Ten Reasons You Must Attend The New Orleans Roundtable

The second national meeting of the Service Roundtable will be the New Orleans Roundtable.  Why New Orleans?  It's simple.  The city's largely rebuilt (at least, the French Quarter's largely rebuilt), the food's great, the jazz is great, it's easy to get to from nearly anywhere in the country, and it's a fun place to gather. 

Yeah, but what about the meeting?  Time is short.  Money is tight.  Why should I take off April 11-13 to attend another industry meeting?  In short, because this isn't like any other industry meeting.  It's completely focused on taking your business to the next level. 

Look, I'm all for efficiency and frugality.  Few companies are more efficient and frugal than the Service Roundtable.  Yet, the truth is you will not save your way to prosperity.  There are times you must invest... invest in the growth of your business, in the growth of your people, and in yourself.  The New Orleans Roundtable represents a great investment.  The tuition is very affordable.  The ideas and knowledge you'll gain are worth thousands.  The motivation and inspiration is priceless.  If you don't come to another event this year, come to the New Orleans Roundtable.  Here are the Top Ten Reasons You Must Attend...

#10 The Meeting Emcee is Ron Smith
Hanging around with Ron Smith is a seminar by itself. The guy casually drops gems of wisdom whenever he engages in a conversation. How can you miss the opportunity to spend time with the contractor who invented the service agreement, who came up with the idea of residential retail salespeople, who started the HVAC industry’s very first private contractor group and was the first person to franchise the HVAC industry, who spotted and recruited Tom McCart, Charlie Greer, Al Roach, Ruth King, and other superstars into the service trades?

Ron’s going to be emceeing the events, signing books, getting his picture taken with contractors, and generally hanging out.

Click Here to Register

#9 The Ideation Roundtables
Contractors from around the country will be bringing their best ideas to share during the Ideation Roundtables. What is an “Ideation Roundtable?” It’s like business idea storm, where you can pick up proven new ideas ways to make money and cut costs from other contractors. Look, some contractors simply do not post to the HVAC Roundtable, Plumbers Roundtable, and Electrical Roundtable. But they still have great ideas. They’re just more comfortable sharing them in person than over the Internet.

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#8 Bar Talk
The best part of any industry meeting is the interaction that’s not on the agenda. It may sadden the people who bust their tails assembling a first class event, but the conversation over a beer at the end of the day is often better than event. This is especially true when you can meet the faces behind the email signatures and the staff of the Service Roundtable. If bar talk’s important, few places are better for it than the New Orleans French Quarter.

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#7 Charlie Greer’s Lagniappe

A lagniappe (lan-yap) is defined by Dictionary.com as “a small gift given with a purchase to a customer, by way of compliment or for good measure; bonus.” Charlie “Tec Daddy” Greer will be delivering the New Orleans Roundtable’s lagniappe in the form of a free-for-all question and answer session at the close of each day. Bring your questions for one of the top consultants in the service trades and fire away as long as you want.

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#6 The Haunted Hotel Monteleone
Okay, no one goes to a conference because it’s held in a cool hotel, but it doesn’t hurt either. Located in the middle of the French Quarter, the historic Hotel Monteleone has been a hangout and inspiration for numerous literary greats, such as Ernest Hemingway, Tennessee Williams, William Faulkner, featured on everything from E! to the Food Network to A&E, CNN, and the major Truman Capote, Eudora Welty, Rebecca Wells, Anne Rice, Stephen Ambrose, John Grisham, and more. It’s been the site for a bunch of movies. It’s been featured on the major networks. The Travel Channel’s featured the hotel many times, including a show about “the best place to pop the question” and a show about haunted destinations. Haunted? Yup. It’s considered “one of the premier haunted hotels in North America.” Don’t worry. Staying on the haunted floor is purely optional. Look, this has got to be one of the coolest places ever for a meeting.

