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Your Business’s Backbone? Budget | Clip of the Week

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Your Business’s Backbone? Budget | Clip of the Week

Your company’s financial structure is crucial; the foundation of your business. And it all starts with the budget.

Gary Elekes explains this vital component of your company, in a clip from Cracking the Code that you can’t afford to miss.

Watch the clip below, and visit EGIA.org/Show to watch the full show, before it goes in the members-only archive on December 24.

Ask the Experts | Sales Process for Millennials?

Question: How would you adjust your sales process for dealing with millennials?

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

Oh, jeez, millennials. It seems like we get lots of questions geared toward millennials; they’re this unique animal out there, this unique character that we need to adapt and adjust for specifically. And I’m not sure why that is, but it seems like those questions come up quite a bit nowadays in regards to many facts of the job.

Let me just say it this way I guess: I wouldn’t adjust my sales process just for millennials. I think you actually have to adjust for everybody. It’s all based on the interaction and what that interaction requires. I don’t care if they’re a millennial, or Gen X, or a baby boomer, or children of the Depression – the Greatest Generation, as I like to call them. I think you have to adapt, adjust and execute accordingly based upon your audience, so that’s what I would say.

But if we want to get specific and say there are some trends, if you will, because people like to stereotype generations a little bit, and typecast them. So if we’re going to respond to the stereotype of millennials, then I would make the process as interactive as possible, because they tend to want to be part of the process, based upon some demographic studies and whatnot. So they like to be part of the process, and vary the process as applicable based on their interests.

Now, again, that sounds like every customer under the sun, but if you look at how businesses are kind of evolving and developing based on what they think the generational trending is driving – and that’s where I think the focus really needs to be – is that the millennial generation has grown up with technology in a very social environment. So what you’re seeing is that they’re actually changing the culture of society; not just of themselves, but for everybody.

So think, like, Chipotle, and Noodles & Co., and Pie Five Pizza, and Zoe’s Kitchen and Moe’s Southwest Grill; Color Me Mine, where you can paint pottery; Board & Brush, where you can paint boards and signs and whatnot; where there’s a very interactive experience – Dave & Buster’s too – to the whole process, and they actually get to be part of the process. And so what they have found, based on studies and whatnot, is millennials like to be part of the process, they want to understand how and why. And that’s very important, also, as an employment standard as well. They like to understand why do we do what we do, how we do things, how are things made, and so forth and so on.

And so, if I were going to bring that into the sales process, what would that look like? Well it’s going to be, again, varied by the audience of, let’s say, the millennial that you’re talking about, and it’s going to be interactive. I would do the load calculation and I would show them the load calculation on my laptop or iPad; spin that right around, or print out a report and show that to them. Involve them in the IAQ monitor or energy audit software, infrared cameras, flow hood, static pressure tests, blower doors, duct blasters, laser temperature thermometers where you can measure the temperature coming out to the registers. And make them actually part of the design process.

I mean, you could actually allow them to hold the flow hood and the infrared cameras and the laser temperature measure and whatnot, and you’re involving them in that design process. And then you provide them with a menu of choices, because they like choice – we all do, but they certainly like to have choices – that they can kind of flex and float in and out of. And let them know everything they can do for their safety, their health, their comfort; to avoid energy waste and conserve resources and protect the environment; as well as to control and access and interact with whatever solution you’re putting in.

So if you go ahead and put in smart home solutions, they want to have control, access and interaction with the solution you put into their house, as well as monitor the performance. So you’re almost “gamifying,” if you will, their interaction with the system. So they can see how much energy they use, how many run cycles they have, if it’s a generator they can see how often it exercises during the week and when it does run and how many hours it runs and how many kilowatts it’s producing and so forth and so on.

And develop a plan, if you will, for the perfect home environment. Meaning – Wally’s been on this call several times talking about Joe the Concrete the Guy. And Joe the Concrete Guy basically told him everything he could do that concrete would solve. Well, as a home services contractor, you want to tell every customer, but specifically millennials, everything that they can do to improve their home health comfort safety energy management aspect, and then help build a plan to build that perfect home environment over time. They may not do it all today, but they may do it over time; at least you’ve given them that process. That’s your job: You tell them everything they can do, and then they can decide everything that they want to do.

And then I would like to spin it, because they’re obviously very socially conscious – they like to understand what others are doing around them—I would share what others like them have done. I would share reviews, and testimonials, and videos, and references, and connect them to your social networks online. And, if you can, have periodic community events, where you invite people to your business and have an open house and allow them to get involved with you and your company and your employees – they like that social interaction.

I know the Philadelphia Airport has gone from having independent lounges and restaurants, to wide open seating, communal seating and tables and whatnot, where you don’t have individual tables, you’re just all kind of sitting at these long, almost family tables now. So that social environment is really what they seem to value quite a bit.

