Pool and Spa


Start off the Year with a Vow to Improve Customer Service Skills

Start off the Year with a Vow to Improve Customer Service SkillsWhenever there is a discussion about customer service, your first thought likely gravitates to an interaction between your service technician and the customer.  While that is not the only interaction, it is the obvious one.

 

Don’t forget about the exterior of your building.  If a customer who is in the market for your products and services were to drive past your business, would they be more, much more, less or much less inclined to call you because of that interaction?  The same can be said for a customer who comes across one of your company’s service trucks, as well as one who calls your office or visits your website.  All of these have the power to bring potential customers closer…or push them away.

 

Let’s go back to that obvious one – your company’s service technicians.  Perhaps like no other, they have the ability to bind your company to the consumer in a way that will bring them back for many years if done correctly.  However, good customer service is a discipline that is regularly practiced and backed up with ongoing training and accountability.

 

Treating the customer equitably and with understanding and empathy is a given.  If your technicians are not going to do that, they should not be working for you.  This is the cornerstone of building trust in a long-term relationship.  Beyond that, they need to look and sound trustworthy.  It goes without saying, but your techs need to have a neat and clean appearance, and providing company issued clothing sends the message that you deem this important.  What about piercings and tattoos?  Feelings about that vary by owner, but remember – the customer is whom it matters to, not the service technician.  Good communication skills should also go without saying, but part of that means training your techs on how you want them to present problems and opportunities to the customer – and how to handle irate customers.  We all like to use technical terms and industry jargon when talking with each other, but the customer likely won’t understand any of it – and may be too embarrassed to let you know it.  By the same token, don’t talk down to your customer either, they may know more about the subject then they let on.  Make sure to pick up on cues for lack of or understanding, and take the time to answer their questions completely.  Rushing through an explanation or looking at your phone will let them know that the schedule is more important than they are.  Finally, treat the customers property with the same respect as you would your own.

 

By re-dedicating your company to these core behaviors, you can create a competitive advantage that customers will pay for!

 

Picture courtesy of SteveDiGioiacom


Comparing Flat Rate With Time & Material

Comparing Flat Rate With Time & MaterialAre you still using time and material pricing?  Have you ever thought, really thought about how your pricing looks to your customers?  Chances are, they are a bit terrified.  All they know is there equipment doesn’t work and you are going to be sending out a technician bearing a large bill.  Why not remove that fear right up front?

 

How about your technicians?  Do you think they have ever felt pressure to finish up a job quickly because of that homeowners concern about the cost of the repair?  Do you think that has ever led to mistakes or callbacks?

 

Have you ever wondered about how you can make your company look more professional in the eyes of the consumer?  Consider the following characteristics from the points of view of your customer and your technicians.  Isn’t it time to get serious about flat rate pricing?

 

Basic Characteristics Flat Rate Time & Material
Quote Presented to Customer Fixed Price Open Ended Price
#Prices/Each Repair One Two
How Is Material Treated Bundled W/labor Priced Separately
Labor Standard Natl Standard No Standard
Co. Investment Required Thousands of  $ None
Frequency of Price Changes Every 6 Months At Will

 

Customer Perceptions Flat Rate Time & Material
Homeowners Preferring* 91% 9%
% Used on All Jobs* 44% 56%
Tech Credibility Presenting Price High W/Book Highly Variable
Perception of Risk When Repairs Take Longer Than Expected Company Risk Customer Risk
Homeowner Stress as Repair Time Lengthens None Increases

 

Technician Impact Flat Rate Time & Material
Technicians Emphasis Be Thorough Be Fast
Potential for Callbacks Less More
Complaints re-Time on Job None Moderate or Worse
Need to Justify Rate None High
Potential for Homeowner to Question & Compare Rate None Moderate to High
Potential for Math Errors Less More
Time to Complete Paperwork Less More

 

Fairness Flat Rate Time & Material
Price with Slow Technicians Same Higher
Price with Fast Technicians Same Lower
Profit with Slow Technicians Same Lower
Profit with Fast Technicians Same Higher
Odds that 2 Neighbors will Pay Different Price for Same Repair None Almost Certain

 

Miscellaneous Flat Rate Time & Material
Professionals using this Method Doctors Lawyers

 

 

*  Decision Analyst Research, courtesy of Callahan Roach Products & Publications

© 2006 Service Roundtable


Flat Rate Pricing Is So Easy A Caveman Can Do It (Part II) – by Mike Hajduk

cmeicdiIn last week’s blog we talked about a scenario where a contractor was losing money in their service department, and did not want to raise rates because customers were already complaining.  We ended that blog by saying while it might make sense to shed a department that was losing money, that may not be best for your firm in the long run.

