Upselling to Higher Profits - February 2020

Sun, Mar 15, 2020

John DeRosa, Director of Contractor Training, SRS Distribution 

Giving your clients options is an excellent way to differen­tiate yourself and get your clients emotionally invested in their project. Rather than offering a “one-size fits all” type of roofing system, I would strongly suggest contractors educate their prospects on the different options available to them and let the client choose those that best support their vision for the project. Doing this provides a few pow­erful advantages to the contractor:

Offering options increases the perceived value of the project and that of the contractor.

The more the prospect adds to their project, the more they expect they will be asked to pay.

Offering options gives the contractor something to negotiate or take away in the event of a price objection.

Free is Bad

I know many contractors who’ve made the decision to offer “free upgrades” with the hopes that it will position them as a better value to the homeowner. Rather than upselling the client to better options, the contractor makes those options his “standard” – and that is a mistake.

As much as I appreciate their desire and commitment to delivering a high-quality project, they must recognize that there’s no value in “free.” The perceived value of those included options is directly proportionate to what the client is willing to pay to obtain those options. In other words, those options don’t mean anything to the client unless they say they want them and they’re willing to pay more to obtain them.

By offering the better options for an upcharge, the contractor also gives the client something to negotiate – which also works to the contractor’s advantage. Here’s an example using synthetic felt as the upsell option.

In this example, we’re going to assume the contractor has decided to offer synthetic felt as a standard part of their $12,000 roof system. Rather than offering the client a $12,000 synthetic felt roof, it’s my recommendation the contractor offer the standard for $12,000 and then sell the client on the availability of a better “synthetic” underlayment for only $1,000 more. The client’s willingness to pay the extra $1,000 is a reflection of them believing the product has a value of $1,000 or more.

With this approach, you also set the table for the prospect to negotiate, telling you they want the better synthetic felt roof but don’t want to pay the extra $1,000 for it. If this happens, the contractor has the ability to make that a condition of sale by saying, “If I was able to make that happen for you, would we be able to get your project started today?” Assuming the client says, “Yes,” the contractor agrees and sells the project for $12,000, which is exactly what they wanted to sell it for, and the client believes they got a $1,000 value for free.

Positioning Your Options

The most effective way to upsell is to bundle options within a “good, better, best” product offering. It’s my recommendation that you identify five system upgrades you can offer and discuss those options during the product presentation stage. We’re not going to offer shingle options at this point. It’s our goal to get the client sold on upgrading different elements of their system and then bundling those upgrades into our “better” and “best” options, increasing the value of those packages.

When discussing system upgrades, I’d suggest you start by showing the client a picture of their home. Use the picture to highlight the critical areas such as skylights, chimneys, vents, dormers, valleys and low slope areas. Highlighting these areas gives you the ability to discuss their susceptibility to leaks, your plans to ensure a successful outcome and the recommended upgrades the client may want to consider to increase their peace of mind. Use the weather to create urgency that prompts the client to make the best decision for their home. I’d suggest you say, “Mr. and Mrs. Homeowner, when you consider the type of weather we get here in Florida, which of these two options do you think is the better choice for your project?”

I suggested earlier that you offer five system upgrades and it should be your goal to sell them on at least three of them. If successful, you can then bundle those chosen options within your “good, better, best” packages and increase the perceived value of those packages.

“Good, Better, Best”

Before I show you how this works, I want to talk about the power and the importance of offering a three-option “good, better, best.” When you offer only two options, the client has nothing to compare them to, which often finds them settling with the standard. When you introduce a third option, the client will also compare the two that are most comparable, choosing the option that represents to best value for them. This method is incredibly effective and the vast majority of clients will go for the middle “silver” type option, because it plays on our desire to avoid extremes. In a typical person’s thought process, they see the “gold” option as too expensive and excessive, a luxury which would be nice to have, but not necessary. In contrast, they perceive the standard “bronze” option as risky. The lower price and limited options suggest that the quality may be less than what they’d like for their home.

This leads to what seems like a completely logical conclusion: the “silver” option is the best of both worlds. Good quality, improved performance and affordable; it is the perfect choice.

The other magic element of this strategy is that it doesn’t just prime the user into buying a particular option; it renders them more likely to make a purchase in the first place. This comes from our inherent need for choice. Choice makes us feel empowered. When given a few options, our natural impulse is to choose one of them, rather than to just walk away and not choose at all. There are many everyday examples of this. If you are a parent, you may well go through the struggle of getting your child to eat fruit and vegetables. However, you may have noticed how your child is more likely to eat healthier when you frame it in terms of a choice: “do you want to eat a banana or an apple?” You are priming them to act within the bounds of the options you have given them.

