Monday, November 24, 2014
A Better Bottom Line in Your Service Department
It's Easier Than You Think!
By Jim D'Amico*The Old Days
I remember the days when oil dealers were content to pump oil and take some of the profits to subsidize their service department. Oil burner service was often provided to customers at or near breakeven. In the early 1970’s, while working in my family's fuel business, I was told by a grizzly, old oil burner mechanic, "Oil companies are supposed to lose money on service." Even back then I found that to be perplexing, considering the significant investment in providing quality, heating service.
Implementing Dealer Programs
By Jim D'Amico and Ken Cederquist*
There are multiple ways for you to get involved with your dealers to allow them to get more out of their HVACR businesses which in turn keeps your dealer base strong and profitable for you. You and your territory managers play an important role in taking your dealer to a higher level.
Offering good programs or business methods can change the tone of your business and that of your dealers in a positive way. However, good ideas offer no value to you or your customers without an implementation plan and a positive attitude. Your implementation plan should include focus groups, dealer development programs, developing your territory managers and placing them in consulting roles with your dealers and perhaps most importantly mentoring and coaching your dealers.
There are multiple ways for you to get involved with your dealers to allow them to get more out of their HVACR businesses which in turn keeps your dealer base strong and profitable for you. You and your territory managers play an important role in taking your dealer to a higher level.
Offering good programs or business methods can change the tone of your business and that of your dealers in a positive way. However, good ideas offer no value to you or your customers without an implementation plan and a positive attitude. Your implementation plan should include focus groups, dealer development programs, developing your territory managers and placing them in consulting roles with your dealers and perhaps most importantly mentoring and coaching your dealers.
Improving Relations Between Your Dealers and Their Customers
By Jim D'Amico and Ken Cederquist*
Focusing on those concepts and products that improve your customers’ businesses should dovetail into improved sales and better business relationships for you. In addition, you can benefit from improved customer relations between your dealers and their customers. The role you play in educating your dealers in this area can contribute to their success, and in turn, yours.
Focusing on those concepts and products that improve your customers’ businesses should dovetail into improved sales and better business relationships for you. In addition, you can benefit from improved customer relations between your dealers and their customers. The role you play in educating your dealers in this area can contribute to their success, and in turn, yours.
Selling Equipment using Good-Better-Best
By Jim D'Amico and Ken Cederquist*
A key ingredient to your dealers’ success is a pricing guide dedicated to equipment replacement. Now, we know we’re speaking your language when we talk about selling equipment and we assume this concept will peak your interest and that of your TM’s.
A key ingredient to your dealers’ success is a pricing guide dedicated to equipment replacement. Now, we know we’re speaking your language when we talk about selling equipment and we assume this concept will peak your interest and that of your TM’s.
Building a Strong Business with Service Agreements
By Jim D'Amico and Ken Cederquist*
We all know that typically the more you do for your customers the more you get from your relationship with those customers. We also know that our industry should not be weather driven and that successful contracting businesses are not weather dependent. To help your dealers improve their businesses, you will need to determine what areas will help your dealers most.
The best way to help your dealers is to educate them on the need to diversify their product offerings to provide steady work in their contracting businesses. For years, consultants in the industry have preached to dealers at national and regional conferences about the need to have a good service to installation ratio, a good product mix, a solid offering of ancillary products and a consistent effort to market and sell service agreements.
In all of this, service agreements are the key component. Once again your territory managers’ involvement in the education of your dealers is very important. And if he genuinely believes in the benefits of the program it will be easy for him to promote it to his customers.
Service agreements build a strong customer base and generate repeat business. One very successful contractor determined several years ago that each service agreement customer generated on average seven hundred dollars in revenue every year for his company. Not surprisingly, his full list of service and installation offerings came into the mix in the seven hundred dollars per customer he billed. The simple math of multiplying the number of service agreement customers, times seven hundred dollars quickly brings us to the true value of a properly implemented service agreement program.
However, it is service agreements that so often pose the biggest challenge. Developing a successful service agreement program is easier said than done. Surely a dealer can more easily focus his attention on the concept of service agreements. The number of scheduled maintenance appointments, checklist of service items, and the appropriate fee for the service agreement is the easy part. The hard part is inspiring your employees to sell the service agreements consistently. As you know, selling any product takes a consistent effort.
Since service technicians are presenting repair pricing, the greatest opportunity for your dealers to sell service agreements is through their service technicians. That’s where a service agreement program and a properly implemented flat rate pricing system come together. Service agreements can be sold more easily from a flat rate service repair guide where a discounted fee for repairs is available to service agreement customers. All the technician needs to do is to know how to properly present that discounted price to the customer.
