Here’s a question. Do you know anyone in this industry who is not expecting to have a great year in 2015? If so, that person is probably in the wrong business because demand for the services of home improvement contractors is building monthly. And don’t take it from me. The Harvard Joint Center released a report at the end of January predicting that 2015 would be a record year for home improvement sales. That’s why just about every company you know, likely including your own, is looking for salespeople, marketers, installers, and admin people. You’re looking for them, your peers are looking for them, and people in other industries are looking for them.
Typically, when demand increases, home improvement companies hire more marketing staff to generate leads, and hire more salespeople to convert the leads to sold jobs. We could do that, and ordinarily we would do that, but this time around we’re going to try something a little different.
That’s for several reasons. We tried psychological profiling of sales candidates, and frankly, it didn't make a lot of difference. The best salespeople I've ever hired were people who came through networking. Friends and employees knew them. They were what great salespeople are: fearless, hard-working and knowledgeable of the product.
But even if you know about them before they apply, there's still a vetting process. The ideal thing would be to duplicate your best salesperson, right?
We decided that the better way to manage the situation was to reduce the amount of time the salesperson spends doing anything other than being in the house, belly-to-belly, with the homeowner. That’s a lot of time, when you tally it. And there are only so many hours in a day. Take drive time. You can’t teleport yourself to the home. You have to get in a car and drive there. And how about all those follow-up phone calls? Or all that office time spent preparing the proposal? Scheduling a second appointment to present the proposal? All this takes a lot of time. It’s stuff most salespeople aren't good at anyway. And they don't want to do it, either.
We broke it down and realized that what we were really after, when it all shakes out, is more closed business. That’s the goal: to create more revenue. Hiring salespeople is the traditional way of doing that. But we decided to try something a little out of the box. Instead, we hired a person who can handle the back office aspects of selling so that the salespeople can run more appointments. She’s smart and has the right skills, but more than either of those traits, she wants to do it, and do it with us. That’s 90% of the battle.
If we sell more jobs, we have to install them somehow. And, of course if anything, the competition for good installation crews is even more intense than it is for marketing and sales people. We use our own crews. We’ve tried using subcontractors but our standards are pretty high. We’ve just won the Angie’s List Super Service Award and our overall approval rate on GuildQuality is 98%.
So the challenge there is: can we increase production and keep that level of quality? Typically, in this industry, an increase in quantity means a decrease in quality. It happens all over. We decided to grow our crews — typically 4 or 5 guys — from the inside, one person at a time. We just bought another truck. And what we’re going to do is take the best guys from our existing crews and put them in charge of a new crew. We will give them year-round work and reward them financially. And we’ll let them find new crew members.
These two approaches reflect what we learned from the recession. There’s a third lesson as well. When it comes to weathering a storm, cash reserves are king.
In the past, contractors would figure that because they were having a great year they needed to spend all the money they were making. I've watched people who came from nothing and made it big change their lifestyle. Suddenly flying coach wasn’t who they were anymore. It had to be first class. Even when times got turbulent, it had to be first class.
My suggestion is, if you’re starting to make
some good money, put that money right in the bank. When a recession hits,
people think it’s a blip. The good times will all come roaring back. If you've
been through a few, you know better.