In this first episode of Qualified Remodeler’s Marketing Matters podcast, host Rich Harshaw discusses the importance of having the right mindset when it comes to success in the remodeling industry. Harshaw has over 25 years of experience in the industry, and is author of Monopolize Your Marketplace.
Hello and welcome to the Marketing Matters podcast. My name is Rich Harshaw, and I’m really excited to have this new podcast starting up and I’m glad that you’re here with me. This is gonna be a little bit different kind of podcast than maybe you’re familiar with because instead of just being a bunch of interviews with high profile people, I’m gonna cover just about any marketing topic that you can think of in a one-on-one, just you and me kind of a format. It’s a marketing training.
We’re gonna drop new episodes every other week. And each episode is gonna be about 20 to 40 minutes per episode, probably about 25 or 30 on average. This one actually might be a little bit longer because I’ve got some introductory stuff to go over, but these podcasts are gonna cover real marketing topics. They’re going to be actionable topics like differentiation, websites, online marketing, social media, SEO, budgeting, home shows, text marketing, branding, broadcast media, direct mail, radio, TV, guerilla marketing, brand ambassador programs, and a whole lot more.
Some of the things that we’re gonna talk about are gonna build on other concepts. So if you can listen to them sequentially, that will probably be best. But in cases where I do cover concepts that have a foundational episode that came before, I’ll mention that, so that you’ll know which episode you might want to go back and listen to. Like I said, this is not primarily an interview style podcast like you might be familiar with from other podcasts, but about every fourth episode or so maybe once every couple months, I am gonna bring on a guest to the show and interview them about the marketing that they’re doing. So you can see the applications for all the things that we’re going to be talking about. So in that sense, it’s a little bit like traditional podcasts, but for the most part, you’re gonna get a full dose of me, RIch Harshaw, on this podcast, going over marketing concepts that are real and actionable.
Like I said before, everything that we’re gonna talk about comes from real world experience. And look, it’s not just theories and ideas, but real world stuff.
So that might lead you to ask, who am I, who is this guy that I’m listening to right now? And why should I pay any attention to anything that he has to say? Well, like I said, my name is Rich Harshaw and I’m the founder and CEO of Level 10 Contractor. That’s a marketing agency that works with remodelers and contractors. We work with full service, remodelers design, build remodelers, kitchen and bath remodelers, home improvement professionals and replacement, contractors, home services, contractors, and even restoration specialists. Naturally, not every marketing topic applies equally to every kind of remodeler. But trust me when I say I have expertise and experience in all of those areas, and you can expect this podcast to be relevant to you, If you fit into any of those categories, which, if you’re listening, you probably do.
Like I said, my marketing agency is called Level 10 Contractor, but some of you may have heard my company’s previous name, which was Monopolize Your Marketplace. We rebranded to Level 10 Contractor in 2019 to emphasize Level 10 and Level 10 is an ethos of doing things the right way, the best way, what we call the Level 10 way. My experience in this industry goes clear year back to 1996. Two of my first clients, when I was a general marketing agency, two of those first clients though, were a design build company in Dallas and a huge residential roofing company in Fort Worth. Since then, I’ve had hundreds of clients that span all the different types of remodelers that I talked about a minute ago. You know what? I’ve also written two books on my marketing.
The first one was called Monopolize Your Marketplace. That was back in 2004. The second one was more recently. It was 2019 called Unlocking Unlimited Lead Flow. You can look that one up on amazon.com, just search for Unlocking Unlimited Lead Flow and my name, Rich Harshaw, it’ll pop right up. I also have my own podcast called the Level 10 Contractor Daily Podcast. I’m considered a pioneer in podcasting in this industry. I’ve done over 900 episodes by the time you hear this one. So, you know, hopefully I’m pretty good at doing podcasts. I guess you can be the judge of that. I’ve also spoken at every major event that the industry has that matters, including the Qualified Remodeler TOP 500 LIVE event. I’ve known Pat O’Toole, the owner of SOLA Brands who publishes several magazines, including Qualified Remodeler Magazine and qualifiedremodeler.com. I’ve known him for at least 15 years.
I’ve spoken at many, many of his events over the years, including having emceed the TOP 500 awards one time. And given I gave a keynote speech at that event on another occasion, but more important than all of that is my experience in doing real marketing for real contractors, remodelers.