Often the technician is the only face a customer can associate with a contracting company and therefore technicians usually carry the most credibility with HVAC customers. Customers generally place faith in the technicians’ opinion about the repairs or other recommendations. Consequently, when a technician makes an offer to a customer to save money on needed repairs the customer will listen. Unfortunately, technicians generally come up short in their confidence to affectively sell, unless they have been educated on the value of the service agreements and coached to improve their confidence level.
That’s where you come in. Earlier we discussed the need to provide dealer meetings. Dealer meetings provide the opportunity to also offer sales training and role playing. Sales training provides the opportunity for a dealer and his technicians to learn how to present the features and benefits of their products to their customers. Role playing allows technicians the ability to learn to communicate the features and benefits of their product and to handle questions and objections.
Role playing before a group will be difficult for some and that’s the great opportunity it provides! If a dealer or his technicians are uncomfortable while role playing in front of a group, how will they gain the confidence needed to make a simple product presentation, in this case a service agreement, before a customer?
Role playing gives technicians the opportunity to gather their thoughts, draw from the knowledge they have gained about the product and to think on their feet. It exposes technicians to new ideas and thought processes and ultimately boosts their confidence level. If done properly, role playing can build self esteem.
By placing your customer’s needs as the focus of your programs you ultimately place your company in a stronger position. Educating and making an effort to get your dealers involved in developing a service agreement program will have a lasting effect. We have already established that dealers who offer service agreements to their customers tend to make more money per customer than those that don’t. Certainly, there is a trickle down effect for you as their distributor since those dealers will buy more add-on and replacement products from you. Therefore, what is good for your dealers, is also good for your territory managers and you.
The importance here is to recognize the role your territory managers play is a key component. Your TM’s can get your dealers out to your meetings or they can bring the message to your dealers by working one on one with them. When your dealers see the benefits of their involvement with your programs they will continue to buy from your company. A dedicated TM will see the advantages of training his dealers for the opportunities that present themselves by way of higher sales per account. His enthusiasm in his role as consultant and coach will make it happen.
The biggest advantage is your customers will view their relationship with your company as a partnership to improve their business and that’s good!
* Jim D’Amico and Ken Cederquist are two of the founders of Profit Strategies, a provider of service pricing systems for the HVAC, Plumbing, and Electrical trades. Jim is a former HVAC contractor and Ken is a former distributor.
We all know that typically the more you do for your customers the more you get from your relationship with those customers. We also know that our industry should not be weather driven and that successful contracting businesses are not weather dependent. To help your dealers improve their businesses, you will need to determine what areas will help your dealers most.
Education is Key
The best way to help your dealers is to educate them on the need to diversify their product offerings to provide steady work in their contracting businesses. For years, consultants in the industry have preached to dealers at national and regional conferences about the need to have a good service to installation ratio, a good product mix, a solid offering of ancillary products and a consistent effort to market and sell service agreements.
In all of this, service agreements are the key component. Once again your territory managers’ involvement in the education of your dealers is very important. And if he genuinely believes in the benefits of the program it will be easy for him to promote it to his customers.
Service Agreements
Service agreements build a strong customer base and generate repeat business. One very successful contractor determined several years ago that each service agreement customer generated on average seven hundred dollars in revenue every year for his company. Not surprisingly, his full list of service and installation offerings came into the mix in the seven hundred dollars per customer he billed. The simple math of multiplying the number of service agreement customers, times seven hundred dollars quickly brings us to the true value of a properly implemented service agreement program.
However, it is service agreements that so often pose the biggest challenge. Developing a successful service agreement program is easier said than done. Surely a dealer can more easily focus his attention on the concept of service agreements. The number of scheduled maintenance appointments, checklist of service items, and the appropriate fee for the service agreement is the easy part. The hard part is inspiring your employees to sell the service agreements consistently. As you know, selling any product takes a consistent effort.
Getting Technicians Involved in the Process
Since service technicians are presenting repair pricing, the greatest opportunity for your dealers to sell service agreements is through their service technicians. That’s where a service agreement program and a properly implemented flat rate pricing system come together. Service agreements can be sold more easily from a flat rate service repair guide where a discounted fee for repairs is available to service agreement customers. All the technician needs to do is to know how to properly present that discounted price to the customer.
