Should Technicians Sell Replacements
Yes, no and it depends. The question is “should” not “can”. Some technicians certainly can sell, and sell effectively, if they are given the support they need to be successful. Other technicians don’t want to sell but are willing to generate great leads. And let’s not forget the customer’s needs in all of this.
In the past three weeks I’ve worked with three very successful companies that have varying levels of success in getting technicians to sell service agreements, enhancements, systems and generate sales leads. It’s common to find at least one technician in a company that excels at all of this which suggests to their management that all of them should be getting the same results. More often than not I find that it’s not the technicians who are falling short, it’s how the company supports the sales process that needs to be first addressed.
The first step is to decide how your company can best serve your customers. If, as an owner, you do the selling and that takes you away from managing your business, then hiring a full-time sales person or selling through your technicians would be two alternatives. If you want your technician to have a chance at being as good as you are then you might want to address these critical steps:
Get him with the same in-home sales training a full-time sales professional gets
Give him the time he needs, up to 2 hours, do make a thorough evaluation, go through discovery and make a professional presentation
Create a detailed installation checklist that he can provide to the installers so they can complete the job without his involvement
Compensate him appropriately
Be able to support this even when your service calls are at their peak
This is just one example and each company has it’s own mix of culture, organization, management, individual talent and on. It would be naïve to think that a simple one-size-fits-all approach will work. Think about what you want to accomplish, honestly evaluate your situation, and create a process that will work for your customers, and for you.
Last week I made the position that our industry needs to focus on the bottom line as the primary strategy to climb out of the muddy pit that the past 5-years of dismal economic conditions has pushed us into. In working with contractors across North American I see genuine lack of an effective pricing strategy that captures all costs and results in a price that will deliver the desired profit dollars or margin. The most common method of pricing that I still see employed today is a simple markup applied to the dealer cost of the major equipment or accessory items. When I ask how the markup used was developed, I typically hear that somebody told them to use that when they first started in the industry. Not the most scientific method!
Ideally your price needs to be calculated based on as accurate as possible reflection of your material cost, labor cost, overhead cost and desired net profit. Not knowing and/or accurately tracking the cost components of this equation can only result in an uncertain and most of the time inadequate net profit. Although far from perfect, our industry tends to do a much better job of understanding and tracking material and labor costs. Overhead cost is a different story – easily the most misunderstood, misapplied and critical principal in successfully running a business.
Overhead costs are simply all costs your company incurs in doing business, with the exception of direct material and direct labor costs. How these are accounted for can vary from company-to-company based on how items such as benefit costs, worker’s comp insurance, etc. are handled… but ultimately properly accounting for costs and having a consistent method to calculate your overhead rate is what is critical. Every business has overhead costs, no matter how small. Many times overhead costs can be effectively leverage as you grow resulting in a lower overhead rate. Knowing what overhead cost are is critical to making sure that your pricing covers or absorbs these costs and so that you can effectively manage them to improve your bottom line.
To understand, track and manage your overhead costs requires:
You have a chart of accounts that accurately reflects your costs down to the detailed level required to separate direct costs from overhead costs. If you use or want to use a pricing method that allocates your overhead to your direct labor cost only instead of all direct costs (labor and material) then you need to have direct labor and material tracked separately. If you want to have pricing that differs by department, then your chart of accounts needs to be departmentalized.
A process to accurately capture these costs in your accounting system
Calculation of your overhead rate at least annually based on the previous year’s history. Ideally you should check this quarterly so at least you understand how your overhead rate changes seasonally.
Projection of any significant planned or anticipated changes to your overhead rate so that your pricing strategy reflects these changes in advance and not after the fact.
Our next article will discuss the different profit methods you can employ in calculating your pricing and how overhead is factored into each one. Future articles will discuss ways you can lower your overhead.
