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Relaxing the Suspicious Homeowner | Clip of the Week

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Relaxing the Suspicious Homeowner | Clip of the Week

Step one of the sales process is designed to do one simple thing: create a sense of trust so the homeowner will relax, ease up on the suspicion, and let you do your job and help them.

In the latest “clip of the week” from Cracking the Code, Weldon Long relates a story about encountering a customer with a health problem. Through observation and taking an interest in the homeowner’s problems, he was able to deliver the perfect solution while maximizing customer satisfaction.

Watch the clip below, and visit EGIA.org/Show to watch the full show, before it goes in the members-only archive on February 4.

Ask the Experts | How to Grow Closing Rates

Question: My salespeople close at about 35-40%. I really feel they’re wasting a lot of my leads. I pay them good commission. Do you have any ideas on how to get my closing rates higher?

Weldon Long, New York Times Bestselling Author:

Yes. Yes, I do. I have many ideas, and I’m sure Drew and Gary do as well. There’s a couple of things in the questions that jump out at me. Number one, I hope we’re talking about marketed leads here. Because if we’re closing 35-40% of marketed leads, you’re at least in the right conversation. If we’re talking tech turnover leads, you’re getting destroyed, so I hope we’re talking about marketed leads. I would say a reasonable goal for marketed leads would be 45-50% — that would be an attainable goal on marketed leads, so 35-40% would be a little low.

So here’s the thing that jumps out to me: “I pay my guys good commission,” I would love to know more about exactly what that means. And here’s why I say this: I was talking to a client a week or so ago, and he was talking about another company that’s still paying their sales commissions (to their guys) a flat 10% off the revenue of the deal. Regardless of the margin, regardless of the profitability, the sales guy gets 10%.
So a person with a compensation system set up like that does not have a huge incentive to worry about selling a ton of deals, cause they’re going to get 10%, they’re going to drop off bids and get three or four out of ten. And if they’re getting a flat 10%, they can drop their price, drop off cheap bids, and still get $100, 000 or $150,000 a year.

So when you say good commission, I’d love to know a little more about what that means exactly, because I think the commissions drive a lot of behaviors in terms of converting sales. If you’re paying your guys based on the gross margin of the deal, and they’re really dropping their prices, they’re going to pay the price for that in their commissions also. So their commissions are going to be diminished, which gives them incentive to go out and close a couple more deals.

If they sell a deal for $10,000 that should have been sold for $15,000, and they still make $1,000, they don’t have a ton of incentive to go out and close the next deal. They just keep going out and dropping bids off it’s going to work out for them. So I would just make sure your compensation system is set up to drive the behaviors you want.

Other than that, it’s just so broad; again, it gets back to everything we’ve talked about today. 35-40% is low on marketed leads; it’s disastrously low on tech turnover leads. But the bottom line is they have to have a sales process, right? It can be EGIA’s process, it can be Airtime’s process, it can be Nexstar’s process, it can be anybody’s process, but they have to have a process.

The reality is the sales fundamentals are pretty much routine and fundamental, there are some nuances here and there and different things people have, but if they’re following a sales process, and in my mind a sales process consists of four major components: Build a relationship, investigate the problem, solve the problem, ask for the sale.

As long as you’re doing those things, then you’re following a sale process. Now there are a lot of things you can do to enhance the relationship-building, a lot of techniques you can learn to do the investigation, a lot of different things you can learn to get better than that, but the four components need to be there. If your’e not doing one of those four or two of those four, then you’re missing out on some of the basic fundamentals. So any sales process is going to make sure you’re hitting those four fundamentals somewhere along the line. Maybe in different orders, maybe different emphases, but they’re going to make sure you’re hitting it somewhere along the line.

So what I would suggest – and obviously you’re an EGIA member if you’re on this call – we have an online program that’s kind of an introductory sales 101 program, which is our core training. Drew and his crew are working on an advanced training, kind of a sales 201 which will be taught around the country later this year and in 2020. So send your people to those trainings. Take the online version, or attend one of the live trainings, and attend the advanced next year, whatever it is. But you gotta get the training, you have to get a process that your people are buying into and using. Listen, I don’t mean to oversimplify here, but as I write about in my books, a consistent sales process delivers consistent results. Random sales results come from random sales activities, it’s not rocket science.

