Question: Can you explain how customer service drives increases in profits?

Brigham Dickinson; President & Founder, Power Selling Pros: Yes! Let me start off with examples, and you may have heard this before, the difference between McDonald’s and Chik-Fil-A is very simple: It’s the service they provide. And as a result, the revenue is just there; it just comes.

At your average McDonald’s, it’s anywhere between $700,000 and $900,000 in total revenue, per location, whereas at Chik-Fil-A you’re looking at an average of $4.7 million. What’s the difference? Well, the service they provide.

Something about the handshake of the host affects the taste of the roast. That’s what it is, that’s what it’s about. It’s not about the transaction, it’s about the connection. It’s not about their wallet, it’s about their heart. It’s not about the price at all, it’s about the experience you create.

You are the value. You’re the brand. You justify the price. So, how does customer service increase sales or increase profits? Well, because, if you create an experience – an unparalleled experience – you can justify any price, you can demand whatever you want to charge.

So that’s why it increases your profits, because you provide a service nobody else can provide.
And funny thing, 86% of your market, 86% of homeowners, will choose a better buying experience over price or brand.

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Question: How do I estimate my market potential?

James Leichter; President, Aptora Corporation & Mr. HVAC, LLC: Oh boy, that’s a tough one. Give that to Mike!

OK, so we gotta do some math. If it’s market potential, meaning like, how much potential do we have for revenue or market share — I’m hoping that’s what they mean, cause that’s how I’m taking it — the first thing you need to do is size up your service area.

To make the math easy, let’s say that we have 100,000 homes. And we’re trying to figure out, by the way, residential service replacement potential. So start with how many homes in your service area, let’s say there’s 100,000. You might have a lot more, but I want to make the math easy. And you might Google this, do a little research to figure out what the average annual spend is for HVAC repair. I’ll tell you that it’s not easy, it’s listed under what the government calls an SIC Code 1711, and you can find the stats.

The average home spends around $500 a year on HVAC work. Now not every year do they spend $500, some years they may spend $15,000, right? But the average is about $500 per year. But do the research for yourself, don’t trust me on that; it’s been awhile since I needed to know that.

So we have 100,000 homes spending $500 a year, that’s $50 million right? That’d be $50 million in HVAC spending. So there it is, that’s your market potential: you could have $50 million in residential replacement service sales. But you’ll never have 100% of the market, right? So what if you were to get, oh, a fraction of that?

Let’s say your department does $1 million in residential service and replacement sales. That’s 2% of 50,000. The formula would be your annual sales, divided by market potential, times 100. So in this case, you’re doing $1 million in sales, divide that by $50 million in potential, times 100, equals 2%. Hope I got all that right, that’s 2%. So you currently have 2% market share.

Well, you could have 3% market share, 4% market share. You’ll never have 10% market share. I shouldn’t say “never,” cause that sounds like a bummer, right? That’s me being negative. But most likely you’re not going to have 20% market share, so you have to think of something realistic. I can tell you that 5% market share is fantastic, if you’re at 5% market share.

Also think about how many heating and air conditioning companies are fighting for that market share. So if you had 100 companies fighting for that market share, well that’s a lot better than 300 companies fighting for that market share.

So that’s how you would determine your current market share, and then from there you just have to set a reasonable goal for the future. Like if you’re currently at 2%, you might say ultimately I want to be 5% market share, we’re doing $2.5 million in residential service replacement sales.

Hopefully that’ll be helpful, hopefully I got the questions right.

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.

What can contractors learn from someone in the supply side of the home services industry; someone with a history working with contractors as well as manufacturers?

In our latest episode, host Mark Matteson welcomes Ryan Kalmbach, CEO of Johnstone Supply, Fresno Group, who shares some interesting insights and experiences from his nearly two decades with the company.

Question: In the Prosperity Mindset training, you talk about getting emotionally committed. How can I help my service techs get emotionally committed?

Weldon Long: It’s really important obviously to be emotionally committed, because our actions typically are a reflection of our emotional state. If we feel sad we act a certain way. If we feel happy, we act a different way. So there’s a direct connection between our emotional state and our physiological state. You know, the things we’re doing are typically a reflection of the things we’re feeling. You can see that on somebody, you can talk to them, in many cases, you can tell what their emotional state is from talking to them.

