In January 2020, The National Association of Realtors published a home survey that reflected a great deal of optimism. The survey found a majority of respondents felt it was a good time to purchase a home and more than half had a positive economic outlook. Then COVID-19 stopped the new home construction and renovation sectors in their tracks.
With some adjustments, however, sales can still be made during the current soft market conditions. Here are some proven strategies.
Update Sales Targets & Compensation
Methods for calculating revenue targets may vary from business to business. Some companies add a percentage of growth to the previous year’s revenue, while others may define sales quotas based upon capacity (i.e., the availability of materials and labor), and some may use a combination of these approaches.
Regardless of market conditions, establishing clear and concise sales quotas is vital for any business to operate successfully. Keeping your sales team sharp and nimble is essential. While the current economic factors may not allow for as many commission opportunities as in pre-pandemic times, there are other ways to maintain morale.
Providing incentives for tasks like a specified quantity of sales calls per week, homeowner meetings, or the number of referrals is a great way to help bridge the commission gap while also keeping the sales team engaged.
The fear of missing out, or FOMO, is a tactic used by marketers and salespeople that leverages the emotional impulse of losing out on something of value due to inaction. The acronym became popular with the advent of social media, but the maneuver is a tried-and-true sales method.
Contractors can leverage FOMO by offering a complimentary service attached to the sale. For example, if installing a new roof, consider offering free annual inspections. Drywall installers can include patching other areas of the home at no additional charge, while insulation installers may choose to expand the zone(s) being insulated. When feasible, offering a product upgrade is an excellent way to take advantage of the FOMO effect.
Don’t Forget to Cross-Sell
Cross-selling or up-selling has been around for an exceptionally long time because it works. As of 2019, Amazon found that cross-selling accounted for 35 percent of overall revenue. This tactic is not unique to eCommerce: just think about how often you are offered fries or a drink with a hamburger – that’s an up-sell.
During an installation, take time to inspect other areas of the home that may need repair or improvement; this can also be done during the quotation phase. Once you’ve identified the additional work, include it in your proposal as an option.
If your company does not offer the needed repair, still point it out. Regardless of the profit you may or may not make on the optional recommendation, it will show customers you have their best interest in mind, and that is invaluable.
Cross-selling should be utilized during any type of economy, but it is even more important during a soft market. More so, as many people are working from home, they may be hypersensitive to needed repairs or upgrades to their residence.
Adjust Your Marketing – Don’t Stop It
When the economy is in a downturn and sales are soft, costs must be decreased to accommodate vital operating expenses like rent, insurance, payroll, and taxes. Thus, marketing is often one of the first expenditures on the chopping block.
Ceasing advertising and other marketing activities during the pandemic, however, may lead to an uphill battle in regaining your market share. Rather than cancel advertising initiatives, adjust them to align with budget reductions and update messaging and creative elements to reflect the impact of COVID-19. Repurpose the dollars that were going to be spent on now-canceled trade shows by boosting social media and pay-per-click advertising, and be sure to include your FOMO offer.
Another tried-and-true marketing tactic is targeting neighborhoods where you are already performing work, a method known as “working the corners of the lot.” Before starting the job, stop by each neighboring home to introduce your company and discuss the work you will be doing. Provide a business card, and advise them to contact you immediately if there are any problems during the job that impact them or their property (such as noise, blowing trash, or parking of vehicles). While you can express all of this in a door hanger, an in-person introduction can lead to additional conversations that develop into new work for your company.
When approaching your client’s neighbors, wear attire that conveys a high level of professionalism. Be sure to follow social distancing guidelines and consider wearing a mask (even if not required) to avoid creating anxiety. At the very least, this inexpensive tactic shows a potential customer that your company is conscientious.
Make it About the Customer
When making a purchase, the consumer will often wonder what the benefit is for them – whether it’s a utilitarian purchase like toothpaste or an aspirational buy such as a piece of jewelry. Therefore, it is crucial that advertising and prospect conversations clearly define the value proposition to the homeowner.
While it may seem obvious that moisture penetration from a damaged roof could lead to mold, reinforce relevant messaging whenever possible. Help homeowners understand that a home repair or renovation is an investment in what is probably their most valuable asset (35 percent of net worth is attributed to home equity).
Once the value proposition has been established, it’s important that your potential new customer feels confident in working with you. References or testimonials from previous clientele is an excellent place to start. Be sure to thoroughly explain to the client how the work will be performed, the safeguards the crew will use regarding traditional job site safety, and your COVID-19 protection practices.
Building a rapport with prospects does not have to be intimidating. First and foremost, be yourself. Trying to force an unnatural personality into sales pitches seldom works well. Speak in an approachable and empathic tone, while humbly touting why your company is best suited for the job.
Then, find common ground. Seemingly inconsequential things such as the desire to attend a football game again may be the start of forging a strong bond. Display sympathy for the large sum of cash the homeowner must spend on an unavoidable repair (particularly during this time). Leave no doubt that selecting your bid for the job is in the homeowner’s best interest.
Deals Will Still Close
The pandemic’s full financial impact is unknown at this time, but the economy will eventually recover. Some companies may not survive this soft market, but with a few marketing adjustments and a modified sales approach, your company can both survive and thrive.