6 Reasons Painting Contractors Have Low Closing Rates + Charge Rates

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Hey guys, it’s Brandon Lewis here, with Painters Academy and Painters Weekly. We’re going to talk about the six reasons painting contractors have low closing rates and low hourly billable rates. I’ll explain the difference in a moment, and one reason this is top-of-mind, are really two fold. Number one, I have, as I often do, ran into sales closing rate problems in abundance. Sometimes these things happen in threes and fours, and it really brings it to my mind that if it’s coming to me organically, you’re probably experiencing it personally.

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And the second reason is, we’re coming into the winter slow down season. And while everyone tries to fix their winter slow down problems by pushing more leads into the company, which is noble, and is helpful, and works if you do it correctly, it’s not the only way to do it. The second way that people try to solve that problem heading into the slow season is to just drop their pants on prices, and that’s a bad idea, especially to your in-house list, B2B referral sources, and folks that you have a relationship with. Frankly, it’s not really even that good for netting new leads.

So let’s talk about the causes. And there are causes of why people have a low closing rates, and why people have low billable rates, and it doesn’t have to do, most of the time, with your personality. And it doesn’t have to do with your ability to build rapport, it does not have to do with your natural sales talent. It has to do with a lot of other things that we’ll discuss here.

So what’s a close rate, right? Just to make sure, I know this is elementary, a close rate is how many estimates you have closed over the last several months. I like to look at a six month horizon, because I believe it more accurately represents your close rate. So if you’ve seen a hundred estimates, and you’ve closed 25 of those, that’s a 25% closing rate, and that’s pretty bad.

A 30% closing rate, not very good. A lot of it has to do with lead source, we’ll get into that a little bit later. But low closing rates really impact your personal income significantly, and low hourly billable rates. Now, most painting contractors truly do not know how much they charge per-painter, per-hour. They don’t know, and they don’t know if they’re actually getting what they think they’re charging per-painter per-hour because they don’t do any job tracking.

But let’s say that you’re one of the exceptional few that actually tracks this daily, and has some sort of simple report that you generate. A lot of people are stuck at 45, $50 an hour. When in fact, if they improve the effectiveness of their sales process, they can be getting 55, 60, even $65 an hour and up. But they’re to do it because their selling process is so weak.

All right, so let’s get into this. But before we do, really, your closing rate being low, and your hourly billable rate being low. If you are, for example, running at 15, 20% profits in your painting business and you’re not in the field, if you shave off five to seven points on your closing rate, and if you’re five to $10 lower per-man per-hour, that can be half of your personal income that is being flushed down the toilet because your sales system sucks. We cannot abide that. You cannot abide that. You work too hard, too many hours, too much money tied up in your painting business, too much time away from friends and family, not doing the things that you love, to have a crappy sales system.

So the first thing I want to get out of the way before we get into these six reasons, is that you save no time or money doing a crappy sales job. Because you’re going to spend an hour and a half going out there. You’re going to spend an hour and a half coming back. You’re going to waste that amount of time, whether you do a crappy estimate or not. Drive time, being at the customer’s place, et cetera. And number two, you don’t save any money.

Because if you have to see twice as many people, 50% more people, 30% more people, to just get the amount of work that you need, that means that your cost of sale from a marketing standpoint’s going to go up, and your hours spent in the field are going to go up. So you save no time doing a less-than-professional, Rolls Royce of estimates. So get that out of your head. “Well, I don’t want to do this. I don’t want to do that.” Well, it’s not helping you, okay? It’s not helping you. You can have a poor attitude, bring your prejudices, bring your preconceived notions to the sales table. You’re just going to lose.

So let’s talk about the first reason, not having a clearly-defined purpose. Most people think, when they go out to do an estimate, that their job is to get the other person a price as quickly as they can, and to move on with their life, and to maybe make some kind of vague, sentimental impression by petting the dog and talking about the bowling trophy, emailing in an estimate, whatever. If that’s your purpose, then you’re likely going to put together a sales system that has nothing to do with you making money. If that is your purpose in your mind, whether you’ll admit it or not, it’s just is conveniently, and as easily as you can do it with the least amount of personal discomfort of personal growth, that’s your goal, well then it’s out of alignment with you making money, right?

So what if we had a better purpose statement? What if our purpose statement for going out to see people was, we are going to close at the optimal close rate. Doesn’t always mean the highest. And in fact, if you’ve got a super high rate, chances are your billable rate’s in the toilet, that’s what I usually see. It means you’re giving it away for free.

So optimal close rate at the maximum allowable hourly bill rate, that is still ethical. That’s what you want. That’s your whole purpose. Well, once that begins to be your purpose, and once you clearly see that as your purpose, then doing a crappy sales job, that’s no longer on the table. Answering the phone the same way as everybody else, not on the table. Presenting the same way as everyone else, not on the table. Emailing in your estimate, not on the table.

A lot of options are taken off the table once you define a financial goal and a metrics-driven goal. It’d be like if I said, “Well, I want to beat Michael Phelps in the next Olympics, but I really don’t want to swim that much. Don’t really want to train, don’t want to learn about it, and don’t want to diet. But that’s what I want.”

