Dealing with Low-Balling Pool Builders

I don't like to discount prices to win business, and I don't recommend you do it either. But since the downturn, it's become an annoying a trend with pool builders in markets all across the country.

I knew it was getting serious when one of my New York area clients faxed over an ad that his competitor started running. It said "Pool Packages from $23,995." If you know anything about what it costs to build an in-ground Gunite pool in that part of the country, then you know this is almost certainly at or below cost for anything close to a normal-sized, properly constructed gunite pool in New England. Which, of course, is what I would call a "going out of business" strategy.

Now here's the interesting side note. The client who forwarded the ad to me (not the company that actually ran the ad) happens to run a highly efficient, high-volume operation designed specifically to build gunite pools for significantly less than all of their competition. They are widely recognized as "the low-cost builder" who wins on price. And yet their COMPETITOR — the one who ran the "low-baller" ad — has never focused on high-volume, low-cost pools. Their focus and strength has always been on the completely custom, lower volume, higher-end market, typically selling pools for two to four times this "entry level" price.

So how does this competitor get away with selling pools at such a low cost? And more importantly, how do all the rest of us deal with these "low-ballers?" I believe there are two answers:

1. Salesmanship Now before you say, "Yeah, duh," let me point out the single most frequently ignored and overlooked aspect of this ever-important discipline we call "selling." It's a craft. It's not a basic skill like learning to ride a bicycle, or how to boil an egg. It's a learned skill that will plateau when the training stops. And yet most business owners (including pool builders) will spend little if any time or money investing in sales training. Why? It's because when a fledgling sales rep goes from "pretty lousy" to "pretty good," the owner or sales manager is usually "pretty happy" and the training pretty much stops there. But there's still a LOT of opportunity for improvement ahead. Just like singing or art, or almost any other craft, there's ALWAYS more to be learned.

So if you're getting beat up by low-ballers, sales training is one lever that allows you to be something other than "the low-cost leader." When the market (or your salespeople) tries to push you into the "lowest cost wins" direction, you can fight back with sales training. Whether you've been in sales six months or 60 years, you'll always be at least a little bit better after some sales training.

So if your competitors are low-balling you, go get some sales training.

2. Educate — Without Badmouthing A big honking discount will likely seem very appealing to the budget minded or cash-strapped homeowner — but they have no idea they're flirting with disaster. Your challenge is to educate your prospect without badmouthing your worthless, no-good, low-balling jerk competition. (Even though they are worthless, no good, low-balling jerks.) So let's say the homeowner you're speaking with likes the quality of your design, but they "want it at this other guy's price." Here's what you do next.

1. Remember: No bad-mouthing anyone.

2. "Remove yourself" from the competition. You should no longer be a "salesperson" who is trying to win this job. You should instead assume the position of "consultant" or "trusted advisor." (That's because as long as you are in the running, the homeowner will presume that every word coming out of your mouth is self-serving.)

3. Now, "shock" the homeowner by announcing that you're not going to play their little game here. Of course, I wouldn't say quite like that. I would say more like this:

"Well, Mrs. Smith, that sure sounds like a heckuva deal. Too good to pass up, don't you think?

"Of course, at (your company name), we would never build a pool like. Not at that price. And not for a variety of reasons. That's just not the kind of company we are. So since I can't possibly sell you what you're looking for, why don't we just take me and my company out of the running here for a minute, shall we? That way, you and I can have an honest discussion about pools and prices without you having to worry about me trying to sell you something. Does that sound reasonable?

(The client agrees.)

"Great. Now Mrs. Smith, I think it may be possible to get a pool in that price range, but you'll have to be very careful. You see, things may go fine, but they can also go very wrong. So here are some suggestions I would offer you to help improve the chances that this thing works out well for you.

"You see, what most builders will talk about is one of the biggest problems with the whole swimming pool industry. See, we have lot of great pool builders in this town. But in this town, and just about every town in America, you've also got a small handful of builders who get themselves in trouble — usually financial trouble — and they're forced to close their doors. And that's usually because they've run into cash flow problems. They couldn't cover all their costs, and couldn't pay their subcontractors to finish the job.

"So obviously, we want to make sure that doesn't happen to you. Because when a pool builder goes out of business, in the best case scenario, they've already finished your pool. And you just hope there aren't any warranty issues to worry about.

"On the other hand, what sometimes happens — and when I say "sometimes," I mean every year this happens to someone — the builder runs out of cash and goes out of business before he finishes your pool. So now you're stuck with a big empty hole in the ground. Or giant gunite shell that you can't do anything with. So then you have to pay someone else even more money to finish it. Or worse case scenario: They have to come in and remove it, and start all over again.

"So here's what I suggest you should do. First, before you sign the contract, ask for an adjustment to the draw schedule. Make sure that when the gunite is completed, the builder has less than 50 percent of your money. And make sure that the final 20 percent or so is held until the pool is 100 percent complete."

Helping Your Competition!?

Whoa! I'm suggesting you helping them buy from your competition? Yep. If they're only going to buy on price, you've already lost the deal anyway. It's not until "risk" and/or "security" and/or "trust" and/or "peace of mind" become important to this homeowner that you've got a shot. And if and when that happens, you've now positioned yourself perfectly for it.

Obviously, you'll want to modify the above script as appropriate for your situation and your personality. And I suggest that in the course of your conversation, you may want to work in some of these other helpful tidbits of advice:

• "Be sure to visit their facility before you sign a contract. That will give you some hint of whether they're doing OK, or actually struggling to make ends meet. For best results, you should visit them unannounced."

• "Look them up on BBB and Dun & Bradstreet. That won't tell you everything, but it will give you a hint if there's a history of trouble. You should also search the name of the pool builder with the word 'complaint' on Google. If the builder has burned anyone in the past, there's a chance it could show up on Google."

• "Probably the smartest thing you could do is find out who their primary contractors are for steel, gunite, plaster, etc. Give them a call, and find out which builders they recommend. If a pool builder is behind in payments to the subs, you'll know you need to steer clear."

• "One other thing you have to watch out for is things left out of the contract, or if they use sub-standard methods or materials. What looks like a good deal might actually be a 'bait and switch' trick. If you want, since we've already agreed thatis no longer in the running, I'll be happy to take a look at their proposal, and let you know if anything's missing, and whether or not it's a good deal."

Whoa, again! You would offer to help them with your competitors contract? Sure, why not? Don't you want to see your competitors' proposals? Besides, look at the credibility you've gained. We're still trying to win them back, you know.

Now it's time to close this rather unusual conversation on a positive note.

"Once again, Mrs. Smith, I really appreciate the opportunity to talk with you about your pool. Now if for some reason things change, and you decide you want to have another conversation about , I'll be happy to meet with you and discuss some alternatives. Meanwhile, feel free to call me if you have questions with the other guy's proposal. I wish you the best of luck."

As you can see, I'm a firm believer in "taking the high road" when it comes to dealing with your worthless, no-good, low-balling jerk competition.