Let’s start with why design fees are usually in place to begin with. Odds are at some point, management realized that salespeople weren’t closing enough business and implemented a design fee as a method to ensure that their team was spending time with people who could actually buy. After all, it feels like a great qualifier, right? If the prospect is willing to let go of a few hundred bucks to start the process, you probably have a pretty good chance of nailing the deal with them. They probably also won’t shop you around so much because who wants to lose their deposit?
So design fees came about as a way to help salespeople spend their time with people who can really buy.
The challenge with this is that it usually results in LESS sales production instead of the desired outcome, which is more sales production. Think about it this way: let’s assume you were making a significant purchase – like a plasma TV for a few grand. You go shopping around and all the stores offer you a home theater design as part of the package. But one store you visit charges you $500 before they will even give you any details on what your home theater system may look like.
How do you feel?
Some would argue that this would encourage you to do business with them since their home theater design would be perceived as more valuable because it has a price tag attached to it. Maybe, but I don’t think so. I think that since home theater design is perceived as more of a commodity (a lot of people can do this), all the consumer really sees is a barrier and 5 other companies who won’t charge them a fee to design their home theater system. The result? The prospect goes somewhere else or, worse yet, never even walks in the door to the crazy company who charges a fee to design something anyone can design.
With Home Depot and Lowes, kitchen design is, unfortunately, perceived as a commodity. And that’s just reality because consumers are not educated about remodeling projects. So charging a design fee in this case really works against you overall. I recommend strongly that you avoid design fees. Or, if you absolutely must use a design fee, then make it optional for the salesperson so that they can “waive” the design fee for a prospect and make the prospect feel special.
The truth is that design fees aren’t really used by the best salespeople. When we interviewed over 60 of the top performing kitchen salespeople (the naturals as we call them), anyone who did have the requirement of a design fee worked around it or avoided it. And management didn’t really care because the naturals delivered results.
So even if you have a design fee, your best salespeople don’t use it because they know better. And the poorer salespeople who are forced to use it don’t deliver it in the right light to the prospect so it just becomes a barrier.
A much more effective way to solve the original challenge of helping salespeople spend their time wisely is to instead focus on a standard process for qualifying prospects upfront.
Some people use design fees effectively, but from what I’ve seen that is more the exception than the rule. Looking at it industry-wide, design fees have proven to be very problematic — especially in a buyer’s market.
Design fees are like dinosaurs. They should have died a long time ago.