Success – by Jim Hinshaw
Just had a conversation with a client: what are the top three things that are standing in our way to improving profits this year? I said, my view from 30,000 feet, here are three that I see. Not enough leads, close rate too low on the few leads we have, and profits are lower on the few we do sell. Sort of connected, one leads to the next in some ways. Take the not enough leads opportunity: when the number of leads drops off, we look at our numbers, realize the bank wants the mortgage money even if the weather was beautiful, sale or no sale. So we lower our prices, but turns out the competition is doing the same thing. And even if we do sell one, it is at lower efficiency and/or price point than we hoped for, so the profits are not there. How do we fix that?
First of all, don’t depend on the weather, the economy, or some government tax credit to drive your business. It will disappoint you. How do we make the phone ring? Simple, by picking it up and dialing it. Yes, calling your customers. Go ahead, tell me you can’t, against the law, all that sort of stuff. Not if they are already clients. So call your customers who have done business with you in the past, offer them a discounted tune-up, a safety inspection, or free analysis of their water in the home. People are not doing maintenance as much as they used to in this economy, but they will spend money on three things: health, safety, economy. They will not call in, you have to initiate the call, make the offer a decent one that gives them some assurance they will get a positive result (maybe a money back guarantee?), make it a positive thing.
Two other positive outcomes from calling out to your customer base. The replacement job is not on the street. You created the opportunity. The customer who has used you in the past trusts you; you have become the trusted advisor.
Now, how do you build your customer base. One way is to join a networking group. Like BNI. Business Network International. Go to bni.com. You can find a chapter near you, and search for chapter that is looking for your trade. They only allow one company from each trade, if you are the plumbing company, there is not another one. Cost is about $400 per year; a couple of service calls will repay that investment. Typically you can sit in a couple of meetings without joining, see if the magic is there. If not, try another group. Find one that meets in the morning, with over 20 members. Less than that, they are not an a fully functioning group, may be a while before they get traction. Usually the real estate, insurance, and lawyer groups meet at noon for lunch. Our best bet is in the morning meetings with the painter, roofer, floor covering company, ones that are getting engaged with remodeling projects. So if you cannot make that happen, form your own networking group. Meet for coffee once a month with a roofer, pest control company, alarm company, companies you trust and would like to refer people to. See how their business is going, and something neat will happen. They will actually help grow your business. Have a formal program in place where your company knows who to refer a roofing job to. Don’t ask or expect a referral fee, instead let them know you want reciprocity.
One creative idea that I heard recently, a heating/air conditioning contractor worked with a pest control company to build his business. When someone signed up for a monthly pest control service, they also got a heating/air conditioning maintenance at no cost. What does it cost to add a new customer? Adams Hudson will tell you it can be as much as $400 to bring them into the boat. So spend less than $100 in labor, pick up a new customer, which is also a positive thing for the pest control company. That is the sort of thing you can test on a small scale, grow it if it works.
So when you begin to look at projects that are referral based, or your own customer base, the last two items are taken care of. You close more, at higher prices. You are a trusted advisor, and the customer will open up with their real concerns, and you will sell more of the cutting edge products, higher efficiency, higher priced. Instead of having to beat the other guys price. When you tell the customer the price is built on what they said they wanted, they realize it is not your fault, they actually asked for that investment number.
Another item that will glue the customer to your company is your maintenance agreement program. I talk to contractors all over the nation, just spent some time with a company that has been in business since the 50s. Over 60 years. I asked them if they had a maintenance agreement program, they said yes they did. When I asked how many agreements they had, it got real quiet. Finally went to the service dispatcher, she said they had almost 300 in effect. The owner challenged her, said it had to be more, but it wasn’t. So they had about 5 per year in business. Not good. No matter if you have been in business 5 months or 5 years, start today to sell maintenance agreements. Set up a goal to add 100 or 500 this year, break it down to so many a month, per tech, per day, make it easy to track. Then track it. Share the results weekly on a chart, get the entire company involved. Have a weekly award for most sold, greatest improved, largest dollars, that sort of thing. Your maintenance agreement can be on HVAC, or Plumbing, or both. Why not combine them into one great maintenance program, where you drain the water heater each year, check all the hose bibs, that sort of thing.
If you need help putting that program together, let me know, have done that many times. And thanks for listening, next month have a great testimony from a client who used some sales techniques to land a couple of interesting jobs totaling over $500,000. Yep, half a million, two jobs. From a company that does a lot of residential, and one of these was a public bid that had to get three prices. All by listening and taking action, not doing what the other guys were doing.
Oh, thanks also from those who bought my book, had some great sales last month, just got a check from PayPal, that is a good thing!