9 Tips for Overcoming Price Objections In An Inflationary Economy

Tips for Overcoming Price Objections In An Inflationary Economy

Hey guys, Brandon Lewis here with the Academy for Professional Painting Contractors. I speak with dozens of painting contractors each and every week over the phone. I correspond with probably 100 or more via email and we reach thousands with our content. And so I will hear things through the grapevine that very few people in the entire nation do. And there is one thing that I have been hearing not in every market, but enough to where I wanted to record this video and that is this. Painting contractors are beginning to feel pushback on their pricing, especially those that are premium priced painting contractors, which I hope you are. My philosophy has always been, “If you can’t be the cheapest, be the most expensive.” Now that presents a little bit of a challenge, but it’s not something that you can’t overcome. And it presents a challenge specifically when you are in what we are in now.

And that is a situation where we had a lot of pent-up demand from when the government unjustly shut our businesses down and people could not buy painting services. And as they subsidized the labor market to pay individuals to sit at home at your expense, we got a lot of people out of the labor market, which means we had a high demand for services when people came out of the pandemic and we had a low supply of labor which drove prices up. Well, what do we have now? We have a slow return to the labor market. So many of our painting contractors have reported to me that subcontractors and painters are easier to find than they have been in the last six months. And they’re reporting a reduction in lead flow and a resistance to pricing. Why is that? Well, we also have something very fantastic going on, which is called inflation.

Because of the government’s policy of printing money, giving away money, interrupting the supply chain, we now have inflation, which means everyone’s dollars are worth less than what they used to be. Now, what market in particular has been affected by this the most? Sorry for the grandfather clock. The market that has been impacted by this the most is your middle class and upper middle class market. People that may have made a few hundred thousand dollars a year in a household budget and they could afford to do a lot of frivolous things, but now that inflation is really pushing the value of their savings down and it is making their income actually be reduced, those individuals are having to make tougher choices than they ever have before. So I hope I have accurately painted a picture of where we are and what you may be experiencing as your close rates have gone down and you hear more price objections than you normally would.

Now, I have lived through this before when I started my painting business in 2008. It was a rough time to be in business, but we were able to grow while other painting companies went out of business. And I was able to sell my painting business for top dollar in a still struggling economy. How was I able to do it? Well, I was able to do it and I’ve taught hundreds of other painting contractors how to do it by doing what I’m about to share with you now. And here are the tips. Nine tips for overcoming price objections in an inflationary economy. Now, this is a little bit of a longer video. If you’re one of these people that’s like, “Just give me the hack. What are the magic words I can say that make people buy? I don’t want to put any work in into this.”

If you’re that type of owner, this is not going to be a good video for you, nor is any of my other content. Because if I could find a way to make someone make a lot of money in painting without any work and without thinking real hard and without changing their mindset, I would’ve sold that years ago. But after eight years of doing this, I’ve just found some things have to be done and they take a little bit of work. So let’s get right into these things. So if you are afraid of work, and I’m not talking about physical labor, but if you’re afraid of mental work of doing things that are different, then this is not going to be a good video for you. But for those of you who are willing to roll up your sleeves both figuratively and mentally, this is going to be a great video.

Confidence in the Accuracy of Your Pricing

First thing, you need to increase your confidence in the accuracy of your pricing. When you’re getting pricing objections all the time, you need to be confident in your pricing. And let me describe for you what that means. That means, you have to have proven production rates. It can’t be, “Well, I’ve been doing this a while. I can go out and guess pretty well.” It can’t be, “I don’t do job costing to see where we come in on our jobs from a labor and material standpoint, from both labor hours, a gallons, what you charge versus what you pay.” You have to know all that. Your average cost per gallon of paint, your markup. You have to understand what you’re paying on average per painter with your labor burden, what you’re charging on average with labor burden. You have to know how long it takes to paint.

So many linear feet of baseboard in your company. You have to understand how long it takes to paint a thousand square feet of drywall. You need to know how many square feet of siding your average painter paints per hour. If you don’t know that when you go present a price to your client, and if you’re just guessing, you could have 20% variants or greater on your estimates, which means you go see somebody one day and your prices are accurate, you go see somebody the next day because you’re guessing your prices are 20% too high. You go see somebody the next day because you guess and your prices are 20% lower than what they should be. And because you don’t do job costing and you just hope there’s some money left over in the bank, you really don’t know how to adjust your prices because they move so much. I know that’s not the answer most people want to hear, but you’ve got to do that.

Build Closer Relationships With Your Existing Clients

Number two, you have to build closer relationships with your existing clients. Now, this means you have to consistently on a monthly basis by email and mail, communicate with your clients with some kind of newsletter, you have to run reactivation campaigns a couple of times a year, you have to be on social media building a relationship with those clients. And here’s why. Your second transaction is 60% larger on average than your first in painting. And I know this from data I’ve been able to see with national painting franchises. Second thing I know is that your average close rate is about 55% with referred clients, about 65% to 55% with repeat clients. And somewhere if you’ve got a poor sales process around 22%, 23% with leads off the internet. And if you’re really good, maybe 32 to 35% with leads off the internet. So if you’ve got a large percentage of your leads coming from online lead sources, you’re going to be in trouble.

