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The Death of Salesmen?

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  • The Death of Salesmen?

    I’ve read through some of the threads and posts and the one that got to me was all the chatter about PRICE. Should it be lower, higher more detailed etc. I’m fascinated that the only solution to a downturn in your business is “Should I lower price?” Should I go back and rebid lower? No one has said that maybe its time to get some sales training and do a better job with the opportunities that they get. Boulderdash man. For the love of God sniffling about the economy must stop. To prove a point I contacted a local company that remodels bathrooms. They gave me 8 leads that called in and I sold 6 of them 5 on the first visit at higher margins than the company expected. They are booked through Feb now and I’m a rockstar. Were things so good that all of America forgot that products and services need to be sold. Detailed pricing and scopes of work left on the table to fend for themselves against the others piled on is a race to the bottom waiting for the starting gun. Shouldn’t the answer to lost projects be better sales skills not lower prices? If all it took was a low price one place could sell everything and there would be no need for salespeople at all. There are three things that almost always sound the alarm of the failure of a business. One thing is declining gross margin. Gross margin only goes down because your selling price is too low relative to your cost. The second condition is wages, as a percentage of sales, increasing. And the third condition, surprisingly, is sales volume increase. Now, a lot of people say how can that be? Well, to put it simply, when a business gets into trouble, and let’s talk about trouble in a business. Trouble comes when you can’t pay your bills. When you can’t pay your bills, you need some cash. Now, to get some cash, we’ve got to sell something. How to sell something, “let’s cut the price.” and invariably they cut the price, but they didn’t cut your cost because when you cut prices, you don’t cut the cost, you just cut the selling price. Your costs are still there. So, your gross margin has gone down. Now, when you cut price, did you cut payroll? No. If you cut price 2%, 10%--pick a number--do you cut wages of everyone that works there 2% or 10%? No. So, wages as a percentage of sales go up and consequently you will probably sell a little more and have some sales volume increase, but your margin hasn’t gone down, your wages as a percent of sales has gone up, your sales volume is going up and your company almost assuredly is going broke. Great sales skills equal better margins. Isn't lost projects a sales problem?
    rick ritivoy CGR
    www.rickritivoy.com

  • #2
    Re: The Death of Salesmen?

    Originally posted by rickr@rickritivoy.com View Post
    I’m a rockstar
    Anything else?
    Bailer Hill Construction, Inc. - Friday Harbor, WA
    Website - Facebook

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    • #3
      Re: The Death of Salesmen?

      Rick, do you know Ms. Ciccone, she's from Rochester, too?

      --Alex

      P.S.: Rick, I do get your point. Price is the easiest close, but should be the last.

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      • #4
        Re: The Death of Salesmen?

        Well of course I think sales and marketing are an important part of success, and while I’ve noticed in the high end custom market people don’t always buy on price (some do), there does seem to be some pressure on prices these days. Especially in spec homes, where existing inventory and slower sales does cause prices and margins to lower. I don’t do a lot of advertising, heck I don’t do any, I just try to build a good product, treat people fairly, give excellent customer service, and brand my name year after year, decade after decade in a few select markets.

        I’ve actually seen a rash of custom work come my way lately, at least in the bidding stage, so it is refreshing to know people are still building houses. And while I agree that people don’t always buy on price, I do feel some pressure to sharpen the pencil on all costs, overhead, and even profit.

        In a bad economy, you don't have to give away the farm as far as gross margins, but you better be a good business person and have your act together and be efficient or you will not survive. You have to react to market forces.
        ============================================

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        • #5
          Re: The Death of Salesmen?

          Originally posted by Allan Edwards View Post
          In a bad economy, you don't have to give away the farm as far as gross margins, but you better be a good business person and have your act together and be efficient or you will not survive. You have to react to market forces.
          I would follow that advice in any economy, good or bad. Hire the best people you can afford, give the best service you can provide, & have a good quality finished product with your name on it.
          Two roads diverged in a narrow wood. I took the path less traveled.
          http://renov8u2.com
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          • #6
            Re: The Death of Salesmen?

            Originally posted by rickr@rickritivoy.com View Post
            . . They gave me 8 leads that called in and I sold 6 of them 5 on the first visit at higher margins than the company expected.
            I dont see the relevance of lack of leads and lowering prices has anything to do with selling jobs for a company that had 8 extra leads laying around.Are you proclaiming their inability to close a deal or just sayig contractors can't sell. The big "salesey" company boss man here in full service remodeling just left a bankruptcy hearing in handcuffs last week. Big in service magic leads, obviously weak in everything else. In my experience, sales specialists and remodeling rarely work together well, maybe a tin man operation but not sticks and bricks type cos.

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            • #7
              Re: The Death of Salesmen?

              Originally posted by Andrew R. View Post
              In my experience, sales specialists and remodeling rarely work together well, maybe a tin man operation but not sticks and bricks type cos.
              That's a good point. Don't clients typically want to deal with the principle of the company? At least when details of the job are being discussed. The person who has their name on the line.
              ============================================

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              [url=http://houzz.com/pro/allan]Houzz[/url]

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              • #8
                Re: The Death of Salesmen?

                Allan:

                http://www.grammarmudge.cityslide.co...92333/8562.htm
                Bailer Hill Construction, Inc. - Friday Harbor, WA
                Website - Facebook

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                • #9
                  Re: The Death of Salesmen?

