Case Study: Learning to Prospect, Saving the Company
The Situation
Founded in 1992, Fair & Square Remodeling had established a strong referral base among architects in the Minneapolis market, typically in a competitive-bid arrangement for significant projects.
On the positive side, owner Mike Otto never had to market for work, as architects brought the work to him. On the negative side, "I sometimes would spend 40 hours or more pricing out a job, only to lose it to another contractor the architect was talking to," he said.
At the recommendation of a remodeling colleague, Otto contacted Sandler Sales trainer Chip Doyle. However, not long after the two began working together, the bottom fell out of the market. "Our $13 million pipeline went away in two weeks," Otto said. Equally precipitous was the decline in work for Otto's referral base of architects. "Our entire business was based on finding leads from architects, so it was a disaster for us," Otto said.
Then Otto's bank called his company's $250,000 line of credit. "We were pretty heavily into that line of operating capital," he said. "The company was in survival mode." He stopped working with Doyle, among other cutbacks.
"I was pretty depressed. I felt we were heading into a tailspin and would end up bankrupt," said Otto (at right, with his sons).
The Analysis
As projects became smaller, and with architects largely out of the picture, Otto found himself estimating projects for homeowners, often to never hear from them again. "We weren't set up to go after the end user" -- to market directly to homeowners, or even to communicate with them post-project completion.
In the first quarter of 2010, he reconnected with Doyle.
"His strength was actually guesstimating accurately, but that would work against him because his accurate guess was higher than other competitors," Doyle said. Worse, some of these homeowners didn’t move forward with other contractors either; they weren't serious about remodeling in the first place.
This is fairly typical remodeler behavior, Doyle said. When faced with a skimpy lead volume, "salespeople often naively bid or estimate every job when they should see that it is never going to be built." Nor do they acknowledge that the homeowner may have "no compelling reason to pick them over the guy who has no office, one worker and a truck."
The Solution
Doyle (at left) had two goals with Otto and Fair & Square Remodeling: to help his company attract far more leads from its new "target market" of homeowners, as well as to efficiently qualify every lead it got.
Otto had to learn first to prospect for leads. Then, "once he had a strong enough lead pipeline, he would apply better qualifying strategies to discern which jobs would a) be built by the homeowner b) be a good fit for his company," Doyle said. As with any successful salesperson, Otto needed to learn to qualify on both "a" and "b."
The solution took the form of what Doyle calls a "cookbook" -- essentially, a recipe of activities to blend together at a specified frequency.
"In golf, they say, 'Play one shot at at a time,'" Doyle explained. "In Sandler, we say 'Do the behavior,' which means focus on the prospecting activities that will generate the leads and the revenue. Get the leads before you worry about converting them into contracts."
Most importantly, from Mike Otto's perspective, Doyle sought to help him "generate enough leads so that he didn't feel desperate to close each one."
The advice came to Otto as a huge relief. "Chip told me not to worry about whether I would make a sale. All I had to worry about every day was doing the right number of things -- talking to the right number of people, or going to the right number of events.
"I can't control whether somebody is going to sign a contract," Otto added. "I can only control how many people I talk to. That has been such a liberating experience. It's taken the stress out of my life."
Results
Otto organizes his "cookbook" based on the number of sales he wants to make. By his current estimating, a sale requires him to talk to 16 people. Four of them are likely to be serious about remodeling, two will want and merit a proposal, and one proposal will lead to a sale.
To schedule and manage these conversations, Otto uses a spreadsheet connected to his ACT database. The conversations themselves take a variety of forms, including regularly scheduled emails to clients, phone calls and networking meetings.
A year into the routine, Otto's company is on the road to recovery. Leads, lead conversions and sales are way up, and he continues to work with Doyle on strengthening conversion rates.
"In three years we'll be back," he told us. In the meantime, he is enjoying meeting new people and "getting out and doing things with the community," such as through his Rotary chapter. "You know that saying: 'The more you give, the more you get'? It's very, very true."
On the day we spoke, he was on his way to a networking meeting (his cookbook says to attend five each month), and he had received three phone calls that morning from past clients who had received his emails.
For his part, Sandler trainer Doyle likes an email he recently received from Otto. It read, in part: "I am focused. I don’t waste time. I know every morning what I have to do – and I do it. My family is happier. My bills are getting paid on time. I FEEL BETTER."
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