Happy New Year! Let’s celebrate by reviewing where you should be in your residential service business. By now, your 2015 business plan should be in place with each of the action steps communicated to the team member assigned to complete that step. Pat yourself on the back for going through this planning process last September. (Even if you aren’t there, keep reading to see what you can do to catch up.)
It is challenging to identify the action steps your company needs to take to succeed. It is also challenging to communicate to the person responsible, even though, ideally that person was involved in formulating this year’s plan.
If planned thoroughly, progress on your action steps should be measurable by both operational and financial key performance indicator targets your team must reach on a daily, weekly or monthly basis. Once your management team understands which KPIs are critical, they can stress the importance of these KPIs with your front-line staff. In the service business, every minute counts. It is your livelihood and that of your team, so it’s in everyone’s best interest to know and understand each KPI and why it’s important.
Let’s start with my top three operational KPIs in your business plan:
1. Call count or lead count;
2. Conversion rate; and
3. Average sale.
From the starting block, in order to have a chance of winning this race, you need the right call count. I rank call count No. 1 in KPI importance. If you don’t have calls to run, you can’t close, nor can you maximize a sale. However, if No. 2 and/or No. 3 are not achieved, you will trip, fall and lose the race.
Knowing how many calls you need on a daily basis gives you a head start to winning. Then, if your marketing efforts deliver the right number of calls on a daily basis, then you have broken from the starting gate early.
Your call center needs to know and understand the call count goals for the next three days. Make it a priority to discuss ways to meet these goals with the call center team twice each day. Start each morning with a huddle to set the actions you will take to reach your three-day call volume goal, then check in with them in the afternoon to gauge the progress on that call goal.
My most successful contractors set the expectation that if the call goal is not met by the second huddle everyone in the call center understands no one leaves for home until the call volume for the next day is reached. Your technicians need a full slate of calls for the next day. Are there exceptions? Yes. However, those exceptions would be primarily weather related. If it looks like the temperature is going to dive or spike overnight, you might want to leave yourself some room in you call volume to handle that first freeze or heatwave of the season.
Once you have the call volume conversations down, then rinse and repeat this activity every day.
Now that you are out of the starting block, and you have calls for the technicians to run, it’s now up to your technicians and sales people to convert the calls.
Your conversion rate should be 90% or better. Why not 100%? There are several reasons, and we can cover them in a future article, but primarily because 90% is a realistic and attainable number. If your conversion rate is falling below 90%, or your customers buy from you less than 9 out of 10 trips, then you have some training to do with your technicians.
I work with many contractors who are just starting out in the residential service and replacement business. In the beginning, they struggle to close at 90%. When we dig in to find out why, it’s often the same thing: The technicians are not trained to have a conversation with their customer. Many technicians are put off or scared to ask a customer to purchase anything from them. Why? To be blunt, they just haven’t been trained the right way.
It’s simple really. Sure, it’s easy for me to say, I’ve been having conversations with customers and training my technicians to do it for 24 years. Be prepared. Some of your technicians will freeze as if they are on their first date or at a high school dance. Some technicians are just not comfortable delivering superior service to customers; rather, they think it is high pressure sales. But I can attest to you nothing could be further from the truth.
Delivering exceptional service to your customers is like talking to a good friend. Have a conversation with your customers. Allow them to get to know you, while you get to know them. Now, as you know something about each other, you form a friendship. In my years of experience, people like buying from people they trust and like. My best advice to improve your closure rate: Encourage your technicians to make friends.
While the close rate is important, remember, you can go broke closing all of your service calls. Let me say that again … you can go broke closing all of your service calls.
Why? Well, if your average sale per call is $100, and you run three to four calls a day and only collect $400 for the day, you will not be able to stay in business for very many days.
Said a different way, getting the calls is crucial, closing the calls is mandatory, but you can do both of these very well and still go out of business.
Contractors excel when they maximize the opportunity for each and every call. This third step in generating revenue is where you make all your profit. Remember what I said earlier about improving close rate by making a friend? Well, it applies to average sale as well. During every customer visit, you have an opportunity to get to know more about your customer, by answering their questions and asking additional questions of your own.
Here’s an example that might take place on a typical plumbing call:
You: “Well Mrs. Hanson, we can absolutely replace this toilet today, well in advance of your party this weekend, no problem. But I have a few questions while I’m here. Have you had any problems with any of the other toilets in the house before?”
Then — you should listen. Whatever Mrs. Hanson says, write it down. Why? Because, whatever a customer shares with you is something you know about the home that you didn’t know before. Guess what? Learning more about the whole home, is where the opportunity lies. Back to our example:
Mrs. Hanson: “No, I’ve never had a problem with any of the other toilets before.”
Bingo! You have just identified an opportunity to offer more options. Why? If the toilet in question is bad, and all the toilets in the home are the same age, it makes sense that the other toilets are likely to fail in the near future. Write yourself a note on your observation sheet so you can include this in a bundled option for your customer. Then continue with the questions:
You: “While I’m here, would you like me to check out anything else in the house?”
If Mrs. Hanson says “yes,” that’s great! You have more work to offer. If she says “no,” don’t worry, simply ask another question. I like to ask the homeowner if she knows where the main water shut off is located. If she does, then she can lead the way, if she doesn’t, then you can educate her. Either way, you and the customer are heading to the main water shut-off, which gives you a chance to observe the entire plumbing system in the home.
Keep your eyes open. While you are heading to the main water shut off, look around the home. See if there is anything in the home system that looks wrong, like a corroded self-tapping valve or a leaking lead bend. If you spot something, direct the homeowner’s attention to the area of concern by just pointing to it and say, “How long has that been like that?” You have just observed with your customer another issue you can offer a solution for.
The more questions you ask in a conversational and helpful manner and the more you observe about the system, the more solution options you will be able to offer your customer. This process is called maximizing your sales, but it’s also our core job.
It is in the best interest of our customers and our businesses that we take care of as many of the needed repairs as we can at once. Homeowners only have to endure one service call, and you become more efficient with your technician hours and travel.
My challenge to you is to focus on these three KPIs, implement some of the steps to improve processes in your business, and your business will truly be on its way to a happy new year.