3 Keys to Avoid Price Wars and Sell Profitable Services to Local Homeowners
Author: Jeremy Harrison
If you sell services to homeowners, you have a lot on your shoulders. You need to make sure your cell phone keeps ringing and your guys keep working.
But it isn’t easy.
There’s more competition than ever. And these days, competition probably includes that kid competing with you in your community — let’s call him Curt. Curt is just getting started. He has no overhead except his truck payment. He sells “the same” services on the cheap. But you know it’s NOT the same. Curt cuts corners… he doesn’t do the work at the level you do, and the customer ends up paying for it later.
Many small business owners feel that their only two choices are 1) lower their price to compete with Curt, or 2) lose the sale. But getting into price wars with Curt will always become a dangerous and costly “race to the bottom” where everyone loses.
Even if you don’t have a corner-cutter in your local community, you certainly have competition, and even good competition can lead to price wars that you can’t afford.
So what can you do?
Every time someone buys from the competitor with a lower price, you need to remember one important thing. The customer saw no real difference between your services and his. If your prospect thinks your services are about the same, they’re going to go with the lower price. Every time.
But take heart. Most buyers won’t knowingly buy an inferior product. Especially not when their home and family are involved.
To avoid price wars, you must truly differentiate your business from all the competition.
Get this right and you will never be in a price war again. The customer has a clear choice: pay a little more for the solution they really need, or pay a little less and settle for something they know is inferior. Remember, the only reason they choose the lower price is when they see no real difference between your services and theirs.
Here are three keys to competition-proof your business and close more profitable sales:
#1: Stop doing ads that focus on you.
Yes, you read that right. It’s time to stop running ads that talk about your business and how great it is. Almost every small business ad I see gets this wrong.
Maybe you have an ad that says “Going the extra mile for our customers for more than 25 years.” Does that work? Nope. Still focused on you.
Instead, you need to create ads that speak to your customer, with a message that is about your customer. They are good people who love their families and care for their homes. But they’ve run into a problem. You can come alongside them and help them solve it. Your ads should celebrate these customers, show empathy for their problem, and position your business as a trusted guide who can help them solve the problem.
If your ads talk about you — you sound just like all the competition. If your ads talk about the customer and their problem — you are already starting to sound different.
Look at how the ad on the left is focused on the HVAC company, while the ad on the right is focused on the benefits of the customer. The ad on the right is missing the call to action, but that would get added on a stripe at the bottom of the ad.
#2: Move prospects away from their pain, not toward your product.
You might be surprised to know that 80% of your buyers are moving AWAY from pain, not TOWARD the thing they are buying. It doesn’t matter what you’re selling — if it’s a furnace in the basement or a beautiful patio out back… it’s always the same.
They aren’t spending money to GET a variable speed, energy star, low maintenance furnace. They are spending money to AVOID a drafty home, noisy vents, or a high utility bill.
They aren’t spending money to GET lawncare services. They’re spending money to AVOID the embarassment of an ugly lawn, hours of labor or lost quality time with their family.
It doesn’t matter what you’re selling — 80% of the time, buyers are moving away from a pain point, not toward a shiny object. And if you sell furnaces, water heaters, roofing, carpet cleaning, pest control or most other things, it’s probably closer to 100%.
Think about how you can help your customers move away from their problems in a simpler, faster and hassle-free way, and you will be speaking their language.
We’ve seen roofing company run ads (left) that talk about the build of their shingles, when the homeowner is only worried about avoiding what is happening in this kitchen scene.
#3: Differentiate your business in the eyes of the customer.
To truly competition-proof your business, and avoid the price wars, you need a solution that looks so different from the competition, that price is taken off the table.
You want to design a unique selling proposition (USP) that is iron-clad. A reputation that you own — and everyone in town knows you for. But the key is, make it about solving a problem for the customer.
Even if you’re different, it only matters if the buyer really cares about how you’re different.
I already shared how how people are moving away from pain, not toward the thing you’re selling. So when it’s time to differentiate your products & services, don’t just differentiate based on what they’re buying. Differentiate on how you can help them move away from their pain points.
In the early 1980s, pizza shops started delivering pizza for the first time. But delivery times were unpredictable, and the pizza was usually soggy and cold by the time it arrived. Domino’s sales soared when they figured out a way to solve that problem, and then they rolled out a truly brilliant U.S.P.:
“Fresh, hot pizza, delivered to your door in 30 minutes or less… or it’s free.”
At the time, this truly differentiated Domino’s and helped them gain massive market share. It worked because it moved customers away from the pain they were used to… soggy, cold pizza and slow delivery.
You know so much about the thing you do every day. And that can be both a blessing and a curse. You probably know that you need to differentiate yourself from the competition. But if you make it all about your vast technical knowledge, or the differences of the technical doohickey you’ll be installing in their home — most of your customers simply won’t hear it.
To differentiate your business, focus squarely on your customer’s problems.
Outline a clear path to move them away from the problem, and differentiate your business based on things the customer cares most about.
Want a shortcut?
Download 15 Pain Points Your Customers Are Desperate to Solve
This one-page worksheet reveals 15 pain points that are proven to be hot buttons for homeowners. You are already solving some of these pain points for your customers, but chances are you aren’t talking about it.
The worksheet is a popular page from our “Small Business Growth Playbook: Service to Homeowners Edition.”