Can a builder lose a sale after the contract is signed? The technical answer is, yes, the client can cancel the contract.

What about the lingering affects of a bad client experience during the construction process?

In part six of the series “Why Builders Lose Sales to Competitors”, we explore the important step of, follow-through and fulfillment. If you, as the builder, don’t set expectations in this phase, your client will do it for you, and disaster typically follows…

Read/Watch/Listen now and find out more about how you can remain ahead of your competition with better after-sale follow-through!

Builder Lead Converter ATTRACTS, CAPTURES & CONVERTS high-quality leads for builders so they can pick & choose their clients & jobs. Find out how at https://www.builderleadconverter.com

 

Transcript:

 Today on Conversations That Convert, we’re gonna talk about why builders lose sales to competitors and what they can do about it, specifically, we’ll be dealing with the fulfillment aspect of building the project and what can and does go wrong.

Welcome to Conversations That Convert. Every week, we’ll spend about 10 to 15 minutes tackling relevant lead generation, marketing, and sales topics for remodelers, home improvement companies, and home builders. Conversations That Convert is brought to you by Builder, lead Converter, and your perfect sales assistant.

And now here’s Rick and Daiana. 

Rick: Welcome to Conversations to Convert Everyone. Hello Daiana, you look lovely today.

Daiana: Thank you. Welcome everybody. Good to see you again. 

Rick: Yeah, nice to see you too, Daiana. So what is our topic today? 

Daiana: Today is part six on how to follow through and how to, how, let’s say, discuss fulfillment. What is that and how can we, how can we, we make it happen? 

Rick: It’s, it’s a little bit of an oxymoron saying, well, how do I lose a sale to a competitor when I’ve already got the contract done and now I’m actually building out the, the new home or the remodeling project? But of course, this is where things do go wrong. And this is where you get negative reviews and this is what causes future sales to go to your competitors versus going to you. So we’re gonna talk about kind of the three primary reasons why things can go off the rails and why builders get negative reviews and get labeled as poor, a poor builder, and what you can do about it most, most importantly.

So this is all about us, our series and why builders lose sales, and where we’re at if you have signed the contract and now we need to fulfill the order. So we call this follow-through and fulfillment. In other words, you promise to do something, build them a home, remodel their home, and so now you’re following through with that promise and you’re actually fulfilling the order. So I know what it sounds like.

You ordered a pizza at a restaurant, but no fulfillment of the order essentially is building the new home or remodeling and remodeling the home. So I guess, Daiana, this is a question and I know you are all too familiar with it. Why do clients go from happy to angry during the construction process, and I know you’ve got personal experience with this, you’re dealing with some of this right now, have dealt with it in the past. But we’re gonna ask you kind of your perspective as well, you know, from your remodeling experience. And I know now you’re dealing with some things, with furniture, but how would you answer that, Daiana? Like why do clients go from happy to angry during the construction process? 

Daiana: I can say that it’s very easy because if you’re not paying attention to the details, then you think you take things for granted, then things can, can happen. So I think that’s my answer. My sensation as a customer is that they, okay, I signed the contract and then. I can’t go back. So they act like they’re taking things for granted, and sometimes that’s annoying because, they don’t answer the phones, they don’t deliver on time.

They’re not saying the status of the, of the project and yes, some of the, let’s say, negative experiences that come to mind, but I’m, I’m amazed by how I remember only the negative aspects instead of enjoying and because there were a lot of beautiful aspects and, and nice, let’s say experiences. But, somehow I remember only those, those builders and remodels that are, let’s say not delivering. They’re not doing what they’re saying they’re doing. 

Rick: That’s it, you make a really good point here. The, the, the devil is in the details, right? And, I think we’ve all done that where we work so hard to get a sale, to get somebody to the contact point. And then once we have them on a contract, we do say like, well, We’ve got you. So now I can, I don’t have to be, as, have my customer service as good as I had it before this sale. And I think, yeah, that’s human nature. We’re all, we’re all guilty of that. So, I came up with three answers. I think summarize a lot of what you, of what you said, but the first answer is why clients go from happy to angry during the construction processes.

