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Ask the Experts | How to Keep the Phone Ringing

Question: How do you keep the phone ringing?

James Leichter: You can always have a friend just call your company over and over again [laughs], but besides that. … I don’t think that’s what they meant.

How do you keep the phone ringing? You have to have ongoing marketing. Marketing is an ongoing effort and you have to play all the bases. You’ve got to do pay-per-click (PPC), you’ve got to do search engine optimization (SEO).

So specifically what I mean there is you have to put up your website and you have to do your best through what we call SEO efforts to get yourself at the top of the list when people search for “world’s greatest heating and air conditioning company.” I could go on for hours by the way, but what you’re trying to do is figure out what phrases people use to search for HVAC companies and you want to make sure your company stands out when people search for those companies; you want to be on the first page, you really can’t be on the second or third or fourth page. You want to be on the first page. It’s easier said than done, it’s a constant struggle. As many of our listeners know I’m in the software business, I work with a bunch of nerds, you would think we’d be awesome at it but not so much; it’s an ongoing practice and study to try to get yourself to the top of the [search results] page, and that’s called SEO.

Now you can also write a check to get to the top of the page, it’s called pay-per-click (PPC). You only have to worry about Google, I wouldn’t worry about Microsoft Bing because they have such a small market share. But if you want to pay anywhere from $5 to $15 per click, you can buy yourself a spot at the top of the list. To do that you want to create a free account called Google AdWords and then you want to start studying that. Or better yet hire someone who knows how to deal with that.

You also want to offer something of value so that you can collect people’s email addresses. You want to constantly email people, but don’t email them too much; once a month might be too much. But at least email them quarterly so that they’re getting something of value, like a newsletter that gives them tips on maintaining their HVAC system, or explaining why indoor air quality is important, or just fun facts. But make sure you’re sending them something that you would want to read. Test it out on your friends or neighbors to see if they would care about that kind of email.

And then social media: you’ve gotta be on Facebook, you’ve gotta be on LinkedIn. So really, to keep the phone ringing, you have to just constantly be working on your marketing, and it is a constant thing. If you can afford it, when your company gets to be about 20 people – so with 20 people you should be about $3 million in sales, roughly, you want to do about $125,000 per person – so when you get to be about a 20-person operation, you should absolutely have a full-time marketing person at that point. Arguably when you get to be at about 15 people you need to look for a full-time salesperson and a full-time marketing person at that 15-, certainly at that 20-person level.

Listen to the whole Ask the Experts call: Every week, EGIA offers two Ask the Experts conference calls to allow contractors to ask questions and get answers about the issues affecting their business right now.

This is the weekly Ask the Experts free excerpt. To listen to all of this week’s calls, or to see the schedule and register for future calls, click here.

Clip of the Week | Open Book Management w/ Ellen Rohr

This week’s episode of Cracking the Code is all about open books, as Weldon Long and John Ketchell welcome columnist, TV star, “Plumber’s Wife” and Business Un-Complicated expert Ellen Rohr, of Zoom Drain and EGIA Contractor University!

Drawing on her decades of experience in our latest Free Clip of the Week, Ellen explains open book management — how being fully and financially transparent with your team breeds not just cooperation and teamwork, but increased efficiency and profitability.

This clip is excerpted from this week’s episode of Cracking the Code. Visit www.egia.org/show to watch the latest full show.

Snapshot Survey Results | Financial Structure – Annual Budget

In the December 2017 Snapshot Survey, we asked contractors all about financial structure to get an idea of what’s working in the industry and what’s not. Here’s one survey question and its results from the summary report.

Question: Does your company have a detailed annual budget?

The annual budget is a centerpiece of nearly any company, including those in home services. Yet just 58% of surveyed companies have one, against 42% that do not.

While some startup contracting companies backburner things like annual budgets because they think their company is too small or too new to need one, the truth is that a detailed budget is always important. It will help add stability and financial security to a company; making scheduling overhead and variable costs much simpler and more predictable; it will more clearly layout organizational structure; and, among other things, it will make profitability and success far more likely.

Simply put, 100% of companies should have a detailed annual budget – and ideally one that’s broken down by department.

Login to access the full research report on Financial Structure at EGIA.org/Login.

Ask the Experts | Limiting Inventory Costs While Being Prepared

Question: How do you limit inventory costs, while still being prepared to address your customers’ concerns?

Gary Elekes: Inventory is one of those areas that can create a lot of dollars that creep up over time and there could be a lot of areas of shrinkage and/or material that doesn’t get returned back on job usage.

