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:
Planning StrategyOne of the ISL sessions centered around the organization's "Performance Marketing Planner." The elements of this marketing tool include:
Gauging ExpensesSince 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 CycleWhittman 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