And then lastly and probably most importantly, I would show them how most people like themselves buy something like this – and that they use one of your convenient and flexible investment plans, which is financing. And show them how it’s flexible and that no one pays for this stuff up front, they get the house that they want, and then they pay as little as possible, and then they allow what they’re going to save in energy savings and repair costs and obviously having the extended warranty, to pay for itself over time.

Because you don’t pay for your utility bill all at once, you don’t pay for your mortgage all at once, so why pay for the appliances that consume the most amount of energy in a space that you’re only going to use a portion of? Why pay for a 20-year solution when you’re maybe only going to be there for 5-7 years? Why not pay for just a short period of time? Allow it to pay for itself over time.

So those would be the things that, if I were to stereotype it, that is the stereotype that I would do. But quite frankly, I’d probably do that for everybody, not just the millennials.

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

Building Tomorrow’s HVAC Workforce

In a special episode of the Contractor Coffee Club, Mark welcomes Bruce Matulich, chairman of the EGIA Foundation. Bruce discusses the mission and activities of the 501(c)(3) nonprofit, which is dedicated to turning around the industry’s workforce shortage by using scholarships, research and other initiatives to attractive more, younger people to the industry. And Mark and Bruce talk about what contractors, manufacturers and everyone in the industry can do to help the Foundation generate tomorrow’s HVAC workforce today.

Selling Service Agreements Over the Phone | Clip of the Week

Service agreements are your contracting business’s lifeblood. So wouldn’t it offer a big boost to your business if you could sell them over the phone, during the course of a normal demand service request?

Customer service guru Brigham Dickinson roleplays strategies for doing that very thing, in this week’s “clip of the week” from Cracking the Code.

Watch the clip below, and visit EGIA.org/Show to watch the full show, before it goes in the members-only archive on December 17.

Snapshot Survey Results | Choosing Equipment Brands

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

Question: Do you carry multiple equipment brands?

While there are some intangibles and soft skills that are inarguably central to your business’s success – trustworthiness, expertise, overall customer experience – a customer’s need for working equipment is what makes the phone ring, so the actual equipment your company offers is still vital.

According to our respondents, nearly 4 out of 5 companies – 78% – offer multiple brands of equipment, while 22% exclusively carry a single brand. There are various schools of thought to either side of the question – vetting out the perfect manufacturer for your customer and committing to them, for example, versus offering a wide range of products to ensure you have the right equipment for absolutely everyone.

The important thing is considering those various factors and how they fit into your overall company philosophy, goals, customer profile and more, as well as finding a distributor that you trust and work well with.

Login to access the full research report on local events and home shows.

For a deep dive into service management operations, pricing, and other equipment-related concepts, and to access training materials, recommendations and education pieces, visit the Contracting Best Practices Library at the EGIA Member Dashboard.

EGIA Snapshot Survey - 78% of HVAC companies carry more than one equipment brand

Ask the Experts | How to Sell More IAQ

Question: I would like to sell more IAQ. Do you have any recommendations to help me do this?

Weldon Long, New York Times Bestselling Author:

Absolutely, and it kind of goes hand-in-hand with the previous question. It comes down to, when I walk in the house on a sales call or a service call, I have to look for all of the additional problems that I can solve.

I told this story last week and I’ll do it again this week, because it really goes to the heart of the issue. I had a contractor come out to my house – I’m having some steps poured – and as we’re in my driveway talking about having the steps poured, he notices I have this motorcycle trailer parked on the side of the driveway. So he asks me why the motorcycle trailer is on the side of the driveway, and I tell him, as you can plainly see, the driveway is not wide enough to park the trailer. He says to me, “Well, when I’m doing your stairs, I can widen your driveway.” And my budget went from about $1,000 to $10,000, right?

So the key is you have to take a broader perspective of the home. Don’t just look at what the homeowner called you about. Your homeowner is never going to call you and say, “Hey, my furnace needs to be tuned up or it’s not working, and oh by the way little Susie has allergies and I was wondering if you could improve the air quality in the house.” That call is never coming. They’re going to call with their basic problem. It’s your responsibility to make sure that you’re looking for the additional problems you can solve.

As we have this discussion, Toviah’s running through the various trainings and opportunities we have on EGIA.org. So the technician communications training is all about identifying opportunities for indoor air quality; there’s a whole program, as you can see on your screen, that’s dedicated to how you can sell more indoor air quality products. Because the beautiful thing about IAQ products is that, number one it’s a great opportunity to solve a problem for your homeowner. But, number two, as a general rule the margins on IAQ products tend to be very, very good.