Unrealistic expectations, and I think it’s as simple as this is that if you as a builder do not set expectations, your client will, and every single client has a different set of expectations. So what might be just fine for you, Daiana, is not just fine for me. Or, you know, maybe you’re less picky than I am. And, so the challenge is if you are dealing with dozens of different clients each and every year for all your different projects, each of them comes with its own set of expectations. And then you as a builder are trying to meet those expectations, which maybe sometimes you can, but more importantly, what if you can’t?

And that’s what leads to a downfall in the relationship. Now the other answer I would give, and I think this is a huge one, is the fear of the unknown. So that whole thing, Daiana, we don’t want any surprises, right? This is the contract price. We don’t want any surprises. So after I get into the project, when I have these unexpected costs outside of the contract, that will take a good relationship between, a builder and their client, and it will send it right down the toilet very, very quickly.

And then the third one I think is poor communication. And what I’m going to say here is, I’m gonna call it reactive communication. In other words, you as the builder, are only reacting to your client initiating communication. So what you feel like as a client then is that you don’t know really what’s going on, or your questions or concerns are really not being properly addressed. So Daiana, anything else you wanna add on to that, you know, based on your experiences? 

Daiana: I can, I can agree with everything. So that’s amazing how, how simple it is to, to, let’s say, too, to do things right and how easy it is at the same time to not do them. So it’s a…

Rick: And I, and I think you made a good point as simple as to do things right, and the key to doing things right is you have to have a process in place, and you have to be able to replicate and duplicate that process. If you can do that consistently, like in other words, do the basics really well, You will be successful, and more often than not you, in fact, 90%, 95% of the time, will come out of a job with a happy, client. You’ll never be able to please everyone. If you do, if you’re in business long enough and you do enough jobs, it’s inevitable.

You are going to have somebody that gets let down. And sometimes circumstances dictate that. Sometimes there are things that happen outside of your control. It reflects poorly on you or negatively on you. And, the client’s gonna look at you and say, well, you, it’s your fault. And that’s just part of the business. I remember as an example when we were building a lot of homes before we had a preferred lender. We were working with, I think at one point we tracked, we worked with 50 or 60 different lenders in one year.

And inevitably what would happen is the job would get done, we would go to closing, and then the finance package wouldn’t be ready. So who did the buyer blame? He blamed us, because the lender is, they’re communicating with the lender that they chose. And a lender is saying, well, we didn’t get this from the builder. We didn’t get that, and that’s why it’s delayed. And so inevitably it was something outside of our control. We, did provide this information for them, but you know, the lender fumbled the ball.

So when we switch to creating a preferred lender and then recommending that preferred lender to our clients, A lot of those issues went away. So a lot of it is just being proactive and being, and being diligent with being proactive. Alright, so those are the three answers I think is why, again, the question is why clients go from happy to angry during the construction process. So what I wanna walk through now is I wanna walk through three fixes. What can you do today to reduce the amount of anguish, if you will, of when one of your clients goes through the fulfillment process? So what do you say, Daiana? Should we jump into it? 

Daiana: I’m very curious. If there’s a solution, a viable solution. 

Rick: So fix number one, setting expectations. There are really three areas that expectations must be set. You know, first and foremost, we have to have a very thorough contract. So our construction contract needs to set, the stage for expectations, and these are gonna be the bigger picture things such as, you know, extremes, what happens in this extreme or this extreme or this extreme. But it essentially sets the table as, so here’s what you can expect as we go through this, this process.

The second one would be the specifications. So once the specifications are built, the specifications need to be very thorough in two areas. Number one is, will be the installation methods that will be used to build the home or remodel the home. And then number two will be the products specified need to be very specific. Any and all notes.

So as an example, whenever I was doing specifications with the client, you know, we would have lots and lots of pages. It was probably the most labor-intensive task of working through, the job, of course, in conjunction with the plan, but, every single page had that client signature that they had reviewed it. So at the end of the day, if something came up, we could go back to the specifications, say, here’s the expected- expectations we set. Did we meet those expectations?