When building your “better” and “best” shingle-style options, you’re going to want to make sure the shingle upgrades are good architectural fit for the home. Choose a reasonably priced, aesthetically pleasing style for the middle “silver” option and then choose a high-end, luxury product for the top-of-the-line “gold” option.

The previously discussed system upgrades should be bundled as “included,” letting the customer know that if they choose the “better” or “best” package they get to choose three of the five system upgrades at no additional cost. I suggest offering only three of the five because it gives the homeowner something to negotiate letting you establish that request as a condition of sale. If the homeowner states they want “all five options,” as before you can ask, “If I was able to make that happen for you, would we be able to get your project started today?”

The pricing should be based on the package you want to sell. If you want to sell the middle “silver” option, you should price that package as it needs to be priced for you to hit your target margin. Then price the standard “bronze” slightly lower and the top-of-the-line “gold” option significantly higher than the middle “silver” option.

When presented this way, the client is likely to remove the higher-end option as being frivolous and then choose the middle option as being a better value, because it’s a better shingle style and includes the chosen systems upgrades.

Differentiation is critical to the success of every contractor. Your ability to win the sale and protect your profits is directly proportionate to the degree to which extinguisher keep the handles from being compressed and engaging the striker. The tamper seal band is present to hold the pin in place. DO NOT REPLACE THE TAMPER SEAL BAND WITH A ZIP TIE, CORD, STRING or anything else which will be required to be cut, untangled or removed before the pin can be pulled out by hand.

■ Vigorously shake the fire extinguisher.

Contents inside a fire extinguisher are under pressure. When a fire extinguisher is stored in locations where exterior temperatures change, the pressure of the tank either increases (hot temperatures) or decreases (cool temperatures). During fluctuations, the powder contents are condensed and harden. Aggressively shaking the fire extinguisher will break up the compacted contents, thus allowing it to travel through the hose as designed when needed.

■ Sign off on the monthly inspection.

The individual who conducts the monthly fire extinguisher inspection shall place their initials and date of inspection on either the rear side of the inspection tag, on the exterior of the fire extinguisher or on a written log. If the inspection is not documented, it is as though it was never completed.

Practice the Plan

Think back to school days: we reviewed various plans with fire drills and lock-down drills, as well as other safety drills the facility deemed necessary so that there would be order and structure in the event of an actual emergency. Do not wait until there is an actual event to tell everyone where to go and what to do. Review it with everyone annually, at a minimum. During an actual event, it can be very confusing, hectic, disorienting and scary. Decisions must be made on the spot. Practicing and discussing the plan with everyone can be very beneficial. Also, including emergency response (the fire department) in the drill can be helpful for everyone. They become familiar with your facility and it makes the situation that much more memorable to everyone participating. Follow all steps of the plan. If the plan includes shut down of important equipment, do it in real time during the drill and don’t forget to do a head count of everyone present. While there, you can request the fire department to review fire extinguisher use with everyone or conduct an office fire safety evaluation.

Review Office Prevention

Periodic site evaluations are a great idea; one individual can be responsible to perform them, or do a blast email to all employees for them to do a self-evaluation of their space.

■ Do not overload power outlets. Do not plug multiple power extension devices into one outlet or into one another. Do not plug power extension devices into an extension cord.
■ Replace frayed power cords, cords which have become detached from the outlet end, or if the end is missing a ground pin.
■ Unplug unnecessary equipment when not in use or at the end of the day such as a microwave or coffeemaker.
■ Do not run extension cords under carpet or rugs, through walls, or in pinch-points of doorway openings.
■ Replace appliances that feel warm or hot to touch.
■ Store hazardous materials according to manufacturers’ instructions and per OSHA regulations. All chemical containers shall be properly labeled and a common area is recommended to be identified with signage.
■ Do not block emergency exits.
■ Do not block the Power Breaker Box.
■ Do not allow waste to accumulate outside of receptacles and never store trash near hot equipment, electrical outlets or smoking areas.
■ Do not permit employees to burn candles, scented oils, etc., even in their personal work space.

Following the steps above is the best way to protect your business, investment and employees. It is crucial that we take safety seriously; if we fail to do so, our employees will follow. It’s a lot easier to prepare for an emergency than to explain why you didn’t.

This information is provided as a service and should not be substituted for a professional consultation by a fire marshal, insurance agent or any other safety professional. Always consult with the fire marshal or your insurer should you have specific questions about any fire safety matter.

FRM


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