Like I said, those ones, I just mentioned over the course of 25 plus years. My company builds websites, does SEO, manages advertising on Google and Facebook and social media platforms. We do radio and TV advertising for dozens and dozens of clients. Everything from startups and small companies, a million dollars and below all the way up to mid-size companies, three to 10 million in sales and even many that are much larger than that. All the way up to a hundred million and beyond. Look our smallest client over here at Level 10 Contractors, makes I think about $300,000 in revenue.
And we’ve got ’em all the way up in, into the 50, 60, 80 million in revenue range. So anything and everything in between: that’s what we do. That’s what we work with every day in real life marketing situations. And I’m telling you this because I want you to know that whether you’re big or small, a general remodeler, design-build, kitchen and bath replacement contractor, whatever, this podcast is for you, the principles will apply and you will find value.
So with that said, let’s get started on this podcast episode, which is the Marketing Mindset: thinking your way to success. As I do this, I wanna put a number in your mind.
Now, before I tell you what that number is, I’m going to admit that it’s kind of an arbitrary number. And for some of you, the number is going to seem unrealistically big. And for others, you may have whizzed right past it years ago, but I wanna throw a number at you.
And the number is 10 million in revenue.
For some of you, that number may be a realistic goal in the next, I don’t know, one to five years for others. It may only be aspirational, but I’m bringing it up here because I want to discuss the marketing mindset and 10 million in revenue. That’s kind of a magical number because at that level, you personally should be rich. Yeah, I’m gonna use that word even at 10% at net profit before taxes. And I hope you can do a little bit more than that. 12, 15, 18. I’ve got some clients up in the 20% net profit margin range, but even at 10% on 10 million, that’s a million dollars a year. And that’s enough to live the life that you wanna live. That’ll allow you to afford to make everything in your company great, do everything right. You don’t have to cut corners on anything at that level.
You can treat your employees much better than anyone else does. You can pay them so much that they’ll never wanna leave because it would require them taking a giant pay cut. They’ll work hard to stay. You can also give them Fortune 500 Level benefits: full health insurance, paid vacations, matching 401k plans, trips stuff that almost none of your competitors do. If you mess up or if you make a customer mad, for some reason, if you’re at that level, you could just pay to have it fixed. You don’t have to risk your reputation by getting some kind of an argument with an angry customer. You just smile and fix the problem and move on. At that level, you can also afford to use the best materials, you can hire all the best people. That means that you can offer and actually service warranties that nobody else can.
You can also afford to hire specialists and consultants and experts to solve problems that inevitably come up. You can build a company with loyal customers that has brand equity in the marketplace. You can legitimately sell your company because those assets are gonna be tangible and valuable.
Here’s the cold hard fact. It’s almost impossible to sell a $2 million remodeling company to anybody but an uncle with a drinking problem. You’re also gonna get a lot of referrals. They’re gonna go through the roof. And then, like I said, on a personal level, you’re gonna be rich, okay. Again, a million dollar a year on a $10 million company on a personal level, that means that just going from experience. I had a client who had a dog that swallowed a bee and it almost died because of anaphylactic shock, $15,000 to save that dog. Client wrote the check to the vet. No problem. You could build a dream house in whatever neighborhood you want. You can drive whatever car you want. You can sit in the box seats or front row seats for any sporting event you want. Doesn’t matter if the tickets are $8,000, just go, you can go to Maui twice a year in less than three months, first with your sales staff and then with your family if you’ve got that kind of revenue, if your parents are elderly and they need, you can be the sibling that everyone counts on to just take care of it, you could do anything you need to or want to, if you’re at this level. Those are gonna be personal things. They’re gonna be completely up to you. But I think we can all agree that if you’ve got that business, that’s at 10 million on at least a 10%, before taxes, profit, man, what a great lifestyle that you can build for yourself and you can make your company do anything you want from that level.
Now, the truth is though that the majority of contractors out there, they just get stuck. Doesn’t mean that they’re not good at what they do. It doesn’t mean that they’re not great people. It means that they don’t know how to scale their business up. And, and a lot of it has to do with this mindset stuff that I want to talk to you about right now.