Often the technician is the only face a customer can associate with a contracting company and therefore technicians usually carry the most credibility with HVAC customers. Customers generally place faith in the technicians’ opinion about the repairs or other recommendations. Consequently, when a technician makes an offer to a customer to save money on needed repairs the customer will listen. Unfortunately, technicians generally come up short in their confidence to affectively sell, unless they have been educated on the value of the service agreements and coached to improve their confidence level.
Sales Training and Role Playing for your Dealers and their Technicians
That’s where you come in. Earlier we discussed the need to provide dealer meetings. Dealer meetings provide the opportunity to also offer sales training and role playing. Sales training provides the opportunity for a dealer and his technicians to learn how to present the features and benefits of their products to their customers. Role playing allows technicians the ability to learn to communicate the features and benefits of their product and to handle questions and objections.
Role playing before a group will be difficult for some and that’s the great opportunity it provides! If a dealer or his technicians are uncomfortable while role playing in front of a group, how will they gain the confidence needed to make a simple product presentation, in this case a service agreement, before a customer?
Role playing gives technicians the opportunity to gather their thoughts, draw from the knowledge they have gained about the product and to think on their feet. It exposes technicians to new ideas and thought processes and ultimately boosts their confidence level. If done properly, role playing can build self esteem.
Your Customers, Your Territory Managers and You
By placing your customer’s needs as the focus of your programs you ultimately place your company in a stronger position. Educating and making an effort to get your dealers involved in developing a service agreement program will have a lasting effect. We have already established that dealers who offer service agreements to their customers tend to make more money per customer than those that don’t. Certainly, there is a trickle down effect for you as their distributor since those dealers will buy more add-on and replacement products from you. Therefore, what is good for your dealers, is also good for your territory managers and you.
The importance here is to recognize the role your territory managers play is a key component. Your TM’s can get your dealers out to your meetings or they can bring the message to your dealers by working one on one with them. When your dealers see the benefits of their involvement with your programs they will continue to buy from your company. A dedicated TM will see the advantages of training his dealers for the opportunities that present themselves by way of higher sales per account. His enthusiasm in his role as consultant and coach will make it happen.
The biggest advantage is your customers will view their relationship with your company as a partnership to improve their business and that’s good!
* Jim D’Amico and Ken Cederquist are two of the founders of Profit Strategies, a provider of service pricing systems for the HVAC, Plumbing, and Electrical trades. Jim is a former HVAC contractor and Ken is a former distributor.
It's All About the Customer
By Jim D'Amico and Ken Cederquist*
It’s not your father’s supply house anymore! Oh, but you knew that. You’ve been living it day in and day out.
It was about twenty years ago, just when your company’s growth and margins appeared to bring you into a comfort zone and the future looked bright, that the HVACR supply industry exploded with new equipment, new marketing ideas, new sales concepts and new pressure to conform and perform.
In addition, consolidation really got rolling. Many of the “little guys” could no longer hang in there and compete at the same level as the “big boys.” You heard the words over and over about “increased market share.” Brands were awarded and brands were pulled. And who would have believed that the corner hardware store would evolve into a home center and then into a multi-state billion dollar a year chain that could become your toughest competitor?
Yes, Darwin’s survival theory as applied to the HVACR supply industry uncovers several Dodo birds! But, all is not lost. The grim reaper hasn’t come for you just yet. And that’s good news!
Changing Times
It’s not your father’s supply house anymore! Oh, but you knew that. You’ve been living it day in and day out.
It was about twenty years ago, just when your company’s growth and margins appeared to bring you into a comfort zone and the future looked bright, that the HVACR supply industry exploded with new equipment, new marketing ideas, new sales concepts and new pressure to conform and perform.
In addition, consolidation really got rolling. Many of the “little guys” could no longer hang in there and compete at the same level as the “big boys.” You heard the words over and over about “increased market share.” Brands were awarded and brands were pulled. And who would have believed that the corner hardware store would evolve into a home center and then into a multi-state billion dollar a year chain that could become your toughest competitor?
Yes, Darwin’s survival theory as applied to the HVACR supply industry uncovers several Dodo birds! But, all is not lost. The grim reaper hasn’t come for you just yet. And that’s good news!
Wanna Buy Some Cookies?
By Mark Matteson
It was a beautiful sunny day in Seattle. I was headed to Starbucks attached to the local grocery store. March Madness and Girl Scout Cookies are everywhere. I was thinking about the days activities ahead. Two young merchants, 11 year old girls and their moms where just setting up a TV tray to display their wares. I immediately looked away. If I don’t make eye contact, they won’t see me!
