Interactive Planning Builds Profit

by WOHe

Every salesperson and business owner in the kitchen and bath
industry shares a common goal: make more income in less time. In
1976, I developed a marketing system that accomplished just that.
It enabled me to grow the business from one store with three
salespeople to four locations with 14 salespeople, more than
quadrupling the sales volume. It also enabled the firm to increase
its gross profit margins from 35% to 51% in both affluent and
working class markets.

Below are the secrets to its success.

The system
The marketing system we used evolved from one simple question: What
will it take for a prospect to retain me on their project? I kept
turning that question over in my mind for several months, until the
answer came to me.

Through a “Fundamentals of Selling” course, I had already
learned how people buy. Whether the purchase was a bottle of
aspirin, a car or a kitchen, I was taught that everyone must
progress through the following five buying decisions:

1. There is a NEED.
2. The PRODUCT fills the need.
3. The SUPPLIER of the product is satisfactory.
4. The PRICE is right.
5. NOW is the right time to buy.

By putting myself in the prospect’s shoes, I realized that two
of these factors were critical to receiving a project commitment in
a relatively short amount of time. First, I had to come up with the
right plan and design ideas for the prospect’s needs (i.e. the
“product”). Second, the plan and ideas had to be affordable.

More importantly, the plan and the price had to be presented in
a unique way that generated a greater perceived value than what the
competition offered. I needed to stand out from the crowd.

Instead of using the traditional method getting measurements,
preparing plans and making a presentation I adopted a new marketing
approach. First, I gave prospects a good reason to always come to
my showroom initially (we would eventually accomplish a lot more
together at their house). The purpose of this showroom appointment,
which lasted 1-1/2 hours, would be to:

  • Educate them on the Intangibility Factor in kitchens and
    bathsthat brand name products are only as good as the people who
    work with them.
  • Present our company philosophy of doing business.
  • Tour the showroom and make preliminary product
    selections.
  • Understand the steps in design-retainer-order process via a
    “storyboard,” so they were comfortable making an informed buying
    decision.

Second, I expanded the home consultation visit to two to three
hours, and decided to take two major risks. After interviewing the
prospects for an hour using a four-page project profile form, I
developed one possible conceptual layout with them on the spot.
This was done without taking detailed measurements, and any
conceptual sketches remained my property until I was retained. Once
retained, it was understood that two to three preliminary plans
would be developed to scale so that the pros and cons of each could
be analyzed together.
Most prospects were thrilled to be involved in the conceptual
planning process, and said so. In fact, they were so thrilled that
they were eager to find out what the initial conceptual layout
might cost.

That’s when I took a second risk and interactively created a
“budget analysis.” Using budgeting numbers for several different
brands of cabinetry, counters, appliances, etc., as well as for
installation, plumbing and electrical that were all contained in a
“Client Information Catalog,” we would develop a project budget
together in about 20 minutes.

If the overall budget total came in at $42,670, it was
understood that the figure was accurate within +/-8% (or $39,300 –
$46,100), and I would need to be retained at 8% of the low end of
the budget range (or $3,140) to commit the time and resources to
developing the best design and cost options within this target
budget range. The retainer agreement stipulated that the fee was
non-refundable, was applied against the purchase price, and the
finished drawings would be released upon the signing of an
agreement to furnish the project.

Why it works
Let’s look at this marketing system from the prospect’s viewpoint.
First, they spent more time with me upfront compared to the
competition a distinct, “bonding” advantage so they might naturally
feel more comfortable with my ideas. Second, they didn’t have to
wait two to three weeks to get a design concept and a price, so
they believed and said I was “more professional” than others.
Third, they enjoyed participating in the development process, and
better understood why the costs added up as they did. Fourth, they
knew it was my practice to develop cost-saving options of 10% to
20%, so ultimately they could package the project just the way they
wanted.

Attention, openness, collaboration, accountability and
flexibility these were cornerstones of the marketing system. As a
result, prospects seemed to view me more as a consultant leading
them through the design process to get what they wanted. I just
wasn’t another salesperson trying to sell them a new kitchen.

From my perspective, I invested about one-third of my usual time
to generate more than three times the sales volume. My closing
percentage on “qualified leads” grew from 35% to 75%, and my gross
profit percentage increased 16 points. The benefits were so amazing
that I soon applied the marketing concept to other kinds of
projects.

The delivery of information is the key to this system’s success.
That it is done interactively clearly generates enormous value in
the eyes of the prospect. That the marketing system has been
applied successfully in a number of markets around the country
proves its effectiveness.
To learn how you can receive detailed information and forms to
develop your own interactive Project Budgeting System, contact me. Please note that
you must be a SEN member to receive this information.

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