Hot Buttons

I have found in my sales training travels that when I ask, everybody seems to have a fairly good idea of what a “Hot Button” is, because the term is generally used in everyday conversations. However, when I ask further, hardly anyone knows the proper way to capitalize on a “Hot Button” in a sales encounter, unless they have had prior training. Therefore, you need to know what to do with a sales “Hot Button” when it occurs, in order to capitalize on it to the fullest. My definition of a “Hot Button” in a sales encounter is: “Anytime the customer picks up on a feature, advantage, benefit or function a salesperson was talking about at the time, and they seem to get somewhat excited about it, and/or he or she makes a positive comment on that particular subject, or at least they show some extra interest.”An Example of a Wrong and Right way to handle a “Hot Button”:

1. Amateur Salesperson Example: Salesperson says… “One of the really great features about our automatic deck awning is that it has a locking mechanism so that whatever position you stop it at, it firmly locks in place to avoid a strong wind gust or sudden storm from catching it loose and possibly damaging it.” Customer responds… “Now that is important to me because we are campers and our awning must be securely anchored and locked in place when we are away, so that if a storm does comes up, we don’t lose the awning and possibly damage our trailer.” Salesperson responds… “Right. Now another great feature about this awning is……”

2. Professional Salesperson’s Response to the Above “Hot Button”. “Exactly, in fact, our manufacturer realizes your investment in this awning, and your home, needs to be protected. This locking mechanism has been tested in 100 mph wind gusts and it still holds firm. In addition, it has a lifetime guarantee not to fail. Plus, this awning is so securely anchored to your home when it is installed, you would have to have sustained winds of over 100 mph, in order to lose this awning. This is a fantastic advantage over regular deck awnings wouldn’t you say?” Customer responds… “Man, I guess so.” Salesperson says… “Great, you seem to like everything about our XYZ deck awning Mr. and Mrs. Jones. Normally it takes less than one half day for installation and we offer in-house financing at an extremely low rate if you need it. We have openings in our installation schedules two weeks from now. And we offer morning, afternoon and even some early evening time slots. Could we lock you into a specific date and time?” The Salesperson has closed, so they shut up and wait for a response before moving on.
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Following Up and Following Through

One of the biggest killers of sales is a salesperson who is terrible at following up on things they promise to do for a potential or existing client. They don’t get back to the client when they said they would. They don’t return a phone call ASAP. They don’t get the client the information that they said they would, in a timely manner. This article will focus on how to make Following Up and Following Through a tremendous asset to your sales ability, while improving your sales results dramatically.

The first step in becoming a more professional salesperson in this Critical Success Factor (CSF) of sales is to recognize you need to focus on improving this because the bottom line results to your sales increase for the year will be sizeable when you do. Following Up properly and in a timely manner also offers us as salespeople, the opportunity to under promise and then WOW our existing and/or potential new client by over delivering (i.e. we tell them we will have that information for them or that material for them no later than such and such a date and time, we make sure that is OK with them, and then we knock ourselves out to deliver well before that promised date and time).

There is another step to professionalizing your sales efforts, once you master Following Up and that is learning how to Follow Through properly. What’s the difference you say? Well, Following Through is doing more than is expected of you when you Follow Up. It’s that simple. For instance, let’s say a potential client asks you to get them some additional information you do not have readily available for them at the time and they seem likely to buy, but they need more information. You sense the emotional urge to buy is definitely there, but now they need to accomplish some due diligence to justify their emotional urge to go ahead with the sale.

First you tell them when you will get that information to them, whatever the means you and they chose to make it happen. Then you tell them a date and time that is a little longer than you know you can get this information back to them (i.e. the under promise and over deliver process is being set up at this point). Next, you get a verbal OK from them that your promised date and time (sometimes just a later time that day). When it comes to information—such as… “You know, I do not have that technical information but I know the exact person who does. It appears to me you feel comfortable with going ahead with this purchase once you get more information, right? (Trial Close) Great, I can have that information for you no later than 4:00 pm today. Will that be OK?” Once you get the verbal agreement, ask them if there is any other information you can get them at this time to help them in their decision (this keeps you from constantly chasing your tail again and again by getting them one thing, then another, then another).

Now you go to work and beat your promised deadline by a significant amount of time and you do it at all costs. Then once you deliver it, you Follow Through by contacting them within a reasonable period of time and (1) make sure they got it and (2) make sure you are readily available to clarify anything within that information and (3) share with them some new information since you and they talked. (4) Finally, finesse your way into a time when you and they can meet again to culminate the agreement. Many times at that point they have told me over the phone they are ready to go ahead with the deal.