                  Originally posted by David Meiland View Post
                  Thanks David. You know when I wrote the word I paused, and remembered that I was taught "principal" was like the principal of a school because it ended in pal and your principal was your "pal", and principle was the correct word. I'm flattered that you're hanging on to every word I write, I'll be more careful in the future. I'll leave it as is just to show that none of us are infallible (except maybe Dick).
                  ============================================

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                  • #10
                    Re: The Death of Salesmen?

                    Originally posted by Alex_Saloutos View Post
                    Rick, do you know Ms. Ciccone, she's from Rochester, too?

                    --Alex

                    P.S.: Rick, I do get your point. Price is the easiest close, but should be the last.
                    No I don't know her. I'm in Scottsdale more these days than Mich
                    rick ritivoy CGR
                    www.rickritivoy.com

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                    • #11
                      Re: The Death of Salesmen?

                      These replies remind me of a CGR training class I sat in on. The company owners around the table made comments like; “People always get three estimates.” “People never buy on the first visit.” “I make them pay for plans before I quote a price.” Here in this thread I read, “People want to deal with the principle.” “Sales specialists and remodeling rarely work together well; maybe a tin man operation but not sticks and bricks type cos.”
                      These are clues to “belief systems”. The “rules” by which you make decisions that determine your actions. In this case these would be called “limiting beliefs” since they are negative and would most likely limit your success.
                      The relevance of the lead example is that this company operated like you guys; measure and return a quote and “hope” they get the job taking weeks to close a deal. This activity took me four days and filled a month’s schedule. That is the relevance. Not how good I am but that it can be done. As for high-end, the most successful remodel company in Scottsdale only deals through sales people, they did 11M this year and the average job is $225,000. The principle never meets a client because he is never there. So before you let your beliefs limit you, find the facts about your industry. As a group you viewers are very negative about sales and instantly label it “salesy” or tin man” when in reality professional sales is “The holistic business system required to effectively develop, manage, enable, and execute a mutually beneficial, interpersonal exchange of goods and/or services for equitable value."
                      I thank Brian Lambert for that definition It’s the best I’ve heard over 26 years.
                      I have dealt with hundreds of companies and over 11,500 home owners directly. You can drop your price thousands of dollars or take a professional sales course for hundreds of dollars and maybe, just maybe not have to drop the price. Of course it occurs to me that you might even start getting projects you lost before.
                      As for the guy in handcuffs. I can show you many more people ripped off, losing thousands of dollars by nice old boys swinging hammers that never finish the job. The state’s complaint departments are full of them. I would trust a sales person before a carpenter working on his own.
                      Does that make your coffee a little warmer?
                      rick ritivoy CGR
                      www.rickritivoy.com

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                      • #12
                        Re: The Death of Salesmen?

                        Originally posted by Allan Edwards View Post
                        That's a good point. Don't clients typically want to deal with the principle of the company? At least when details of the job are being discussed. The person who has their name on the line.
                        I believe that. Can you imagine having some fast talking greased hair guy selling to your customers and discussing structural and decorative issues?

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                        • #13
                          Re: The Death of Salesmen?

                          I worked in a large-ish company that had a couple of sales people. By and large it worked fine. Neither had greased hair, and I think they knew their stuff. They were able to bring in projects. The problem for me as PM was being left out of the early discussions, so the owners would sometimes say "So-and-so said you guys would do X, Y, and Z". Sometimes it was true, sometimes it was a stretch.

                          It's hard to imagine anyone using sales staff in this market. Everyone is small, owners deal with clients directly. Personally I like it that way. I want to know who these people are and if we are a good fit for them. After all, I am signing up for a financial relationship with them. There also isn't the volume here for $11M operations. No one is remotely close to that.
                          Bailer Hill Construction, Inc. - Friday Harbor, WA
                          Website - Facebook

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                          • #14
                            Re: The Death of Salesmen?

                            Rick,

                            Give us (who havent signed up for your newsletter) some tips. I'll be back in a while, going to the store to get Brylcreem.
                            Last edited by Andrew R.; 12-13-2008, 10:52 AM.

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                            • #15
                              Re: The Death of Salesmen?

                              I don’t have a newsletter and I don’t do this to chum for business. I have never accepted a client from JLC. If anything I have privately given free help to JLC people.
                              If you read your own comments the first challenge is your stereo type of what a salesman is, greased hair, white belt, suede shoes and plaid sport coat. Yuck. I wouldn’t want any of that type in my company either. The appropriate remodeling sales rep has a background in construction knowledge, certified design training, and training in people skills. They have integrity and character. They are not a character. The sales professional is responsible to monitor the build process and maintain client relations throughout the build.
                              If there is a he said they said issue then the company has a problem in its preconstruction process or system. The past relationship between production and sales has been equal to Hackfields and McCoys but not any more. Today the synergy between the departments directly affects the success of the company. I have yet to meet a carpenter/trade or sales rep that is equal in skill at both positions. The personality traits that make someone successful at one position will make them terrible at the other position. You guys need to catch up to 2008 in what is remodeling services and sales skills really are. How’s that coffee temp doing?
                              rick ritivoy CGR
                              www.rickritivoy.com

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