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During seminars, I usually refer to the need for contractors to focus on value, instead of attempting to compete on price. When you compete on value, you are able to use your innovation, which allows you to differentiate your services from the competition’s. When the construction industry competes on price, it is competing as a commodity. It doesn’t matter that you don’t think what you offer is a commodity or, in fact, that it isn’t a commodity; if the owner is purchasing your service based on price, he thinks your product is a commodity and that is all that matters.

However, this position often causes a considerable amount of pushback from seminar attendees. They argue that prospects typically care about only price. I try to explain that what they must to do is educate the prospect. Their response to that is they don’t want to listen. My answer is you are talking to the wrong people.

A recent study by the Corporate Executive Board Sales Executive Council found that many traditional sales beliefs are invalid. Their study found that most salespeople fell into one of five categories:

1. The hard worker (21%)

2. The relationship builder (21%)

3. The challenger (27%)

4. The lone wolf (18%)

5. The problem solver (13%)

There is nothing new about that list, but what is interesting is which style is the most effective. We often hear that we need to build relationships with clients. You need to send the message that you are here to makes things happen. What may surprise many is that this group had the worst results with only 7 percent of those using this style being classified as star performers.

Professor Dean Kashiwagi at the Performance Based Studies Research Group at Arizona State University advises clients not to select contractors based on relationships. Of course, if you work with someone and he or she does a good job, it’s only natural to develop a strong working relationship based on common goals, collaboration and performance. What contractors should avoid is trying to build relationships based on social interaction. This conclusion isn’t unique to Kashiwagi. In earlier Garrison Reports, I’ve discussed how Stephen Covey and Russell White have both emphasized the importance of performance, instead of favors.

In the 1990s partnering developed a bad name in the construction industry. Clive Thomas Cain, in Profitable Partnering for Lean Construction, explained the reason for that problem. Partnering in the construction industry, he wrote, should be on the supply side of the supply chain, not on the demand side. Partnering on the supply side allows contractors, designers and vendors to work together over many projects to improve their processes to eliminate waste and problems. Since most clients have a limited number of projects, it’s difficult at best to develop a true partnering process with the construction team. Attempting to partner with clients results in establishing false expectations and ends with undelivered expectations from the client’s perspective.

Largely this approach has a fundamental flaw because despite the fact the relationship builders build strong personal relationships by being likable and generous with their time, they are in the reactive mode. In this mode the client takes the lead and contractor responds to the client’s needs. If the construction team represents the experts, wouldn’t it be better if the experts led the process?

The challenger, the winner with nearly 40 percent of its people in the star performer category, does take control of the process. The challenger changes the tone of the discussion. Instead of asking the prospect what keeps her up at night, he tells the prospect what should be keeping her at night. The challenger is excellent at teaching.

I make the bold statement during my seminars that contractors need to get out of the construction business. I don’t mean they should stop building things because that’s what they do. However, they need to change the paradigm. Contractors need to get owners to focus on life-cycle costs, not just their initial capital investments. They certainly need them to look at the total cost of construction, not just the construction bid.

The contractor needs to coach and advise its prospects on how to create a better solution for their construction-related capital investments. To win these debates requires dominant proof of performance. Only by having consistent provable performance in the past can owners reasonably anticipate similar performance from that contractor in the future.

Of course, prospects may be uncomfortable with this approach at first, but the challenger has the ability to be both assertive and maintain control over the process without being overly aggressive, annoying or abusive. The contractor needs to stand firm when the client pushes back. However, when the challenger can address the prospect’s needs from the prospect’s perspective and provide dominant proof of the past results in similar situations, prospects begin to look at the contractor in a different way.

Whether you are a client or contractor who wants to learn more about a value-based approach on your projects to ensure superior value and performance, I would suggest you learn more about the best-value concept. Go to www.TedGarrison.com/best-value-model.