The Low Bid Myth

By Tom Woodcock

So, you’re great at your particular trade. People say you do quality work. You’ve gained respect in the St. Louis construction industry. You’re connected enough to get plenty of bid opportunities. Then let me ask you this: why do you have to be low bid to win the project?

Your answer may well be, “Tom, everyone knows you have to be low bid to get the job.” Bunk! There are many contractors who win projects as high bidder or even through competitive bid-free scenarios. Why isn’t that you? Oh, you may pull it off every now and then, but not consistently. How do they do it? Is it the fact they’ve known the contact so long or are they the recipient of some bid-shopping tactics? Let me enlighten you. You’re not a contractor first, you’re a sales organization before anything else.

This is the great myth many contractors have fallen into. Granted, you may be very good at your particular trade but why do you still get hammered on price? This is because fundamental sales principles are ignored in the estimating and bidding process. I’ll bet you practice at least one of these following sales faux pas:

1. Faxing in bids and quotes-Removes face to face contact and eliminates the opportunity to close
the job onsite with the customer.

2. Lack of presenting competitive separating factors- Equates you with your competitors and gives the customer no reason to use you over them except by price.

3. Delayed or forgotten follow up - Shows a lack of interest and opens the door for a more enthusiastic competitor.

4. Non-establishment of partnership at initiation- From the first moment of project knowledge failure to assume the business is yours putting you on equal competitive footing.

5. Poor qualifying- Assuming a project is similar to one you’ve had in the past and therefore you “mail it in.”

These are just five common errors. There are others. Many contractors spend time improving their technical aptitude and job management abilities, but, if you’re not winning higher margin bids and becoming an exclusive bidder, your sales skills are lacking. I’ve seen contractors who have made the effort to improve those skills and realized immediate results. People want to buy from people, not e-mails, faxes or phone calls. It is possible in many cases to close the transaction on bid delivery. It gives you a great opportunity to handle objections, gain the customer’s trust and elevate you above your competitors.

Whether the market is strong or weak, good sales skills are essential to secure strong margins and not have your expertise degraded by a pricing war. Once you establish that you’ll negotiate primarily on price, you’ve built the foundation for the customer in relation to your sales practice. They become more prepared to challenge you on every project. Think about it, does a customer really WANT to go through the bid process on every project? Why would they when he or she knows a contractor who has done a great job for them in the past and has always treated them fairly? You really don’t want to bid, you want to win the project at a healthy margin! Both contractors and contractor suppliers have a plethora of excuses why this is “just the way it is.” Hogwash! There are scads of contractors who receive project purchase orders and never have to worry about some yahoo with an ’80 panel-van and a stolen ladder undercutting their price and taking jobs away from them. When you lose a bid and ask the customer why, ask what, besides price, might have been a contributor to the loss. Whatever they say, that’s the real reason.

If contractors were to invest the same amount of time and finances on their sales skills as they do on equipment and technical training, margins would increase, referrals would grow and more no bid situations would develop. Without revenue, no business can succeed. Jobsite and people management are major factors in construction success. The problem is however, if you’re not securing enough high-margin jobs it doesn’t matter how talented you are in these other areas. So instead of beefing about dwindling profit percentages and fly-by-night competitors, get some stick! Sharpen your sales tools and win those contracts the old fashioned way!