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Know Your Competition

Originally published: 04.01.17 by Karan Dhillon

I had a business coach who once said that business is like a game of volleyball. You can be concerned about the other team, but once the ball is in your court, it doesn’t matter whether the other team is good or bad.

Your job is to make sure you don’t “drop the ball” and send it back over the net. If you can do that consistently — that is, take care of your end of the bargain — then it doesn’t matter how good the other team is; you will win.

This analogy is true in business, especially in the construction industry. The point of this example is that your competition is not who you think. It’s not the other guy. Mostly, your competition is just you.

Most contractors are concerned if the customer is going to get three bids. They don’t like being “price shopped.” They want to be the last one in with their bid so the customer remembers them, or several other versions of these concerns.

There are several factors to consider when you are trying to win in a competitive marketplace.

Winning the Price War

As stated earlier, most contractors worry way too much about their competition. This worry misses

the key point. At the end of the day, there is only one reason why a customer buys from you or from someone else.

People buy from people they like and trust. Or, in one word, people buy based on rapport.

This is true in a low dollar service call or a high dollar project. It is true in a residential remodel and a commercial project.

Pick the Right Price Point

In every competitive marketplace, understand that there is a customer at every price point. There’s a customer at a low-price point, a customer at a middle-price point, and a customer at a high-price point. The first thing you have to decide for yourself is which price points are you going to compete in.

Do you want to be the company that is the cheapest? Amazon decided to be the cheapest at shipping products. Being the cheapest is a very different game and a game that only large companies can win.

Many companies in HVACR are small, and small companies do not win the price game. They may think they have less overhead — but a small business trying to be the cheapest in the market is going to drive itself down to a grind. This is the reason why most contractors have work but don’t make any real money — they just stay busy.

If you want to build a successful company that makes money and gives you, the business owner, a decent life, you have to pick your price point right. The higher up the food chain you go in the price point, the easier it is to be successful. That’s what most people don’t understand.

A far better way to win the price war is to be the most expensive or to be in the top price brackets.

Then you have to be more expensive and still win the job. How do you do that?

Build Rapport Quickly

This is where we go back to the original concept. The key to any business relationship, short term or long term, is that people buy from people they like and trust — which means people buy from people who take the time, make the effort, and spend the energy to build rapport. The higher up the price brackets you go, the more powerful this concept becomes.

How do you build rapport? Fortunately, there is a formula for building rapport anytime and with anyone. It takes 4 steps.

Step 1: Go into their world first. The most important thing to understand is why? Why is it that the client wants to spend money? It’s not about the price or the equipment.

Most of the time the reason is that when you are done, there’s a certain way they want to feel. It is about a pain or a frustration or an aspiration. Find out what that is.

Step 2: Be Interested. Ask lots of question about them. This is the opposite of telling them a lot of things about you, how many generations you have been in business, how great you are at this etc.

Simply focus on being interested in them.

Step 3: Develop Shared Reality. If you do the first two well, you will discover they are a person just like you, with a real life, and in real life people have things in common, kids, schools, interests, sports, beer whatever.

When done right, this is the magic moment, that will remain with them after you leave, and in many cases close the deal even before you have submitted your proposal.

Step 4: Verification. Don’t just do the above and leave on a happy note. Understand the specifics about the project and repeat back, just like they do after a drive through order. This needs to be the shortest part of the conversation.

Most contractors spend all their time here. Don’t be one of them.

The key to knowing and beating your competition has little to so with the other companies in the marketplace. It is about picking the right people to do business with and being the person they want to do business with. When you do these two right, the competition doesn’t matter.

About Karan Dhillon

Karan Dhillon is the founder of The Contractors Coach, a business coaching company focused on contractors and the construction industry. He is also the author of the book The 7 Deadly Sins in a Contractors Business. For additional information, visit thecontractorscoach.com.

Articles by Karan Dhillon

Know Your Competition

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