Marketing Tactics For Subcontractors
Pricing, and the subsequent selling, of fire protection systems has no set form or style. Depending on the complexity of the project, the dollar amounts contained in estimates can be wildly erratic.
More than one general contractor has relayed to me that he may have 25 or 30 separate trades bidding a project, and only one trade submits prices that are “all over the board.” This trade is not the painters or the steelworkers or the carpet installers; it is the fire sprinkler contractors.
The reason for this is all about rudimentary design. Because of the varying factors involved (water pressure characteristics, degree of hazard, building height, types of sprinklers used), the sprinkler contractor cannot simply “square-foot” by some factor to achieve a safe proposal amount.
And due to the degree of estimator aptitude (and how much time and elbow grease is expended in determining projected costs), the bids naturally do come in all over the board.
Trust Is Key
There are a couple of points to be made about the haphazard ways of the construction industry. Jim Molinari is the assistant coach of the University of Minnesota basketball team. He is fond of telling his players that “trust is everything. Without trust, we don't have a relationship.”
He is right on target with regard to trust, but unfortunately, untold numbers of relationships exist between general contractors and their subs in the construction industry today where trust is a slim commodity. In many business relationships, guarded suspicion seems to be the norm. The only antidote for that condition is plenty of communication.
In any event, a sub who can be counted on is gold in the eyes of the general contractor. The degree of presupposed trust is a make-or-break reality for both parties involved.
So, reputation is everything and price is always the strong consideration. The salesman creates himself as the company he represents creates a reputation - through the choices he makes in his business interactions.
The successful salesman is always a good estimator. The estimator makes a rough design of the system, outlining system type and including a general piping layout that may be a grid, tree or looped system, whichever configuration lends itself best to the project. Then all costs and numbers are tabulated. The estimate includes individual dollar amounts for material, outside labor, shop time, special purchases, engineering, rentals, freight, outsourcing costs, bonds, permits, insurance, taxes, overhead and profit.
It is an easy task to simply submit a bid, but closing deals is a constant challenge that puts demands on the most seasoned professional. The salesman usually falls into one of two categories.
One Of Two
Some are such accurate estimators, they usually quote a firm price and stick to it. They know that they're covered. Their confidence in their estimating abilities allows them to retain this stance, and they view dropping their price at the last minute (at the request of the general contractor) as an admission that they were “padding their bid” and actually cheating the general contractor on the original quote.
The reputation gained by this salesman earns him solid trust, leading to repeat business, and usually guarantees steady dollar returns. This salesman may be short on slick or manipulative sales techniques, but is smooth, steady and reliable. He is not a gambler. This is an employee that an owner will never fear.
Given time, he is able to pick and choose the projects most desirable to his firm, and aggressively pursue only those. Of course, what type of salesman someone becomes is often determined by the question, “What type of company are we?” But this category of salesman has invented himself to such an extent over time that the general contractors quickly recognize him as someone who will always deliver a solid, sincere bid with no strings attached, and many buyers are more than satisfied with that modus operandi.
Other salesmen habitually shoot from the hip, and some general contractors actually like to deal with a sub who is always willing to negotiate. This guy lives by his instinct, and is sometimes a poor estimator whose motto is “get the work first, then worry about how we'll do it.”
All salesmen develop a number of strategies. The salesman we first described will often lose work because he works so diligently that he provides the general contractor with an organized, detailed, written proposal well in advance of the bid due date. The problem with quoting too early is that somehow your price is out on the street, and your competition may become aware of that number. Then they work around it.
The second salesman we described usually calls the general contractor several times in the days and hours leading up to the time of the proposal deadline, with each call including some mundane question.
He is reluctant to put anything in writing or to offer a proposal amount until the last possible second. Actually, if all bids are due by noon, the issue doesn't become timing so much as a race against the clock on bid day. Suddenly, it's a potato sack race.
The questions he asks aren't important because what he is really doing is prospecting for information. Often, he will be able to learn several other prices before he volunteers his own.
As time runs short, some monetary proposal must be extended, which will always be verbal, as the subcontractor feels out the buyer. If he finds out that his price is not the lowest one received, he typically remembers something and needs to “check his estimate.”
Of course, that “something” he soon discovers, and he then excitedly tells the general contractor that he needs to quickly sharpen his pencil and refigure, to “polish his bid.”
I think you get the idea. The second salesman described is a tough competitor who obtains work through a little guile and a lot of persistence. He loves in particular to get the last look on a job. But there's a major downside to that, which has to do with the inherent assumption that all his competitors are expert estimators.
For example, if he wings it with a bid of $95,000 and then finds out that ABC Sprinkler Co. came in with a $78,000 bid, he gladly takes the job for the lower figure and is quite certain that he will complete the installation with a nice profit margin.
However, it is not at all unlikely that the ABC salesman made a major estimating error. As a result, our salesman's fire sprinkler company may not realize that they are eating the ABC bid mistake until it is far too late.
Sales techniques are a lovely art. Out-maneuvering your competition can be fulfilling. But if you haven't determined that estimate very precisely, then you've tasted the double-edged sword and all else is wasted effort. And you don't get a mulligan.
The bidding wars can take place in what seems to be a minefield when competition gets fierce. It will come as no surprise to anyone doing business in the contracting game that there lurk some unethical buyers and bidders, all wearing different disguises.
There are many buyers who will always try to beat your price down, and some bidders whom they can never nail down to a price. Buyers will renege on promises and low bidders will vigorously attempt to correct their mistakes after a deal is verbally set.
Everyone develops a reputation and many relationships are based on anything but trust. Since complaining about it won't change a thing, the only option left is to maintain a good attitude. Perse-verance, deliberate strategies and plenty of communication are the closest friends of the subcontrac-tor sales representative.