Focus of Contract Sales Reps

November 9, 2009
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Whether an owner/operator, service or sales manager, you are probably under constant scrutiny to ensure peak performance from your HVAC contract sales reps.

This is no more apparent than under the current uncertain economic times. In your efforts to attain this goal of nurturing the best in your sales force, you probably have sought advice in the form of generic sales publications or discussions with peers, either locally or through an association such as the Mechanical Service Contractors of America (MSCA).

Your research and conversations have probably had two results. First, you obtained creative and interesting ideas related to hiring, training, compensation, and job descriptions. Second, you probably determined that there is no outright formula for ensuring success.

The quality of a mechanical service company can typically be measured through the quality of the customer contract base. Service firms with both a high volume in income and numbers of clients, combined with a high retention rate, experience a stable and recurring stream of revenue. For this reason, many HVAC companies have taken the approach that the contract sales rep’s sole measurable task is to generate new contract customers. Once the new contract has been processed and handed to operations, the sales rep’s responsibility with that client has either been minimized or virtually terminated. Why? The conventional thinking is that these highly skilled reps should be freed up to focus on new business rather than servicing existing customers.

However, most of us believe that an initial contract sale is possible due to a sales rep’s ability to quickly build trust with the new client, and then leverage that growing trust into creative and imaginative solutions that provide clear and measurable benefits to the client. If that is the case, is it wise to remove that sales rep from the client relationship?

Perhaps the solution is to modify a sales rep’s measurable objective. The rep’s goals can be in alignment with new contract growth and ensuring the long-term satisfaction of the customer. It is through that growing loyalty that you develop further streams of revenue, margin, profit, and referrals.

Ask yourself the following: Are you providing all of your clients with all of the services that you currently offer? What about additional services that are under development? With even the most basic service software and accounting packages, you should be able to complete an analysis that illustrates how well your team is cross-selling.

COST OF SALES EVALUATION

The illustration identifies the typical cost of sale for increasing revenue streams from new clients versus existing. The cost of a new sale can be as much as 10 times more than the cost of retaining a client or developing additional streams of revenue from a client.

The lower half of the illustration represents well-established services and the upper half either represents newer services or existing well-established services that a client knows nothing about. It is important to remember that you may well have provided chiller service for the past 10 years, but if a client or a prospect was not aware of this service to them, it’s new!

The left half of the illustration represents existing clients, while the right represents prospects. Look at your existing customers in the lower left portion of the chart. They are using existing, well-established products and services. Are these customers using all of your established services? If not, the promotion and acquisition of these additional revenue streams should represent your lowest cost of sale. It’s possible that the technical people who might be looking after those accounts are doing a great job, but they may not be comfortable seeking additional business from that well-developed relationship. In fact, there may be many reasons why the staff you currently use do not develop the additional revenue streams. Some may say, “I don’t want to be that typical salesman - always trying to upsell.”

Look at the existing customers in the top left square. New products and services you develop and offer to them should be well received by your customers, resulting in an acceptable cost of sale. As stated above be prepared for some of those existing clients to say, “Gee, Bob, I didn’t even know you guys did that!” This comment identifies a separate issue to deal with, but at least you have a receptive listener in the form of an existing satisfied client to discuss this new service offering. This box represents the second lowest cost of sale to your organization.

The lower right box addresses well-established existing products and services marketed to new prospects. These prospects know that your company offers HVAC service (or some other service). If a prospect is not at all familiar with this established service, then that particular prospect would be considered within the cost of sale for the group in the box on the upper right quadrant.

The upper right square represents new products and services you have recently developed and marketed to new prospects. It will also involve established services being marketed to new prospects if they were not aware of the service offering. This category represents the highest cost of sale.

Do a quick analysis of what resources you are applying to each box. In many HVAC service companies the sales reps spend the majority of their time in the last box - the upper left one that represents the highest cost of sale. This strategy may be sound if you believe your existing base is being fully leveraged. If not, consider a temporary or permanent shift in the measurable targets and compensation for those highly skilled new contract sales reps.

Publication date: 11/09/2009

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