Contractor’s Corner: Closing that negotiated commercial sale – April 2022
By Dave Stafford
Ask and you shall receive should be the one thing to remember in pursuing a commercial sale. The right questions from you and the answers you glean from a prospective buyer will determine your success. And it’s not one question but a series of what, where, when, how much and payment details that will tell you how to close the sale profitably. Many a time, what seals the deal is your drawing a logical conclusion rather than closing eloquence or begging for the sale.
What’s at stake, and who’s playing? The sooner you find out the potential of an opportunity, the better you’ll be able to judge the energy you’ll have to expend to land it. Most buyers will try to maximize its importance; it’s your first job to drill down into its reality. How large is the area, square feet or number of floors? What is the general scope of work? Is this for a budget or a live, fully funded project?
REAL OR FANTASY
In my early years, I made the classic mistake of confusing the buyer’s interest in an estimate with an actual project; I ended up spending a day with a tape measure instead of 30 minutes calculating a budget for his planning-a painful lesson that had me write down and commit to memory a whole series of qualifying questions.
Sometimes, the best strategy is to arrive at an appointment with a notepad and brochure rather than multiple samples. “Mr. Jackson, I wanted to introduce myself and the company and ask you a few questions before bringing in samples, fair enough?” This sets the stage for a relaxed conversation and opens the door for him to explain his project. If you’d like to open the conversation, then a 30-second “elevator speech” is fine, but after that shut up. Let him talk; ask questions for clarification and prod for answers. A great question is, “Have you allocated money for this project, or are you in the planning stage?” It is tough for a buyer to avoid a direct question of this type. “Have you seen a product you like, and how soon do you expect to be ready for flooring delivery and installation?” At this point, you should find out if the project is real or a fantasy.
If in the planning stage, offer a “back of the envelope” budget (current price levels plus 10%-15%). He’ll thank you for it, and you’ll minimize your time and not have to lug samples up three flights of stairs. Or you can send him a written estimate with a nice note for meeting with you and set the stage for follow-up when the project is funded. Take your time but don’t waste it.
However, if you’re convinced this is viable project, continue on with probing for information. “Are there any special product requirements and color ranges, or have you seen something you’d consider?” Here is where you should find out about your competition or any unusual requirements. With a smile on your face and a twinkle in your eye, perhaps you’ll ask, “Who’s my competition going to be on this?” I have had answers from, “I’m not going to tell you that” to being handed a list of bidders to, “Well, I talked with these idiots, and I wasn’t too impressed. At least you’re asking questions about what I want.” I’ve also been handed sample books from a competitor and asked, “Can you match this or give me something similar? I really don’t care; it just has to be in the blue tones.”
SET A PATH
Consider things that will make you look great to the buyer. Unlike the strict parameters of a bid, most negotiated commercial opportunities are a vague blend of product desires, colors and ideas of how to transform the area with beautiful new flooring with a minimum of effort and disruption. That’s why direct, open-ended questions are so important. The image you convey and your professionalism will set the tone for the initial meeting.
Show up on time or even a few minutes early. Be prepared with your elevator speech and present a colorful company brochure. Mention a project or two (like his) that you’ve successfully completed along with problems overcome. If you specialize in some type of installation he might need, then note that (like vertical lift installation if a packed office setting). Don’t go on too long; 90 seconds is about right unless he asks questions.
If appropriate, present samples that target his visual, textural and budget parameters. A “good-better-best” selection is ideal. Do not flood him with so many samples as to be confusing. I remember proudly showing at least ten samples only to have the buyer say, “I kind of like the first two you showed me. Can we go over those again?” Should he say, “Didn’t you bring more samples?” you can always respond with, “Yes, but these are more specific to your color range, visual goal and overall budget to get us started.” You don’t want him to feel shortchanged but to understand that you’ve been listening to his requests. I admit there is a fine line between too few samples and too many. If too few, this gives you an opportunity to set a further appointment. Make him feel special through your product selection and insight.
An important question to him might be, “What is the one part of this project that worries you the most?” Sometimes they will say without your asking; other times they will pause, and then blurt out, “Oh my gosh, I just hate the disruption this is going to cause.” Or, “I damn sure don’t want to be over budget; I hate the thought of such a mess.” Whatever the answer, that is your clue to closing the sale. Find a way to allay his biggest concern. In the occupied office, maybe that is installation after hours or on the weekend; build in enough site prep to avoid multiple change orders; present cleanup, debris removal and inspection as you complete each section.
Offer to provide guaranteed, certified installation and/or an extended warranty. Stress your experience and the company’s years in business. An eye-popping list of five well-known commercial references plus a local bank reference can be impressive. Mention your training programs and installer credentials. “All of our crews are managed by a CFI-CII level certified installer or those with INSTALL training credentials.”