Mark Sims is a 35 year industry professional and the founder and chief architect of TRUST PRO® online, a HVAC operational management system. TRUST PRO® online has up to 9 built-in price books and supports multiple pricing methods. For more information and a free demo of how to use TRUST PRO® online to easily manage your pricing and improve your profit, log onto www.trustproonline.com.
TO BE YOUR BEST
Have you ever wondered what it takes to be your best? Is there something you wish you were more knowledgeable of or more confident about?
If you have a desire to be the best you have to work at it. It has been said that to become a master in your field requires approximately 10,000 hours of training, practice and skill building. Most of us work about 2,000 hours a year. How quickly you get to your 10,000 hours is up to you.
While out making calls, I keep a notepad with me and make quick notes when I come across something I don’t fully understand. At the end of the day I review my notes, choose the most important item and after a quick search online I can usually find all the information required to help me better understand something I was not quite sure of.
It always helps to start with an attainable goal. Can you commit to dedicating 20 minutes a day to self-study of something you want to learn? Before you know it, you will be well on your way to becoming the best.
Tye Leishman has serviced, installed and sold HVAC systems for more than 20 years. He is the founder and President of Tempco Refrigeration & Air Conditioning Ltd., a full service HVACR/Electrical contractor located in Powell River, B.C. Canada. He is also a certified sales trainer with TRUST® Training and Consulting. Tye can be reached at firstname.lastname@example.org 1-604-485-5352.
Selling Habits – How can I change behaviors?
People are naturally habit-based creatures, both good and bad. Here in Minnesota, sales people often get into ‘seasonal habits’. A switch seems to go off with a change of seasons. In the winter, our team did a great job up-selling IAQ, combos, water heaters and duct cleaning with a ‘furnace only appointment’. But when summer came, the sales team seemed to switch to AC only mode. No furnace, no accessories, no duct cleaning, just the AC.
How did we change this ‘habit’? The first thing that needs to be in place is good tracking. With a large sales force of roughly 20 reps, I was amazed at the difference in up-selling results. I had reps selling over 150 humidifiers annually and others that sold two. How can a sales rep go on over 600 sales calls and only find an opportunity to sell two humidifiers? By being in the ‘habit’ of never mentioning them, that’s how. Tracking is the first step in addressing habits and be sure to make it ‘public’. Whether you have two people selling or twenty, no decent sales person wants to be on the bottom of a list.
The next thing to address is the company philosophy around seasonality and what’s expected. When the weather hits, a lot of contractors focus on getting as many boxes in as they can, and miss out on the bigger margin picture. We found accessories, upselling and focusing on combos year round produced a much higher margin rate, then ramping up box only sales for seasonal weather bursts. Always offer a system solution, and break the seasonal habits.
Contractors often worry about the appearance of ‘overselling’. When you have a lot to offer, say everything from fireplaces to water heaters with a full HVAC line, it would not be a good habit to always try and sell everything. A good presentation offers a balanced solution that fits the customer’s needs.
One tool that can help build awareness of products available without the appearance of overselling is a simple one-page product sheet. Utilizing one for all of your IAQ options works well. UV lights were a perfect example, something the reps were not offering, but with the sell sheet, customers were asking the sales rep about them. The right ‘habit’ on what to offer is what you hire. The best sales people will read their customers and find the right solution. You can also utilize their talents to help other reps gain good habits.
Another strategy, utilize sales rewards to change bad habits into good ones. Give the rep who sells two humidifiers a year a reward to bring it those pitiful results up. Find a spiff that fits your group, once they get comfortable with the ‘habit’ change and start seeing results, you won’t need a contest.
Changing bad habits and behaviors into good ones, will definitely grow your bottom line.
Mike is an innovative leader with over 20 years’ HVAC experience in generating sales and increasing earnings. Mike has led one of the most successful HVAC sales teams in the nation, generating over $40 million in annual residential replacement/add-on sales. Currently, Mike co-hosts a CBS radio talk show – the “Centsible Sustainability Hour” discussing various energy topics including residential and commercial HVAC.
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