As I stood in line for coffee, I began to question my attitude about buying cookies from Girl Scouts. Why am I such a Scrooge about helping out these young entrepreneurs? Answer? My wife always buys a box or two. As if that were not enough, hey, I sure don’t need the empty calories. I had a hundred excuses but not one good reason. Right then and there, I changed my attitude. I went back outside with my Venti drip coffee in hand.
“So, why should I buy some cookies?” I asked with a mock sarcasm.
It was a beautiful sunny day in Seattle. I was headed to Starbucks attached to the local grocery store. March Madness and Girl Scout Cookies are everywhere. I was thinking about the days activities ahead. Two young merchants, 11 year old girls and their moms where just setting up a TV tray to display their wares. I immediately looked away. If I don’t make eye contact, they won’t see me!
As I stood in line for coffee, I began to question my attitude about buying cookies from Girl Scouts. Why am I such a Scrooge about helping out these young entrepreneurs? Answer? My wife always buys a box or two. As if that were not enough, hey, I sure don’t need the empty calories. I had a hundred excuses but not one good reason. Right then and there, I changed my attitude. I went back outside with my Venti drip coffee in hand.
“So, why should I buy some cookies?” I asked with a mock sarcasm.
What Business are you REALLY In?
by Mark Matteson
The meeting was with Laura. She was a Facilities/Asset Manager. She was smart, kind and caring. She had a client that was unhappy. “Would you go with me to talk to this client? She represents 25% of a building that is 65% occupied.” In the Class A Commercial building market, if a building is 70% occupied, it breaks even. This one was losing money.
“Certainly,” I said with confidence. “I am in the tenant retention business. My real job is to keep your tenants in their place!” “Pardon me?” Laura exclaimed as if I had just insulted her father. “Staying and paying…in YOUR building. That’s my real job. Let’s go see her and find out why she is unhappy.” Laura smiled that ‘I like your style’ smile. “Let’s go, I’ll drive,” she said, shaking her head. She had an ally.
The meeting was with Laura. She was a Facilities/Asset Manager. She was smart, kind and caring. She had a client that was unhappy. “Would you go with me to talk to this client? She represents 25% of a building that is 65% occupied.” In the Class A Commercial building market, if a building is 70% occupied, it breaks even. This one was losing money.
“Certainly,” I said with confidence. “I am in the tenant retention business. My real job is to keep your tenants in their place!” “Pardon me?” Laura exclaimed as if I had just insulted her father. “Staying and paying…in YOUR building. That’s my real job. Let’s go see her and find out why she is unhappy.” Laura smiled that ‘I like your style’ smile. “Let’s go, I’ll drive,” she said, shaking her head. She had an ally.
Mexican or Italian?
By Mark Matteson
I had been in Dallas, Texas for four days conducting seminars with a fine group of successful contractors. Sales training. We covered all aspects of the sales cycle: suspects, prospects, qualifying, writing proposals, asking for the sale and following up. I had come back with a slight southern drawl. I had learned several important bits of southern philosophy. #1, the difference between a Yankee and a “Damn Yankee?” A Yankee is one who visits, as I had. A “Damn Yankee” is one who stays. I was just a Yankee. I also learned the plural of “You’ all” (pronounce YAWL) is “All-YAWL!” Good stuff. I love Texans. They just might be the most polite people in the United States.
I had been in Dallas, Texas for four days conducting seminars with a fine group of successful contractors. Sales training. We covered all aspects of the sales cycle: suspects, prospects, qualifying, writing proposals, asking for the sale and following up. I had come back with a slight southern drawl. I had learned several important bits of southern philosophy. #1, the difference between a Yankee and a “Damn Yankee?” A Yankee is one who visits, as I had. A “Damn Yankee” is one who stays. I was just a Yankee. I also learned the plural of “You’ all” (pronounce YAWL) is “All-YAWL!” Good stuff. I love Texans. They just might be the most polite people in the United States.
When the Nose of the Camel Is in the Tent…
By Mark Matteson
My new job was to sell Commercial Service Agreements. It was a fine company. They were growing. They wanted to expand their Service Base. I had a territory that no one wanted. It was the farthest away from the office. “There is no business there!” was all I heard from everyone when I first took the job. I also heard, “You’re nuts! Why did you give up the security of being a Technician?”
I had to. I was stale. I was restless. I was a C+ technician on my best day. But I had people skills. I made friends easily. I liked people. I took the personality profile. I was made for the job. I read a lot. I was curious. I was ambitious. I have always been an entrepreneur. Now I was an Intra-prenuer.
