Sales lessons from a veteran renovator (Part 1 of 2)

Note: This is the online version of a story appearing in our current print issue. It is part 1 of 2. We will run the second part next week.  To read the full interview in our Canadian Contractor Digital Edition, scroll down to the bottom of this page and click on the cover of the magazine.

One of five contracting sons of a Hamilton, Ontario homebuilder, Mike Cochren first incorporated Cochren Homes in 1983. Today it’s a design-build firm that does a mix of very high quality homebuilding and renovation projects in the Oakville marketplace that generate some $2.5-million in annual revenues.

Cochren, now 68, has learned many business lessons in his 35 years at the helm of his firm. We first talked to Mike about his business at our RenoFocus event in Nov. 2016. He told us about his experiences helping train contractors when he was chair of the CHBA National Renovators Council. We were so impressed that we asked him to share his sales wisdom in an interview. Hopefully, some younger contractors can benefit from this veteran builder’s wise counsel – especially when negotiating with customers who – by the very nature of human beings – can be “challenging.”

Can you tell briefly describe your business model?

We do additions, complete guts and general renovations, mostly based on referrals. About a third of our annual business is with repeat clients. We also do complete new builds as well. We have two designers and an architect we work with on a regular basis to do the design and process the permits . The majority of our projects are usually in the $125,000 to $250,000 range.

Why is that the sweet spot for you?

Within that price range, the jobs are big enough job that we are separated from the smaller contractors who don’t have either the capability to handle that size of job, nor the management skills to handle either the complexity of the job and the planning and permitting aspects. Further, on the larger $500,000 to $1-million projects, clients tend to polarize to architects, who despite their design skills, usually design a product that far exceeds the owners budgets. The fallout of this is very dissatisfied clients and a substantial amount of wasted time, that could be spent more productively elsewhere. We like to apply our expertise right from the ground floor, where we prequalify, based on the homeowners wish list and what we feel is a realistic budget. Thus the old adage: “ I’d rather take a no today and stop working, than continue on and get a “no” next week.”

So you are a design-build contractor.

Yes, though we weren’t always that way. We started moving in that direction about ten years ago. We realized that we were wasting so much time when the architect had already done the design and established a budget – but with designs that were usually not actually complete! Also, we would sometimes start building and find that the architect was still drawing and designing details that they, and the client, expected us to do for the price we’d agreed on a previous version of the project. So we prefer to do it so that we manage it from the start to the finish. If we can establish the budget and the design we can make sure that, as we go along, it’s not going to exceed that number. Now, when we hire the designer, they answer to us. Whereas with the outside architect, there would be conversations happening with the client that we would not be privy to. And this would lead to issues down the road. Ours is now a much more successful process in terms of meeting the budget and getting things done on time.

You have been the sole salesperson for your firm for 35 years. If you were hiring a replacement for that role, what special skills would they have to bring to the table?

Given the nature of our industry, a successful candidate for a salesperson would be someone with a good background either in design or fieldwork. The key to selling in our industry is to be able to evaluate the customer’s personality, relate to the customer and properly align the budget to the scope of work. Your three drivers in selling in our business are (1) budgets (2) objectives/scope of work and (3) timelines. But again, you’ve got to be able to assess and relate to the customer to make sure you are the right fit. What I mean is, relate to them as human beings. Different generations of customers bring different challenges. Millennials are a new challenge for many contractors. They are going on Houzz and looking at all these images online – which is great – but they are often putting icing on the cake in terms of going right to finishes when we haven’t yet established the cake!

How has your sales approach evolved over 35 years?

Well, nobody ever sat me down and taught me how to sell. So when I first started out, it was mostly about the lowest price. I think this is typical of the growth of firms in our industry. Usually a contractor starts out on the tools and then manages his way up to the point when he starts his own business. Then he needs to rapidly acquire some business acumen. Unfortunately there is a high mortality rate amongst contractors because ours is a highly management-oriented business, thus as they grow they can easily over step their management infrastructure.

Give us your firm’s basic selling proposition.

I tell people, “We are not the cheapest on the block, nor are we the most expensive. If you get 10 prices, we might be about the sixth.” And there are a number of reasons for that. One, we don’t do part jobs. We don’t go for the cheapest of everything, we tried to improve what we do: we add value. As we say on our website: Good, better, best. We make our ‘good’ better and our ‘better’ best. My staff knows that if they come across something where they don’t think that’s the right way to do something, if takes a few extra hours to do it the better way, then they are to do it that better. No one at our firm is going to challenge them for spending the time to do it the right way. People appreciate that. And the second point we stress to our prospective customers is that we have a track record: we have stability. We have the proper staff to do the particular jobs we like to do. We highlight jobs that we have done for others, take them through the projects and show them the work that is in there.

Another key value-added item is the fact that we keep the number of actively running projects to approximately three at a time. I highlight this to potential clients and explain that that is about the maximum we can handle and keep the projects running smoothly and on time. We also show them the timelines from where they are now and when we can start the project, as well as the estimated production time to complete. Further, once the drawings are progressing, we will do a customer selection list and dates that we need met in order for us to meet our production times. This illustrates that a successful job is a collaborative effort and that we have the experienced needed to execute professionally.

Next week: How to read customers and present the right information to them