So how we limit inventory is, we sit down and evaluate our service tickets. And we look hard at what has happened to us as a business in a marketplace, and we’ll typically use a year’s worth of service tickets. I’ve done this three or four times now in my own firms, where we’ve acquired a business as an asset and said, “OK, what is the product?” Are we doing heat pumps, are we doing gas furnaces, are we split systems, are we packaged, are we plumbing, what’s the type of product? And then look at the service calls and evaluate service calls and you create a histogram.

This is an analytical process, because what happens is you need to begin deciding what inventory you want to have on your vehicles and, in order to do that, you need some data to tell you what type of flow of material that you’ve dealt with over the past. And one month is not enough. Statistically you usually want somewhere around one to five percent of your overall tickets, and that would be of your company history. So a year’s worth of history is probably enough to look at. And I literally take the manual tickets and sit them down, open an Excel spreadsheet and say, “OK, great, contactor. OK, that’s one.” And you could do this with stick figures or an abacus, but Excel is probably the easiest way to create a histogram.

And what that does is it identifies what actually happens inside of your community, and what’s going on inside of the world of inventory. And it also allows you to have the conversation with the suppliers about what they’re seeing. And that’s the second step in that process is, OK, what does the supplier I’m doing business with, or suppliers, what do they recommend? What are their histograms?

Now, they’re not always in love with the idea of sharing that data with you, and there’s also the idea sometimes that if the supplier relationship isn’t a strong one, sometimes they might want to sell you some things. Back in the early 2000s I asked the Trane Corporation factory operation for that information and they gave me a 16-page “stock this on your truck” list and I just laughed. I’m like, “that’s about 13 pages more than I have now, why would I want to do that? I’m trying to thin it down.”

We had circuit boards on the truck and we discovered through that process that we really only did about three circuit boards in a year, and if you had eight service vehicles with one or two circuit boards on them, you have 16 circuit boards in your inventory model that you’ve probably paid for. Why would you want to do that when we only sell three a year? So that was an example of something that we narrowed down on our histogram and said, hey, we don’t really have very many of those repairs, let’s take that off the truck.

And so what we want is a business model that puts 80% of the items we deal with on a regular basis in our repairs – so if you took all of your repairs and said “What number represents 80% of our repairs?” – that’s inventory that you’re going to put on your truck.

The second step of that, and then the other 20%, really you could narrow that down to about 15%. That’s really what would go into the inventory channel in your warehouse, if you were going to keep inventory at all. Some suppliers are local, so you don’t necessarily need to do that. Some businesses are rural and don’t have suppliers close by, so you might need to put a little different inventory model in place in your warehouse. So you have to recognize that as a process.

But then the third phase of that is set up seasonal indicators. Contactors, in the air conditioning season, are probably more important to have on your vehicle at a higher level. So you begin to look at the flow of your inventory – how many times you’ve actually used a contactor in June, versus how many times you might use it in February. So you have this bulk number of repairs – let’s call that 100 contactors – well if 75 of them occurred in June, July and August, then you don’t really need to keep five contactors on your truck in February. So we set up seasonal indicators with min/max quantities.

So the minimum might be one and the maximum might be seven. And then you use what we call an economic order quantity, which means whenever I get down to my minimum, whatever I order, I order an economic quantity that allows me to get the best supplier transaction – no freight, maybe they can consign the inventory, whatever.

So, we’re going to keep inventory on the vehicle active and live and reduced, and that’s going to be about 80 percent of the repairs we run into. And we treat each vehicle as a unique warehouse.

So we use purchase orders, we used standardized truck stops, we use seasonal indicators – min/max, economic order quantity – and we need to count that truck on a regular basis and validate that the inventory we said was on the truck, that’s supposed to be on the truck, is actually on the truck so there is no shrinkage. So we randomly count a truck once a month, no one knows which truck we’re going to count, and that’s just a process that we use. Of course, then you have to decide how often you’re going to reinventory your trucks, or reinventory your warehouse, and that’s when you really get down to min/max and how many you’ve used and so forth.

I can honestly tell you that most companies in the trade carry way too much inventory. And the reason they do that is because most of us have come through the service technician background, and having the parts on the truck is a convenient process when you’re a smaller business so that you don’t have to go to a supply house and wait around and burn that time. The unfortunate part of that is you’re deploying capital, in a lot of cases, for that inventory. So reducing the inventory allows that capital to be freed up to do other things, like create a digital footprint, or hire a salesperson, or do something that’s productive, even CSRs.

So I think what you want to do is look at your 80/20, and you want to analyze that. You want to create your chart, you want to figure out your min/maxes, and you want to thin down your inventory on your vehicles and match that up. We’ve always involved our service techs in that process so they’re bought-in and they understand why we’re doing it and how we’re doing it and a lot of times they have some really good input.