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#5 Your Own Personal Board of Directors
Want help with a problem? We’re creating mini Roundtable Boards of non-competitive contractors to address each others’ business problems. Bring your most perplexing issues, whether it’s sales compensation, marketing issues, human resources problems, succession planning, figuring out a tactful way to get the mother-in-law to retire, truck policies, or anything else that affects your company. Get input, suggestions, and advice from contractors who have been there, done it, and have a closet full of t-shirts.

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#4 Bob Viering’s Secret of Successful Email Marketing

Email marketing is one of the more powerful marketing tools at your disposal. Service Roundtable Content Manager, Bob Viering will show you an incredibly easy way to create an email marketing program to reduce the cost to build relationships and promote your company. Done right, email marketing is the lowest cost method for pushing communication to your customers. It’s the fastest marketing method around – what’s sent today is opened today. Customers who opt-in to receive your email communication and promotional offers are surprisingly likely to open the mail and respond. If you’re tired of expensive, hit or miss marketing, you must attend this session.

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#3 Joe Cunningham’s Menu For Success
Popular sales trainer and consultant, Joe Cunningham promises he’ll show you how to take your business zero to profitability in 60 seconds. By adopting Joe’s simple, proven processes and plugging them into a “menu for success” implementation calendar that you’ll build, even the smallest contractors can leap forward, regardless of the economy.

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#2 Brandon Jacob’s Exit Strategy
Every so often a window opens where buyers, ranging from consolidators to utilities to independent business people, look for contracting companies to buy. When the time is right, your company must be ready. Brandon Jacob, the service trades’ go-to-guy for acquisitions, will identify the steps you need to take to prepare your company maximum attractiveness and value. Even if you never want to sell, following Brandon’s guidelines will help your company more easily secure lines of credit and other loans, as well as generally improve your financial performance. If you ever want to sell your company or borrow money for less, you should pay attention to Brandon.

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#1 Ken Goodrich’s Wild Ride
Ken Goodrich is a contractor like no other. The guy’s put together a team of all-stars who built and sold six companies. When he sold his last business to a consolidator, management hired him and told him to keep doing what he was doing. With his team, he grew the company and expanded to $100 million in 10 markets with 250 trucks. Incredibly, most of the growth was organic, not the result of acquisitions. With double digit net profit, Ken doubled the size of his operations in 2009.

Ken is a contractor with an amazing, inspirational story. He shows you what is possible in our industries. Even if your goal is to grow to $10 million or $1 million instead of $100 million, you can learn lessons from Ken Goodrich. Because he’s a contractor, growing like crazy, it’s rare for Ken to speak in public. This isn’t the type of presentation or speaker you’ll hear anywhere else. Do not miss this change to change your perspective on your business and industry.

To register for the New Orleans Roundtable, call Janet Thomasson at 877.262.3341 or click here to send her an email.  Or, you can click here for more information and the registration form.

Bonus:  Maintenance Agreement Seminar
Stay an extra day and join me to attend the Profit Strategies "Build Lasting Value With Maintenance Agreements" seminar.  You're already in New Orleans.  Stay one more day and get that much more value out of your travel dollar.

Click Here to Register For the Profit Strategies Maintenance Agreement Seminar

Improving Your Loyalty Program

"Deeper engagement and personalized contact drive loyalty, not mass blast communications and gimmicks," writes Marketing Charts about a new report from the Chief Marketing Officer Council. 

The classic loyalty marketing program is an airline's frequent flyer program. For service contractors a service or maintenance agreement program is a loyalty program, even though many do not think of them as such.

Marketers think loyalty programs make sense and make money for their companies, but that they're not doing a good job executing.  According to Marketing Charts:

According to the survey, most marketers (61%) believe that loyalty program participants are the best and most profitable customers with 65% of respondents viewing customer loyalty program investments as an essential, or quite valuable part of the marketing mix.