So we’ve got to have some kind of process that we’re using. 35-40% … I’d love to know what the average ticket is, because that would impact my opinion on this as well. But it seems a little bit low even on marketed leads, 45-50% should be our target, and probably 65-75% on tech turnover leads, depending on – some companies turnover less quality leads within their own company because they’re going for volume rather than quality, based on the decision the owners make.

But, “any ideas how to get my closing rates higher?” Yeah. Attend the training online, attend the training live, read books, study, practice, roleplay, roleplay, roleplay. When you get done with that, roleplay some more. It’s just the basics, it’s the fundamentals, it’s the blocking and tackling of business and sales. With that I’ll turn it over to Drew who’s only been selling in this industry about 30-35 years, so probably has some pretty good insight.

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.

Repair vs Replace on Winter No-Heat Calls | Clip of the Week

During the no-heat calls that will pour in during the winter, it’s more crucial than ever to have established rules for when to recommend repair vs replace — and to ensure every tech is adhering to those rules.

In the latest “clip of the week” from Cracking the Code, Weldon Long explains how to have the “replacement” conversation when the last thing in the world your homeowner is thinking about is spending money on a new furnace.

Watch the clip below, and visit EGIA.org/Show to watch the full show, before it goes in the members-only archive on January 28.

Ask the Experts | Install-Only Company Marketing Budgets

Question: Is there a guideline for my marketing budget as a percentage of total revenue if I’m not doing demand service?

Gary Elekes; Founder, EPC Training:

Well, I’d love to be able to give you a magic bullet or the one number that you could hang your hat on and it would work, but unfortunately marketing doesn’t work that way. So the questioner is not doing demand service, so I’m going to take that to mean we’re mostly doing installation, and that we’re targeting replacements as the primary philosophy.

So you’re probably going to wind up spending more money than the average company in terms of the KPI’s that we vetted in the trade, simply because if you’re going to do paid search, and you’re looking for a person or a consumer that is looking to buy a new system, chances are they’re going to click on multiple ads. So you’re probably going to have to spend some resources to be present and accounted for inside of that space. It’s a lucrative transaction on the replacement side, so given that framework everyone knows that. Wally knows that, Drew knows that, I know that. We’re in the same market; we’re probably fishing in the same pond. So when things are slow, you’re going to spend a lot more money per click or per lead. Or if you’re doing traditional advertising, even if you’re doing targeted direct mail, that’s going to be a higher number.

But I would also say that I’m ok with that, meaning that service is an expensive business. It does produce a lot of leads and lead turnovers and maintenance. So we love it for that reason. But without that expense from service, I have the opportunity to reduce my overhead exposure. I probably don’t need quite as many people, and my assets and my vehicles aren’t there.

I’m probably not worried about certain tools and training and compliance issues that are part of my overhead structure in the service business. So that does give me some additional liquidity to spend on a higher cost per lead, if you will.

So traditionally what we’ve seen is somewhere around 12-15% would be a number that you would say an installation-only company would spend. I’ve seen higher than that, but I think you’re gonna have to figure that’s going to be about what it’s going to take to compete effectively in the marketplace. The downside that you have by not having the service and the maintenance business – which is not necessarily part of the questioner’s question, but there are two sides to that knife – is that you’re not going to have the slow-season customer relationships to be able to leverage internally: email campaigns, drip campaigns, call center marketing, precision tune-up discussions. So you’re giving up the lead turnovers inside of that model.

So as long as you understand that’s one of the reasons why you’re going to have to spend money. The trade you get in favor of that is a lower overhead structure, probably more flexibility to turn off the spigot. So we have several clients in our digital agency who are absolutely in that model. And both models are successful, but they tend to spend quite a bit higher numbers comparatively than a company who has the service business.

One other comment I’d make on that is: The value of the company at transition is worth less in that particular model because there’s no way to prove to the buyer that there’s a repetitive or recurring revenue stream that creates profit, it’s based on the marketing model. So not that you want to do that, in terms of the questioner, but I think you also need to understand that that’s a downstream issue that you need to think about.