And if we did, we could go back to the client and say, look, we reviewed this with you. You did sign off on this. They could complain, but they really couldn’t complain. So number three is a construction process. What will happen during the construction process? And so in other words, what can you expect on a week-in and week-out basis? So all big picture things, big picture things, but a construction process obviously is broken into phases. So we had multiple phases within each job. We had to set expectations for each and every job.

Case in point, we had a homeowner’s manual and there was a whole section on the construction phase. And so whether it was excavation or prior to excavation, what would happen? What would happen if there were delays in the schedule? Nothing was happening during the framing phase, during the foundation phase, rough ends, drywall, all sorts of, we had, so we had a, a page of that. So as the homeowners would get to that phase in their schedule, they could see this is what they were going to expect during that phase. So any thoughts on that, Daiana? 

Daiana: I think that’s, that’s very important to have a, a process and set the expectation and especially speak, speak about them out loud and clarify them with the, with everyone, and then repeat them if necessary, so…

Rick: Absolutely. Yeah, it’s a good point because of our trades. We also would go through expectations with them, such as, yeah, cursing on the job site, smoking on the job site you know, toilets, you know, all this. Just, just some of the basic things. But we’d say, this is what we expect. And we would post, you know, those notices on the job site.

And so we made sure that, hey, if you were a trade and you were working on our job, these are the minimum expectations of you, you know, we’d oftentimes would have, you know, we’d have loud music and on the job site and you know, we had expectations that, hey, if the homeowner showed up, the music gets shut off, right? And you not, you’re not smoking in the home or on the job site. You’re yet to get off of the job site. We’ll put a porter potty, you know, on each job site and you’re making sure you’re using it.

Not a corner in the basement, you know, as a lot of these guys would, would, would do. So, yeah, it’s very important. Everyone is on the same page. Alright, so fix number two, dealing with unexpected costs. Now, no matter how perfect the job goes, no matter how good your process is, you can and will have unexpected costs. So I think the important part here is how you deal with those unexpected costs. Number one, I, I’ve done it both ways. I’ve done it where you sign the contract, you give people an allowance, and they go out and make selections.

The benefit to that obviously is that you can start the permitting process and if you’re quick enough, you can actually start the construction process while people are doing selections, and you can essentially cut your cycle time. The other way that we’ve done it is where the client makes all those selections upfront before the contract and then signs a contract and goes forward. Now, I can tell you that after reviewing the pros and cons of each of these, it was always a much better experience for the client if the selections were completed before the contract, because then we did not go into the job with a bunch of allowances based on selections, and we also reduced change orders dramatically.

Because they would sign off on everything. And if you’re doing construction of perm financing, you know how important it is because you get that appraisal up front, there’s very little wiggle room and change orders going down the road. So the nice thing is, is that the homeowner feels like, yep, this is signed and done. I think the key thing is, is that you know, maybe six months before those selections are installed so people forget. So having a visual history of what they selected and also having a really good interior designer that will reassure them that they made a good selection.

So that’s number one with dealing with un unexpected costs. An unforeseen circumstances clause in your contract. This is more, you know, I, you know, there are two areas that this really happens. Of course, with remodeling, you open up a wall, and you find something you did not expect. So there was some, some additional damage, rot, some sort of issue in there. And now that’s going to cause some additional costs on the job site for custom home building. The other one that I found is that usually that we’d find soil issues, on-site.

So we would dig into something, the soil was not correct, so we had to do some, some fixes to that. That could cause a big change, in cost. But if you have a clause like that in your contract with unforeseen circumstances, you can review it with the client upfront. They can sign off on it. And then obviously you get into that phase of the construction, you can go back to your homeowner manual during that phase. And you could say, here, this is a potential unforeseen circumstance that can come up, that could have an extra cost.

So again, you can set the stage, and if you get through it and there are no issues, hooray. That’s great, but if there is an issue, at least the client is expecting it. And then the, the second third thing, excuse me. I’d identify any and all items that could fluctuate in cost and create an allowance sheet. Now this goes back to supply chain issues right now, typically things that have been fixed in price. Are no longer fixed in price and there’s a long order time.

