Success Can Hinge On Embracing Change

December 23, 2003
/ Print / Reprints /
ShareMore
/ Text Size+
NASHVILLE, Tenn. - Tom Whittman, ISL business team leader, looked out over a sea of attendees at the Nashville conference. He had a tough act to follow. ISL vice president Mike Moore had led an emotional charge at the beginning of the meeting.

But Whittman quickly focused in on the topic of implementing change. One key to success is to create a "culture of discipline," according to Whittman.

"You can spend countless hours of putting spreadsheets together, but if you don't have a culture of discipline, it won't amount to a hill of beans," he said.

Whittman said there are various building blocks, which should define the structure of any organization. His suggestions included:

  • Keep your team in front of your customers.

  • Get the right price.

  • Create a sales culture.

  • Manage labor to the price.

  • Track results.

    Planning Strategy

    One of the ISL sessions centered around the organization's "Performance Marketing Planner." The elements of this marketing tool include:

  • A business mix evaluation - A model for residential, commercial, and new construction contractors is set up to include the following categories: gross margin, operating expense, profit, and direct labor.

  • A company structure evaluation - This includes current structure, ISL model, and goal. The elements include: operating expense, gross margin percentage, operating expense percentage, net profit percentage, break even, sales needed, and target profit.

  • Departmental operating expenses and sales needs evaluations - This includes a company operating expense projection and business mix percentages, including projected overhead and the sales needed.

  • Residential replacement projection model - This includes yearly projected operating expenses and monthly operating expenses (which are typically higher for residential service).

    Gauging Expenses

    Since most of the ISL contractor members include residential service in their business mix, Whittman asked attendees why monthly operating expenses are higher for residential service.

    "Customer transactions per day drive operating expenses," he said. "That could be a good reason why service contractors who go into new construction have a hard time making a profit - because they are set up differently from a typical new construction contractor."

    Whittman suggested that contractors take their business mix into consideration when they are figuring the gross margin equation, stating, "Remember that operating expenses plus net profit equal gross margins."

    Pointing to differences in residential service, commercial service, and new construction, Whittman said, "The margins for each business mix are different. As you look at each mix, you have to identify strengths, opportunities, weaknesses, and threats to each mix."

    The Marketing Cycle

    Whittman said the purpose of planning is to meet the four phases of the marketing cycle of business: high demand, low demand, demand downswing, and demand upswing. He outlined the characteristics and ISL's recommended strategy for each phase.

    In periods of high demand, the objective is to make a profit, build future business, and monitor expenses, said Whittman. The goal is to respond to customer needs. The marketing strategy should be moderate, involving 6 to 8 percent of sales revenue.

    When demand is low, the objective is to generate cash, make a profit, and control expenses. The strategy is to offer discount replacement specials. The marketing strategy should be aggressive, involving 8 to 11 percent of sales revenue.

    During a demand downswing, the objective is to generate cash, make a profit, and control expenses. The strategy is to offer agreement tuneups, off-season specials, and sell accessories. The marketing strategy is moderate, involving 6 to 8 percent of sales revenues.

    When demand is on the upswing, the objective is to make a profit, build future business, and monitor expenses. The strategy is to offer tuneup and preseason replacement specials. The marketing strategy should be aggressive, involving 8 to 11 percent of sales revenue.

    Publication date: 12/29/2003

  • Did you enjoy this article? Click here to subscribe to The NEWS Magazine

    Recent Articles by John Hall

    You must login or register in order to post a comment.

    Multimedia

    Videos

    Image Galleries

    2014 Energy Efficiency Forum

    Highlights from the 25th annual Energy Efficiency Forum in Washington, D.C.

    Podcasts

    NEWSMakers: Rajan Rajendran

    Rajan Rajendran, newly appointed director of the Emerson Innovation Center, talks about the new $35 million facility and how it will function on the University of Dayton campus. Posted on Aug. 29.

    More Podcasts

    ACHRNEWS

    NEWS 08-25-14 cover

    2014 August 25

    Check out the weekly edition of The NEWS today!

    Table Of Contents Subscribe

    Prohibiting HFCs

    EPA is proposing a rule that would prohibit some HFCs in select refrigeration applications. Do you agree with this move?
    View Results Poll Archive

    HVACR INDUSTRY STORE

    plumbing-hvac.gif
    2014 National Plumbing & HVAC Estimator

    Every plumbing and HVAC estimator can use the cost estimates in this practical manual!

    More Products

    Clear Seas Research

     

    Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications, Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

    DON'T MISS A THING

    Magazine image
     
    Register today for complete access to ACHRNews.com. Get full access to the latest features, Extra Edition, and more.

    STAY CONNECTED

    facebook icontwitter iconyoutube iconLinkedIn i con