Offering Options Not Ultimatums Can Double or Triple Your Revenue

By: Joe Crisara

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Let’s say that you and a companion decide to try out a nice new restaurant for dinner Friday night after a long week. You walk in, ask for a table, and the hostess seats you at a table by a window with a very nice view.

A couple minutes after you sit down, your waiter brings a tray to your table and places two hot dogs in front of you along with two glasses of ice tea.

He says, “Here is your dinner and your tea. That will be $15 please.”

Needless to say, you’re completely confused. You say, “We just sat down! Hot dogs and tea? I didn’t want that. I want to look at a menu. I want an appetizer and maybe a steak… and a beer.”

The waiter looks at you and says, “I’m sorry sir. We don’t do it that way here. This is the meal I’ve decided you need – and here is your bill. You can eat that or you can choose another restaurant. Have a good evening.”

How would you feel about that? After you got over the shock and confusion, I’d imagine you’d be pretty ticked off about getting an ultimatum like that as a paying customer at a restaurant.

Would you go back to that place?

The chances of a restaurant being successful doing that are slim to none. It’s no way to operate a business.

So why in the world is that ok in our industry?

(It’s not.)

One Solution Does NOT Fit All

I know. For years people in our industry have operated that way.

This part is broken, so I’m replacing it, and here’s the price. Take it or leave it.

It’s basically an ultimatum – just like the restaurant scenario.

Maybe that worked for some companies at some time in the past, but I’m here to tell you that things have changed.

Your customers have much more access to information on the internet, markets have become much more competitive, and consumers these days expect a little something extra from the companies they patronize…

They want options. Choices.

Options may be new to some in our industry, but they’re are as American as apple pie. Land of the free. Home of the brave. Freedom of choice.

Options are also the cornerstone of our Total Immersion program.

There are 3 major reasons you need to start offering options to your customers…

  1. Options allow clients the choice of increasing the quality and reliability of the work you do instead of just the minimum.
  2. They allow your clients to choose a level of service and how many years they get.  Choosing a service that’s right for them.
  3. Options lead to increased profit and revenue for your business. Potentially even doubling or tripling them.

Why Offering Options Leads to World Class Service

First things first: Offering choices is just the right thing to do customer service wise. It’s what we call Pure Motive Service, and it’s a vital part of everything we teach here at Contractor Selling.com.

By not offering choices, you’re failing to serve your customers. You’re telling them this is your one option and here’s the price. Live with this or call someone else. Of course you’d never say it that way – but that’s the message.

When you offer options, you’re saying there are several ways we can fix this problem for you, and the choice is 100% yours.  

Your customer will be more satisfied in a repair or replacement they chose as opposed to one that was their only choice. One feels like decision making, and one feels like an ultimatum.

By offering options, you’re telling your client that you recognize that they’re unique and you’re not pre-judging them in any way. They feel catered to, and they’ll recognize that you’ve customized your solutions to their situation.

A customer who feels catered to will come back to you time and time again – not to mention be a great source of referrals.

Three Types of Buyers

People tend to fall into one of 3 “Buyer Type” categories: premium buyers, mid-range buyers, and economical buyers.

You probably have a tendency toward one of those buyer types yourself.

Car dealerships, clothing stores, car washes, appliance stores… virtually any business. They all offer a variety of options to satisfy all three of those buyer types.

Let’s say you’re an economical buyer and you decide to go into a clothing store. When you walk in, you immediately notice they only have high-end, premium priced clothing? What would you do?

I can tell you what you wouldn’t do. You wouldn’t change the way you think and suddenly decide to be a different type of buyer.

You’d leave and go somewhere else where you could find something in your range.

Some of your customers will always want the very best money can buy. Others want something priced more in the middle of the road, and some will just want the most economical solution available to them at that time.

If you fail to provide them with a choice in the category that fits them, and you could potentially lose 2 out of 3 of them.

When you allow your customer to choose their own solution that matches their lifestyle and financial situation, you’ll get more jobs and have much happier customers.

Can Options Really Double or Triple Your Revenue?

Now for the big claim. Offering options will have a positive impact on your profit and revenue. Potentially a big one.  As a matter of fact former Total Immersion Training student of our Rodney Koop from Dalton, Georgia said, “Not doing options probably cost me $10 million dollars in revenue.” in a video interview he did with us a few years back.”

So YES it works but why?  Well, there was a study done a while back about offering choices to people who were buying cameras. I’ll summarize it for you here.

If you sold cameras, and the only camera you had for your customers to choose from costs $200, then all your sales would be $200 sales. And if that’s the case, 100 sales would amount to $20,000.

But in the study, when they added a middle choice for $600 and a premium choice for $800, something interesting happened.

60% of their sales were still the $200 camera. But now 20% of their sales were from the $400 camera, and another 20% were from the $600 camera.

That means that 100 customers were no longer worth only $20,000 to them. Now those same customers were worth $32,000. That’s a $12,000 swing just because they offered a choice for all 3 buyer types.

Are your wheels turning yet? Just wait!

Options At the Highest Level

Let’s go back to that clothing store scenario from earlier.

What if you were an economical buyer and you walked into that same clothing store but found that the clothes there were economically priced to match your buyer type? But now there’s a different problem. You went there for a pair of pants, and you hated the ONE style of pants they had in the economical price range.

Out the door you go, right? Time to go find a competing business that can offer you more of a selection.

Some years ago, a major university did an interesting study about what they called “market segmentation” essentially creating choices that addresses this problem.

The short version is that they gave consumers six choices.

They offered two premium choices for premium buyers, two mid-range choices for mid-range buyers, and two economical choices for economical buyers. So really, they offered two choices for each buyer type.

The results? As you would guess the vast majority of those who purchased chose the two midrange options.  again, allowing consumers a chance to upgrade the scope of the work with better service included

Now, at ContractorSelling.com we did a test of our own a few years back. We wanted to see what would happen if we applied this methodology with some of our clients that volunteered to take part in a study of our own.  So we had several of our clients do 6-options on select calls with the choices starting at $1,500 and ranging down to $200 to put this theory to the test.

Here are the results of that testing…

7% choose a $1500 option
8% choose a $1200 option
28% choose a $800 option
46% choose a $600 option
9% choose a $400 option
2% choose a $200 option

If we again look at those results in terms of 100 buying customers, the total revenue now becomes $74,100. When we were offering one option of $200, those same customers brought in only $20,000. That’s a huge swing (over 370%) just because you offered options. More than tripled!

Not only that, but the study also showed that 88% of customers customers who received six options structured in this way were happy customers as opposed to only %57 who said they were happy with just one option.

How to Start Offering Options

When you offer options instead of ultimatums, everyone wins. Your customer receives the world class service they deserve, they’re happier because they had a choice in the work you performed, and your company gets to enjoy a nice bump in revenue.

But you can’t just throw any six options together and hope it works. There’s some science to it. Don’t worry… we’ve got you covered.

In an upcoming article, I’m going to share that science with you so you can build your own options that will perform this well for your company.

In the meantime, we’ve created a fantastic tool that takes all the guesswork out of creating solid options that sell. It’s called The Best Ever Flat Rate Guide and you can get all the details about it here.

Now I want to hear from you…

Does your company offer just one choice, or do you offer options? Tell me about your experiences in the comments below.

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