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Mark-ups and Gross Profit Margins

Overview: As a business and sales consultant that has worked in the home building and remodeling industry since 1983, I’ve attended a lot of national seminars from some of the most successful home builders and remodelors and they all have some common success traits. But the one that is consistently present is the mark-up formulas they use. Assuming you know the difference between mark-ups and gross margins, here is what I have found and continue to recommend to my clients.

For the small builder, since he or she cannot get the buying power of the big builder, he needs to shoot at no less than 1.25 (or a 25% mark-up) to achieve a 20% gross margin. Most home builders I run into that are working for wages mark-up only 10%, or at the most, 15%. Then, by the time they pay for all their overhead (even though it is no where near what the big builder has), they end up working for wages. They cannot grow and expand with this kind of mark-up and when one bad job comes along, they could be forced into bankruptcy because they do not have any cash reserves. The name of the game with big and small builders is to hit somewhere around the 10% net profit mark before taxes.

Large builders can mark-up 34% or more to get a 25% gross margin. And in large custom homes where there is no real bidding involved, these margins can be higher. It is the choice of the builder (large and small) to do this, and, so long as the customer gets what they were promised at the price they were promised, everything is ethical and legal. That’s the hardest part to sell to builders who are working for wages.

Remodelors need sharply higher mark-ups (and thereby higher gross profit margins) because their business is not as easy to price and work within for many reasons. Most successful remodelors I’ve talked to over the years mark-up no less than 1.54 (or a 54% mark-up) to get a 35% gross margin and the really good ones go 1.67 (or a 67% mark-up) to get a 40% gross margin. In some cases, on smaller jobs, I’ve seen 2.0 (or a 100% mark-up). This might also happen on individual items within a project.

“Is this fair to the customer?” … I was once asked in a Home Builders Association seminar I was putting on. “Absolutely,”… I answered… “because you do not want to get 100% of the jobs you bid or even 50% of them unless you are getting great margins. To have the income and profits to grow your business and hire and keep the best employees (and subs, etc.), you must charge higher prices to get better margins. I’ve worked with hundreds of different types of companies in all types of industries over the years and the consistent winners always have more mark-up and gross margins than their competitors. This allows them to put money back into their companies to make them an even sharper competitor. But if they just take the extra funds and squander them, instead of reinvesting them, they will eventually fail. It’s just a matter of time.”

The goal in any business, large or small, is to be profitable and build wealth. You are hopefully in it for the long haul. Therefore, you must have the courage to charge properly for your products and services and be prepared to not get all the jobs you quote. Begin a bite size at a time, not all at once. If you are an excellent builder, remodelor or business, you will be doing very well, profits wise, within a year.
Mark-Up/Gross Margin—Guideline Sheet

Gross Profit Margin Desired Multiplier Add To Cost Of Item

Theoretically a true GPM of 100% is Not Possible

90% ..........10.0.......... 900%
80% ..........5.0 ...........400%
75% ..........4.0 ...........300%
67% ..........3.0 ..........200%
64% ..........2.75......... 175%
60% ..........2.5........... 150%
55% ..........2.25.......... 125%
50% ..........2.0........... 100%
47.5%........ 1.91.......... 91%
45% .......... 1.85.......... 85%
42.5% ........ 1.75......... 75%
40% ............1.67......... 67%
37.5% ..........1.60........ 60%
35% ............1.54......... 54%
32.5% ........ 1.48......... 48%
30% .............1.43........ 43%
27.5% ..........1.38........ 38%
25% .............1.34........ 34%
22.5% ..........1.29........ 29%
20% .............1.25........ 25%
17.5% ...........1.21........ 21%
15% ..............1.18........ 18%
12.5% ...........1.14........ 14%
10% .............1.11......... 11%
7.5% ...........1.085....... 8.5%
5% ..............1.06.......... 6%

The figures in the quick reference above are rounded in most cases for ease of use only.
Actual Formula: Final sales price divided into the mark-up dollar amount from your total costs = the actual Gross Profit Margin desired (i.e. cost total $100.00 and sales price is $181.81 or a mark-up of $81.81 = $81.81 divided by $181.81 = .44999% GPM or 45% rounded up).
The easiest way to achieve a desired GPM is to follow this Divisor formula: (1) Subtract the desired or required GPM from 1.00, which is $100 converted to 1.00, and this can work with any cost figure. (e.g. I desire to have a GPM of 45%) (2) 1.00 - .45 = .55 Divisor (3) Now, Divide your direct costs of $100 by .55 and you get a sales price needed of $181.81 to obtain your desired Gross Profit Margin of 45%.

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