And the new people that you see are more price sensitive than those you have built a relationship with, understand the value you bring to the table. And then you have the whole thing that comes along with just knowing someone personally that can’t be reproduced by any form of technology and people that say that it can or liars. Okay.

Hold Your Painters Accountable

Third thing, you have to hold your painters accountable to hit budgets. If you don’t hold your painters accountable to hit budgets, you may often price yourself higher than you really need to be. And if you hold your painters accountable to hit budgets and if you’ve got accurate pricing, then you can reduce your prices from 65%, 60% gross profit down to 55 or even 50, or if times got real tough, 45%. And because you knew that your prices were accurate and because you have a labor force that can hit a budget, if things get real bad, you can run a very efficient and effective painting business with a little bit more volume, but at a slightly reduced rate. I’m not one to say that you should reduce your prices arbitrarily. And we all go through dry spells. It’s seasonal, it’s school starts, school stops. We are still very much like a herd of buffalo in the way that we respond as humans.

Humans are very sheepish and herd in their behavior. If you don’t believe that, look at the last two or three years and they just are. And so people buy and get nervous and put things off in these big weird waves. And sometimes you’re just in the middle of one. And so your job is to be doing everything right all the time. And if you’re doing everything by best practices, just do what you can do. But don’t worry about the market, you can’t control the market. Now, you need to increase the persuasiveness of your sales process. I’ve done entire videos on this, entire volumes of videos on this. If you’ve got a pet the dog, email a PDF, build rapport, talk about the type of paint you use, get a product data sheet and maybe a flyer, and that’s how you try to sell painting services.

Uh-huh. It is not working in a recessionary inflationary economy. You’ve got to be persuasive. You’re asking people to paint with large amounts of money. Additionally, you’re usually asking them to part with discretionary income, meaning, the walls don’t have to be painted, the house doesn’t have to be painted in most cases. Occasionally, it is an actual protecting the substrate issue, but more often than not. Painting is something people do because it makes them feel better, because it makes a better impression on people that come to their home or business. That’s probably 80%, 90% of all painting. So when you’re selling something discretionary and you’ve got high prices and high profit margins, you can’t have a weak sales process and no, your reputation will not proceed you. And no, just doing good work is not enough.

Related to that, you need to have three or four different ways you routinely explain in a scripted fashion that you have written down why your prices are higher. We’ve got scripts about labor and material that our members use that are built around reducing the risk for the client because we have a higher quality of painter that has been background checked, that has gone through drug screening, that does have a tenure of experience with our painting business and trustworthiness. Those are very important things. If you don’t have those things and if you can’t communicate those things, often, you will not win. You need to diversify your lead flow rather through operational marketing.

Operational Marketing

Operational marketing is where you put up three yard signs per job and leave them. Operational marketing is where you do door hang and have good collateral that actually has been proven to work the 40 houses around where you work, it is asking for reviews and referrals in a programmatic trackable, preferably, with some kind of program that incentivizes your crew leaders. When leads are more expensive, when the close rates are lower, you have to use every job as an opportunity to get another one. It’s what we call tailwind marketing, and very cheap, yet very effective and very essential. You’ve got to build strong B2B referral relationships. There are people that are inside the homes of the folks that you want to sell to right now.

Plumbers, roofers, gutter installers, flooring people, maid services, HVAC, you name it, realtors, interior decorators. If you don’t have them on your newsletter list, if you’re not meeting with them for lunch and learns, if you’re not in some networking group, if you don’t have personal relationships with these people, you’re crazy. If you’re not surveying your clients every time you go out on an estimate to find leads so that you can distribute them to other people so that they distribute them to you, it’s a mistake. It costs pennies per estimate and moments per visit. Why is this important if you want to hold your price? Objection, this is not just a marketing issue. Again, it’s important because these individuals that come to you from those particular sources are what referred, referrals have higher close rates, lower price resistance. Same thing with operational marketing, what I just mentioned to you about reviews and about in particular and more specifically yard signs and canvassing and/or radius marketing.

When you have done work for a neighbor in a neighborhood, that is an implied referral and they close in many cases similarly to actual referrals. Two more things. You need to target older more affluent clients. People that earn 500,000, a million, $300,000 a year have not quite experienced unless they have really ridiculous spending habits. The type of pressure that a family that makes 100,000 or 200,000 does in this economy. Older folks, in many cases, can’t paint, don’t want to paint, fear of painting because they don’t want to fall, they don’t want to injure themselves, hurts too much. So you need to shift any of your net new marketing dollars to targeted not shotgun approach. Older affluent homes and homes in particular that have substrates on the exterior that require a lot of maintenance. Wood, siding, not brick, and hardy board and aluminum, and those are neighborhoods, I’ll grant you, that are inside your market that are easy to walk, easy to target, easy to mail, easy to reach on social media.

