NASHVILLE, TENN. Ken Goodrich knows where his money is, and other contractors better know that's too if they want to make a good living. Goodrich told fellow members of Plumbers Success International meeting here in September what numbers they need to track on a daily basis.
Goodrich, originally an HVAC contractor, owns Green Valley Plumbing in Las Vegas plus four other shops, both plumbing and HVAC, in Las Vegas and Phoenix. Combined, they bill about $10 million a year.
Contractors can go two ways, Goodrich told the 450 PSI attendees: They can plan for the day, track the numbers, recruit, train, and supervise, administer or motivate; or, they can fight fires, leave paperwork undone, not hold their people accountable and, generally, live with chaos.
While many things may be beyond their control, contractors can manage their time, their peoples time and their money. Contractors should know what happened yesterday, what's going on today and what to expect tomorrow.
Goodrich has managers running his five shops, and he tells them exactly what to track.
"Track, track, track," Goodrich said, repeating his mantra. He said he knows what sales came from which technician every day.
Managers must post sales goals for the day and actual results. Everybody, especially customer service reps and service techs, need to know what numbers they're supposed to hit that's day. Everybody needs some incentive and everybody likes something different, Goodrich noted. He said that's he uses money, praise, titles, job tools, training, parties and dinners.
All personnel should be told what the goals are for the month for items such as average invoice and service agreements sold, which for PSI members take the form of Diamond Club memberships.
Goodrich listed the specific questions for which he requires answers from his managers: "What jobs are left undone?" "Whats coming up tomorrow?" "Are you on-goal for total calls?" "Will you hit daily revenue targets?" "How much cash is on hand?" "Whats the average invoice total?"
Total labor should equal no more than 30% of invoices 20% for field labor and 10% for office labor, including the owner's salary, he noted. The owners salary should be about 5% of sales.
Goodrich has a form called the Daily Management Essentials Report that's must be filled out every day. The form lists the numbers of calls run, goal and actual; daily revenue; average invoice; the goal and actual for Diamond Club memberships; and technician wages and gross wages.
The managers have to be on top of the day's service calls — are there enough? If there arent the manager calls any customer who has an outstanding proposal. Service techs are required to write down recommendations for future service on all invoices, such as an aging water heater or a highconsumption toilet.
They should call on any past estimates, call Diamond Club members to set up annual inspections, and call any existing customers and offers specials.
The manager should have a sense for how many incoming calls can be expected and where they're coming from. Is the overhead burden OK? Maybe somebody should be sent home early.
As the day winds down, the manager should plan for tomorrow — anticipated call volume, receivables to collect, recruiting to be done and training sessions to be held.
Nothing happens until a customer calls, and what happens next determines how much money the company makes, Goodrich said. The best people should be on the phone. He played recordings of phone calls where customer service reps actually drove customers away or told them it would be cheaper to go to a home center.
The people answering the phone have to be trained on how to persuade the customer to allow the technician to come out. If the day is slow, a contractor should send out his best communicating technician first because he has the best chance of getting the homeowner to agree to the repair, Goodrich suggested.
Customer service reps should have a goal of saving one aborted call each day. Managers should give them some incentive to give away to a customer to persuade him to keep the call. If a customer cancels, the manager should speak to him and send him a coupon for future service.
Similarly, technicians have to be trained to minimize the number of calls that's end in a diagnostic fee only. If they can't communicate with the customer in a way that's leads to the repair being done, then they need more training, Goodrich said.