What do you think the cost might be when your order is different from when you actually receive the order? So these are just simple, I need to identify all the costs for these in an allowance. Make sure that contractually, it tells the client these things could fluctuate. And as the costs realize, I need to go in and recap that allowance sheet. So, Daiana, what? What are your thoughts there with unexpected costs? 

 

Daiana: Here I can share my experience, I had an interesting situation. So, some I work with some stone providers and they offered me the price plus 35% extra to cover the unexpected cost. And saying that you will pay the first payment and then we will see what will appear on the, on the job. And then in the end they said, you will pay, we will assume less than. 20% extra.

So, they had, the unexpected costs already included in the contract. And then the final first I said, oh, that’s a lot of money, but when the final, the final invoice came, I was happy because I was, my mind thought that I was paying less because they said, oh, we estimated 35%, but there were no extra costs. So, then they even reduced by  5% some, of the materials, and they said, you will pay less than 40%. So…

Rick: Oh, wow. 

Daiana: It was, it was a, a, a playful game around that. So initially I thought, oh, that’s a lot. Why, how come I’m paying 35%? I’m, I’m signing to pay 35% extra. And then the final invoice came with 40% less. So… 

Rick: Yeah, that’s actually a good way that, that’s a good way to do it. I think too when you can give it, get away with that we used to do that a lot with we were going into excavating, and if we thought we were gonna have some extra cost, we would just put a round number and they’re like that. So whether it was 35% or just a fixed dollar amount, make that an allowance.

And then when the invoice came in, we would recap it. And so oftentimes people are like, well, look, you know, we estimated an extra $10,000 in costs. It came back in at 6,500, so you’re $3,500 here, which will offset some of the overages maybe in other areas. And so, absolutely, and it’s being proactive again with identifying what the issue could be. Putting a number in there, a number that’s large enough that will cover most situations. And then when it’s less, you come out happy.

Versus if I said, Hey, we’re gonna put in 15%, and, but it could be up to 35%. And now you’re saying, well, I, I was expecting 15 and now I gotta pay 35. Well, I want the opposite. So that, that’s a good that, that, that’s very smart. It’s like when you tell somebody, How much more could it be instead of giving ’em a small number first, you give ’em the big number first. So how much more could it be? Well, it could be as much as $10,000. It could be as little as $6,000. You oftentimes remember the first number you hear.

Daiana: You’re right.

Rick: You’re thinking 10,000. 10,000. Oh wait, it came in less than 10,000. So if I, if I said it could be as much as six to 10,000 more, I remember six. So it comes back in at nine and you as a builder are saying, well, look, I told you six to 10, all the client remembers was six. You know, so that’s why I like that 35%. It’s like, oh look, it’s, yeah, we didn’t go over and even save a little bit.

So it’s, it’s, it’s under where we thought it would be. So that’s, yeah, another way to deal with un unexpected costs. And, and, and I think the last one here is how do you fix poor communication? And very simply, it’s being proactive in the communication. So number one, you have to establish how and when communication will happen each week as it relates to the construction schedule. And I know a lot of guys don’t wanna give a full schedule out to the client, and I agree with that. I think if you give a full schedule up right up front, you set the expectations that the job will be done during this time.

But if there are any delays with either supplies or trades, You’ve essentially, now you’re going back and you’re apologizing. So I like the idea of giving a schedule week by week with an anticipated closing date but understanding that the closing date or completion date will change. So number one, how do I give that schedule each week for using a tool like a builder trend or a co-construct? It’s very easy to do. You can just show them what will ha be happening this week and with the schedule.

But number two is as far as communication is how should the client ask questions or report issues? Because if we don’t tell them how to ask questions or report issues, you know, if they’ve been texting us, they’ll discontinue texting us, but we may lose a text. Maybe they’re calling us, but we’re, you know, we can’t take the call or it goes into voicemail, we miss it. Maybe they send us an email. We don’t want that. Maybe we want to have it reported, in the communication portal if we’re using a builder trend.

