Archives for March 2019

Many of you have heard Bill Farrell’s true story known as “Give ’em the Pickle.” Bill’s customer had been coming to his restaurant for lunch for over three years and he always ordered the same thing. Let’s read the letter Bill received for a customer as it appears on Bill’s website at www.giveemthepickle.com .

I’ve been coming to your restaurant for over three years. I always order a #2 hamburger and a chocolate shake. I always ask for an extra pickle and I always get one. Mind you, this has been going on once or twice a week for three years.

I came to your restaurant the other day and I ordered a #2 hamburger with a chocolate shake. I asked the young waitress for an extra pickle. I believe she was new because I hadn’t seen her before. She said “Sir, I will sell you a side of pickles for $1.25.” I told her, “No, I just want one extra slice of pickle. I always ask for it and they always give it to me. Go ask your manager.”

She went away and came back after speaking to the manager. The waitress looked me in the eye and said, “I’ll sell you a pickle for a nickel.” Mr. Farrell, I told her what to do with her pickle, hamburger and milk shake. I’m not coming back to your restaurant if that’s the way you are going to run it.

The story illustrates a common problem and the point is obvious. Create a happy customer at almost any cost, and be sure the customer service message is properly conveyed to each employee. However, to make that happen, a couple of things need to be in place. First, funding needs to be in place to cover the cost. Second, an internal training program needs to be in place.

When a company determines what they need to charge per hour to cover costs while generating a reasonable profit, the first step is to determine what it costs to run the business. Those costs include rent, utilities, insurance, and many other very real costs of doing business (including your salary!). Anything and everything the company expects to spend over the coming 12 months needs to be included in what is known as overhead costs. The money to fund the cost of “pickles” (or, in your case, whatever it may cost to retain happy customers), needs to be included as a cost of doing business. For most companies, the cost of customer retention runs about 2-3% of gross sales. That means if your gross sales are around $1 million a year, the company needs to include an additional $20,000 to $30,000 in it overhead costs when setting their hourly rate. If you have eight service techs who bill out an average of 1,000 hours a year, that would amount to an additional $ 3.13/hour ($25,000 / 8,000 billable hours = $3.13/hour) in your hourly rate.

Now it’s time for training. When it comes to training, it’s a lot like raising children. How many times do we, as parents, do a great job of training our first three children … and then number four comes along. What happens? We have spent so much time training the first three that we “assume” we have taught number four as well. Ok, maybe we didn’t sit down and train number four, but surely he or she picked it up from the first three, right? Well we all know what happens. Number four never really gets the message; we just “assumed” they knew what to do … until things don’t work out as planned.

The same thing happens when it comes to our employees. We have taught the principle, or process, for so many years that we simply assume the new employee somehow picked up the training when, in reality, he or she didn’t. Then what happens? Our customer asks for a pickle, and the new employee drops the ball and mishandles the situation.

Training needs to be constant and consistent to ensure the proper message gets to every employee within the organization. Part of that training involves empowering each employee with a budgeted amount of money to create, or retain, happy customers. That includes the tech in the field through the accounts payable person. Many of the major Five Star hotels provide a budgeted amount of money for every employee, including the janitor. If an employee happens across an unhappy customer, for whatever reason, they are empowered to give them something. That something may be a gift certificate, a free dinner, a room upgrade, or even a free night’s stay. In extreme situations it might involve sending a gift basket to their room with an apology for whatever might have happened.

If your tech shows up late for a call, they might reduce the bill $20 or waive the diagnostic fee. If the customer complains about a charge, the receivables person has the authority to waive part of the fee. Maybe the tech messed up the customer’s carpet. Can you imagine the startled look on the customer;s face when the office calls and says, “Mrs. Jones, we understand Bill accidentally tracked grease onto your family room carpet. When would a good time be for XYZ Carpet Cleaning Company to come to your home to clean your carpet?” How many people do you suppose Mrs. Jones is going tell about that call?

It’s not just about keeping the customer happy, although that is very important. It’s also about future cash. In one of our classes we talk about the future cash flow generated by a happy customer over a 14-year period. Between their annual maintenance agreement, a service call once a year, a major repair every seven years, and their referral of at least one new customer, it amounts to over $20,000 in gross sales. What’s the point? Don’t cut off $20,000 in future cash flow over a $45 service call! Give them the pickle!