Here’s what the problem is that I see in most of these companies that get stuck. Now, here’s what happens. They’ll start their company out. They’ll get kind of outta the gate strong. They’ll find something that works for them from a marketing standpoint, they’ll get good at that thing. It’ll become reliable. It becomes what I call their bread and butter, right? It’s a that they can just rely on consistently all the time. For some companies that’s home shows for others, it’s canvassing, or others it’s some kind of, uh, you know, aggregated leads, whatever it is, but you have a hard time getting past whatever level that bread and butter thing will take you to. And you then start having a very heavy reliance on repeat and referral business, which is good. Obviously repeat and referral business is good, but here’s the problem with it. It’s really hard to scale. It’s hard to scale, not impossible, but it’s difficult.
Now I’m gonna tell you a quick story. I had a guy call me, this is going back, uh, gosh, 2011. I think guy ran a huge company in for Philadelphia. And he said, “Hey, we’re at about 40 million in sales. And we need some help going to the next level.”
I said, “Okay, I’m game. Let’s talk about it.” So I started looking at what they were doing and they were spending a tremendous amount of money on direct mail.
And it worked really well for them. And they spent a lot of money on newspaper advertising and that worked well for them. And now they were starting to put some billboards up. They didn’t really know what to do besides that. I mean, they were literally spending something like $3 million a year on direct mail and newspaper. And after that, they just didn’t know what to do. I came in there and I said, “Hey, what about TV and radio?”
And they said, “Oh, we hate TV and radio. That stuff sucks. We’ve tried it before. It doesn’t really work. And most of all, we hate it because it’s not trackable.”
And I said, “Where are you trying to go? What, like you’re 40 million, where are you trying to head to?”
And they said, “We’re trying to get to a hundred million in sales.”
And I said, “You’re never gonna get to a hundred million in sales unless you’re spending the right amount of money in the right places.”
You’ve gotta get more coverage out there for less money than you’re doing right now. You don’t have to quit what you’re doing right now, but you need to add to it. And I push them in the direction of heavy expenditure on pay-per-click advertising and heavy expenditure over the next few years into radio and television advertising. And sure enough, about five years later, I think it was 2012 that we started doing a lot of that stuff. And then 2017, they sold the company. It had gotten up to 150 million in revenue and they sold it for an absolute fortune, uh, which again is a great reason to get unstuck so you can sell your business.
So look, here’s what I’m trying to tell you. If you wanna get unstuck and you wanna make that jump from two to five or from five to 10 or from 10 to 20, or in the case of the story, I just told you from 40 to 150 million, you’re going to have to do some stuff that you’re not doing right now.
And you’re gonna have to execute on it in an outstanding world-class way. And that’s what this podcast is here to help you do, is to understand what those things are and how you can execute on them so that they work. Look, I’ve heard it a million times. This is part of the mindset. I’ll mention some kind of marketing tactic like radio or TV or Facebook or YouTube or pay-per-click or anything you can name and no matter what the thing is that I name inevitably, some people, in a lot of cases, a lot of people will say, “Oh, we tried that and it didn’t work.” And I’m gonna tell you something right now. I want you to hear this. And I want you to believe me, any marketing activity that you can think of can work for you. Anything can work. If it’s executed properly, execution is where the rubber hits the road.
You can spend a million dollars on TV and utterly fail. You can spend a huge amount of money on direct mail and it can fail. You can show up at the home show and fail. Conversely, you can do all of those things and you can succeed beyond wildest imagination. If you just know how to do it, if you understand the principles that govern those activities and you execute flawlessly, and that’s what this podcast series is here to help you.
Look, I’m putting this part of this discussion right here in this conversation called Marketing Mindset, because I do not want you to shut down anything I’m talking about before you hear me out. And before we have a full discussion on it, that doesn’t mean that you should do everything that I say. You have to pick and choose. You don’t have enough marketing budget to do everything that we’re gonna talk about in this series over the next year.
But I do want you to know this no matter what it is, no matter what the marketing tactic is, it, it can work. You’ve just gotta understand it. You’ve gotta understand the principles and you’ve gotta execute flawlessly. So again, marketing mindset, we gotta get you unstuck. Now here’s a four step formula for you for doing well in business. Now this is pretty simplistic and you’re gonna hear this and you’re gonna say, “Okay, Rich” and you know, whatever, but I want you to know that success is really just this easy. Now I’m talking about success in terms of marketing, okay? There’s a lot of other areas of your business that I’m not gonna touch on. I’m not a sales expert and I’m not a finance expert and I’m not an operations or an installation expert. There’s other podcasts and other people that are gonna help you with those things.
But from a marketing standpoint, it really is just as simple as what I’m about to say. So here’s the four steps.