So I would include your service group, your service management function, anyone that’s attached to the inventory usage, I’d make sure they’re involved. If nothing else, just so they have an opportunity to understand what the usage actually is, that it’s not just “hey, we’re reducing inventory”; that we’re trying to put the right inventory on the truck, and there should be a regular feedback process to adjust.

There’s an action plan for that as well, so if anyone’s interested in that I can make sure that they get that.

This is the weekly Ask the Experts free excerpt. To listen to all of this week’s calls, or to see the schedule and register for future calls, click here.

Clip of the Week | Flat Rate w/ James Leichter

In the latest Free Clip of the Week, the king of flat rate, Mr. HVAC himself James Leichter joins Weldon Long and John Ketchell to explain flat rate pricing and how to implement.

Flat rate drives productivity, simplifies business and even gives techs an opportunity to earn more while making more for the company. James, ever enthusiastic and entertaining, discusses that and more, and answers some of the questions that always arise when companies consider flat rate.

This clip is excerpted from this week’s episode of Cracking the Code. Visit www.egia.org/show to watch the latest full show.

Ask the Experts | Reconnecting with Old Customers

Question: What methods should be practiced in the office to help reconnect with old customers?

James Leichter: Hmm, reconnect with old customers. It should start with you as a company trying to gather personal information about your clients. Maybe birthdates, things like that, names of their children, anything you can. You don’t need a birth year by the way, but a birthdate would be nice. Because you can send birthday cards to people. Also you can send a Thanksgiving card. Now hear me out on this one.

I don’t like sending Christmas cards, because not everybody celebrates Christmas, so you could send a holiday card, but the problem with that is everyone gets a lot of holidays cards. But who gets a Thanksgiving card? So if they got a Thanksgiving card from you they would think that was pretty amazing, pretty unusual. So I would do that.

I’d also send a birthday card to the equipment, I’m assuming that you installed the equipment and you have that date, so you can send a birthday card out for their equipment.

Now if you’re talking about on the phone, reconnecting with people who call on the phone, then of course we can always present them that information over the phone as well, like “Hey, happy birthday next month to your equipment?,” or “It was your birthday last month,” or “How’s your daughter, Jessica?” Something like that, assuming that you know those people. But I think the person asking the question is asking how to reconnect with people after they’ve just stopped calling. And we know that that’s the reason most people leave our company and go somewhere else; it’s just apathy, really. But that’s what I would do to reconnect with people.

Mike, I’ll bet you’ve got some ideas, that’s probably one of your areas, isn’t it?

Listen to the whole Ask the Experts call: Every week, EGIA offers two Ask the Experts conference calls to allow contractors to ask questions and get answers about the issues affecting their business right now.

This is the weekly Ask the Experts free excerpt. To listen to all of this week’s calls, or to see the schedule and register for future calls, click here.

In Conversation with HVAC Sales Coach Mike Treas

In our latest episode, host Mark Matteson welcomes the industry-renowned HVAC Sales Coach Mike Treas to the microphone.

Mike offers his take on the issues and opportunities facing the industry right now, how he got started, and dives into the Ask the Experts calls he’s featured in every week, where he responds in real-time to contractors with burning business issues.

Clip of the Week | Leadership w/Steve Shallenberger

Legends collide in the latest episode of Cracking the Code!

This week, our host, Weldon Long, sales expert and New York Times bestselling author, welcomes world-renowned leadership consultant Steve Shallenberger!

Sharing insights from his new book on improving oneself and becoming a better leader, Steve introduces the idea of the Transformation Challenge, an strategy that can help everyone from frontline workers to CEOs, and introduces a simple way to overcome obstacles by ignoring the problem and focusing on the vision.

Below, check out the free Clip of the Week, capturing one of the highlights of Weldon and Steve’s chat.

This clip is excerpted from this week’s episode of Cracking the Code. Visit www.egia.org/show to watch the latest full show.

Ask the Experts | How to Get Customer Testimonials

Question: What would you suggest using if we do not have good testimonials or none at all?

Drew Cameron: It’s interesting in this day and age, the day of online reviews and whatnot that everyone is able to get, but maybe this is a smaller company and they don’t have testimonials. I would find out why, if you don’t have any, why don’t you have any? So ask yourself that question, or ask your people and ask your customers.

I imagine if you’ve been in business for any period of time, you’ve probably had someone say to you something complimentary. Why haven’t they memorialized a letter or a card or an online review or something? It’s probably cause you haven’t asked. The answer is always no unless you ask. But I would also ask your people: Do they hear good things from customers? And if they do, what have they heard? Try to find out what they have heard and who they’ve heard it from. And if they’ve heard good things from customers, go back to those customers and ask them if they could give you a testimonial. You can just kind of come out and ask people. If they’re happy with you and they’re satisfied with your work, they want to see you be successful. And having people share a great review and a great testimonial is how we maintain and stay in business. And people like to do business with people who know that the word-of-mouth of others recommends them to go do business with us. So if you could provide us with something, we’d greatly appreciate it.