Why do you want to be the last person in with an offer? Unlike a formal bid, a negotiated buy is usually a lower dollar limit, and the buyer may be relatively unsophisticated in purchasing. He has been told to get three bids for comparison purposes within a range of funding to “keep it legal.” Beyond that, he can make the call based on his intuition and best value. That means your bid will either set the standard or be the one he needs to make a decision.
If he is asking for a verbal quote, to be confirmed in writing, he may be looking to gauge whether it is in his range, especially if impressed with you. “Hey, that’s pretty high, can you do better?” To which you might respond in several ways, “Where do you need to be? Where’s my competition on this? How do my detailed quantities look? I might have to change products. How does my scope of work compare? How about my terms and deposit; other than the price, how does everything else sound? What can you suggest?” Of course, the longer you can keep him talking, the more insight you’ll have and the more you can either delay putting something in writing or refine what you should detail.
If you are having this type of conversation after presenting a written quote, many of the same questions should be asked or through a follow-up phone call. The real selling comes in before he makes a decision, not after.
In one instance, I had a good rapport with the buyer, and I sensed he wanted me to do the job, “So, Ted, I sent the quote over to you. How do we look?”
• “You’re too high.”
• “Really? I thought it was an aggressive number, so where would we have to be?”
• “I can’t tell you that but at least 10% to12% lower.”
• “How do my quantities look? Oh, and by the way, did my competitor include the attic stock requirement and multiple deliveries?”
• “Hold on, let me check. His yardage is off, and he makes no mention of extra stock or delivery. What could you do to get your price down?”
• “Ted, I’m already pretty tight, but I’ll check. Where do I need to be to get the order today? Can we cut back on the attic stock and get a little more of a deposit?”
• “Hey, if you can shave off 4% on the total, I’ll cut the attic stock by 2%.”
After rechecking my numbers, that’s what I did and closed the sale.
THE DEVIL IS IN THE DETAILS
Use deal specifics, give-a-ways, gambits and closes to your advantage. Your questions and research before giving a written price quote may determine your strategy. Have you presented a polished, professional written quotation, free of errors and obvious mistakes? If not, that is usually a deal-breaker. “How can I trust someone that doesn’t proofread their quote?” is what one buyer said to me.
Have you clearly specified what you’re offering? Very few buyers just want a total price. Most ask for a breakdown of materials, tax and labor. The astute ones require a detailed listing of materials or product quantities, a unit price, tax, and labor prices based on type of materials installed. While more work, you will impress the buyer and avoid making simple, stupid mistakes by giving more rather than less detail.
We had to eat a $25,000 mistake because our salesman transposed numbers, and an even bigger one when another left out a complete floor of a building. If you are not specific in the details, you are unable to legally prove it was just a simple error. As the purchaser said, “I know you’re losing money, and I understand it was just a simple mistake; however, maybe you were giving me an ‘at-cost price’ to get your foot in the door. I relied on your price, gave you the job and faxed our acceptance to you. I expect you to perform.” No amount of whining or protestations could win. Had we listed quantities, unit prices and extensions, we would have prevailed because it would have been clear we had made a transposition error.
Try these sorts of give-a-ways, gambits and closes yourself:
• “Are you in a position to make a buying decision today, or is there someone else that needs to be involved?” If so, schedule a time to get the decision-makers together.
• “What are you looking for in a flooring company, Sid?” Then proceed to show how you fit the bill and review your local references.
• “Alright, Joe. I know we are a little high, but we are using certified labor. How about I add an extra year to your warranty? Would that do it?”
• “Jean, what if we go ahead and include cleaning of the carpet in your existing conference room without charge-fair enough?”
• “I know you’re concerned with job completion since there have been delays with other trades; what if I could add another installation team to guarantee a prompt delivery? Wouldn’t that be worth the small difference in price?”
• “How soon were you looking to make an award? I may be able to get a lower price on products if you can place the order now, before the end of the month.”
• “Our price was for 30-day terms, but if you could swing a 35% deposit and the balance within 20 days, I believe we could be at your number.”
• Should the dreaded objection, “I want to think about it,” surface, then push a little. “What would you like to think about, George? Perhaps I can answer your concern or clarify our quote. Our price is a fair one, so let us do the same fine job for you as we did for these clients [show reference list]. Okay?”
• And a classic close that means business, “Harold, what would I have to do to get this project right now, today?” Now it’s put up or shut up time for him; no thinking about it and no more delays. What would it take? Most negotiated commercial jobs finally evolve to this point; otherwise, you are not asking for the order enough times.
One wise sales trainer always said, “The typical salesperson asks for the order once or twice; the successful ones three or more times. They take rejection well and a ‘No’ is not personal.” Good to remember. When you’ve asked questions, you should have four or five polished closes ready to get the project today.
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