So if you’re going to spend marketing dollars, don’t go after the middle class. Don’t go after the slightly upper middle class, go after the upper middle class and high class clients. Those are the most recession proof clients you can serve. And finally, go after commercial repaints and recession proof vertical segments. If you’re going to go after commercial repaints, target medical, assisted living facilities. Those are high margin service businesses. In many cases, depending on the type, manufacturers. People that can’t afford for their facilities to look bad and be in poor shape. High-end HOA communities where it’s been built into the contract, they have to paint the property regardless of the economy. And I could list several others, even if you don’t do all of these things, just doing a few of them will help you.

I’m going to repeat these. Increase your confidence in the accuracy of your pricing. That is production rates and job costing. You don’t think it has anything to do with it. I don’t care. You’re wrong. Build closer relationships with your existing clients. Hold your painters accountable to hit budgets. Increase your persuasiveness of your sales process and script objections… responses rather to objections about pricing. Diversify your lead flow through operational marketing. Build strong B2B referral relationships. Target older more affluent clients. And finally, go after commercial repaints in recession proof vertical segments. That’s it, baby. You got it all. I just told you all my secrets.

Now, I often say this to people when I go to speak in groups especially that are live, having a vague awareness that something needs to be done, meaning you have heard it, you have been informed of it, and doing that thing efficiently, effectively, and by best practices. Those two things are as far as the east as the west… We’re going to have lots of dongs. We’re at the top of the hour. I’m sorry. I grew up in a house that had a grandfather clock, my grandma, my grandpa, and even my mother. And so I love the sound of it. I don’t notice it, but sometimes I forget to turn it off when I do these videos. Luckily, it’s only, I think, 2:00. So you just get two of these. Now we’re done.

So if you have listened to all this, don’t think just because you have heard it, you’re going to run out and do it or that just hearing it helps you. Each one of the things that I mentioned are really what I call in my program, standalone modules that have video trainings, templates, tools done for you elements, whether it’s sales diagnostics, presenting scripts, presenting tools, if it’s B2B referral acquisition programs, going after commercial repaints and retaining them, done for you newsletters, job costing, production rate template, whatever it is. And you’re like, “I’m so sick and tired of goofing around on the internet just looking for information, looking for information, but not having someone who can look at my business and tell me exactly what I need to do first, second, third, and fourth. And how to specifically do it.

If that is you, if you’re just like, “I’m tired of this trying to figure it out. I’ve been trying to figure it out for 5, 10, 15, 20 years,” I’m happy to just get on a phone call and talk to you. 423-800-0520, 423-800-0520. Or if you want to email me, that’s my favorite way to hear from people. I’m about to go down to Jekyll Island for a week. So if you watch this video and you email me and you don’t hear back from me, and the next little while, I’ll try to check emails a few times while I’m down there. But I’m sorry, I leave during the summer because typically the busier you are, the slower I am. But if you email me Brandon@PaintersAcademy.com, I’d be happy to set up a diagnostic call and see if you’re a fit for our program. If you’re not, that’s no big deal. Okay?

And finally, go to paintersacademy.com, we have lots of helpful articles there. Do like and subscribe to this video if you have found it helpful, share it with others online. And we have a great resource on our website, paintersacademy.com, which is the five keys to finding success in an uncertain economy. And we are in an uncertain economy. When I wrote that thing, we were just in the middle of the scamdemic. We were just right there. And I knew that this was all coming. I knew that it would be this for a long time. An economy is not a windup toy, so we have screwed around with the economy and the government has spent a bunch of money it doesn’t have, they spent your money, has put you in debt. And so now we’re living with the consequences and we probably will be for another two or three years, maybe longer.

And so all these things that I’ve talked to you about are critically important, and I hope you address them. And if I can help you, let me know. Brandon Lewis here with the Academy for Professional Painting Contractors. I love spending time with you. I love informing you, helping you. If you have found this to be helpful, do hit that subscribe button and just leave your comments below and say, “Hey, Brandon, this is what I think about that. Hey, Brandon, I don’t believe anything you said. That sounds like a bunch of BS.” I don’t care what you leave. I like to read those. I do reply to those on YouTube. Guys, I hope you have a fantastic and wonderful upcoming Memorial Day weekend. Not this one, but the next one.

I’m actually leaving on Friday or Saturday to go down the beach with my beautiful wife and two little girls and a buddy of mine to stay right on the beach on Jekyll Island, which is a wonderful, beautiful primitive island in Georgia that’s not as crowded as a lot of other areas. So I got a lot of work to do to get out the door, and I hope you’re having a wonderful spring/summer. If I can help you, let me know. Talk to you next time.

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