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Selling Your Wood Work Tutorial #4: Effective Prospecting

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Blog entry by Michael1 posted 10-09-2011 08:58 PM 4508 reads 2 times favorited 3 comments Add to Favorites Watch
« Part 3: Three catagories of sales and the sales cycle Part 4 of Selling Your Wood Work Tutorial series Part 5: Cold Calling »

EFFECTIVE PROSPECTING

In order to find the right people to sell to you must have an effective prospecting plan. Recently I read an article in INC magazine where the focus of the article was that prospecting was no longer necessary for success. Personally I can’t disagree more. The message of the article had a good general idea to rely on referrals and word of mouth to promote your business rather than cold calling leads and prospects. While this approach might work if you are well established, but what about the person just starting out?

Now I will say and stress that I believe that the best advertising you can have is a word of mouth referral from a satisfied customer. I don’t care how much you spend on your advertising budget for the perfect well placed advertisement, it will not yield the kind of results that word of mouth can do.

However; let’s look at the reality of word of mouth. Have you ever heard the saying that “Good news travels fast and bad news travels even faster?” Let’s say you are commissioned by a customer to build a piece of furniture. Everything goes smoothly and you deliver as promised and your customer is overjoyed with their purchase. Who are they going to tell about it? Chances are, nobody unless someone comes into their home and is impressed with the piece of furniture and inquires about it, they will say they had it custom made and then tell about their experience and may even give out your name and phone number. Perhaps they will be so excited about the work you did for them that they call their friend or neighbor just to tell them of the new piece of furniture. Chances are though that your name will only be mentioned if someone inquires about it to them.
Let’s say, something went wrong during the transaction. Maybe the customer was not as satisfied as they expected to be. Perhaps things went so south that the customer felt that they were done wrong. Who are they going to tell in this case? EVERYONE and I mean everyone they come in contact with. They might be in a conversation about the weather or the Sunday afternoon football game and out of the blue they say something like, “Oh by the way, if you ever are in the market to have custom woodwork done, don’t go to this shop, I had a really bad experience.
I don’t want to imply that good word of mouth is not effective. However; in reality, relying on word of mouth for someone just trying to get established is a long hard road.

A perfect example of bad new traveling fast is a week or so ago I came across a blog on this very site where a LJ was upset with a mail order supply company and the blog they wrote had several comments from those that read it of similar unpleasant experiences and a few mentioned other mail order companies they went to instead, but most just confirmed why they didn’t use that particular company. A few times I have seen a blog where someone asked if anyone recommended a particular vendor, say a lumber supplier where others would respond with who they used. But to my knowledge I don’t ever recall anyone ever writing a blog saying “Hey everyone, I went to this particular store or ordered from this particular place and it was so awesome that you should go there too.” It is just the way things are.

So for the shop that is just branching out from hobby to professional or even the person that decides to make the move to full time woodworking as a means to make a living, where do you sell your work? Allot will depend upon the type of woodworking that you are doing.
Let’s say you are building residential or commercial cabinets. There are a slew of contractors out there to solicit your work too. On the commercial construction side there are also several publications that you can subscribe to that list job postings such as Dodge Reports (www.dodgeprojects.construction.com) another good one is the Associated General Contractors (AGC). (www.agc.org) Most states have a chapter of the AGC and they as well as Dodge reports publish a monthly paper that lists commercial construction project out to bid and also lists the bidding contractors who have indicated that they are planning on bidding the project which you can use as leads to submit a sub bid in the architectural casework or finish carpentry section. For most projects this will fall under section 6200 of the specifications.

One word concerning these reports. Subscription fees are pretty steep. They can be beneficial especially if you partner up with other tradesmen and share the publication and split the cost of the subscription.
An important note on using these types of publications. While they are valuable resources concerning job leads and I have found that if you were to call any contractor on the list of bidding contractors to inquire if they will accept your bid, I can almost guarantee that you will get 100% response of them wanting your bid. You might even be the low bidder but that does not mean that they will necessarily contact you to do the job. I have found from experience that it still pays to make a sales visit to the contractor’s office to sell yourself.
If the world of contracting was merely who had the lowest price, then there would be no need for salesmen and everyone could get on a computer data base a look at who had the lowest price.
What happens is Contractors are usually on a tight schedule in getting a project finished. Most will use your bid to compare with the bid from who they are already using to ensure they are still giving a competitive bid, but are reluctant to try some one new. A general Contractor’s success is based upon other people doing what they are supposed to do in terms of getting the project built. When the General contractor goes with someone new, they are taking a gamble that they might be successful on the project or they might end up eating crow when someone does not perform on time.

Although my main line of business now is caskets and funeral supply, I still build commercial and institutional casework, namely for banks, and finance companies as well as schools. When I submit a bid to a General contractor that I have never worked with before or who is not familiar with me, I always try to get an appointment with them to sell myself to them.

In 20 plus years in the cabinet industry, I can only think of a few times where I was contracted by a contractor based on being the low bidder and not ever meeting with them prior to submitting a bid. I have on several occasions been awarded a contract and told that I was the highest bidder or on the higher end of the spectrum but still received the contract based on past performance and confidence that I was going to perform as promised.

For those who are not in the cabinet industry but more into furniture or smaller crafts, where you have a product line that you build and are not really building to specifications of what a designer lays out but entirely your own designs, where do you sell your work? A good place to start is local furniture stores and gift shops. I recommend keeping with stores that specialize in custom work. Visit the stores in your area and target the stores that sell items similar to your products. If there is an unfinished furniture store in your area, that is selling solid wood furniture rather than veneered particle board furniture, would be a good potential prospect. You might also be able to contract with the store to perform a custom finishing service for customers that do not want to finish the furniture themselves.