Well, no. those things are off the table for you. You’re going to have to practice like a crazy person, and you’re going to have to eat right, you’re going to have to do all kinds of things to achieve that excellence. Even for me, if I were going to swim a decent time in, say, an iron man. There’s a lot of things that I would not be able to say no to. So once you say yes to making money, you have to say no to being lazy, and to not really knowing what you’re doing. So that’s number one. No clear purpose.

Number two is not viewing the estimate process as a thin-sliced, comparative experience. Not viewing the estimate process as a thin-sliced comparative experience. Who is making the comparison? It ain’t you. The person making the comparison is the client. When you answer the phone, they have an experience with you, they have an experience with Jose, and they haven’t experienced with Joe. Okay.

And if you say ABC painting and schedule the estimate, and Jose says ABC painting and schedules the estimate, and Joe says Whatever Painting and schedules the estimate, then those three experiences, those small interactions with you on the phone, are exactly the same. If nothing happens between the time you answer the phone and the time you arrive, and there’s zero pre-positioning, etc. Those experiences are exactly the same. Let me tell you this, people will not pay more money for the exact same, identical experience. Will they?

Go to a cheap amusement park sometime. Not the cheapest, rattiest one you could find that pulls up in the worst part of town. The carnies throw the thing up and you ride a few rides. How much are you going to spend there? Well, let’s face it, that’s kind of what Disney World is, but it’s on a completely different level. How much do you spend there? More than in any other location per-tourist, per-day in the world, even Las Vegas.

Experiences matter, differentiated experiences matter. And every time you interact with a client, from the way that you greet them at the door, your overview, your set up, your use of diagnostic surveys, all the way to the mediums, et cetera, you use for followup, which we’ll talk about later, all that matters. Because they are cumulatively piling up all of this experiential data, to try to figure out a few things. And we’ll talk about what those are.

Number three, messaging that does not connect. When you have been a painter more than a few months, you forget to think like the client. The client is scared to death of having men in and around their home, for several days at a time, that they don’t know. In an industry with a reputation for felonious background, drug abuse, theft, poor manners, not showing up on time, shoddy workmanship, etc. So you’ve got fears of physical safety, property safety, and then things kind of going okay, and then excellence.

Well, if you don’t talk about those top three things, and most painting contractors don’t, we pretend like they don’t exist, we pretend like we’re the first person who has shown, up in a logo’d polo that they’ve ever seen. Well, they’ve been lying to people in logo’d polos over and over again. You would be like the 15th or 40th person who had lied to them in a logo’d vehicle with a polo. With a quote unquote “good” reputation that does good work.

So you can’t do that, right? You’ve got to talk about the things they actually care about, and you got to do it, as we’ll talk about here in a moment, over and over again. So most people have crappy messages. You might show them a reference or two, maybe your insurance, a couple of product information sheets from the paint store. Big whoop. That’s the bottom of the barrel. That’s the least you can do to try to differentiate yourself, and that’s not going to get the job done. Not if you want optimal closing rates and high charge rates.

Number four, weak and informal tools and processes that do not connect. You’ve got to remember that you are going to do something completely differently every time, if you do not have tools and processes in place so that you can uniformly do things. There is an optimal way to paint an empty bedroom. To get in and get out of there as quickly as possible. There is an optimal way to message in a sales process, in pre-positioning presenting, post positioning and follow up.

Using tools like your company’s story, project leave-behind book, buyer’s guide, diagnostic surveys based on the type of project, overviews, the way you do the audit and the measurement, gifting clients, what you wear, how you wear it, follow up mediums, et cetera.

There is an optimal way to do it. And if you just do it any old way, you’re just going to get any old result. You can’t have an informal, constantly changing sales process, and expect to get some sort of formalized, consistent, predictable results. You don’t go to McDonald’s, or any other chain store, Chick-Fil-La, and have 110% different experience every time you go through the drive through. It’s pretty darn consistent, nationwide and at the same store.

If you want to produce consistent profits and results, you’ve got to be able to hone that in. You can’t move the target and move the rifle every time you pull the trigger, or you’ll never be able to stop the thing in. So if your sales process is informal, doesn’t have the tools that communicate effectively, that doesn’t give you a guide so that the words that come out of your mouth are rather consistent about the same subjects that are aligned with the messaging that the client cares about, you’re going to be in trouble.

Number five, follow up missing mediums and forever longevity. Average American takes 68 days to make a $500 purchase decision for their home in a retail environment. Best Buy, Ashley Home Furniture, et cetera. 68 days, 500 bucks. Average transaction size for a painting company in North America is about $3,000. Higher in some markets, slightly lower in others. You’re trying to sell something that has six times bigger than that major purchase. And this study comes out every year.

So if you think somebody is going to say yes to that, or that the majority of people are going to say yes to that immediately upon your arrival, and maybe you just send them an email and make a phone call or two for a week and then just let it go, good luck. And if you’re only using email and phone, and you’re leaving out text and mail, you’ve got four tools. Why would you only use two?