Be sure to set hourly rates based on your increased costs of doing business, which should now include money for customer service situations. Also make a note to hold a class on customer service for all your employees to be sure the message is received loud and clear!

If you are a company owner, inventory is important to you. If you don’t have the right parts in stock the result is an inefficient service call that often results in a callback. What’s the solution? You put an inventory system in place. Someone records what’s needed, and the order is placed. Knowing what you need, and when you need it, is important. To remember what needs to be ordered requires making a physical list, if you are a small business. If you are a larger business you might have inventory software, but the principle is the same. A list of what needs to be ordered has to be kept in some form or fashion.

We all want to increase our add-on sales, right? Service technicians are typically in roughly 1,000 homes per year. While you’re in the home, take inventory. Create a checklist, depending on the trade you may be in. For HVAC contractors, the list might include the age of the equipment, making note if they have an air filtration system, or if they are in need of an updated thermostat. Plumbing techs will want to note the size and age of the hot water heater while electricians will want to note the age of the panel and/or the need for added capacity.

Create a checklist of what your customers do not have but might need. Keep it simple by creating a standard checklist that the tech fills out while on the call. Be sure to provide space where the tech can enter unique needs for a specific customer.

The next step is to have a system set up for keeping track of the data. If you have a detailed customer base program then enter the data directly into the customers file AND keep an overall list of your customer’s needs.

As time goes on do a bit of marketing. One area of marketing might be a direct mail piece to customers covering their specific needs. Another idea would be to create a simple one-page flyer that can be handed to the customer on each call. The flyer might feature a discounted price on a specific product. It could be your Special of the Month. The tech would obviously have the product on his, or her, truck so it could be immediately installed while the tech is on site. Create a simple flyer in your computer and print it in the office.

My dad always told me that if you want to be successful, then find a need and fill it. That is what this program is all about!

*Published with permission in the February, 2015 newsletter*

The great statesman Benjamin Franklin once said, “When you are finished changing, you’re finished.” And even though it’s been 200-plus years since he uttered those famous words, they still hold true — especially in today’s business world.

Long standing ideas about how to lead a team are no longer viable. Workers won’t stick around for a bad boss these days, no matter how much they’re paid. They want to be motivated and inspired. So, how can you ensure that you’re functioning as an awesome leader? Start by avoiding these common, but mistaken, leadership beliefs.

The Myth: They’re inspired by their paycheck. As the owner of your company, you have the power to change lives. After all, you’re the person signing the paychecks. Everyone should be happy, and even grateful, to do their jobs with no questions asked.

The Truth: Great leaders know that power comes from persuasion, not position. Simply offering a paycheck, or intimidating workers by holding their jobs over their heads will not make them more productive or creative. Leaders who take the time to communicate, support and encourage earn loyalty and respect from their teams.

The Myth: No news is good news. Your team doesn’t need to know when something bad happens. If sales are down, they’re going to become scared and maybe even leave. As a matter of fact, they can’t be trusted with any sensitive news — good or bad.

The Truth: Winning organizations have a culture of communication. Your team wants to know what’s happening and why. Sure, there’s some information you can’t share. But when you have the right team members on board, you can trust them with almost anything. Make a habit of over-communicating. Your team will respect you for it even more.

The Myth: You can’t find good workers anymore. Today’s generation doesn’t listen. They lack initiative, and they never show up on time. They want the world handed to them.

The Truth: You’re probably not good at finding and recognizing talented, responsible workers. Think there are no young people who are willing to do an awesome job? Look at Chick-fil-A. The company has thousands of them. Part of being a good leader is knowing how to hire. You have to be willing to wait for the perfect person — one who shares your values and work ethic. At Dave Ramsey’s company, team members are interviewed four to six times, and the process can take three or four months.

Becoming a great leader is not easy. It’s a skill that needs to be developed, and it’s one that takes time, patience and a willingness to learn and improve one’s self. But if you’re willing to put in the hard work, you’ll find yourself with a team full of talented, passionate people — a team willing and able to slay dragons right alongside you, and do whatever it takes to win.

