If we met on an elevator ride, could you tell me in that short amount of time what key numbers you need to know to run your service contracting business effectively?
Probably not.
And that’s okay for today but not for the long-term health and prosperity of your contracting business—and you.
I, along with my brothers and dad, kind of ran our plumbing, heating and cooling (now electrical) company without knowing the key numbers too. So, know that there’s no preaching here but rather a desire to share what we learned as we went along. Know that we had always believed if you worked incredibly hard and kept expenses down the money would follow.
The answer is sometimes it did and sometimes it didn’t. What I mean is the accountants would walk into our office in December and say, “You had a great year. Go buy yourself some tools and trucks and pay yourselves a bonus.” We liked that visit very much!
Unfortunately, there were other years when the accountants would walk into our office in December and say, “This year wasn’t so great. So, we need to keep the numbers looking good and preserve cash. This way the bank will be happy as will your other creditors. In other words, I hope you’ve all got money saved up in your personal bank accounts because you’re not going to get paid for the next month.” We HATED that visit…a lot!
Once we learned the value of doing a budget, setting goals in writing and working proactively on our business vs. just reactively, things got better. We actually created a process to follow that helped us gain control of our business vs. our business always being in control of us. We called it the Five Steps to Gain Control.
This is what you too need to engage.
The Five Steps to Gain Control at Your Contracting Business are:
- Decide
- Devise
- Measure
- Coach
- Reward
A little more detail:
- Decide what you want to change
- Devise a plan and gather the resources
- Pick a measurement that would indicate you were successful
- Coach on a continual process to allow mid-course correction
- Reward if the goal is reached
Let’s look at some activities you need to manage, and talk about some objective, measurable statistics.
In order to know what marketing is working for your company, you need first to know where the calls came from. This means lead source tracking that you can rely on. You need to know how many calls come in and when so you can adjust how and when you answer the phones. You need to ascertain the ROI (aka Return On Investment) for the money you spent.
There are three types of marketing statistics you will want to track:
- Number of calls per lead source
- Cost per call per lead source
- ROI which is the total sales from lead source divided by the cost of the lead source
Only with these key numbers and following the 5 Steps can you properly allocate Marketing Dollars to the right Marketing Drivers. Marketing Drivers are ways to go to market like TV, radio and SEO (search engine optimization) as well as SEM (search engine marketing).
Make sure to share these numbers with your employees so that they, too, know the value of every incoming call.
Once you’ve tracked calls for a year, you’ll eliminate guessing as to when your slow times are, and you can plan your marketing accordingly. How do you know when to add another CSR? Do you guess? Do you wait until they don’t answer the phones in time? NO! You have a formula to use, based on the expected number of incoming calls per month.
If you’re growing your company rapidly, when do you add a Field Supervisor? Do you think one Service Manager will be as effective with 15 or more techs as he was with five? You need a set formula – so many Field Supervisors for so many Techs.
If you don’t have this figured out, you’ll either be under-or over-staffed and both are not where you want to be for long. The team can’t get the support it needs due to the bottlenecks.
Here’s an example of how to use these 5 Steps in a real-world application:
Decide: We want to improve the Big-Ticket Salesperson conversion rate.
Devise: We will begin tracking how many calls are given to each Big-Ticket Salesperson and how many of them he closes.
Measure: We will track the numbers for 3 months and then the Big-Ticket Salesperson will be competing with the established group average.
Coach: Do role-plays in the training center to simulate how to approach a potential big-ticket sale from beginning to end. Discuss how each lead was run this week (or, at least this month).
- Note: Don’t have an in-house hands on Training Center? Use your home and your business for now.
Reward: We will reward and coach the Big-Ticket Salespeople based on a three-tier system of measurement:
- Hit goal and there is a built-in sales commission to augment your salary
- Go above sales goal derived from the budget and the sales commission rises since this is all found money
- Go below sales goal and we’ll coach you….but…only for so long
Do this Five Step Process to Gain Control at Your Company and enjoy “Less Stress and More Success.”