My new job was to sell Commercial Service Agreements. It was a fine company. They were growing. They wanted to expand their Service Base. I had a territory that no one wanted. It was the farthest away from the office. “There is no business there!” was all I heard from everyone when I first took the job. I also heard, “You’re nuts! Why did you give up the security of being a Technician?”
I had to. I was stale. I was restless. I was a C+ technician on my best day. But I had people skills. I made friends easily. I liked people. I took the personality profile. I was made for the job. I read a lot. I was curious. I was ambitious. I have always been an entrepreneur. Now I was an Intra-prenuer.
Moments that Matter
by Mark Matteson
Many years ago, I was a first year apprentice assigned the task of pressure washing a set of condensing coils on the roof of a grocery store on Capital Hill in Seattle, an upscale part of town. It was a 90-degree day, in late August. To make matters worse, it was a Friday around 4:30 PM. I was wet, dirty, tired and I was anxious to get home, knowing full well I had at least another hour to finish up. An elderly gentleman in coveralls, and an old and worn straw hat approached me as I came down the ladder. “Watcha’ doin,’ sonny?” he asked. At that moment, it would have been easy to dismiss his inquiry and say something curt or rude. After all, I was tired. However, I decided to smile and explain what and why I was doing what I was doing. His body language told me he appreciated my gesture. He then exclaimed, “That’s great, I’m glad you’re doing this. It’s important. You see, my son runs the store for me. In fact, I own the whole block. Keep up the good work!” On the drive home, it occurred to me, “You just never know!” He didn’t look like a millionaire. It was a moment that mattered from a business perspective.
A moment that matters is the dozens of daily interactions that occur when we come in contact with our customers. We sometimes forget that it costs $7 to GET a new customer, but only $1 to KEEP one!
Keeping customers delighted and letting them know how valuable they are is as rain is to dry flowers. Great Service is communicated from the top of the Organization on an ongoing basis. It is rewarded and discussed through stories that become legendary internally.
Appreciating the Customer is everyone’s responsibility. Great Service means asking great questions in a moment that matters, like:
Great Service means being flexible and willing to change and never being content with the status quo. It means continuously investing in education and growing people. It means guarding against the twin thieves of Arrogance and Complacency. Great Service means treating every person in your organization with dignity and respect. Those “Moments that Matter” will, in the long term, make or break your company.
USA Today carried a story that headlined: “Bank gets $2 million dollar lesson.” It began when John Barrier went to Old National Bank in Spokane, WA, to cash a $100 check. When Barrier tried to get his parking slip validated to save .60 cents, a receptionist refused, saying he hadn’t conducted a transaction. “She said you have to make a deposit,” Barrier said. “I told her I’m considered a substantial depositor and she looked at me like…well.” He asked to see the manager, who also refused to stamp the ticket. Barrier went to bank headquarters vowing to withdraw his $2 million-plus unless the manager apologized. No call came. “So the next day I went over and the first amount I took out was $1 million. But if you have $100 or $1 million,” he says, “I think they owe you the courtesy of stamping a ticket.”
I wonder if John Barrier was wearing a straw hat and coveralls. There are many days I don’t feel like providing great service. I’d rather take a nap. But you know, you just never know, when a Moment…will Matter!
“The purpose of business is to get and keep customers.” Theodore Levitt.
Mark Matteson is an inspiring speaker and the author of the international bestseller, Freedom from Fear. For over 20 years, Mark’s positive humor and peak-performance tools have impacted organizations around the globe, igniting personal and professional success for tens of thousands of people.
Disclaimer: The views expressed in articles from third-party authors do not necessarily represent the views of Profit Strategies. Profit Strategies is not responsible for any loss which may arise from reliance on any information in these articles. Links to other sites do not imply an endorsement of those sites, their contents, or organization. Profit Strategies is not responsible for content on linked sites. All articles are provided with permission from the original author or current intellectual property rights holder.
Many years ago, I was a first year apprentice assigned the task of pressure washing a set of condensing coils on the roof of a grocery store on Capital Hill in Seattle, an upscale part of town. It was a 90-degree day, in late August. To make matters worse, it was a Friday around 4:30 PM. I was wet, dirty, tired and I was anxious to get home, knowing full well I had at least another hour to finish up. An elderly gentleman in coveralls, and an old and worn straw hat approached me as I came down the ladder. “Watcha’ doin,’ sonny?” he asked. At that moment, it would have been easy to dismiss his inquiry and say something curt or rude. After all, I was tired. However, I decided to smile and explain what and why I was doing what I was doing. His body language told me he appreciated my gesture. He then exclaimed, “That’s great, I’m glad you’re doing this. It’s important. You see, my son runs the store for me. In fact, I own the whole block. Keep up the good work!” On the drive home, it occurred to me, “You just never know!” He didn’t look like a millionaire. It was a moment that mattered from a business perspective.
