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Ask the Experts | How to Recruit Techs?

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Ask the Experts | How to Recruit Techs?

Question: What’s the best way to recruit technicians?

James Leichter; President, Aptora Corporation & Mr. HVAC, LLC:

Best way to recruit technicians: we get this almost every week. The unemployment rate right now is 3.9%. Now of course we don’t know what the unemployment rate is for an HVAC or out of work plumber, but I bet it’s something like .01%. I have no idea what it is, but it cannot be 3.9%. There cannot be a 3.9% unemployment rate between plumbers and HVAC technicians; even the lousy ones have jobs right now.

So there’s no easy answer for that. It’s not easy to find anyone right now. It’s not easy to find waiters and waitresses and bartenders and auto-mechanics and landscapers and roofers. It’s not easy to find accountants. It’s not easy to find anybody right now. So when you’re looking for an HVAC person that can be lousy and still get a job – and let’s face it, all of us contractors know that’s true, we’ll hire even the bad ones – then what are you supposed to do? There’s no easy answer.

I believe that you have to be opportunistic, so you’re always advertising. Your vehicles say that you’re always hiring, even if you’re not. Your website says that you’re hiring always, even if you’re not. You’re constantly advertising, looking, networking, putting out the word; you’re looking for employees all the time. Even if your company doesn’t need one, because you never know when someone is going to leave and you never know when you’re going to need somebody. But the one thing you do know is you’re going to have a heck of a time finding somebody when you do need them, so always be on the lookout.

Number two, you’re going to have grow your own, and it costs a lot of money. And it’s risky because they may not stay. So what I mean by that is that you should probably consider filling the seat next to your best technicians. Each of your best technicians – and I don’t mean skills best, I mean people best, I mean like Brigham best; the people that he likes, those are the best – the best attitudes, the best personalities, etc. You probably are going to need to partner them up with tomorrow’s technicians; you’re going to have to grow your own.

Now that means you’re going to have to charge more, and you may or may not be able to do that, I think you can; most of the people that I’ve talked into doing this have found that they can afford it, they can charge more. Two people aren’t twice as fast, but when they have good chemistry two people are faster. They can maybe cut the time down by 25%.

So I guess the bottom line here is that you’re going to have grow your own, you’re going to have to hire people who have skills you can’t teach – great personalities, great work ethic, etc. – put them through a thorough vetting process, hiring process, get them in that seat and just flat tell them, “we’ll train you on everything you need to know, we just want a commitment from you because it’s a big investment for us.” Fire them as quickly as possible when you know they’re not working out, because it does cost a lot – so fire them quickly when you know they can’t work out: if they’re tardy, unreliable, get rid of them, start over.

And hopefully after a while you will have your next greatest technician. And I’ll end by saying this: That story is exactly how I got my career in HVAC. Many years ago I was lucky enough to be hired by a company that wanted to give me a chance. I had no education in the HVAC world – I had almost no education in any world, for that matter – – and I had no HVAC experience and I had an HVAC and electrical company hire me. And I was an apprentice and I worked really hard and, I’ll be darned, but 52 months later I got my master mechanical license. And anyone that has had me work for them, to be frank about it, has been pretty darn happy.

I’m not saying you’re not going to have to go through some bad people, but I don’t think you have any other possibilities right now than to grow your own technicians and installers.

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.

Using Fleet Management Services | Snapshot Survey Results

In the April 2018 Snapshot Survey, we asked contractors all about Vehicle Fleet. Here’s one survey question and its results from the summary report, which is now available in its entirety to EGIA members.

Question: Does your company use a fleet management service?

More and more often, home services companies are choosing to use specialized services or outside agencies to manage the functions of their business outside of their core competencies – from marketing to payroll and everything in between. For nearly a third of surveyed businesses, that goes for using fleet management services as well: 32% of companies reported doing so, against 68% that manage everything on their own.

While needs vary based on various factors like company size – some businesses certainly have the resources available to effectively manage internally – management services may be able to cut enough costs through efficiency, increased productivity, insurance savings and more to offset the price of the service.

Login to access the full research report on the Vehicle Fleet.

Additional direct mail marketing resources for EGIA members:

For exclusive discounts on fleet management services, visit the Smartfleet page on the EGIA Contractor Marketplace.

EGIA Snapshot Survey - Does your company use fleet management services?

Ask the Experts | Include CSR’s in Tech Meetings?

Question: Should we include our CSR’s in tech meetings each week?

Stephen Dale; Trainer & Coach, Power Selling Pros:

Great question, and I’ll answer it with one word and then I’ll explain my thought behind that. I would say: ABSOLUTELY.

