It's time contractors wake up and budget profit as a line item on the P&L. Quit working for wages and start running a retail business. We have a ways to go yet and I'm hoping the Roundtable is the forum and low-cost lure to get smaller and less profitable contractors involved in running a successful business. With the help of the best coach partners in the industry, this can happen.
The contractors out there who are members of the Service Roundtable MUST join in and contribute. They must participate in the daily discussions and give or ask for help. Don't be afraid or intimidated by others. We can all learn. Any subject, any topic, any time on your business.
If you MUST pay a draw, make it against commission, settled monthly. I have yet to see a salesperson in this industry on a salary who was exceeding his ability.
“Salary” and “salesman” don't even go together. What and why would I be paying a salesman for? $52,000 for $400,000 in high-margin business?
Any new salesman should be doing more than $650,000 his first year, for probably an average of 8% commission. Most salespeople want to be in control of their income to increase it, not to depend on it and be merely satisfied.
(NOTE: This post followed a comment about Jehovah’s Witnesses.)
I know you meant the reference about the Jehovah Witness with levity. Be careful you are not pre-judging. I have found Jehovah’s Witnesses are no different than any other customer I have sold systems to in the past. My first sales manager was a Jehovah’s Witness who inspired me to get up when I fell down and to look within when I blamed others for my problems.
I wish I had more salespeople with the drive and conviction the Jehovahs have when it comes to their belief and getting the message out. How many doors do you think has been slammed in their faces?
I felt compelled to respond because I feel that all have a right to religious freedom without prejudice. You see, people offer me their prayers without question to how I believe. I am grateful for the prayers from any faith; it’s what keeps me going right now.
Some of your former and potential customers are Jehovah Witnesses, Mormons, Mennonites, Adventists, 7th Day Baptists, Muslims, and many others. I have spent years training and teaching people not to pre-judge, not to be prejudiced, not to judge the book by the cover, and not to pre-qualify customers.
It's too bad we can’t look customers in the eye and tell them why they should be doing business with our company, our unique competitive advantage, the value we deliver over the ownership, the safety we offer in warranties, our installation standards, service follow-up, extended warranties, service availability, trained technicians, office automation, and our company solvency . . . not to mention that we're proud to have the privilege of doing their work.
Most of you are certified by your state to do their work. You have a third party protecting their home for damages. Another third party covers their investment in case you do not perform the work correctly with your performance bond. To me it is a no-brainer for the customer.
If you had a heart attack, would you look for the cheapest surgeon in the yellow pages? NO! You would want the most expensive you could find.
Price competition is always going to be your #1 problem and always has been. The only way to deflate it is to learn how to sell around it. We have the industry’s best sales trainers on the Service Roundtable. Give them a call for help.
If you are using your techs to sell, Charlie Greer has the best results-driven program going in the industry.
If you can't justify your price, how can you justify your budget, your sales goals, or your profit needs?
Below are the statistics from a company run by a friend of mine. They do $4.5 million a year in sales. They have more than 5,000 maintenance agreements.
Here is the current brand mix:
• Signature Series (a private label brand): 40.5%
• Amana (exclusive to them in their market): 24.3%
• Trane (many dealers in their market): 0.1%
• Pro Series (another private label): 35.1%
We all need to get beyond this brand name thing and start managing our businesses like they're a business, instead of a contracting shop. Sell and market your own company's name.
Recapturing Lost Customers
I would go back on every call I lost to a competitor and present the homeowners with a free complementary maintenance agreement and our promise to take care of any warranty problems they might experience just as we had always done in the past. Why would you want to lose a service customer that provides you with 65%+ margin service work?
"Hi Mrs. Jones, my name is Rusty Vann. I got your name from your neighbor Mrs. Brown who is a customer of ours.
Her referral entitles you to this valuable coupon book (or check or whatever -- give it an amount or value). We have many customers in this area and we are at Mrs. Brown’s twice a year doing an Energy Saving & Safety Inspection on her comfort system.
"I wanted to take the time to introduce myself and my company, give you this valuable gift, and let you know we would appreciate having you for a more than satisfied customer too. If I can be of help in any way please call.
"Thanks and have a great day!"
If you're getting a decent labor rate for just being repairmen running five to eight calls a day, think what you could get for being a true professional and servicing all of your customers' comfort and safety needs! It’s the difference between value and perceived value. Higher perceived value can command a premium.
Too many owners want to remain repairmen and just fix it. Heck, if the owners are paid on performance why shouldn't everyone else?
Replenishing Truck Stock
If you don't have a parts runner or helper, consider hiring a retired person (who can only make minimum wage so they don't screw up their SSI). Give them a duplicate set of truck keys to deliver each tech’s parts and pick up the days paperwork. He could even refuel and wash the trucks if needed.
The last thing you need is to pay your tech to refuel your trucks on company time!
Retired people love to feel needed and need the extra income and some just need to get out of the house for a few hours.
I used the Polk directory when I was selling. It is now on CD ROM and you can print labels with route numbers.
If Polk doesn’t cover your area, try City Publishing. The phone numbers are:
- Polk: 800/275-7655
- City Publishing: 800/925-4654
These are invaluable tools for sales people. I have been using them for 30 years. No sales person who is serious about selling should be without a reverse directory.
If you have truly promoted an employee to manager, I would think it would be important for the manager to be included in your review of his men, including any pay increases.
Why is it so hard for us to give up management responsibility? How are we going to grow sorely needed middle management for this industry?
You know you can't do it all. Grow a strong management team, train and mentor them. They will build you a great company. Your life will be so much easier when you manage your managers instead of the entire company.
Just remember that your managers will make mistakes. Use these as positive learning opportunities to teach them.
Your goal is to make your business work without you. Most HVAC businesses are built around the owner. Take the owner out of the business and what do you have?
P.S. Make sure you have a defined job description for your managers.
A long-time contributor to Contracting Business, Tom McCart was HVAC’s first million dollar residential retail salesperson. Tom died of Lou Gehrig’s Disease on Jun 10, 2004. ALS took a toll on Tom physically. It took a toll on his family financially and emotionally. Tom’s business has survived. Please support Tom’s survivors and his legacy by purchasing his books or attending No Secrets training (www.nosecrets.com).
You can also purchase “From the Sky Up, the Tom McCart Story on DVD,” or any of Tom’s seven sales, marketing, and management manuals, at www.hvacprofitboosters.com. All proceeds from the sales of Tom McCart’s products go to Tom’s estate to help his survivors pay Tom’s medical and long-term care expenses.
For more information about the Service Roundtable, including a FREE e-book on service company marketing, visit www.ServiceRoundtable.com, call Liz Patrick at 877/262-3341, or e-mail [email protected].
|Matt Michel is president of the Service Roundtable (www.ServiceRoundtable.com), an organization dedicated to helping contractors prosper. Matt is also the publisher of Comanche Marketing, a free marketing e-zine. Subscriptions are available at www.ComancheMarketing.com. You can contact him directly at [email protected]. Or send your comments to Contracting Business at [email protected].|