Ask the Marketer: Leaving the Low Price Leader Behind

By Mike Crow

 

Question:  One of most frequent questions I get is how to compete with home inspectors who market themselves as “low price leaders.” In fact, I received this question so frequently that I felt we needed to answer it and sooner rather than later. Once you know the answer to this question it may help keep you from competing on price and losing business to those that do.

 

Answer: The marketplace is always being subjected to a flow of new inspectors or, worse, desperate inspectors that at some point decide that the only way to compete is by lowering their prices. There is a better way to compete.

 

I remember sitting in a meeting with a group of inspectors and all of them were asked to name a company that they thought would be a good model to follow. I was shocked when I heard companies like Southwest and Wal-Mart. Don’t get me wrong, these are great companies and I use both of them from time to time. I simply don’t want to build my business on the same model they built theirs on.

 

Why? Because both are what you would call “low price leaders.” Now this can be an effective strategy, but there is always someone who can do it cheaper. If you stop and think about it, both Southwest and Wal-Mart replaced competitors who thought they could compete with them based on price. I suspect that, at some point, if Southwest and Wal-Mart don’t adjust or be careful they will likely be replaced as well.

 

One of the many companies that provides a good model for competing on standards other than leading an industry with low prices is the Disney Corporation. Disney continues to bring new ideas into the market and price is rarely the main focus. In fact, most of the time when you hear an advertisement for Walt Disney World the ad talks about the attractions, the dreams, the celebrations, and the memories, but not the price. You can do the same thing with your business.

 

The main way to do this is to make sure that you and the bottom feeders don’t look the same, and you need to be especially sure that they don’t look better than you. How do you do this? Pay attention to what I call Unique Selling Positions (USP). The problem with inspectors is that they all advertise (when they advertise at all) a good quality inspection. Their ads also say that they really care, they offer a through inspection, they take really good care of the buyer, and that they work for the buyer and not the seller.

 

If you line up 100 inspectors and ask that only the inspectors who deliver a good inspection step forward, they are all going to step forward. Without realizing it, inspectors have positioned themselves as a commodity. Commodities are sold on price. So when the buyer can’t see any difference between you and your competitors they start asking the price question and, of course, one of the 100 is more than happy to fill the position of low price leader.

 

When shopping for a home inspection, buyers don’t that there are other questions to ask aside from who has the lowest price. We need to show them that there are other factors. If a potential customer were to ask the following questions of the 100 home inspectors, the outcome would be different:

• Do you deliver the report at the time of the inspection? Only seventy-five out of the 100 would step forward.
• Do you do a computerized report with a one-page summary? Only fifty step forward.
• Do you offer color digital photos with your report? Only forty step forward
• Do you offer a guarantee on your findings? Perhaps twenty inspectors step forward.

 

What question or series of questions would you have them ask that would lead them to just you? You need to direct the buyer to points of interest that are important to them and, even more importantly, completely differentiate you from your competition. The more interest you generate in your buyers, the more you can charge.

 

If you work independently and plan to do so forever, you need to make sure you do not focus the questions on what you bring to the table. I see inspectors make this mistake all the time. They say things like, “I am code certified,” “I have twemtu years experience,” “I am a master plumber,” and “I am a past home builder.” All of these can be useful at first, but when you try to bring on a second inspector you have just created a problem. Will your second inspector be code certified, have twenty years experience, be a master plumber, and a past home builder?  Not likely. As you create your company’s USP make sure it is based on what you bring to the table as a company.

 

So when a potential home buyer calls you and asks about your price, you might want to say “That is a great question. May I ask you a couple of questions to calculate that for you?” In the process of asking the questions you will want to make sure that they know what makes you different from everyone else that they may be considering. Help them to understand that price may be one of the least of their concerns. Ask questions like: “How soon do you want the report?” “Would you like to have color digital photos with the report?” and, “would it help you to know that we absolutely guarantee your satisfaction with our inspection?” 

 

When talking to a client on the phone, mention at least four things that make you different from your competition. When you can do this you work in a competition free zone and this allows you to charge a lot more than the low price leaders. Don’t let price be what makes you different and don’t let your competitors set your price. Give your clients something no one else does and charge what you want.

 

Mike Crow works with hundreds of inspectors across North America helping them to market their business and put systems in place to help move their business forward. You can receive a Free CD with more secrets and get more marketing information at www.richhomeinspector.com – tell him you saw him in the Communicator. To have your question answered about marketing your inspection service email DreamTeam@MikeCrow.com