The reason I feel this way, and Mike and James may have some different thoughts, I’d like to hear their thoughts as well, is that I read a lot about what’s called “CX” – that’s customer experiences. But there’s also an “EX,” which is the employee experience, and that has to do with your culture at your company.

What I say is when you have meetings, and I don’t necessarily call them tech meetings because that excludes everyone else, but when you have your town hall meetings or your weekly team-building meetings, everyone is included. That’s a great opportunity to get the entire team moving in the direction that you’re looking for.

When you realize that we are one — we’re one company, we’re one team, we have one goal, everybody is rowing in the same direction so we can make some momentum there. What I have found is many people will not include their CSR’s, and a CSR will feel left out, abandoned; they will not receive as much attention (as a service professional) as one of your technicians will, and this is an opportunity to include them as a vital team member of your company. They also will gain some knowledge on some technical issues, and it will also give them some really good perspective sometimes.

Mike mentioned this I think it was last week, I wasn’t on the call but I listen to them all the time because they’re just golden. Someone had asked about meeting during the busy time and Mike was like, “Yes, absolutely!” Maybe it’s a refresher, maybe it’s a shorter version, but you’re always talking about getting the team on board moving in this one direction, and so out of sight, out of mind.

And so I believe that absolutely you should have the whole crew involved. When we did it there was a tech time when one technician per week would get up for five minutes in front of everybody and they would get to talk about something positive or something uplifting. Which was maybe, “Hey, Susie took care of this customer, thank you so much,” or they’d say, “My daughter just won a softball tournament,” or they’d say, “I just learned a new way to approach a customer about an IAQ product or surge protector.” It was a five-minute time.

And also our CSR’s had a five-minute time, and it was uplifting. One of them would get up, and it builds confidence in them to get in front of people, but also it was a time for them to share some positive reflection. So we made the meetings a team-building exercise every time.

Now, if I had a manufacturer coming in – say, whatever manufacturer you’re with – displaying a new flux capacitor, whatever the case is, and it was a training for technicians only, I would more likely not include our CSR’s. I only invited them when we were doing whole team meetings, because I wanted them to feel like part of the team. It’s not an “us” and “them,” but it’s a “we” thing. So it really helped build some camaraderie between our inside office support – our CSR’s – and our outside support system, which is our technicians. And together it built some affinity that they were able to help communicate concerns and things like that in that meeting.

So that’s my thought on that, the answer should be “Yes!” But love to hear from James and Mike as well.

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.

Taking Off the Customer’s Blinders | Clip of the Week

When homeowners have an air conditioning (or heating, or …) problem, they’re going to have blinders on. It’s your job to remove them.

In this week’s selected clip from Cracking the Code, Weldon Long outlines how removing your customer’s blinders — they only called about their AC unit, that’s all they’ll be thinking about — can grow your average ticket and increase the homeowner’s comfort and satisfaction.

This clip is excerpted from this week’s episode of Cracking the Code. Visit EGIA.org/Show to watch the full show, before it goes in the members-only archive on May 21.

Ask the Experts | Offer Financing to Cash Buyers?

Question: Why should I offer financing to a cash buyer?

Drew Cameron; President, HVAC Sellutions & Energy Design Systems, Inc.:

I love financing, one of my favorite topics. Sales and financing and everything marketing/sales-related, it’s a passion, I study it every single day of my life. I don’t think I’ll ever know it 100%, but I always like to be a better version of myself than I am today.

This is a topic near and dear to my heart that I was talking about last week and the week before visiting two different clients in two different markets. I’ve heard this exact question so many times and I say to the questioner and to the salespeople: How do you know they’re a cash buyer? Just because they say it doesn’t mean it’s true.

You need to have a process, follow your process, don’t let whatever customers say or don’t say or how they act knock you off your game per se. That’s why we standardize the process.

So I would say how do you know they’re a cash buyer? We offer all the ways a customer can pay to all people. I don’t care what house they live in, what car is in the driveway, the zip code of the home, the investment, or what the customer says. By sharing it with all customers, it provides perspective that all options are affordable and make economic sense, because you can show a customer a number that gets them down into that $100-$150 range for basically a $15,000 purchase. If you think about that, that is less than most homeowners pay for having a cell phone, for having cable, internet and landline phone at their house. That’s usually less than most people pay for utility bills, car payments. You can see where I’m going with this.