A moment that matters is the dozens of daily interactions that occur when we come in contact with our customers. We sometimes forget that it costs $7 to GET a new customer, but only $1 to KEEP one!
Keeping customers delighted and letting them know how valuable they are is as rain is to dry flowers. Great Service is communicated from the top of the Organization on an ongoing basis. It is rewarded and discussed through stories that become legendary internally.
Appreciating the Customer is everyone’s responsibility. Great Service means asking great questions in a moment that matters, like:
- “What will it take to make you happy?’
- “What would you like us to do?”
- “You have a right to feel the way you do. How can we make it right?”
Great Service means being flexible and willing to change and never being content with the status quo. It means continuously investing in education and growing people. It means guarding against the twin thieves of Arrogance and Complacency. Great Service means treating every person in your organization with dignity and respect. Those “Moments that Matter” will, in the long term, make or break your company.
USA Today carried a story that headlined: “Bank gets $2 million dollar lesson.” It began when John Barrier went to Old National Bank in Spokane, WA, to cash a $100 check. When Barrier tried to get his parking slip validated to save .60 cents, a receptionist refused, saying he hadn’t conducted a transaction. “She said you have to make a deposit,” Barrier said. “I told her I’m considered a substantial depositor and she looked at me like…well.” He asked to see the manager, who also refused to stamp the ticket. Barrier went to bank headquarters vowing to withdraw his $2 million-plus unless the manager apologized. No call came. “So the next day I went over and the first amount I took out was $1 million. But if you have $100 or $1 million,” he says, “I think they owe you the courtesy of stamping a ticket.”
I wonder if John Barrier was wearing a straw hat and coveralls. There are many days I don’t feel like providing great service. I’d rather take a nap. But you know, you just never know, when a Moment…will Matter!
“The purpose of business is to get and keep customers.” Theodore Levitt.
Mark Matteson is an inspiring speaker and the author of the international bestseller, Freedom from Fear. For over 20 years, Mark’s positive humor and peak-performance tools have impacted organizations around the globe, igniting personal and professional success for tens of thousands of people.
Disclaimer: The views expressed in articles from third-party authors do not necessarily represent the views of Profit Strategies. Profit Strategies is not responsible for any loss which may arise from reliance on any information in these articles. Links to other sites do not imply an endorsement of those sites, their contents, or organization. Profit Strategies is not responsible for content on linked sites. All articles are provided with permission from the original author or current intellectual property rights holder.
“Thanks Mrs. ‘G’! ”
By Mark Matteson*
There is a Ferris Bueller’s in every High School across America. He is the go to guy, the person that knows people and can get things done. Everyone looks to that person for advice, suggestions, and direction. He or she is a leader. In short a “Connector”. That is what Malcolm Gladwell calls them in his best selling book “The Tipping Point”.
There is a Ferris Bueller’s in every High School across America. He is the go to guy, the person that knows people and can get things done. Everyone looks to that person for advice, suggestions, and direction. He or she is a leader. In short a “Connector”. That is what Malcolm Gladwell calls them in his best selling book “The Tipping Point”.
Apples to Apples
By Ruth King*
There may be times when you look at your financial statements and say, “That can’t be right”. Here are some clues as to where to dig.
One of my favorite sayings is that you have to match apples to apples. That means that you have to have revenues matching expenses. (If you don’t, I call it “apples to oranges”). If you put revenues in one month and expenses in another month, then you are fooling yourself. The month with the revenues and no expenses will be a great month and the month that has the expenses and no revenues will be a bad month in terms of your financial statements. So, watch the work at the end of the month. If you have the expenses in one month you need to have the revenues which offset those expenses in the same month.
The easiest way to check is to look at your gross margin. If the gross margin is not consistent from month to month, you have a problem. If you know that you have revenues and expenses in the same month, then you dig deeper and resolve the minor issues before they become major crises. Here are some things that could be happening:
Ruth King is a nationally recognized HVAC industry consultant. To receive her free weekly e-zine, Contractor Cents, send an email to ruthking@hvacchannel.tv or call 800-511-6844.