It’s definitely worth the wait!

You’re on a road trip with the family. It seems like you should have arrived at your destination by now. The kids are asking, “Are we there yet?” and your wife gently suggests that you might be lost. What’s your reaction? “I’m not lost, we will arrive soon.” Twenty minutes later your wife asks you to pull into the next service station to ask for directions. You become a bit irritated, and continue driving. Another 30 minutes pass and the kids are getting impatient while your wife is getting angrier and angrier. With tempers getting shorter as the road trip gets longer, you finally pull over and ask for directions. Ten minutes later you arrive at your destination … late and frustrated.

What just happened? One word: Pride. There was no way anybody was going to tell you what to do. Was it worth the price? You could have saved valuable time. The kids wouldn’t have been upset, and the “I told you so,” look on your wife’s face would never have occurred. If you had simply swallowed your pride and admitted you were lost and pulled over to ask for directions an hour ago, it all could have been avoided. The fruit of pride is expensive!

There is a Proverb you might be familiar with. It says “Pride goes before a fall.” In essence it means being self-centered, while refusing to ask for help, will cost you. The cost on the above road trip was time and bruised relationships.

What about your business? Are you making a profit? Do you have problems with technician productivity? Are you getting the reports you need to manage your business? Perhaps some of your employees aren’t coming to work on time or aren’t filling out their paperwork properly. How well do you handle customer complaints? Does your total marketing program still solely rely on your large yellow page ad that isn’t producing quality leads? Chances are you are dealing with at least one of these issues. Now before we address the core problem let’s talk about a related topic.

Do you know why trades companies are called independent contractors? The answer is right in the name; we are called independent contractors because we are independent! As problems occur within our businesses, our thinking tends to go something like this: “I’ll bet I am the only contractor that struggles in this area. I’m not going to ask for help because people will laugh at me for not knowing the answer. I will work through it … eventually.” That is called pride! The reality is that there is nothing new under the sun. Every problem you currently have, or will ever have, has been experienced by almost every other contractor within the trades industry.

So what’s the solution? Ask for help. If you need help with marketing, attend a marketing class. If you want to understand the business-side of your business better then think about attending our two-day Planning for Profit class. If you need help creating a Company Policy Manual, do a Google search and look for sources that can help you. If your techs struggle when it comes to customer service, provide some training. If your closing rate is low when it comes to your sales, then join your fellow contractors in a sales training class.

Swallow your pride and get some help. When you do attend a class, a light bulb will be turned on in lots of ways. First of all you will find a room full of contractors struggling with the same issues you are dealing with. As information is presented in class, and discussed between attendees, you will find answers to your questions. Best of all you will make new friends, usually in non-competing territories, that you can begin to network with. Next time you face a “new” problem you can call Jim, Sally or William to see if they can offer some input. Again, the reality is that every contractor has either faced the problem you are facing, is currently going through the problem or will be facing it before long.

Too many quality contractors go out of business each year because of pride! Remember our road trip? Asking for directions when you first became lost would have saved time and preserved family relationships. The same principle applies within your business, but the consequences are far greater than strained relationships. When it comes to pride within your business you are opening the door to failure. If pride continues it could even put you out of business!

Really great sales people ask a lot of questions. Why do you think they do that? They do it to determine what the customer’s needs are … so they can fill them!

Let’s visit a high-end retail clothing store. As a matter of fact, I was recently with my wife in a high end women’s clothing store that’s “guy friendly” – it has nice comfortable chairs if your wife is shopping there for a while!

As soon as my wife stepped through the front door one of the associates greeted her and immediately asked her if she was looking for something in particular. After a few short questions, the associate walked my wife to the area of the store containing the items she was looking for. As they were walking, the associate noted the newest items in the store and even pointed out where the sale items were. The associate continued making suggestions and even carried items of various sizes back and forth to the dressing room where my wife tried them on. To make a long story short, my wife ended up with a sizable purchase, partly because the associate asked questions.