Another avenue is to solicit Interior designers. Often times an interior designer is contracted to decorate a home all the way down to the furnishings and being teamed up with a good designer can lead to allot of custom work. In this scenario, many designers will have you contract with the homeowner directly so it is good business to pay the designer a fair commission for referring your work and giving you the lead for the sale.

Some stores that you contact will want to do a consignment agreement rather than buying your goods out right. Consignment is not all that bad of a deal if it is approached correctly. The most important aspect of consignment is that you should be able to set the retail price. Most furniture stores and some specialty craft stores have extremely high markup on their product. It is not uncommon to see a furniture store place a 300%, markup on furniture. That means an end table that they purchase for say $200.00 has a price tag of $800.00 It is not fair to you to give them the product on consignment and they make this kind of a markup and it doesn’t matter to the merchant when or if the piece sells because they have no invested interest in the piece. What happens is they naturally tend to push the items that they have to purchase, especially if they bought them on credit as the bill for the inventory is coming due and the longer it sits on their showroom floor the more money they lose. Your product is only shown or an effort made to sell it only occurs as a back up when they could not close on other items in the store.

Often times I have funeral homes that are interested in my caskets but want to test the waters and as the funeral homes have a large capital outlay for inventory, they often ask if I will place them in their showroom on consignment. When they do, I usually say, “We do have a standard consignment agreement that we use and these are the guidelines we practice.” Then I go into detail of the policies. I make the consignment agreement so it is beneficial to both parties, and tell them that they can place any price on the casket not to exceed 100% markup. I also tell them that I have the right to remove the consigned item at any time. Also if th eitem isn’t movong and they need the floorspca for something else, They have the right to contact me and have me come and remove the unsold casket. I do this because I might get an order for the same casket that another funeral home has on consignment and if I don’t have another one in inventory, I don’t want to lose the sale.
The reason for controlling the retail price is to not limit the amount the funeral home makes from the sale but to give a competitive edge over the competition in the price sector. Of course not all will agree to these terms, but to me they should purchase the product and they can sell it for whatever amount the market will allow.
Often times I believe that when a merchant agrees to this type of agreement, I have a better opportunity for increased volume as my product is sold at a faster pace than if they purchased it out right and put a 300% mark up on it and it sat in their showroom for several months, As long as there is one of my caskets in their showroom, they are not ordering a replacement.

Another avenue is craft festivals and art shows. If you do an internet search for “craft Fairs” there is a large selection of web sites that list craft shows and art festivals that you can do a search from to find dates for shows in your area. The prices for booths range from economical to very expensive. Before choosing a show and purchasing a booth, it is a good idea to contact the show organizers and investigate what types of vendors usually attends that type of show and the number of general public that attend. It is better to stay with the well established shows as new shows often don’t generate the amount of general public that you might need to be profitable, however the more popular the show is, the more you will pay for your booth space. The same applies for flea markets. I have known people who were very successful at flea markets and also have known people who said the flea markets were a complete dud. I believe the difference is the type of flea market and what the public is expecting or accustomed to purchasing at a particular flea market, so it is wise to do your research.

Also do not discredit the potential power of the internet. You can sell your work on your own web site as well as purchase a storefront on many established web sites. I would recommend Etsy (www.etsy.com) or Artfire at www.artfire.com. One that I am not as familiar with but would be worth looking into is Made It Myself at www.madeitmyself.com.
What I like about these types of web sites is they let you design your own page and you are competing with people who have similar crafts and not distributors that are importing their goods.

-- Michael Mills, North Carolina, http://www.scicaskets.com



3 comments so far

View brian88's profile

brian88

108 posts in 1425 days


#1 posted 10-10-2011 02:25 AM

well written. I agree that prospecting is one of the best ways to move business. I put potential customers into two basic categories in this economic environment. There are those that see the face of the dollar and those that see the value of the dollar. I think the first group are those that are spending there money on the very cheapest item of what they need out of fear of never seeing another dollar. The next group sees the value of the dollar not only in how paying a little more to get something that will last longer but also as an investment into the local economy by buying local from a local producer. Those are the people I focus on. I feel that business now must refocus on building customer relationships and loyalty rather than just trying to close the deal in front of them. I think people are for the most part more educated spenders so they will do some research into the company and or product they are purchasing. Prospecting should be done carefully and strategically. In my case I try to use the uncommon circumstances to open a sales presentation. I will work it into a conversation at a restaurant, a home center, at parties, it is much easier than one would think. I also try to always have business cards with me as well. I have also found that Craigslist has been very good for me. You can post a few photo’s of work you have done and if priced correctly and worded in an intelligent fashion I can generate about 5-10 leads a week…and its free. I use Craigslist as another client base. Understanding that I must be willing to take a profit margin hit to gain another branch of clients through their friends and family….We must all be creative and let our performance character sell itself…

-- "thats all I have to say about that..."

View Les Hastings's profile

Les Hastings

1275 posts in 2429 days


#2 posted 10-10-2011 11:00 AM

100% of our work is by word of mouth. We have no website and spend no money at all on advertizing. So I guess we are pretty lucky. We stay busy all the time.

-- Les, Wichita, Ks. (I'd rather be covered in saw dust!)

View SASmith               's profile

SASmith

1590 posts in 1643 days


#3 posted 10-11-2011 01:39 AM

I like your “standard consignment agreement”.
Thanks for sharing.

-- Scott Smith, Southern Illinois

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