Tips to get more out of a struggling market
June 1, 2009
OK, so the economy isn’t good. What do you have to do to get the telephone to ring? Here are some ways to get business.
Talk with your customers whose air conditioners are more than 10 years old (or whatever the equipment’s life expectancy is in your geographic area).
The new federal tax credits, manufacturer rebates, utility rebates, and gas or grocery store rebates give you a great reason to contact your customers with older equipment.
Review all proposals that haven’t closed.
Some may be a year old. Again, use the tax credits and rebates as the reason to call. If the customer did hire another company and its warranty is up, offer to put them on your maintenance plan.
Review your “tickler” files.
Your dispatcher should keep a copy of all service tickets where a technician recommended work and the customer chose not to have it done. These tickets are to be put in a “tickler” file.
Last August, when a customer said, “I’ll wait until spring to repair or replace this system,” that customer’s ticket should have been put in the tickler file. Review those tickets and call the customers. You can be sure they forgot about it. If you haven’t started a tickler file system, start it now.
Talk to your technicians.
It always amazes me how much is stored in most technicians’ heads. They can tell you which customers really need work done, whether or not that technician wrote it on the customer’s service ticket. If they are prompted, they will remember - although not always on the spot.
Ask them and then say, “If you think about anyone later, just write it down or call.”
Reactivate inactive customers.
An active customer is one who has done business with you in the past 18 months. Many contractors have thousands of customers on their active list. In reality, only a small percentage is active. Find those customers inactive between 18 months and 5 years. Give them a reason to come back - a free spring inspection (and yes, it can be free after they use the gasoline or grocery rebate).
Everyone is looking to cut costs right now. Give your customers a reason to buy. The tax credits help. Utility and manufacturer rebates help. Gasoline and grocery rebates help. Most of the contractors using the gasoline and grocery rebates are not complaining about being slow.
Sitting around and complaining doesn’t increase your revenues. Be proactive. Talk with your customers and prospective customers. Give them a reason to buy now.
Cleaning houseSpeaking of business, every day many of us read about companies laying off people and downsizing. In fact, many companies have needed to get rid of the deadweight for a long time and this is the perfect excuse to do it.
Are there people in your company who are not pulling their weight? Are there technicians who are not productive? Are there people who are there just to collect a paycheck and don’t do any productive work?
Hopefully you’ve answered no to these questions. Most small businesses can’t afford people who aren’t productive. They don’t have the excess cash to cover nonperforming employees who can hide in larger corporations.
How do you know whether you have a productive work force? Look at the employee compensation ratio. This ratio answers this question: For every dollar that you bring in the door how much is spent in payroll and payroll taxes?”
The ratio percentage is calculated by adding the total payroll plus payroll taxes and dividing that number by total sales for that month. Include everyone’s salary, both field and office workers. Do not include workers compensation, health insurance, bonuses, retirement payments, etc.
RatiosIf your ratio is greater than 40 percent, you’ve usually got unproductive labor. If your new-construction department ratio is greater than 20 percent, you’ve got unproductive labor. If you have a mixture of different types of businesses - service, replacement and new construction - the ratio should probably be 28 percent to 32 percent.
If you’ve never calculated this ratio, start with the percentage compensation for a quarter or a year. The monthly ratios are affected by seasons, which could make it higher or lower than normal. However, once you’ve calculated it monthly for a year, you will have a baseline so you’ll know which months have higher percentages.
If you find that your percentage compensation ratio is too high, start looking at the productivity of each employee. Where can that person increase production? Ask for ideas from your employees. They know who is slacking as well as ways to increase everyone’s profitability.
And finally, if someone truly is deadweight, you have the perfect excuse to lay that person off right now. Or you can give him or her a chance to improve their productivity. Just make a decision and act on it.
Copyright Ruth King. All rights reserved. Write to Ruth King, 1650 Oakbrook Drive, Suite 405, Norcross, GA 30093. Call (800) 511-6844; e-mail firstname.lastname@example.org.