I once read, “If you think change is hard, you should try extinction.”
In many ways, this characterizes the changes going on with homeowners and the changes residential contractors need to make to effectively sell to them.
Homeowners are more educated than ever because of the internet. Ten or 15 years ago, homeowners turned to us to learn about buying a new HVAC system. Now they have that information before we show up, and in many cases they know as much about the equipment as the comfort advisor — or at least, they think they do. In almost every case, the information they have (particularly about pricing) is incomplete if not outright wrong.
Nevertheless, the dynamic has changed. Homeowners are armed with more information (and misinformation) than ever. The selling strategy that worked for residential contractors in the past is not what is going to work in the future. We have the choice to recognize this reality, make some changes, and succeed … or ignore the trends and suffer the consequences as our competition takes market share.
The choice is ours.
Over the past 10 years in my consulting practice, I have seen “first call” closing rates decline and “rehash rates” improve. In other words, fewer homeowners are making the decision on the first call, and more sales are being made through effective follow-up with homeowners by the most successful contractors.
In many cases, the most successful companies are staffing entire “rehash” departments to follow up on lost leads. The results are hundreds of thousands of dollars in sales through an effective rehash program.
A recent study by ServiceTitan revealed a shocking statistic — half of all sales people never follow up after the initial call. Think about that. As homeowners are making fewer decisions on the initial call, half of comfort advisors are not following up at all. This is great news for the half that is following up, but it does not bode well for contractors selling the way they were 15 years ago.
The most successful contractors obsess as much on the deals they don’t get as they do on the deals they do get.
Think about it. The average comfort advisor runs 500 leads per year and closes 40 percent of those. That’s 200 installs. Not bad.
But what about the 300 leads they didn’t sell? How many of those do you suppose purchased from your competition? How many of those could have been yours with better follow-up? How many of those could have been yours with a better rehash strategy?
Here is the worst part. You already paid for the 300 leads your comfort advisor lost. In fact, those 300 leads probably cost you about $100,000. Why not implement a rehash process that recovers some of those lost deals? Even if you only recovered 10 percent of the lost deals, that’s 30 new systems at $10,000 each. That’s $300,000! Even at only a 40 percent margin, you at least recovered the cost of the leads.
Why wouldn’t you do that?
To measure the rehash activity in my company, I began measuring sales performance differently. Instead of just measuring a singular “close rate,” we now measure “first call close rate” and “rehash rate.”
The combination of these two KPIs reveals our total close rate and also gives us a clear measure of how many deals we are recovering. And because “what gets measured gets done,” it forces us to focus attention on our lost leads. That focus results in additional sales. Additional sales equal additional revenue.
The opportunity to recover revenue in lost leads has become an obsession of mine. It’s one of the first things I measure on new consulting projects. It’s low-hanging fruit and a very simple and inexpensive way of generating new sales and revenue. My obsession on recovering lost leads was my motivation to develop technology that automates the process. It’s the reason I am sounding the alarm.
The landscape in residential sales is changing. Your homeowners are more educated and sophisticated than ever. As result, they are making fewer buying decisions on the first call. It is up to us to adapt and change. The alternative is much worse.
To learn more about the sale process, and how to implement profit-driving changes throughout your sales department, visit egia.org/achr-sales to download a free training package complete with how-to documents, plug-and-play sales menu templates, industry research, and much more.