So here’s a good example: Technician Communication –Indoor Air Quality Selling Process [as seen on EGIA.org], we had a whole program on that. If you go into Gary’s side of the EGIA website – the Best Practices Library – and type in “IAQ,” all the videos, all the trainings that Toviah’s going through right now are going to pop up for you. So: overview of indoor air quality; how to sell it; how to diagnose problems. So just go on the Best Practices Library on EGIA.org [must be logged in], type in “IAQ,” click on that, and it’s going to take you to a ton of training on the basics of indoor air quality, how to sell it, how to convert. There are six programs it looks like. So these are all going to be really important.

One of the things I love about EGIA is that, if a contractor has an issue, a concern, a problem, the resources that you need are right here and they’re super available. We have the ten core foundation courses we’ve talked about – the ten core disciplines you need to master, or at least have an understanding of. But then you go to the Best Practices Library and you see that search bar up there, that’s kind of like your Google for HVAC. Type in “IAQ,” type in whatever question you have, and a series of videos and content created by Gary Elekes is going to pop up. You’ll watch those videos, understand the concepts, share them with your service department, you use them at your next service tech meeting or sales meeting, and the next thing you know you’re going to have much better results in terms of selling IAQ or whatever the problem is.

So the key is to take a broad perspective on the customer’s home and make sure that you’re looking for every problem that heating and air conditioning and IAQ can solve for your homeowners. If you do that, you’re going to open up a lot more opportunities on every service call.

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

How Financials Are Vital | Clip of the Week

Having the financial structure in place to tell you exactly what’s going on in your business won’t necessarily make you more profitable — but it will give you the information you need to make the decisions that will make you more profitable.

Gary Elekes explains the importance not just of financial structure, but of measurement and reporting within that structure, in this week’s “clip of the week” from Cracking the Code.

Watch the clip below, and visit EGIA.org/Show to watch the full show, before it goes in the members-only archive on December 10.

Ask the Experts | How to Set Price, Commission

Question: How did you set price and commission in your company?

Weldon Long, New York Times Bestselling Author:

Well, I’ll tell you up front, I’m going to defer a lot of this to our resident expert, Mr. Gary Elekes – on a variety of different pricing models and what works and what doesn’t work – but I think what the question is – well, there are two very distinct questions, right? Setting your price in terms of what you’re charging vs. what you’re commissioning your salespeople.

So, in terms of your pricing, I’ll tell you what not to do, and that is not to have some random price that you make up out of your head, or use the cheapest guy in your community, in your market, as the benchmark for what you want to be. Right? That’s what you don’t want to do.

I’ll let Gary comment more on specific models, but it’s about how much revenue do you need to generate based on your installation fee, right? What do they have to generate for you to make money? Gary will comment in detail on that – he’s got courses, by the way, on all of this stuff on the EGIA Contractor University platform.
On the commission part, listen, I think commissions on average tend to run anywhere from 6 to 10, 11, 12 percent, depending on the company and the margins on the deal. What I will tell you conceptually, I always preferred to pay my people off a percentage of the gross margin of a job, not of the gross revenue. We all know you can sell a job for $10,000 and maybe not make a dime off of it. If you’ve got a 30% gross margin on a job, and your overhead is 40%, then you just lost $1,000 when you sold a $10,000 job.

So you gotta make sure that the commissions are related to the gross margin, the gross profitability on a job. So what we did, we had a sliding scale – and we’ll take an imaginary $10,000 deal – if it came in at 60% gross margin, so $4,000 went to cost of goods and $6,000 went to gross profit, then if I recall correctly I think the top of the scale was 25%. So the sales professional would get 25% of the gross profit of that $6,000. If you do the math on that real quick, that’s $1,500. So he would have gotten 15% of that overall $10,000, but that’s on a 60% gross margin job. As the gross margins came down, then the percentage came down. And it got down as low as, if they got maybe 45% or 42% gross margin, they were making next to nothing on the job; they were probably making a couple hundred bucks on the job.

But I think it’s very important that the sales professional’s performance is attached to that gross margin. Otherwise you get in that situation – and I’ve seen it happen – “oh we just pay 10%, we pay all salespeople 10%.” So a guy sells a job for $10,000, he makes $1,000 and the company breaks even or loses money on it. That’s not a balanced, fair approach.

So you can experiment with the numbers you’re comfortable with, there’s no set amount, some companies are more generous than others. But at the end of the day, you’ve got to be making a sustainable gross margin, gross profit, to run your company, pay your bills, and still make a little bit of profit.

So, I’ll toss that over to Gary to get into a little more detail on the price and how that structure is set.

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

How to Change Your Comfort Zone

Everyone has room for improvement, at work or in their personal lives. Anyone could book one more call, close one more sale. But how do you change well-established habits? In the latest episode of Contractor Coffee Club, host Mark Matteson talks about the importance of setting a new normal and explains how to set a new comfort zone in order to achieve hitherto unseen results.