Some months ago an extremely successful producer of marketing and sales support systems conducted a survey on the state of business for small and large home improvement contracting companies. The validity of the responses is consistent with the many concerns of those who regularly contact my company looking for definitive advice and direction in dealing with their concerns.
As an example, the survey asked, “What are the hardships your business is facing?”
The top 5 responses were:
- Rising marketing costs
- The economy
- Hiring, retraining competent sales reps
- Skilled worker shortage
- Supply chain issues
Coincidentally, these issues with varying subsets are top among the many inquiries we get weekly. Although the calls we receive ask how we can deal with these concerns and ‘how can we get solutions in these trying times?’ Our team must probe further with three relatively simple questions.
- What is happening (concerns) in your business?
- What are you doing to respond to the concern?
- How is that working for you?
The answers to these questions often expose even greater concerns. When we assign an account executive to follow up on both the concern raised and the actions taken by the caller, the plot thickens.
Most often we find that in both small and large companies, the rapid change in the economy, coupled with social changes and changes in consumers’ habits and attitudes, are more complex than what they imagined or what they have sufficient knowledge to comprehend. New methods are necessary to implement change.
In the case of these owners facing these challenges, we console them with a favorite phrase of mine: “You cannot know what you do not know.” It then becomes our duty to examine as many aspects of how the problem is perceived and how they are dealing with solutions. We assure the owner that they are not alone as many come to us with the same query. But if they are open to our process they will, with tried-and-proven methods, respond well to the circumstances.
During our work with clients today, we usually uncover core issues that had not been apparent and, thus, were not apprised or submitted to modification, augmentation or outright change.
You Cannot Know What You Do Not Know
When owners, managers and trainers review their current success, their egos often impair their ability to evaluate what they are doing and search for the truth; thus, achieving some degree of success blinds them from examining, which is evident in aftermath. Despite impractical methods and less-than-imposing (net pretax) profit, they are making what they consider good money (a common blind spot).
Many sizable companies such as Sears Roebuck, Kodak, Blackberry and Encyclopedia Britannica once had industry prominence. If they knew their challenges, why didn’t they take corrective action? And if they didn’t know, why not?
Specialty companies (who sell and install products such as windows, siding, roofing and re-bath) in today’s marketplace need to make, at the very least, 10 percent pretax net profit (the more efficient companies make 15 percent or more). Only then do companies have the available capital to address unanticipated issues and to invest in growth, education and efficiencies, all of which contribute to sustained growth.
Companies specializing in general remodeling, design-build or similar need to aim for 6 percent to 8 percent pretax net profit with the same admonitions.
Smaller companies who grew from word-of-mouth recommendations/referrals often feel they do not need to examine modern marketing and sales techniques; thus, disavowing the need without examining content and purpose. Plus, they are ignoring potential positive outcomes for themselves and their customers. They also fail to examine what their customers really want versus what so-called experts tell them about “customer satisfaction” in today’s market.
With growth comes increased needs. Growing companies need to examine the market (territory) in which they operate then define the marketing method that best fits.
Modern sales and marketing methods are a science, not an art form. Marketing, which produces leads, requires a formula that produces sales which, in turn, produces an appropriate profitability. Ultimately, when an inquiring company owner explains how their business is run and all the actions (as well as the investment that the company makes), ‘true facts’ come into the examination. This frequently exposes a core issue regarding the need for change.
Pomposity Within Growing Companies
A 40-percent closing rate against ‘leads issued’ is not a logical return for high-cost leads. If a sales force of 10 or more average a 40-percent closing rate versus leads issued, it means that some salespeople might close 50 percent to 65 percent of their presentations while salespeople of lesser skills are closing 20 percent (sometimes less) of their issued leads. These inequalities are often tolerated and may even be considered effective as selling prices continue to increase.
A recent survey indicates the fully loaded cost* of an issued lead runs from a low of $250 to highs in the range of $700.
(Fully loaded cost is all the costs associated with lead development—advertising, marketing methods, lead intake, home shows, job signs, rent and other costs for showrooms, samples, and personnel affiliated with lead development.)
Improving Marketing Efficiency
A method to create a plan for the distribution and control of the leads is a prime requirement. Salespeople, project managers and designers do not own the leads. The company made the investment. The seller (whatever title) needs to understand that a step-selling system, one that meets the needs of both buyer and seller, must be standardized and presented totally and efficiently on every call.
(Step selling was first introduced to the home improvement industry by Dave Yoho in 1962 at a seminar titled, “6 Sales (Steps) to a Sale,” to an audience of more than 1,000 home improvement owners and managers. The premise, if not exact content, is utilized by thousands of companies who sell directly to consumers in their homes.)
A step system is designed to develop the improved use of leads, thus boosting the performance of salespeople regardless of their title. It ultimately leads to more efficient use of leads, thus reducing the ultimate cost of issued leads (Eureka!) for better profitability.
This is not a simple task for either design or implementation but an absolute requirement to grow and maintain customer satisfaction. Efficient use of costly leads creates a profitable return-on-marketing investment.
The Sales Manager
The sales manager is a critical management position. It is often the role of the owner in smaller companies, and it is badly misnamed. The job calls for managing people, not sales. In most successful companies, to be effective, the sales manager is the one who interviews, evaluates, hires and trains the fledgling salesperson while managing to upgrade skills of those in the job for a longer period and, finally, to handle the often-complex behavior of veteran and sometimes prima-donna salespeople.
This series of tasks is vastly improved with the use of DISC Analysis Profiles for hiring and training purposes. The latter accurately describes the behavior of new hires as well as that of those already employed.
(*DISC Analysis Profile: A format that aids in determining—Can they do the job? Will they do the job? Do they fit the model and style of the business?)
A sales manager has a job description that clearly defines the various responsibilities in the management role, along with weekly, monthly and annual goals for performance. Ultimately it’s your decision to thrive, and not just survive, in today’s marketplace. QR
Dave Yoho Associates (daveyoho.com) is the oldest, largest and most successful consultancy representing remodelers and home improvement pros. Through account executives and advisers, they develop plans, training and execution for large and small home improvement companies, manufacturers and other service providers. They offer a no-charge, 30-minute confidential consultation. Contact Dave directly at 703.591.2490 or firstname.lastname@example.org.