Disclaimer: The views expressed in articles from third-party authors do not necessarily represent the views of Profit Strategies. Profit Strategies is not responsible for any loss which may arise from reliance on any information in these articles. Links to other sites do not imply an endorsement of those sites, their contents, or organization. Profit Strategies is not responsible for content on linked sites. All articles are provided with permission from the original author or current intellectual property rights holder.
There may be times when you look at your financial statements and say, “That can’t be right”. Here are some clues as to where to dig.
One of my favorite sayings is that you have to match apples to apples. That means that you have to have revenues matching expenses. (If you don’t, I call it “apples to oranges”). If you put revenues in one month and expenses in another month, then you are fooling yourself. The month with the revenues and no expenses will be a great month and the month that has the expenses and no revenues will be a bad month in terms of your financial statements. So, watch the work at the end of the month. If you have the expenses in one month you need to have the revenues which offset those expenses in the same month.
The easiest way to check is to look at your gross margin. If the gross margin is not consistent from month to month, you have a problem. If you know that you have revenues and expenses in the same month, then you dig deeper and resolve the minor issues before they become major crises. Here are some things that could be happening:
- Inconsistent pricing on jobs. One job you bid a 45% gross margin. The next job you bid a 30% gross margin. The third you bid a 20% gross margin because you want the job and you think that it will lead to others…it may or may not.
- You miss job estimates. This means that you bid 12 hours on a job and it takes 16. Or, on the positive side, you bid 12 hours on the job and it takes 8. Either way, your gross margin will be affected based on your bid price.
- There are a lot of callbacks or warranty expenses. You have additional expense with no revenues against those expenses. In the case of warranty, you may recover part of the expense when you submit warranty claims. In the case of callbacks, you have a very little chance of recovering the expenses. This decreases your gross margin.
- You have situations where the customer pays regular prices and you are paying your employees overtime because you are behind. This means that you can be busier and make less money.
- You get a large stocking order and expense it. When you order materials for future use it is inventory until you use it. You need a revenue to offset the materials expense.
- You have outright theft. Employees don’t charge customers for parts they use. Or the parts disappear. Hopefully, this is not the case in your company.
Ruth King is a nationally recognized HVAC industry consultant. To receive her free weekly e-zine, Contractor Cents, send an email to ruthking@hvacchannel.tv or call 800-511-6844.
Disclaimer: The views expressed in articles from third-party authors do not necessarily represent the views of Profit Strategies. Profit Strategies is not responsible for any loss which may arise from reliance on any information in these articles. Links to other sites do not imply an endorsement of those sites, their contents, or organization. Profit Strategies is not responsible for content on linked sites. All articles are provided with permission from the original author or current intellectual property rights holder.
Get to Know Your Financial Statements
Financial statements are a compilation of your daily financial activity. Understanding your financial statements is just as essential to your business success as a consistent marketing effort, strong sales and a high level of customer satisfaction. As you know, banks, creditors, investors, and your tax advisors make important decisions about your company using your financial statements. As a business owner you owe it to yourself to carefully review your financial information. Do not depend on others to interpret your financial status. If your statements look like a foreign language to you, ask your accountant to explain each statement to you and what each line item means. Or, better yet, take a basic accounting course so you can conduct your own financial review.
Formula for Making Money
By Jennifer Shooshanian*
The change of seasons will be here before we know it, so it is time to begin gearing up. Getting an early start on our maintenance checks will avoid having to turn down profitable demand service work later in the year.
The first priority is to take care of the agreement customers. To help with this process, consider the following:
Review your maintenance checklist with the service technicians to ensure we are providing the value of the service that is being delivered. While some technicians may be able to perform a maintenance visit quickly, this doesn’t build value to our customers.
Train the technicians on what is expected and what other accessories should be offered to the customer along with the importance of recommending replacement of equipment that is over 10 to 12 years old.
Scheduling and training pre-season will provide your service departments with satisfied customers and greater profits.
* Jennifer is a Service Coach for Business Development Resources. Jennifer and her service team work with service departments across the United States helping them turn their service departments into profit machines. To find out more information about making your service department more profitable or Business Development Resources call 206-870-1880 or see their website www.bdrco.com.
Disclaimer: The views expressed in articles from third-party authors do not necessarily represent the views of Profit Strategies. Profit Strategies is not responsible for any loss which may arise from reliance on any information in these articles. Links to other sites do not imply an endorsement of those sites, their contents, or organization. Profit Strategies is not responsible for content on linked sites. All articles are provided with permission from the original author or current intellectual property rights holder.