Number one, sell awesome stuff that people genuinely love.
Number two, charge high prices.
Number three, master the internet.
Number four, broadcast advertising.
So by way of review sell awesome stuff that people genuinely love. Charge high prices, master the internet and master broadcast advertising. I will make you an ironclad promise. If you follow those four principles, you are going to have an unbelievably successful company selling awesome stuff that people genuinely love.
Now, here’s what we’re not going to talk about on this podcast: the detailed, operational way to achieve that. That goes beyond the scope of what I’m gonna talk about. But I do want you to know that if you work hard on your business to innovate it and to make it outstanding, to do things the right way, and remember we talked about having high prices, which is the second step here, charging high prices.
Why? So that you’ve got the money to actually do the things that are actually going to make your company awesome. Okay. Those two steps are critically important. Then once you master the internet and master broadcast advertising, you are going to be an unstoppable force. If you go look at all of the companies that are hyper successful in this industry, go look at any of ’em. They all follow this formula to the T, all of them, every single one.
Now the stuck companies, they tend to have a slightly different formula instead of having awesome stuff that people genuinely love. They tend to sell pretty good stuff that keeps most of their customers pretty happy. Not good enough. Instead of charging high prices, they tend to charge middle of the road prices, or maybe slightly higher, instead of mastering the internet, they generate a few leads a month on the, uh, from the internet. And they think that’s all that’s available. Nothing could be further from the truth. And instead of mastering broadcast advertising, they stick to their bread and butter and they’re wary of anything that falls outside of that because they’ve tried it and it hasn’t worked. And so they draw a conclusion that because I haven’t been able to make it work, then therefore it must not be workable. And it’s just not true. Okay. So the four step formula, keep that in mind.
And I want to talk about this: demanding excellence. This is part of the mindset at every owner of every substantial remodeling and home services company that I’ve ever worked with, or even just known, I’m telling you they demand excellence. I went to meet with Brian all Elias from 1-800-HANSENS. This was about, man, I don’t know this, 5, 6, 7 years ago before he sold the company.
And I was up there at his headquarters and I was blown away. I walked into this, looked like flipping NASA, all these computer screens all over the wall, like a control room. And it showed to the second what was happening with all the sales people and all the cities that they were servicing, what the, to that minute conversion rate and sales, everything was tracked. And he showed me, pulled out his phone and he says, here, look, I’ve got this app that I custom created and it shows me exactly what’s happening. And that particular day (I’m gonna make this up cause I don’t remember exactly what it was, but) there was something like 58 appointments that were to be run that had been set for that day. And at the time we were talking something like 13 of them had already been running. It was relatively early in the day. And it showed me exactly who had, uh, sold how many dollars. I mean, it was amazing. This guy demands excellence.
Now remember that company I told you about earlier, that was up in, um, in Philadelphia. I remember when I first went up there and met with those guys, it was amazing. I’m gonna tell you full of experiences. I just, and I’m telling you these stories, because I want you to think about this: Do you as an owner or marketing person, but probably owner of your company, do you absolutely demand excellence? And this guy’s name was Mark. And we were walking around his, uh, building in his facility. He was giving me kind of the tour to show me what they all about. And it was amazing. He was telling me this story, as we’re walking around, he said, “We used to have a bunch of truck collisions, rear end collisions.”
And they had something like 13 of them in a year. It was really becoming a problem. So they installed these cameras that would show two things. First of all, it would show the driver. So if there was an accident, it would show what the driver was doing leading up to the accident. And it would also show outside the dashboard, the window so they could see what was happening outside when this accident occurred. And here’s what they found out. They found out that the overwhelming majority of these rear end collision accidents were because of driver inattention. They just weren’t paying attention. So they were rear-ending people. Okay. So here’s what he did. He came to into the meeting after they had aggregated this data and they figured this out and he said, okay, new policy. Here’s how it works. If you are involved in a rear end collision, do the following.
Number one, get your things out of your truck.
Number two, put the keys in the truck.
Number three, lock the door.
Number four, close the door.
Number five, go home. You’re fired.
And everybody, he said looked around the room and they’re like, wait a second. What just happened in this meeting? Did we just get a policy that says, “if we’re in a rear end collision that we’re fired”? and a guy raised his hand guy had been worked there for years and years and years. And he said, “Wait, well, I don’t understand what are you saying?”