However, only 13% of respondents believe they have been highly effective in leveraging loyalty and brand preference among club members, and nearly 20% don’t even have a strategy for this. Another 25% admit they have not mobilized brand loyalists to become active advocacy agents.

Yikes.  Here are the problems (click to enlarge)...

A few key stats from the report are:

• Loyalty programs do generate buzz with 50% of customers in loyalty marketing programs talking about the brand some of the time and 20% outright cheerleading.
  
• One out of two (54%) customers will drop out of the loyalty program following a bad service experience.  It's surprising it's not higher and indicates a degree of forgiveness among loyalty participants.  Still, the company must deliver or lose, regardless of a loyalty program.
  
• Even though customers complain about spam, nearly two out of three (64%) want electronic communication.  The good news is you can reduce costs with customers who want electronic communication.  The bad news is you can't use electronic communication across the board.  A mix is required and it's necessary to ask customers what's preferred (and it may be both).

Service agreement programs are strong loyalty marketing programs. They can be enhanced by the inclusion or a "rewards" element, such as the Service Roundtable's "Comfort Cash" program.

Click here to read the full article from Marketing Charts. Click here to learn more about the Service Roundtable.

The Pool Contractor Was Too Busy For Service

http://www.flickr.com/photos/realestatezebra/ / CC BY 2.0

During boom times many contractors avoid service work. It's small dollar. It's a pain. It involves too much management of those pesky employees. The big bucks lie in the big projects and equipment sales.

Yet service work is profitable and steady. When times are tough, installation and project work slacks up while service continues. By the time most contractors realize the value of service, it's too late. Let me give you an example.

After we built our pool, my wife and I were a little intimidated about maintenance. Neither one of us had ever maintained a pool and had no idea what was involved. We were ripe for a pool service pitch.

Instead, our pool contractor informed us, "You don't have to use a service. You can do this yourself easily. I'll show you how."

And he did. He showed us how to test the pool. He showed us how to maintain the right pressures, when to clean the filters, and how to clean the filters, pump, and skimmers. He explained about shocking the pool, how to do it, when to do it, and why to do it. He told us the best place to buy chemicals and recommended taking pool water to this store for analysis if we ever had problems. He explained everything we needed to know.

Not once did he remotely hint that he was interested in providing pool maintenance for us. In fact, he wasn't remotely interested. He was too busy selling and installing pools. The big bucks were in installation, not service.

But what if he took a different approach? What if he built the cost of the first year's maintenance into the price of the pool? He could say something like, "Matt, I want you to enjoy your new pool. Don't worry about anything. For the first year, I'll maintain it free of charge."

How could I refuse? Even if I was charged extra for chemicals, how could I refuse? I couldn't. And when the year was up, what then?

Panickville! "We can't maintain the pool," my wife and I would say to each other. "We don't know anything about it. How much will it cost to have the pool contractor keep doing it?"

If the contractor built 50 pools a year and captured the service on half, over the course of the ten years since our pool was built, he would have a maintenance base of 250 pools. Using some back of the envelope calculations, that would likely result in six figures of gross profit. Plus, when it was time for resurfacing (costing thousands) and equipment replacement (thousands more), he would have a lock on the work. Through the years, he could suggest additions to the pool and backyard, ranging from fountains and waterfalls to built-in backyard grills. Some customers wouldn't be interested, but others would.

Alas, the contractor who built our pool was too busy. He was too busy then. Today, he wants us to pay him to maintain our pool. Is he crazy?

24 Ways to Boost Your Average Ticket - Part I

This is the start of a new Comanche Marketing series on boosting your average ticket, or average sale. I’ve compiled a couple of dozen tactics, but this number may change before I’m finished. I’ll add tactics when readers suggest new ways to boost the ticket I haven’t thought of (hint, hint) or when I stumble across new approaches. And also, when it comes time to write about the tactics, what seemed brilliant when building the initial list seems hopelessly stupid when I try to describe it. Well, let’s get started…


Why It Matters

Raising your average ticket even a few dollars can make a tremendous difference to your bottom line. Let’s consider the following scenario. A pure service company has an average ticket of $325. The company promotes braided steel washing machine hoses for $49 installed on all service calls. The company buys these hoses for $9. The time required to install one is so minor, it’s incidental (e.g., 5 to 10 minutes). On every 10th call, a customer opts to add the house on the ticket.