The principles are identical in the trades industry. The tech may have been called to a home or office for a specific repair, but the potential sales are far greater than that. Note, my wife entered the store looking for one item, but left the store with several non-related items, thanks in part to the associate asking questions. If you are a tech, I encourage you to ask some general questions when you walk through the customer’s front door. Here are just a few to get you thinking:

• Do you have any rooms that are warmer or cooler than the rest? (Potential sale: Zoning)
• Do you have difficulty reading the thermostat? (As people get older those little letters and numbers are harder to see. Potential sale: Large viewing area on a new thermostat)
• Do you travel a lot? (If the answer is yes, then installing a setback thermostat may be in order to reduce utilities while they are away for the home. Potential sale: Setback thermostat)
• Do you, or any family members, have allergies? (Now you can talk indoor air quality. Potential sale: High end electrostatic air filter sale)
• Do you ever run out of hot water while taking a bath or shower, especially when you have overnight guests? (If the answer is yes they might want to look at a larger, more efficient, water heater. Potential sale: Fifty gallon high efficiency water heater or perhaps a tankless, instant, water heater)

Asking questions can generate a substantial number of add on sales. My wife wasn’t even thinking about the jacket she purchased when she entered the store. However, when the associate told her about the latest and greatest in jackets, she bought one. Again, you entered the home to fix the furnace, or to repair the leaking facet, or fix an electrical problem but by asking a few questions you might just sell a setback thermostat, zoning system or air cleaner. Remember, when you are in the customer’s home you are the expert so talk about things that could actually be of significant benefit to the customer. How do you know what those “significant benefits” are? You ask questions!

*Published with permission in November, 2014 newsletter*

The Ask Dave series is brought to you by the Dave Ramsey EntreLeadership team. In this series, Dave Ramsey will answer questions that come into his radio show or at his live EntreLeadership events across the country. Dave will address a couple of questions each month with the same methodology that he uses everyday in running his business.

Re-ignite The Fire

Dear Dave,
How do you reignite a sales team member’s fire once they have reached a financial goal they set for themselves? – David

Dear David,
I love team members who have the energy and drive to go out and make the sales. But when it comes to this type of work, you’ve always got to be on the lookout for someone who is there simply to collect big checks.

I call a person who is on some type of commission, and brings in more than they cost you per unit, a tiger. These are the types you want in commission-based roles, because they enjoy the chase and the thrill of the hunt. But it’s a little difficult to change things with people who are already in place and have been with you a long time. You can talk to them about the situation and their goals, or you can change the environment around them or their compensation structure and give them every opportunity to catch fire again.

But I think the best thing is to spend lots of time and effort in the beginning making sure you pick the right people for the right jobs. At my company we stress the importance of having a crusade mentality. You have to be on fire for what you’re doing. You have to love your job, love the reason you’re here and love doing work that matters. We’re a Super Bowl team, David. We’re not setting a goal of getting to the playoffs. We’re playing for the ring every time.

You have to understand that what I’m talking about isn’t something you can suddenly start cramming down people’s throats. It’s a gradual, gentle process. But the first and most important thing is to surround yourself with winners and give them what they need in terms of motivation to win on a consistent basis. It’s not acceptable for someone to reach a particular goal and then slack off or start doing things in a half-butt kind of way. I’m not okay with that at all!    — Dave

Expensive Lesson Learned

Dear Dave,
I work for a civil engineering firm that makes about $1 million annually. Two years ago one of our new clients didn’t pay a $40,000 invoice, even though a promissory note was signed. Our company sued him and won, but his assets can’t settle the bill. Do you think we should continue to pursue this?  – Sarah

Dear Sarah,
You can hit a rock with a hammer, and it will never bleed. In other words, there’s no money to get because he doesn’t have it. Unless you think you’re dealing with a snake, and he’s going to great lengths to try and hide something, I’m just going to use this lesson learned and change my sales procedures and requirements to reflect the experience.

You might want to spend a little effort looking into things a bit deeper. You could even spend something on a private detective to try and search out bank accounts and other assets. Try to find out where the snake laid its eggs. Who knows? You might be able to squeeze a few thousand out of the situation.

Still, I wouldn’t spend a lot more time, effort or money chasing this guy. You let him get too far into you for a new client. If I were in your shoes, I’d probably just go make more money, see how I could learn from the lesson and make the changes necessary so I never had to go back there again!   —Dave