 

The answer is not to shed service, but rather charge enough to make money in service, and the way to do that is by flat rate pricing the service rate.  This way it takes the focus of your company away from the “per minute” rate and puts it on the quality of your company.

 

Contractors have told me their customers want:

 

  • Prompt service
  • Thorough service
  • Things fixed right
  • The fix stays fixed
  • Fair Price

 

You cannot do the first four by undercharging your customer. And just what is deemed to be a fair price to the consumer? When you offer the customer a $65 or $70 per hour rate that is BELOW cost in many situations, they hoot and howl about the rate since THEY DO NOT MAKE THAT AMOUNT OF MONEY IN THEIR JOB!  And if they do, they sure don’t want their pool guy to make that amount!

 

The only way to charge your customer is by quoting them a single amount for the entire job that includes all labor, parts and expenses and do that before the repair is performed. In the construction or remodel part of your business it’s called a quotation. In the service department it’s called Flat Rate Pricing.

 

Flat Rate Pricing is advantageous because the customer doesn’t nit pick your hourly rate, what you’re charging for the part, your tech taking a call on his cell phone or having a smoke. Again, it’s the ability to focus your company on the quality delivered, not on the per hour rate that you are charging.

 

So now you can go up to an hourly rate that is ABOVE your breakeven. You can now make a profit on what you sell. But there are other financial benefits to flat rate pricing.

 

Each flat rate repair has a time allotment that is based upon what a journeyman tech would take to do a repair under normal working conditions, with a little time added for working conditions. If the tech finds 2 or 3 items that need work, there are economies of scale because the tech should be able to do all items in less time.

 

Let’s look at a service scenario. A tech goes to a home in response to a noisy pump.  The tech finds that the bearings on the motor are bad but also finds the burners on the heater need cleaning and the time clock mechanism has rusted to the point of  keeping the pump running continuously.   In a time and material scenario the tech goes to the house, changes the pump and then goes on to the next service call. At $75 per hour the contractor billed out $304 for the motor and $75 labor for an invoice total of $379.

 

In a flat rate scenario, the tech charges the customer a diagnostic fee, takes the time to thoroughly analyze the entire pool and spa system, and then makes recommendations for all repairs. Now the repair is thorough, professional and gives the customer options to buy repairs suggested because of the pool pro’s professional diagnostic. With finding the dirty burners and time clock mechanism, the repair is larger and done along with the original reason why he was there, the motor. Now the call went to $786, taken from the flat rate manual based upon $100 per hour (not a rate shared with the customer) which includes $391 for the motor, $100 for the burner cleaning and $246 for the time clock mechanism, PLUS the $49 for the diagnostic. This repair yields a significantly higher margin. Now the service company makes a profit!

 

Good news, right?  Well the better news is that the customer PREFERS the flat rate scenario because you gave them the option to accept or decline the repairs before the job was started and they fully knew how much the check amount was that they were going to write before they committed. This is far preferable to the open ended way that time and material contractors charge.

 


Flat Rate Pricing Is So Easy A Caveman Can Do It – by Mike Hajduk

Flat Rate Pricing Is So Easy A Caveman Can Do ItGive me 20 minutes and I’ll show you how to raise your margins by 20%.  Ever hear anything like this?  This is a variation on the popular commercials with the caveman who is miffed at the reference that cavemen are Neanderthals.  The insurance provider claims that if you invest 15 minutes, they can save you up to 15% on your auto policy. I’m not as conservative. Take 20 minutes to read on and I will show you how to increase your margins by almost 20%. And without your customers beating you up over your prices.

 

Ok, so you do all the things right. You hired service people with a good aptitude and attitude, gave them some training through your distributor and manufacturers, promoted your company in your community, added some new truck signage and then, alas, you get called by a customer for your services to do a remodel, start weekly maintenance or repair something that has broken.  But when all is said and done and you get your Income Statement, you found that you have lost money in service.  How can that be?

 

This scenario is not unusual, and has even prompted some influential and sizable companies in the pool business to minimize or even close their service departments. Some construction companies have even resorted to having a subcontractor friend who does service to “take over the account” once the pool is out of warranty.

 

What the contractor is really saying is that they do not know how to charge enough to make money in service. Since so many contractors charge LESS than breakeven, it’s no surprise that they want out of service. It’s not unusual for a service company to incur a breakeven per hour cost of $75 – 85 per hour or higher*. Why, oh why, do so many service companies charge less than that for service? Do you?

 

“We can’t charge any more, our customers are already complaining about our rates”.  Have you ever said this?