And [Mark] said, “Well, which part did you not understand? Did you not understand the part about lock your keys in the truck or go home? You’re fired.” And he said, “Look, here’s how this company operates from now on. There are no rear end accidents and it doesn’t matter what happens. We’re going to hold you accountable.”
And guess what happened? They quit having rear end accidents. As we were walking around doing the tour of the building, we were on a back set of stairs. This is one that no customer would ever see. And probably the majority of employees would never see cuz it’s kind of in the back near the executives office. And uh, we’re walking, uh, up the stairs and there was a little spot there’s carpet on the stairs, a little spot about the size of a dime. It was black. And he looked at it and he pointed and he said to his assistant “what’s that?”
And she said, “I don’t know.” And she looked at it and she said, “Looks like somebody spilled something on here.”
He says, “I want that clean no later than tomorrow.”
A few minutes later, we were in this long hallway and you could see at the end of the hallway, there was uh, a glass door, and outside of that door, you could see a bunch of their trucks. And as we’re walking down the hall, he’s kind of, his head goes a little cockeyed like a dog. That’s trying to hear something.
And he says, “What’s that?” And he points literally 50 yards away, outside, down this hall, out through the glass door. He says, there’s a truck. That’s got some stuff on the dashboard.
And his assistant said, “Yeah, I don’t know.”
And he said, “Who’s truck is that?” And they went and they, you know, tried to figure this out. And he explained to me, “We have a strict policy, no stuff on the dashboards. It’s not safe and it doesn’t look good.”
And then we got into his warehouse, beautiful warehouse. It looked like a home Depot cuz their company colors are orange. So all the shells were painted orange.
It looked beautiful, said a lot nicer than a home Depot, actually it, and as we, he was showing me this beautiful, awesome warehouse. I mean it was ginormous. It was huge. It was awesome. And he looked on the floor and there was a scuff mark on the floor about, I don’t know, 12 to 18 inches long. And he said, “Hey, what’s with this scuff mark?”
And the guy that was showing us around the warehouse said, “Oh, well it just happened from one of the skid skid steer loaders.”
[Mark] said, “When did it happen?
[Warehouse Worker] said “About five minutes ago.”
[Mark] says, “Get it cleaned up.”
Now you’re gonna hear those stories. And here’s what you’re thinking. Wow. This guy sounds like a tyrant and I would hate to work for that guy. But the truth is the exact opposite was the case. This guy ran a tight ship and everybody knew it. And everybody loved it because they were the kind of people that didn’t want spots and scuff marks and stuff on the dashboards themselves. And when they found these things and you know, maybe he was putting on a little bit of show for me, cuz he was, you know, showing me this, this operation of his, but I’m telling you, it stuck with me: demanding excellence in everything you do, demanding excellence from your people, from your processes, from your procedures.
Does that describe you? You don’t have to be a tyrant. You do not have to rule with an iron fist. In fact, I am staunchly anti-tyrant and anti-iron fist, but I do want you to think about demanding excellence. Okay? Now when you do this and when you execute your business, remember I said earlier, you have to execute marketing in such a way that it actually will work.
You have to execute your business in a way that it actually works so that you’re selling awesome stuff that people genuinely love. And when you do that, you’re going to achieve what I call the ignition code.
This ignition code is a metaphor and it comes from a movie from the early two thousands called the transporter, starring Jason Statham. I don’t know if you’ve seen it. It’s a pretty good movie. It’s getting a little bit old, but here’s what happens in this movie:
The opening credits show the lead character, Jason Statham, driving a black late model, seven series BMW through the streets of some unnamed French town on a what appears to be a summer morning. He’s dressed in a black suit. He’s got black gloves, dark sunglasses. He looks very, very official. The camera focuses in on a huge clock at the top of a building.
Then just as the clock moves into the 10 o’clock position, the camera pans down and shows the car that this guy’s driving stops in a circle drive in front of this building. Then an alarm sounds and four masked men come running out of the building, carrying what appeared to be big sacks of cash. And oh, okay. Now we understand, his viewers, this is a robbery. And we’re figuring out that the lead character, the transporter, which is the name of the movie is apparently yeah, the getaway driver. But instead of speeding away the, that the four money bag toting, bandits get into the car, which includes the ring leader who got in the front passenger seat. And then the other three who got in the backseat, the driver, the transporter, Jason Statham. He just sits there doing nothing. While the armed guards pour out of the building and surround the vehicle with their guns drawn.