This works out to an increase in the average ticket of $4.90. The material cost increases $0.90, resulting in an increase of $4.00 in gross profit per call.

Hose Price	$49
Material Cost	$9
Gross Profit	$40
% Buying	10%

Increase in Avg Ticket	$4.90
Increase in Avg Material Costs	$0.90
Increase in Avg Gross Profit/Call	$4.00

Ho hum. Yawn. Four bucks. That’s a whopping net increase of 1.2% of sales ($329 / $325). Wooooow. I can retire.

Don’t get hasty. Let’s get into the numbers in a little more depth. For grins, let’s say the following roughly describes the company’s income statement. The company is profitable, but barely once Uncle Sam gets a cut.

Gross Revenue	$800,000	100%
Cost of Sales	$440,000	55%
Gross Profit	$360,000	45%
Overhead	$320,000	40%
Net Profit (Pre Tax)	$40,000	5%

Now, what happens when an average $4 of gross profit per call is added.

Gross Revenue	$809,846	100%
Cost of Sales	$442,225	54%
Gross Profit	$367,631	46%
Overhead	$320,000	40%
Net Profit (Pre Tax)	$47,631	6%

The company has increased pre-tax profitability 20%! Slight increases in a company’s average ticket can result in significant increases in the bottom line. While not the only one, this is certainly one path to prosperity. Let’s walk down this path and see what we find.


1. Raise Prices

Yes, the simplest way to increase your average sale is simply to increase your prices. If this seems completely obvious, it’s not. Many a contractor moans about average tickets without really pondering the notion of a bump in prices.

A recession may or may not be the right time to bump prices. If you aren’t profitable at your current price levels, you should figure out a strategy to raise prices or increase volume while holding overhead in check. Otherwise, you might as well cut prices to the bone and go out of business faster, sparing yourself the prolonged agony of a long, slow bankruptcy.

Let’s return to our pure service company. Assume the company’s billable hour rate is $125 and the company charges a $65 diagnostic or response charge. With a 40% material gross profit (i.e., 67% mark up), and average of 1 billable hour per call, the company’s average service call looks like the following.

Average Ticket	$325
Diagnostic	$65
Repair Charge	$260
Labor Rate	$125/Hr
Billable Hours	1.0
Labor Charge	$125
Material Price	$135
Material Cost	$81
Material % of Total (Average Ticket)	41%

Bump the billable labor rate, 10% and the following results.

Average Ticket	$338
Diagnostic	$65
Repair Charge	$273
Labor Rate	$138/Hr
Billable Hours	1.0
Labor Charge	$138
Material Price	$135
Material Cost	$81
Material % of Total (Average Ticket)	40%

The total charge increased $13 or 4%. Let’s see the impact on the bottom line.

Gross Revenue	$831,818	100%
Cost of Sales	$440,000	53%
Gross Profit	$391,818	47%
Overhead	$320,000	39%
Net Profit (Pre Tax)	$71,818	9%

The pre-tax profit increased 80% or $32,000!

Of course, price increases might scare away customers. How many calls would this reduce? Let’s say 5%. That’s likely unrealistic. It would lower total company revenue. Yet, the company still makes more money!

Gross Revenue	$790,227	100%
Cost of Sales	$418,000	53%
Gross Profit	$372,227	47%
Overhead	$320,000	41%
Net Profit (Pre Tax)	$52,227	6%

The company would need to lose just over 8% of its customer base for the price increase to have a negative impact on the bottom line. In all likelihood, no one would notice. As Jim Kimmons, who developed the original Callahan-Roach flat rate system used to say, “If the customer’s upset at $338, would he be thrilled at $325?” The answer, of course, is no.