You would never show up to a big paint job and just take a paintbrush if you needed to roll and spray too, would you? Take forever. You’d never show up to a detailed paint job with just roller would you? It’d look like crap. Why then, when it comes down to do follow up, or sales or pre-positioning, do you just decide “Oh, I just use one tool.” That sounds like a very dumb sales person.

So that’s a big reason that people fail. Now, I’m going to take a moment before we go into this last sixth item, to say this. If you employ estimators as an owner, you employ estimators, and they’re failing, but you did not give them tools, and you did not give them a system, and you did not give them guidance, and you didn’t model the behavior, and then you didn’t go with them and watch them, and then audit their behavior? And you don’t give them a system and they’re failing and you blame them? Mm-mm (negative). Wrong place to place the blame, pal. You’re the owner, buck stops with you.

Number six, low percentages of repeat and referral clients. If you are running an oil refinery, the quality of the oil comes into that refinery will determine the amount of gas produced by your refinery, and the quality. Same thing if you’re processing coal, same thing if you’re processing gold. The better the ore, the more gold that comes through the process. And the better the thing that’s processing.

Okay, so if you’ve got the ore. We’ve got the quality of the ore, then we’ve got the quality of the process. So far we’ve talked about the quality of the process. This doesn’t have anything to do with your sales process, but if you do not have a significant amount of your budget that is set aside to consistently communicate with past clients and unconverted leads, people you wrote estimates too, and B2B referral sources. If you’re spending ten thousand, twenty thousand, forty thousand dollars a year on brand new people that don’t know you from Adam’s house cat, and next to nothing except for a Christmas card on your in-house list, and then you complain about low closing rates? Well that’s kind of your own fault.

You can’t want all repeat and referral business, but yet spend all your money on net new, and then be mad that you don’t have more repeat referral business. It’s insane. Hunt skunks, get skunks, right? So once you get your sales process dialed in, if you’re putting crap leads in there all the time … Now, when you’re first starting out, and even as you grow your business and it matures, a certain percentage of people are always going to come to your business that are not referred, and do not know you, that find you through other means. That’s a sign of a healthy business. But it should not be the primary part of your diet. Okay?

So here’s the bonus. We’ve gone through the six tips. This is even worse in the winter, because as your leads get reduced and they do, the organic demand goes down during the winter, you can’t process less of those leads. You want to process more of those leads, and have them become clients. So it’s even more essential, as you head into the winter, to fix your sales process. Unless you don’t want to have work for yourself and your men. Unless you want to lose money all during the winter.

So, what I want you to do is to start tracking your hourly build rate. I want you to start tracking your charge rate, because it is determined by the quality of your sales process, meaning the persuasiveness, and the quality of the leads. It’s not about your market, it’s about how persuasive your sales process is, and the types of quality leads that you’re processing.

The more repeat, referral, B2B referral that you can get, the more likely you are to have higher close rates, even if you’re sale system’s awful. I’m not advocating for that. But the primary person that is responsible for whether you lose jobs or whether you win them, whether you get a high bill rate or a low bill rate, is you. So there are two things I would do. If you want to really fix your sales process, walk over to the mirror, look at yourself as the owner, or the estimator, or both, and just say, “I’m going to become a persuasive salesperson. I’m going to hold myself accountable to learn how this is done, the messages that matter, the processes that are used in presenting, pre-positioning, post-positioning and follow up. I’m going to get good at this. I’m going to become a serious student of persuasive sales, not just functionary pricing.”

Okay? Functionary pricing people never make any money. It’s the same as scanning a can of beans at Walmart. You don’t make a lot of money doing that job. And then I want you to do one of two things after that. Either one, email me, personally, and say, “Brandon, I need help with my sales process. I need help. You’ve done this 430 some odd times, you probably have a thing or two you can teach me, you probably have things kitted up and ready to go. Would you please just show me how to do it?” Okay. There’s number one.

Number two, if you are so inclined, I would encourage you to register for the pre-day sales training at the Power Paint Presentation Process Revealed Training we’ll be doing at the Painting Profits Summit. That’s a lot of P’s. So the Painting Profits Summit, fourth annual event down in Fort Myers, Florida.

We’re going to spend a half a day going through the Power Paint Presentation Process. In addition to that, we are going to be giving you all the tools and templates you need. You’ll walk out with a huge manual, with digital tools that you can immediately take and apply in your business, in your market. Okay. This isn’t one of those, let’s give you a bunch of ideas and a notebook full of notes. Although I’m sure you’ll take those too.

But we want to give you everything you need that’s plug and play simple, so that you can implement it in your business. So if you’re struggling with sales rates, or you just want to see them higher, if you’re struggling with charge rates and you just want to see them higher, email me personally, brandon@paintersacademy.com, we’ll see if it makes sense for us to get on the phone. Or go ahead and register for the painting profit summit, and at checkout add on the sales predate.

But it is well, well worth it. I’m Brandon Lewis with the Academy for Professional Painting Contractors and Painter’s Weekly. I can’t wait to see you at the painting profit summit, or hear from you. Let’s improve those sales rates, and let’s improve those bill rates as we head into the winter when you need it most. Take care.