Avoid the red lights

December 9, 2014 -  By
Jeffrey Scott

Jeffrey Scott

Four years ago I visited with a contractor in New York state.

He was losing money for the first time, while working 80 hours a week. He had a good brand and lots of work. His problem was he chased too many red-light leads.

A red light is someone who’s not going to buy from you, no matter how many “maybe” signals they send you. They are shoppers, undecided or simply a wrong fit. They key is to remove them from your appointment calendar so they don’t negatively affect your time management or your psyche.

First, you have to define their profile. Take a full year or two of proposals that you’ve written but not sold and identify the three to five traits they have in common. Next, develop “questions” that will uncover their red-light cues, and plan to screen these folks when they call in.

Red-light qualities vary by company, but here are some common traits to look out for: getting five bids, wrong geographic area, first-time buyer, haven’t been to your website or seen your work, unrealistic turnaround time or budget, not in pain with current contractor or doesn’t know anyone using you.

Don’t just rely on my list. Look back over a year or two of records to get clarity on the red lights attracted to your company.

Make yourself scarce

The key to successful selling is to protect your time and your psyche. The problem with red lights is they’re always sending you negative signals, lowering your confidence and putting downward pressure on your pricing. Staying away from them will allow your margin to float higher, your confidence to soar and your sales win-to-loss ratio to climb. You’ll estimate your work correctly, do better work and get more referrals.

After I visited with the New York contractor, we implemented qualifiers for his company that had an immediate positive impact. They included:
-Consultation fee. If the clients moved forward, it was credited back to them.
-Minimum job size. This measure removed the shoppers and posers who didn’t want to spend above X amount.
-Four-figure design fee. Such a fee told the prospect that we respected our skills and profession and you need to, as well.
-Limited number of appointments per week. This move protected the owner’s time and conveyed scarcity.
-List of qualifying questions. The office staff would discuss these points with all leads. If they gave too many red-light answers, they were screened out.

You might have the same initial reaction to these changes that my client had: “I can’t do that. No one else does that.” My response? “That’s exactly why you need to do it—to stand out from the crowded marketplace and start making some real cha-ching.”

Estimating accurately

We also identified the type of work this contractor made money on and where he needed to raise his fees. We made some big changes in his mix of work and his pricing. After three years, his net profit increased from zero to between 20 percent and 25 percent, and he cut his hours to 60 per week. Plus, he’s able to take off two-plus months in the winter.

If you spend more time with prospects who respect you and your expertise, you’ll sell more at higher margins and do better work. You’ll be happier, your clients will be pleased and your employees and family will enjoy the change.

Take action

1. Identify the bottom 15 percent of your leads from 2013 and 2014 that you need to stop selling to in 2015.
2. Create qualifiers you can use on the phone, email and during the first appointment.
3. Identify which services aren’t meeting your sales-margin goals and take action: raise the fees, stop doing the work, work in density clusters only or shift the material mark-ups of those jobs.

Jeffrey Scott

About the Author:

Jeffrey Scott, MBA, author, specializes in growth and profit maximization in the Green Industry. His expertise is rooted in his personal success, growing his own company into a $10 million enterprise. Now, he facilitates the Leader’s Edge peer group for landscape business owners—members achieve a 27 percent profit increase in their first year. To learn more visit www.GetTheLeadersEdge.com.

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