure, these types of oversights can lead to a reduction of gross margin profits as the bidding wars increase.
The practice of up-selling can help alleviate some of these pressures, increase your profit on irrigation system installs and help safeguard your bottom line.
Show and Sell
Often buyers always want more; they just don’t know it yet.
Think about the last time you went to buy a TV or a car; you went in with a dollar amount you wanted to spend, but probably came out spending more. On top of it, you were happy about the outcome. The salesman demonstrated all of the cool features that could improve your ownership experience. You forgot all about your budget—but you got the best TV or car.
There is a huge opportunity for contractors who can successfully incorporate this type of approach into their sales pitch, without overwhelming the customer.
Taking the time to explain all of the options means you get to spend more face time with the customer, giving you an advantage over the competition you are bidding against. The more you tailor your pitch to the needs and interests of the customer, and the more personable you are throughout the process, the better chances you will have at winning the bid—while doing so at a higher profit margin. Here are five steps and eight products that can better your chances of winning the bid and a higher profit margin.
1. It’s a good practice to have a “base price” in mind, which includes your calculations on the bare minimum of materials and labor for the system.
2. Next, visit the site to identify any additional factors that may elevate your materials or labor costs, and incorporate them into your bid. Be sure to include an explanation of what is included to help your client understand what is involved (and why you may have a higher price).
Doing so can also help add credibility to your bid as a knowledgeable and experienced professional, which can help establish greater trust and set you apart from your competitors.
Visiting the client’s landscape also allows you to get a feel for possible up-sells and upgrades that might be of interest to the client. If possible, walk the client around the site, explaining the various facets of your bid, as well as illuminating the possibilities.
This will also give you some extra time to ask questions that can reveal information about how your client might use the space, and that can help you further refine your bid and look for opportunities to set yourself apart from competitors.
Below your price on the bid, list additional options the client may be interested in adding to the job, or possibly as a second or third phase in the future. Be sure to include and explain how each line item can contribute to their overall system, water or energy cost savings, or increased enjoyment of their outdoor space.
3. Explore your up-sell options.
4. Work with your supplier to determine your materials costs for the items listed on your bid, and then calculate your labor costs. Be sure to take into consideration any site conditions that may impact your labor.
I am not suggesting every client will go for all of these upgrade ideas, but I think you will be surprised at how many of your customers will be interested in one or more. Just think of how much more revenue this could add to your bottom line.
Selling more to fewer customers is always going to be easier (and typically less expensive) than finding more (new) customers. You will gain credibility with your customers by knowing your stuff, being able to articulate it clearly, and by letting them choose for themselves versus overly aggressive selling tactics they might be experiencing with your competitive bidders.
Sure, it requires a little extra work – but that is why most of your competitors aren’t doing it. If done consistently and properly, you can position yourself where you can install the same number of irrigation systems, and increase your profit with minimal added work.
5. Kick-start your customer satisfaction. When you finish an install consider adding a fertilizer application to the yard at no extra cost to your client. This should cost you ten dollars or less, and will help the grass look greener than ever just one week after you have completed the project. Your client will be excited about the way the lawn looks, and will rave about your services, which will create more referrals. The best advertisement you can ever get comes from a happy customer.
These days, people want more; so offer more, so you can make more on your jobs, and sell more jobs because of it. This may require a little extra effort in the beginning, but I am sure your supplier will be more than willing to help you get it rolling. Try it for 10 jobs, and see how it works. If it is anything like cars or televisions, it will.