Increasing your prices a small amount, even during a recession, may have a huge benefit to your company profitability. And if you aren’t profitable, what’s your choice?

Surprisingly, many contractors hesitate to raise prices because they don’t want to order new price books. That’s the silliest notion of all. Who wouldn’t spend an extra $2,000 if they could be guaranteed it would result in $32,000?


2. Courtesy Inspections

Charlie Greer teaches service personnel how to perform a “courtesy inspection.” Friends of mine have used Greer trained companies, reported that the inspection uncovered other issues – some had been festering for years – resulting in higher tickets AND… happier customers.

At the end of the work, the homeowner spent much more than the original problem necessitated and thanked the service personnel.

Charlie describes his approach to a Plumbing Courtesy Inspection on his website. It’s worth the read…

Here’s the scenario: I went to the immediate problem that prompted the service call, checked it out, and said, "Okay. I can fix that. That won’t be a problem," thereby putting the customer’s mind at ease.

I then said, "You know, Mrs. Smith, whenever I come out to someone’s house, I always do a quick, courtesy inspection of all their fixtures and drains, just to see if there are any little free adjustments I can do."

Charlie proceeds to check stuff out, tighten things that are loose, clean aerators, and so on. In the process, he builds his value, builds customer rapport, and creates a sense of obligation. In the course of the inspection, inevitably problems or deficiencies are revealed. In many cases, addressing these now will save the homeowner a lot of money down the road. Other times, the problems are like open sores, festering and irritating.

Sometimes the homeowner knows the problem should be fixed, but lacks the skills, knowledge, or inclination to tackle the job. That’s where you crack team of professionals comes in. It’s why you were called in the first place… to solve problems the homeowner couldn’t solve for himself or herself.

Other times the homeowner isn’t even aware the problem could be fixed. Millions of homeowners live with comfort problems, unaware that it’s possible to have even and consistent comfort levels throughout the home.

Remember, no consumer knows all of the things you can do for them like you do. You offer products and provide services that could improve their lives, but you can’t keep them a secret.


3. Sell Service Agreements

This is another no-brainer. Service, or maintenance agreements are contractors between you and the customer to perform repetitive annual maintenance at discounted rates scheduled at times convenient to both of you. Service agreements help you fill in valleys of demand, keeping your service force working during slack times.

Because they are prepaid or charged monthly, service agreements also help with cash flow. And, they represent an unspoken agreement between you and the customer that the customer will do business with your company exclusively during the term of the agreement.

Service agreements are well accepted in the HVAC and pool industries, less well accepted in plumbing, and practically absent from electrical. Often, plumbers and electricians express skepticism about their ability to sell and maintain a base of service agreement customers. The trick is to build sufficient value that the service agreement is an obvious value for the homeowner.

Pool & spa varies around the country, but generally the contractors build up maintenance routes and then, incredibly, sell them. Why not keep the route and keep the future add-on, accessory, toy, and backyard oasis sales? Why not keep the future equipment replacements and resurfacing?

Call takers and dispatchers should start the service agreement sales process by stating at the appropriate point, “I’m required to inform you that we give priority service and discounts to our service agreement customers.”

Pause, and if the customer asks about the service agreement say, “You can save quite a bit of money with our service agreement. In addition to priority service and a ___% discount on repairs, the service agreement includes… [benefit, benefit, benefit]. The investment is only $______. Would you like to save money with a service agreement or simply schedule your repair today?”

Even if the homeowner refuses the service agreement, the stage has been set for field service personnel to repeat the offer. One of the best approaches is to use an apples to apples comparison sheet that compares today’s repair plus the service agreement with today’s repair plus the maintenance services covered by the service agreement.

© 2009 Matt Michel