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.

The Power of Employee Reviews | Clip of the Week

Employee reviews aren’t some worthless obligation. In fact, when properly undertaken, they have tremendous value — for the company and the employee.

In the latest “clip of the week” from Cracking the Code, Gary Elekes explains how the employee review is one key to get employee and company on the same page — and offer the employee a roadmap to prosperity that encourages peak performance and loyalty.

Watch the clip below, and visit EGIA.org/Show to watch the full show, before it goes in the members-only archive on January 21.

Ask the Experts | Hourly or Performance-Based Pay?

Question: Should service employees get hourly or performance-based pay?

Gary Elekes; Founder, EPC Training:

Well, that’s up to the company owner and the philosophy and culture that they’d like to drive in their organization. I happen to favor performance-based pay, I wouldn’t own or operate a company that wasn’t performance-based pay, but that’s culturally a fit with our business philosophies and how we approach it. I think that you can be successful in either one of those methods; I don’t think it’s really a question of “should you?” or “do you have to?” It’s more, How do you want to actually operate in terms of the company performance and the culture?

One of our core values in our company is peak performance, and a second value is operational excellence. So I think culturally we’ve set it up that we want people to be rewarded for peak performance. Performance-based pay allows me to pay them more money when they do peak-perform. Hourly is really a system that sets it up so that it’s a disincentive to be more productive. It’s actually an incentive to go slower, not necessarily an impact on quality.

So I think the question become what does the business owner want, what does the management function want?

The challenges that a lot of companies face on performance is how do we do dispatch, how do we do customer service, how do we do accounting, how do we do the office staff? So you want to tie those back to the budget and the performance metrics for the particular job. Performance-based pay isn’t the same as task-based pay, I think that’s an important point to make.

Performance-based pay is related to KPI’s, benchmarks, individual performance, and so you set up bonus programs that are in alignment with behavior patterns. So if someone performs better – let’s use call-booking for CSRs as an example – if we want 75% call bookings and they’re booking 85%, they would be given some kind of reward system based on the idea of their improvement over the KPI.

So the real trick is, what do you want as a company and how do you want your culture set up? And then align your rewards systems, not just pay plans, attached to that. I happen to favor the performance-based pay plans, but we have a pretty tight culture set up. I think that’s the big conversation you have to have before you answer that question.

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.

Overcoming Objections

In the final episode of Contractor Coffee Club, Mark Matteson concludes his series on sales by explaining how to overcome sales objections — and why objections may not be such a bad thing.

Plus, a segment on how to properly set goals and use them to drive success, and a discussion on the latest Snapshot Survey on holiday bonuses and perks.

Millennials Want a Social Value Commitment | Clip of the Week

Not all millennials are the same, but there are some oft-shared common traits you should be aware of when trying to sell to them — such as a commitment to social value.

Weldon Long explains how to cater to millennials social concerns during the sales process, in the latest “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 January 14.

Snapshot Survey Results | Determining Holiday Bonuses

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

Question: Which factors are considered when determining holiday bonuses?

Eighty percent of surveyed contracting companies give their employees a holiday bonus. So how are those companies determining bonuses? Most cited years of service (54% of respondents), followed closely by individual performance (52%) and company performance (50%). Another oft-cited factor was the bonus recipient’s current salary (16%), while 14% of respondents said there essentially were no factors – all holiday bonuses given out are equal.

While “years of service” is a rather straightforward measure, some other factors, such as company or individual performance, can be determined using a number of different methods. The most commonly mentioned measures included earnings before interest and taxes (EBIT) on the company level, while “individual performance” ranged from personal financial impact on the company to a bonus structure tied to overtime hours worked.

Login to access the full research report on holiday bonuses & perks.

For a deep dive into service management operations, financial structure, and other related concepts, access training materials, recommendations and education pieces in the Contracting Best Practices Library, available in your EGIA Member Dashboard.

EGIA Snapshot Survey - What factors go into determining holiday bonuses