Now here’s the dialogue that ensues: the ring leader looks at the transporter and says, “Move it, move it. Let’s go move it. In the car. Let’s go.”
And the transporter says, “There’s four of you.”
And then the ring leader says, “You can count. I’m impressed. Now drive.”
The transporter says, as he’s facing forward, very calmly, he says, “Rule number one, never change the deal. Deal was transportation for three men with a combined weight of 254 kilos”.
The ring leader points his gun at the transporter’s head. And he says, “Well, this is the new deal.”
Transporter, again, expressionless and just staring straight ahead, says “An extra 80 kilos means that we’re not going to make the destination on the gas that I have allotted.”
And then the ringleader is getting very agitated right now. He says, “So we’ll stop and we’ll get more gas.”
This is where it gets interesting. The transporter says, “Every stop we make exposes us. Every exposure increases the risk of getting caught. An extra 80 kilos means that the koney shock absorbers that have installed for this job will not give us the ability to out maneuver any police that might be chasing us. Which means if there is a chase, we lose our advantage, which also increases the possibility of getting caught. I don’t want to get caught.” And then he turns and he looks straight into the barrel of the gun that the guy’s been pointing at his face. And he says, “You don’t want to get caught.”
And then the ring later, very agitated at this point says, “Just drive the car, man. You’re gonna catch a bullet through the brain.” Well, now he’s got him, right?
The transporter again facing forward. Now expressionless says, “And who’s gonna drive?”
Now the henchman in the backseat, one of them says, “Shoot, this guy I’ll drive.”
And the transporter glances down at a keypad in the center console says, “Not without the ignition code, you won’t.” And then he faces the gun barrel and he says, “Three men, 254 kilos. That was the deal.”
Now this is where it gets a little crazy. The ring leader, just a sheer exasperation turns and actually shoots one of his own men in the backseat and the others open the door and throw his body out.
Meanwhile, the guards who are surrounding the car with their guns drawn are stunned that this guy’s been shot and thrown outta the car. And the ring leader looks at the transporter and says, “Three men, 254 kilos” to which the transporter says, “Seat belts.”
Now, after this, now after that, one of the most ridiculous, insane car chases ensues that you’ve ever seen on any movie, the transporter outmaneuvers dozens of cops while driving the wrong way through town, evading pedestrians on sidewalks, triggering hidden obstacles that just suddenly pop out of the street. He backs off a bridge at one point onto a random car transport truck, and then barely makes it in front of a speeding train without getting hit among other things. It was a crazy car chase all of this while, of course, keeping perfectly calm, perfectly cool, perfectly collected. In other words, the transporter was not just talking the talk, he could walk the walk or I guess drive the drive so to speak. He was that good. You might wanna go look that clip up on YouTube, if you can find it.
Look, here’s why I’m telling you this story. In the story, not only was the transporter prepared to the ultimate level, he had the exact amount of gas, the right shocks, the right tires. Everything was exactly set up perfectly because he was that level of expert. And he had the ability to actually drive the car in such a fashion that allowed them to not get caught.
I mean, I want you to think about the critical line that I just gave you a minute ago. The one that’s relevant to our discussion about making the jump to $10 million and this whole idea of the mindset, the transporter calmly stares down the barrel of the gun and says, “Who’s going to drive?” This is called confidence. It’s like David Lee Roth in 1984 level confidence. It’s like Tom Brady and the Final Drive kind of confidence.
It’s a belief that you’re so good at what you do is far superior to any of their choice the homeowner could possibly make that you’re willing to ask for an extremely high price while looking the homeowner calmly in the eye, without blinking.
The key, and in case I haven’t been perfectly clear, is to actually be that good. You cannot fake being height of his powers. David Lee Roth, or you know, is your metaphor, Tom Brady, Magic Johnson. Usain Bolt, you have to actually be that good.
I wanna go through one last topic, which is something that I’ve mentioned a couple times already, but here we go: raising your prices.
Raising your prices, selling for more than average so that you’ve got the kind of money coming in the door that you need to run your company at this exceptionally high level. Now I’m gonna recommend a book to you. You don’t have to actually read the book. You can just go watch a, a short video. If you go to YouTube and, uh, search for this: Trading Up, the book is called Trading Up. And here’s what it says. It says that people actually want to spend more money. Yeah. They want to spend more money. The value that people place on quality and experience is so far superior to the value that they place on price.