I’d caution you against paying for reviews and testimonials. Maybe you give them an unsolicited five-dollar gift card to Starbucks or something like that, if they gave you a testimonial, just to say thank you for taking the time and going out of their way on a testimonial that they handwrite. I do not pay for reviews at all; I wouldn’t recommend that you do either.

The other way to get good testimonials is give them more value than anybody else offers and do more than anybody else thinks is reasonable out there. Then go out there and exceed the customer’s expectation, under-promise and over-deliver if you will. And then, with your service calls and your maintenance calls and your installations – and your installations really happen more so with your sales people first, and then your installation people, and then back to your sales people – what do I mean by that? On a service and maintenance call and on a sales call, I like to tell customers upfront, after we get through pleasantries and setting expectations for the visit, I like to tell customers that my measuring stick for success is not just that you’re so happy, but that we meet and exceed expectations that you’re so happy you would tell somebody else; that you could recommend our services to someone else. That’s the Disney measurement.

Walt Disney said, I believe it was back in 1947, and I’m going to paraphrase, that if we satisfy all our guests, surely we will fail. But if we satisfy them so much, to the point where they have to tell somebody else, we might just make it. And that’s how I approach business. I like to go above and beyond a customer’s expectations to the point that they’re going to say “I got more than he even said I was going to get, and then some, and I didn’t even expect to get some of those things,” including a happy call or a thank-you gift after the fact. I’m not going to tell the customer some of the things I’m going to do, I’m going to surprise them and exceed their expectations.

But one of the things I will tell them upfront is exactly that. My measuring stick is not that you’re so happy you’ll do business with us, but that you’ll give us a review, a glowing testimonial, and that you’ll happily refer us to your friends. And upon completion of my service or maintenance call or the installation, I will have my technician, the field people if you will, ask for that review, ask for that testimonial. And if they say something, I mean, just interview them, ask them a few questions: “What did you enjoy about today’s service?” and set them up. “Was there any area in which you think we could improve our level of service?” And you can do that in person, you can have happy calls done after the fact if you want. Some customers, if you ask them, and then say “would you mind writing that down?” Some customers will. I don’t think most will though.

So what I have done, I’ve made it a habit of doing, I say, “Listen if you don’t mind, based on what you’ve shared with me, I can transcribe what you said, send your comments back to you for your review, and if they meet with what you said, would you be OK signing off on that?” And I’ve never had a customer say no. So, in essence, you write the testimonial. Cause that way you make sure it covers everything you want to cover, says it in a way you want to say it, recaptures the spirit of the comments, and that way you’ve got a glowing review or testimonial, if you will. Now you can’t go ahead and do the online reviews for them. The online reviews, just ask for them at the end of the visit, I know Gary [Elekes] can talk a little bit about that too, because he’s got a business that does exactly that.

On a sales call, what I have my salespeople do, is I have them go back out after the job is done, about two or three weeks after the job is done, do a QC – a quality control check on the job – make sure the job is done up to our expectations, make sure the customer is happy, go out to the car, bring in the thank-you gift, completely unexpected, to customer. I like to give those folding chairs that are in a bag, they’re logoed up – those are nice and big and robust and they only cost me about $40 to get, logoed up – and I give them to the customer, cause they can use them at picnics and barbecues and going out to see soccer games and stuff like that, and I get a little bit of exposure that way, and it’s something they didn’t expect. And I’ll ask for that testimonial then.

And we’re doing things nowadays with our customers, where we’ll just pull out the iPhone or a GoPro camera and we’re doing like an audio or video testimonial recording, we can then transcribe that and get the letter. And now I’ve got audio, video – so I’ve got audio for television or radio, I’ve got video for television, radio or the website, I got a letter if I need a letter, I’ve got all three modalities covered there. So that’s the way we’re doing things nowadays.

Listen to the whole Ask the Experts call: Every week, EGIA offers two Ask the Experts conference calls to allow contractors to ask questions and get answers about the issues affecting their business right now.

This is the weekly Ask the Experts free excerpt. To listen to all of this week’s calls, or to see the schedule and register for future calls, click here.

Clip of the Week | Selling Service Agreements w/ Brigham Dickinson

The legendary Brigham Dickinson, president and founder of Power Selling Pros and faculty member of EGIA Contractor University, joins Cracking the Code this week to talk sales and CSR closing rates.

Specifically, Brigham breaks down how to increase revenue by increasing service agreements — by converting more of the calls that are already coming in. That means more revenue without increasing marketing spending.

This clip is excerpted from this week’s episode of Cracking the Code. Visit www.egia.org/show to watch the latest full show.