By showing them a monthly number, it’s a number that they deal with on a regular basis, they pay for other things and spend a couple hundred bucks. And I don’t care if you live in the house on the hill or the house in a bad neighborhood, you know, where values are depressed. People put their pants on one leg at a time, so people pay their bills exactly the same way. They’re used to what they pay on a monthly basis, because we live in a payment society more than anything. Nowadays even if they have the money, they still make monthly payments for things like mortgages and insurance and cars and utilities and whatnot, and showing that this is relative to that makes it make sense.

This also will yield increased closing ratios and average tickets. Many people, even with money, will spend more [if they use a monthly payment], meaning they’ll buy a better grade of equipment, or add-ons, or whatever, if they see that it makes sense. Payment options also offer money flexibility and free up the cash. So even if they may have the cash, why go ahead and sink all of your money into an investment like this, which actually pays for itself through energy and repair costs?

If you’re thinking about doing something with the pool in the back, or refinishing the driveway, or working on the windows or gutters, or remodeling the kitchen or basement, all those types of things – none of those pay for themselves. Windows don’t pay for themselves. So I would pay cash for those types of things, don’t pay cash for the types of things that actually pay for themselves through energy and repair costs.

And lastly, if these people were to talk to others, these people may be cash buyers, but maybe they have friends, family, coworkers, people from church, whoever. If they were to talk to others, they can talk to the affordability story that you have available, because what I know is most contractors don’t offer financing, or are horrible at doing so. So if you’re the company that shares it in a very compelling way, and they know someone who is not a cash buyer, they can relay that information that your company is affordable to somebody else.

And bottom line: If they insist on giving you a stack of cash, take it. So I’m not against taking cash, but make sure you offer financing and offer all the ways you can pay to all people.

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.

Turn Your Job Into Your Calling | Podcast

What’s the difference between a job, a career, and a calling? And how can you turn your job into your calling — and make yourself irreplaceable to your employer or your customer in the process?

Mark Matteson explains on the latest episode of Contractor Coffee Club. Plus a Snapshot Survey focus on vehicle fleet and the value of vehicle wraps!

“Do Right By the Homeowner” – Clip of the Week

“We always do the right thing by our homeowners.”

In a clip from Cracking the Code, Weldon Long explains why doing the right thing isn’t just good for your reputation — it’s good for business.

This clip is excerpted from this week’s episode of Cracking the Code. Visit EGIA.org/Show to watch the full show, before it goes in the members-only archive on May 14.

Ask the Experts | Are Our Prices Too High/Low?

Question: How do we determine if our prices are too high or too low?

James Leichter; President, Aptora Corporation & Mr. HVAC, LLC:

I love pricing questions, thank you. There are two things to think about when you’re considering if your prices are too high or too low. There’s the mathematical question. By that I mean, are you charging enough to cover your costs and produce a net profit?

And are you charging the correct amount for what your market will bear? Gosh, I hate to even say that, because everyone uses that as an excuse to not charge enough. “Well, my market won’t bear that,” but that’s almost never the case, but anyway, we’re going to cover both of those.

So the first thing you want to do is properly calculate your breakeven point on labor by department. Let’s talk about the service department – typically you need to charge about six times what you’re paying your service technicians. If you pay him or her $25/hour, then you probably need to be at about $150/hour.

Keep in mind if you offer discounts such as military discounts, service agreement discounts, that could mean you need to charge a little more. But that’s a rule of thumb. You really want to go to the EGIA website and use the breakeven calculator to determine what your hourly rate is to break even. And then add to that your net profit. So let’s say that your breakeven is $150/hour. You would then want to add for net profit – net profit before taxes – and you decide what you want: 5%, 10%, 15%? When it comes to the service department, I would want at least 15% — somewhere in the area of 15-20%. So calculate your breakeven and then add for net profit.

Now, just a reminder: if you are a 15% net profit company right now, and you offer somebody a 15% discount for a service agreement, you are at a 0% net profit for service agreement people. Are you with me? So if you’re a 10% net profit company, and you offer a 15% discount, you’re losing 5% of revenue on that customer. So you have to keep in mind, when you calculate your breakeven, you’re calculating breakeven as if they own a service agreement.

Now one more word about adding for net profit: Your net profit requirement should probably be higher for your service department than your replacement department, and let me tell you why. Service is more difficult and more stressful to provide because it’s more labor intensive. The more labor intensive something is, the less fun it is to do it and the more money you should make. So for me, I have about a 20% requirement for service work, and I have about a 10% requirement for replacement work – half – because replacement work is much easier.

