During my facilitation of a recent project management course for the Restoration Industry Association (RIA) I was asked to include a section on upselling strategies.
At first I was reluctant, feeling the topic was inappropriate to the subject matter of the course. However, upon presenting the material and seeing the reaction of the audience, I now recognize the need.
Restoration contractors are leaving money on the table every day. They have been conditioned over their years of writing estimates for insurance companies to view a loss with a ‘like, kind and quality’ attitude. They assume the customer will be unwilling to pay more than their insurance reimbursement to have work completed on their property. Some contractors even go out of their way to discourage the customer from making changes to the scope of the work. This approach is not only shortsighted, but costly.
Given the availability of funds, most homeowners would change something about their home. Whether it’s a fixture, paint color or floor covering, customers are always looking for something a little nicer or a little more functional. We know this because of the increased popularity of home improvement shows. The lack of discretionary money or the inconvenience of another home improvement project usually prohibits them from taking action. But restoration work on an insurance loss provides a portion of the funding and forces the inconvenience of the repair, thus creating the perfect scenario for the contractor to sell upgrades to the customer.
Selling upgrades to a homeowner who has just experienced a loss, without coming across as vulture, requires tact and skill. The restorer must pay close attention to see if the customer indicates a desire to make a change. Some will come right out say they would like to replace damaged materials with something better while others may make subtle hints like “We were planning to remodel this room anyway.” However the vast majority will not say anything at all. These are the cases when a savvy restorer will ask the customer about their satisfaction with the current materials and fixtures in the home.
If a desire to upgrade has been established, the next step is to qualify the customer’s ability and willingness to pay for the change. This step can be a bit trickier, as the only clue a contractor has is the current size and aesthetics of the home, although this can be misleading in today’s unstable economic environment. The best way to truly qualify the customer would be to come right out and ask, “If we were able to provide you with a better grade of product or additional services at a modest price, would you be interested in seeing those options?” Most customers that have the means will say yes.
Once the customer’s willingness and ability to upgrade have been identified the contractor can begin developing options for the customer. At this point it is helpful to gather feedback from the customer about quality and budget. It is very easy to underestimate how much a customer is willing to spend to upgrade the scope. Gaining a better understanding about their desires can help put the options into the right perspective.
During this assessment the contractor has the ability to seal the deal simply by using a little common sense. Speak to the customer at their level and let them tell you what they want. This will prevent you from being tempted to only present them with what you want to sell or what you think they want. Ask intelligent questions about functionality and resale value of the home. Include all parties involved and compliment (never criticize) their style. Having this discussion makes the presentation of options much easier.
When offering options to the customer I would recommend having three. This is called ‘the triplicate of choice.’ Numerous studies have shown that if a consumer is given three options, they will most likely migrate to the one in the middle. For the restorer, the lowest available option will revert back to the ‘like, kind and quality’ of the damage repair scope. The highest option will always yield the contractor higher price and higher margin, while the compromise may fill the role of lower price but higher margin. Regardless of how the options are structured, the contractor should never accept a lower margin for any change or upgrade.
Occasionally customers will object to the cost of the upgrade. Fortunately, this is the easiest objection to overcome. Since the majority of the indirect and overhead expenses associated with completing work in the customer’s home are already covered in the insurance settlement, the additional cost of the change is just labor and materials. When presented properly this usually supports the contractor’s position in the negotiation.
Selling upgrades to customers in the midst of an insurance loss can be a win-win situation for both parties. If the contractor can communicate a “Let’s make the most of the situation” message to a receptive customer, the potential to close the deal increases dramatically. These situations are real and present themselves every day. The additional revenue they can generate adds profits to the bottom line and can help offset slow periods associated with the unpredictable nature of our industry. Try turning your project management team into a sales force and see what it can do for your business.
Timothy Hull brings first-hand insight and mastery of large-scale restoration operations to those who face operational challenges in this industry. He is currently a business development advisor for Violand Management Associates (VMA) where he works closely with business owners and their key management staff as both a business consultant and an executive coach. To learn more about VMA’s services and programs, visit www.Violand.comor call (330) 966-0700.