The change of seasons will be here before we know it, so it is time to begin gearing up. Getting an early start on our maintenance checks will avoid having to turn down profitable demand service work later in the year.
The first priority is to take care of the agreement customers. To help with this process, consider the following:
- Compile a simple spreadsheet or database to track your maintenance customers that include the customers name, address, phone numbers, equipment type and the season the maintenance checks are due.
- If you have a database of customers, check on the ability to export the customer information into an excel spreadsheet. Or better yet, maybe your system already has the ability to print mailing labels.
- Develop a reminder postcard that reminds the customers that it is time to call and schedule their tune-up.
- Print the following on the postcard: We will be in your area the week of _________; if not convenient to call during normal business hours, please email us at dispatch@valueheating.com
- Print mailing labels from the database in order of zip code or area.
- Date stamp when you will be in the area based on your mailing schedule.
- Mail out groups to specific areas or zones
- This will improve scheduling and routing.
- For example: If you have 1000 agreements, in five specific zones, send out 250 cards, 50 per zone.
- Follow up with a phone call within 3 to 7 days.
- Sample calling schedule (1,000 agreements)
- Week one: Mail 1st group of cards (ie: 250)
- Week two: Begin calling 25 per day / 125 per week
- Week three: Continue calling 25 per day / 125 per week, Mail 2nd group of cards (ie: 250)
- Week four: Begin calling 2nd group mailing
- Repeat process
- Work backwards on call schedule / mailing based on number of agreements you have
Review your maintenance checklist with the service technicians to ensure we are providing the value of the service that is being delivered. While some technicians may be able to perform a maintenance visit quickly, this doesn’t build value to our customers.
Train the technicians on what is expected and what other accessories should be offered to the customer along with the importance of recommending replacement of equipment that is over 10 to 12 years old.
Scheduling and training pre-season will provide your service departments with satisfied customers and greater profits.
* Jennifer is a Service Coach for Business Development Resources. Jennifer and her service team work with service departments across the United States helping them turn their service departments into profit machines. To find out more information about making your service department more profitable or Business Development Resources call 206-870-1880 or see their website www.bdrco.com.
Disclaimer: The views expressed in articles from third-party authors do not necessarily represent the views of Profit Strategies. Profit Strategies is not responsible for any loss which may arise from reliance on any information in these articles. Links to other sites do not imply an endorsement of those sites, their contents, or organization. Profit Strategies is not responsible for content on linked sites. All articles are provided with permission from the original author or current intellectual property rights holder.
Sell Later – Build Value Now!
By Brandon G. Jacob*
Business owners often ponder the value of their HVAC business as they invest long hours into maintaining a profitable operation. While selling your business may be something you plan to do later, understanding today what drives the value of HVAC businesses will automatically ensure that you realize greater financial rewards when the time does come to sell.
Business owners often ponder the value of their HVAC business as they invest long hours into maintaining a profitable operation. While selling your business may be something you plan to do later, understanding today what drives the value of HVAC businesses will automatically ensure that you realize greater financial rewards when the time does come to sell.
Think Retail in Your Service Business
By Jim D'Amico*
I recently had a discussion with George Winslow of City Fuel in Manchester, NH. George told me the reason he decided to subscribe to my company's flat rate pricing system for his service business was based on one bit of advice I gave him. That advice was to consider selling his services at retail. I said, "George, customers are used to paying retail for everything they buy. Why should your service prices reflect anything less than retail?"
George got the message. He reviewed his numbers and structured his pricing strategy to reflect his true cost and desired net profit. His results were sensational! His service revenue increased handsomely. In addition, his company found that because their flat rate service pricing system was properly implemented (my company actually trained his staff), complaint calls about service pricing went down drastically! In fact, they nearly disappeared.
I recently had a discussion with George Winslow of City Fuel in Manchester, NH. George told me the reason he decided to subscribe to my company's flat rate pricing system for his service business was based on one bit of advice I gave him. That advice was to consider selling his services at retail. I said, "George, customers are used to paying retail for everything they buy. Why should your service prices reflect anything less than retail?"
George got the message. He reviewed his numbers and structured his pricing strategy to reflect his true cost and desired net profit. His results were sensational! His service revenue increased handsomely. In addition, his company found that because their flat rate service pricing system was properly implemented (my company actually trained his staff), complaint calls about service pricing went down drastically! In fact, they nearly disappeared.
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