It’s amazing. I mean, just look at your own life. Look at anything that you buy. Look at the computer you have, the phone that’s in your hand, look at the golf clubs you have, look at the places that you eat out. Look at the things that are in your house, the brands of furniture that you buy. And you might say, well, you know, I’m a cheapskate and I don’t, you know, spend a lot of money in those areas. But here’s what the premise of the book Trading Up is: it says that people will gladly spend more money in the areas that are important to them. So while one person might spend a tremendous amount of money on really nice Callaway golf clubs, another person might not have any interest in Callaway at all, but they might have a $5,000 Mac computer top of the line that allows them to do amazing graphics and things like that.
It doesn’t matter what a particular person’s interest is. Here’s the premise: people will pay more money if they think that the experience is going to be great and the quality is going to be superior. Okay? Now, as a rule of thumb, you should look at having margins that are an absolute bare minimum of two to one, two and a half to one is better. And three to one is preferable. Meaning if it cost you $5,000 in labor and material to deliver it, three to one would be a $15,000 price tag, $5,000, $15,000 price tag. That should be your goal. That’s going to give you the kind of money you need to spend on marketing and on making your company awesome. Okay, now the biggest problem you’re gonna have with raising your prices to that level is your sales people. It’s not gonna be the consumer.
It’s not gonna be the homeowner. They’re not gonna care some well a lot won’t. I can give you, I’m not gonna do it, but I can give you so many experience I’ve had with companies that have raised their prices and raise their prices and sell at absolutely the top of the market. And they have to keep, keep raising their prices because the demand outstrips their ability to produce it. You’ve gotta believe this.
I mean, let me give you a great example on a personal level, have you ever been to Disney world? Now say what you will about Disney world. Some people, a little cynical, you know, whatever. I, I get that, but I’m gonna tell you this. If you wanna go to Disney world right now and you wanna get a four day pass, it’s gonna cost you about $600. It’s gonna cost you about $600 to go spend four days at Disney world.
That’s gonna give you access to four parks and it can allow you to visit those parks over the course of several days. If you get the park hopper option. Meanwhile, if you want to go to Six Flags over Texas, you can get a season pass for 79 bucks. And it includes parking. A season pass goes many times as you want to both Six Flags over Texas and Hurricane Harbor, which is their water park. That’s right across the freeway. 79 bucks unlimited attendance versus four days at Disney world for 600 bucks. Why on earth would somebody pay literally 10 times more money to go to Disney world? And the answer is obvious and it’s everybody knows it. It’s because Disney world is awesome and Six Flags isn’t. And the truth is the absolute honest to goodness truth. As somebody who had season passes to six flags over Texas for over 10 years, while my kids were younger, I will tell you without a out of a doubt, the thrill rides at Six Flags, they’re better.
They are better. They got better roller coasters. They’ve got Mr. Freeze. They’ve got the Titan. They’ve got all of these awesome, awesome roller coasters, but they execute on that park horribly. It smells. It’s not that clean. The employees aren’t that friendly. There’s not that much extra things to do besides go on the rides and they’re charging $79 for a season pass where it’s gonna cost you $600 for four days at Disney world.
Look, your salespeople are gonna be chicken to ask for more money. They don’t think that they can even sell at the rates that your prices are right now. You might have to replace them, but here’s what I’m telling you right now. If you can get your prices where they need to be, it’s gonna give you the money that you need to do all the things that we’re talking about. The mindset is so critical.
That’s why we haven’t talked about marketing tactics yet. That’s why we haven’t talked about techniques yet, because you need to understand that you’ve got to think the right way before you can really execute well on all these other things. You’ve gotta get unstuck, you’ve gotta understand the four step formula. You’ve gotta demand excellence. You’ve gotta have your prices in the right place.
And here’s the conclusion. Like I said, we can go over all the marketing philosophy and tactics in the world and we will on future podcasts. But in my experience, if you don’t think right, it’s not gonna matter that much. Work on how you think. And the next time that we meet back here together, we’re gonna talk about differentiation and really gonna get started on the actual marketing part of this podcast series. And I’m gonna give you a foundational concept for everything that we’re gonna talk about in the future. Something that I call identity, communicating with power, precision, and passion, who you are, how you’re different, why you’re better and what people can expect when they do business with your company. That’s called identity. And I’m gonna talk to you about it next time we meet. So I look forward to that. See you then. And until then, happy marketing, go out there and kick some butt. QR