So we have to tell them, here’s how you need to report the issue. And then, of course, we need to acknowledge that we received it and, give them a realistic expectation of when we will get back to them with the answer, or at least deal with their concern. Then the third one is and I’m, I’m big on this, is that you have to survey the client during the different phases of construction. So a lot of these construction schedules now between when the sale is made and when the actual job is completed, if you’re in a big custom home, it can be more than a year.

So there’s a lot happening during that time and there’s a lot that happens just to get to the contract through design, engineering, permitting, et cetera, and the sales process. So we need to be surveying, surveying the client at different times throughout that because they may have had an issue during the sales process. Or, they may have an issue during, they’d be happy during the sales process, but have an issue with the project manager during the construction process.

So what we do is we, we, we survey them, proactively, survey them and ask for their feedback. We wanna create that feedback loop for not only positive, Hey, where do we do well? Or, who on our team really performed well for you? Cause we wanna know about that, or was there a negative issue? We wanna know about that too. And if we have a negative issue, then we can use that as a coaching tool for an opportunity to coach up staff, but more importantly, Daiana, we give you as the client an outlet because if we don’t give you an outlet, what did you just say at the beginning of this conversation?

I remember all the negative things. If we don’t give you an outlet, you’ll think of all the negative things. And now you go to Facebook and you go to Google My Business, and you go to house, and you go to any online platform you can find and you post these negative reviews out there. And once that happens, there’s, you’re done as a builder, there’s really nothing you can do to recover from that, even if you’re able to go back and satisfy the concerns or frustrations of the client when they’ve left the review.

Good luck getting it down. So what we wanna do is give them an outlet. If they have negative feedback, we, we keep that internal, we deal with it. But when they have positive feedback, when they’re happy, then we incentivize them to push that review out to online platforms. So we have positive reviews out there to counter, counter set any negative ones that we might have. Final thoughts, Daiana, that’s the fixed number three for proactive communication.

Daiana: I think that’s very important to just keep it simple answer to the phone. Just send an email in advance or inform the client about the status update. So those are my, let’s say, frustration about those simple things. Status update, when you will deliver when it’s ready, and just.

I can, I can understand that it’s a delay of a week or two, a month, or a year, but just say it out loud so that I can plan and know how to prepare myself. Just, it doesn’t matter what it is, just say it out loud or I, and yeah, because other than that, I will think that you have some hidden agenda and I will consider that you, I’m not important and you take some other projects that are more important. 

Rick: Very well said. You’re right. And, and, we do assume the worst when things yes. Aren’t going our way. We assume that there is some sort of like I say, hidden agenda that you as a builder have against your client, which of course, you’re just busy or you’re just, you don’t know either. So sometimes you just have to call people up and say, Hey, we’re trying to get an answer for this. Yes, and as soon as we have an answer, we will let you know. 

Daiana: Exactly. 

Rick: You know, give them that update. So a status update is still a status update when there’s nothing to update. 

Daiana: Exactly. Yeah. I have nothing to say to you. Yeah, just say that. I have no updates. So nothing is happening. We are working on other projects and, we estimate we’ll start to work on yours two years from now. So just to let you know, to let you know.

Rick: We haven’t forgotten about you. 

Daiana: Exactly. So I, I, I really appreciate the communication like that, then no communication. 

Rick: Absolutely. Yeah, absolutely. So very, very important. Thank you for your feedback, Daiana, as you continue to go through trying to get, some things completed on your remodeling job. But if you would like to schedule your strategy, call today and find out how we can attract, capture, and convert high-quality leads so you can pick and choose your clients and jobs, go ahead and click that link below.

Schedule your strategy call. We’d be happy to learn more about your business and see if we might be able to help you pick and choose those clients and say no when the job is, is wrong, and say yes when the job is right. So for my brothers and sisters in Christ, may the grace of the Lord Jesus Christ, the love of God, and the fellowship of the Holy Spirit, be with you all. Always. We’ll see you next time on conversations that convert.