Now here’s a few rules of thumb to know if you’re priced too high or too low. Your technician should be averaging about $250 per ticket, or about $670 gross profit per day – or you’ll sometimes hear that referred to as $670 gross profit per man-day – and if you’re below those numbers, then you’re probably charging too little.

How do you know if you’re charging too much? Let’s say that you’ve calculated your breakeven and you’re way above that and you routinely get complaints about your price being too high. Let me reiterate that: You’ve calculated breakeven and you’re way above that and you’re constantly getting complaints that your prices are too high. Well that might mean that you’re charging too much. So, you might consider lowering your price, but you would never lower your price below breakeven, otherwise you’re a charitable organization, right?

But you’re not a charity, you’re a for-profit corporation, and you have to charge more than it costs you to provide the work. There’s no way around that. I think that about covers it.

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.

Ask the Experts | How to Calculate Commissions

Question: How should we calculate commissions for our salespeople?

James Leichter; President, Aptora Corporation & Mr. HVAC, LLC:

Interesting I get this question, because this morning I was discussing this with someone – be funny if it was the same person. He wanted to pay his salespeople based on net profit. I recommend that you – generally speaking – pay your salespeople based on gross profit.

Now you have a couple methods here. Let’s say that you use what we call cookbook pricing. So you have a menu of prices and those retail prices are the prices that a salesperson has to quote, except for maybe promotional items that you offer and pull away as your schedule permits.

If you use cookbook pricing, then you could offer them what I’ll call a flat rate sales commission: $100 for this, $50 for that, etcetera. Because you’re dictating the retail price anyway, it’s a fixed cost, it’s guaranteed, so you could also guarantee a commission on each of those menu items.

If you don’t have that, then you would pay them based on gross profit, which of course is the sales price minus the cost of doing the job. That’s your gross profit of course, and you could pay them a percentage of that. Typically, I like to pay them 20% of gross margin, gross profit dollars – 20% — and I would also offer them full benefits.

So they’re typically commission-only, 20% of gross profit dollars, you might offer them a draw every week. By that I mean a small amount of money to get them by, it’s basically a loan against their future commissions. That number could be anything you like, but it might be $500 a week; so they might get a $500 a week draw.

Here’s something that’s really important, in my opinion: In order to make them feel like employees, part of the team, and not an outside subcontractor, I think it’s important to offer them the same benefits you would offer everyone else. So they get paid time off, paid vacation, paid holidays, etc. And that way they are part of the group. If they are paid just a commission and nothing else, oftentimes they feel like outsiders. And let’s face it, they’re not going to enjoy holidays like everyone else. Everyone’s going to be talking about getting Thanksgiving off paid, and he or she isn’t going to get it, so they’re not going to like that. So I like to pay them for their time off.

Now why don’t I want to pay based on net profit? As everyone knows, net profit is gross profit minus overhead. It’s the overhead I have a problem with. They don’t have control over overhead, and if you buy yourself a new pickup truck, they might question you. If you give yourself a raise, they might question you. If you remodel the building, or remodel your office, and you didn’t need to remodel your office – your office looked just fine – they might question you. Because, if you think about it, all of those things lower their sales commission. And because they have no control over sales commissions, they’re always going to second-guess your decisions.

But they have full control over gross profit margin, because they control the retail price and, to some extent, they control how much they’re paying for the materials and the equipment and they could also have a hand in controlling labor costs. So I want them focused on not overhead, which is not under their control; I want them focused on direct costs. And that would directly offer them more money, if they keep those costs under control. So pay them a percent of gross profit margin, not net profit.

One final thing I’d say is I’m not a fan of paying a percentage of the sales price, because then the emphasis becomes making a sale; who cares about profitability? I would offer a 10% discount in a minute to make the sale, and what difference does it make to me? It only cuts my commission by 10%. But that could completely eliminate the contractor’s profitability. If you’re a net profit of 10%, and they offer a 10% discount, you’re a zero net profit, and I would still get my sales commission.

So I don’t like paying commission on retail price. I don’t like paying commission on net profit. I like paying a percentage on gross profit where they have control over how the job ultimately plays out.

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.

“Ongoing Sales Training & ROI Per Lead” | Clip of the Week

Sales training never stops. It’s an ongoing process to ensure you’re getting the best out of your salespeople and that they’re always improving — even your best salesperson.

In a clip from Cracking the Code, Weldon Long answers viewer questions, including about how and how often to do do sales training in your company, and the importance of measuring revenue per lead.

This clip is excerpted from this week’s episode of Cracking the Code. Visit EGIA.org/Show to watch the full show, before it goes in the members-only archive on May 7.