To make sure that our technicians — anybody in our company – are emotionally connected, emotionally committed, to the company goals as well as their individual goals, one of the tried and true methods that has been around for thousands of years is repetition; getting people to make declarations. There is a consistency theory established by Robert Cialdini that public declarations dictate future actions. So if I tell you something, I’m more likely than not to actually do that thing. If I tell you I’m going to pick you up at the store at 4 o’clock, I’m probably going to pick you up at the store at 4 o’clock, because we tend to take actions consistent with our words.

So one of the things I talk about in The Power of Consistency is, individually, to have a prosperity plan and review those dreams, those goals, those aspirations on a daily basis. Allow yourself to get excited about that as you review it.

If we go back to Think and Grow Rich, Napoleon Hill, he said as you read your goals you have to imagine yourself already in possession of those things. Allow yourself to get excited about that new car even before you have it. Well that works on an individual basis, but it also works on a group basis.

We’ve got clients that write out the basic affirmations, the things we talk about – “we’ve got to run every call with passion and purpose”; “we’ve got to diagnose and recommend like a boss”; and “we’ve got to ask for the order every time” — we have clients who have that made up into a poster. You put it up in your meeting room and, when your service techs are there, have them read it out loud, just like they would the Pledge of Allegiance or your mission statement or whatever.

Even though they may not completely believe in it, they may think it’s corny, the reality is public declarations dictate future actions whether we want them to or not. So even though they may not be completely bought-in to the prosperity mindset and those types of things, simply by saying, “I run every call with passion and purpose,” “I diagnose and recommend like a boss,” “I ask for the order every time,” they will feel an impetus, they will feel an obligation, to act in a manner consistent with those words when they’re in the house. And eventually those begin to drive the new behaviors. So emotional commitment is a reflection of what we tell ourselves, because our brain, obviously, is producing the chemicals that trigger our emotions.

So that’s one very common technique that’s been around forever, it’s worked well for me, works well for the customers I’ve dealt with and, frankly, industries and different companies I’ve worked with all across the country. It’s a matter of getting people to make public declarations according to what we want them to do.

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.

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In the January 2018 Snapshot Survey, we asked contractors all about digital branding 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, which is now available in its entirety to EGIA members.

Question: Has your company found online marketing to be a cost-effective way to increase leads?

While just seventy-one percent of those surveyed said their companies had engaged in online marketing, a whopping 81% of those who had engaged in it found value, against 19% who did not.

While it can be daunting to shell out untold amounts of money toward marketing, there’s balance to be found once you’ve established a proper return on investment (ROI) that will ensure the revenue you bring in from any given marketing activity exceeds the marketing costs.

Once you’ve found the target ROI, after factoring in other expenditures and costs associated with onboarding new customers, it’s much easier to simply incrementally increase those marketing costs knowing revenues will increase proportionately.

Login to access the full research report on Digital Branding.

EGIA Premium & Plus members: For a deep dive into digital branding research, recommendations and educational materials, visit the Contracting Best Practices Library at the EGIA Member Dashboard.

Question: What can I do as a business owner to increase my sales and customer base?

Gary Elekes: Well, a number of things, gosh. There’s existing customer marketing – just leveraging the customers you already have in your database, from the sales point of view, with accessory opportunities – training the techs to be more attentive toward those types of things.

Lead turnover opportunities. Setting up some basic rules for over-10, and 4K is one of our rules: price of repair times the age of the equipment — if that’s four thousand or greater, we identify that as a definite opportunity for a conversation of repair versus replace or energy upgrade solutions.

Drew had mentioned getting into whole-house management. Identifying club memberships is an opportunity. Certainly when we have club memberships, existing customer relationships tend to buy 67% more than the non-customer relationship we have, just because of the trust factor. So there’s a lot of things you can do on the “existing” side of things.

Growing the customer base itself is a marketing problem, so you really have a couple of different options there. You can go to the acquisition tuck-in model, which is a very effective approach. Or you can go to the marketing model, where you’re generally advertising – media and advertising is one subset of your overall marketing plan.

So establish a good brand; create that brand promise; create a good unique selling proposition, something that’s strong enough in the market that the call-to-action, people will choose you over every other me-too company. And then you can go forward with the promotion and start advertising and trying to generate new customers through that model.

Typically the digital media platform is going to be the approach you want to use in today’s environment, and then you can drive all traditional media through that. Generally speaking, I could spend two days on the development of the answer of that question, but those are some general high-level, top-of-mind type of things. Drew, I’m sure you can probably add a couple of things.

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.