Case Study: Changing the Low-Bid Mentality

The smartest contractors realize that, while bids have to be competitive, trying to win work through low pricing alone is not a sustainable way to run a construction business. Some, however, feel that potential customers lack the knowledge to understand the quality that is lost by going with the lowest bidder.
 

The Problem 

Jeff Bartholomew, president and owner of JWB Inc. Custom Homes, faces this problem:
“I can position myself as more knowledgeable than most of my competition and can show a tremendous track record of satisfied clients, but that is worthless in the face of a lower price on a competitor’s lesser quality hidden by a shiny paint job.”

The Solution 

“Over the past few years, we have been seeing more competition in the marketplace on the same pursuit. The clients’ decision-making process is ever-changing, and we appreciate the ‘best value’ approach most of our clients are utilizing today. We like when they truly value a solid approach, strong team and well-thought-out execution plan coupled with a fair fee, rather than falling for flashy presentations that are limited on substance or depth. We have seen that clients are starting to see through the flash and instead are evaluating teams based on their custom-tailored presentations and are selecting the best teams that are focused on their specific projects and challenges and that have provided realistic, relevant solutions. This is how McCarthy has been able to overcome these challenges.”

Paul King
Director of Business Development
McCarthy Building Companies Inc. 

“You must start with the right prospects and clients. Studies indicate 17 percent of people will buy value always. They simply want the best. Twenty-seven percent always buy price. They don’t care about quality. Just forget them because you will never win the argument. That leaves 56 percent in the middle who will buy price or value. In cases where you are working with clients who value quality and you are being underbid by a contractor delivering low-quality work, what you need to do is ask, ‘Why don’t you call somebody who has had work done by that contractor?’ Then they hear directly from the customers.
           I have a friend who is a contractor, and he’s not the cheapest guy in town, but he has more work than he can handle. He used to have the same problem, but then he began walking away when he was working with a customer who was buying on price alone. The customer has to be interested in performance; otherwise, he won’t do the job. Better to spend the time looking for the value-based prospects.”

Ted Garrison
Ted Garrison’s Construction 3.0 Strategies