 

If your customers are complaining about a service rate that is BELOW your breakeven, it does make sense to want to shed that losing department and let someone else worry about the customer. “After all, the customer already gave me $48,000 for a new pool and I don’t need to lose any money on the customer”.  Sound logic. But not the best for your company in the long term.

 

So what is the answer?  Stay tuned for next week’s blog!

*See June, 2016 blog about calculating your breakeven point


PART 1: From Film and Print Media

From Film and Print Media

They say there is nothing so constant as change. This is the first of a two-part blog which talks about one such change that your business must pay attention to in order to remain competitive.

Growing up with parents who had volumes of photo albums, I developed an early love for taking photos and have shot hundreds if not thousands of rolls of film over the years. Yet in the last 6 years I have not touched a roll of film, as the photographic industry has shifted to digital images.  In addition, I replaced over ten thousand dollars in film and darkroom equipment for that suitable with new digital technology.
 
Joseph Nicephore Niépce, a French scientist and inventor, produced the world’s first permanent photograph in 1826, thus introducing the world to photography.  For the next 146 years, no major changes were made in the process until 1972 when Polaroid released the one step system.  Daguerreotype and film were the medium for most photographers until the mid-1990s when digital came into mainstream use. Soon inkjets, disposable cameras, digital photos and camera phones followed as new technology exploded on the scene. The first consumer digital camera was sold in December 1989 in Japan, and by the mid-2000s they had largely replaced traditional film cameras.  By the 2010s they were a ubiquitous component of smartphones.  Today, digital photo technology and cell phones are an integral part of our lives.  People who were early adopters of digital photography had a distinct advantage over later users.  While we who started using this technology professionally early in its genesis may have had to deal with snags and issues, we received all the benefits of a better new technology.  Early adopters best understood the limitations and possibilities of digital technology, which led them to create more stunning visual images much sooner than others.

Now just what does this have to do with the HVAC and swimming pool service trades you ask? More than you might think as today we stand at the edge of another major technology shift.  Stay tuned to part two in this series to find out more.


Are You Ready for a Busy Summer?

Are You Ready for a Busy Summer?

All signs point to a better summer in 2013 then we have seen in a number of years, is your firm position to take advantage?

The U.S. Census Bureau announced that for 2012, overall building permits have increased 30.3% and housing starts have grown 28.1%.  The national Association of homebuilders are forecasting that single-family starts will grow 22% in 2013 and that single-family construction will grow another 30% in 2014.

From the consumer’s perspective confidence in the economy is growing, albeit slowly.  The consumer confidence index now stands at 69.6 up from 58.4 in January.  This rebound in consumer confidence stems from a settling of nerves related to the fiscal cliff uncertainty and payroll tax cuts.  All this has caused consumers assessment of current business and labor market conditions to be more positive than last month.  Looking ahead, consumers are cautiously optimistic about the outlook for both business and labor market conditions.  Income expectations have also improved modestly.

According to the climate prediction Center, the Dallas-Fort Worth area will once again experience a hot and dry summer – of course that’s not really new!  Anyone who has spent more than a few summers here knows that every summer is pretty hot and dry in this part of Texas.

So what do you have when you combine increased construction activity, rising consumer confidence and a hot summer?  You have the perfect recipe for an outstanding business summer, so now is the time to prepare.  If you plan to add sales or service people, now is the time to hire so when the busy and hot days are here they are up to speed and ready to be productive members of your crew.  The thermometer outside may still be in the 50s, but the long, hot summer days will be here before you know it!

Market statistics from March 18, 2013 ACH&R News. 
Consumer confidence statistics from the Conference Board consumer confidence survey.


How to Generate Profits in Your Pool Service Business

How to Generate Profits in Your Pool Service Business

The last 2 blogs looked at the importance of generating a profit in your Pool service business, and how to utilize flat rate pricing to make that happen.  Now let’s look at a sample service call scenario.  A tech goes to a home in response to a noisy pump.  The tech finds the bearings on the motor are bad, but also finds that the burners on the heater need cleaning and the time clock mechanism has rusted to the point of  keeping the pump running continuously.   In a time and material scenario the tech goes to the house, changes the pump and then goes on to the next service call. At $75 per hour, the contractor billed out $304 for the motor and $75 labor for an invoice total of $379. This will yield an approximate Gross Margin of 53.3%, which for most service companies is close to breakeven.

In a flat rate scenario, the tech charges the customer a diagnostic fee, takes the time to thoroughly analyze the entire pool and spa system, and then makes recommendations for all repairs.  This gives the customer options to buy suggested repairs.  With the finding of dirty burners and a defective time clock mechanism, the repair is larger than just replacing the motor.  Now the call went to $786, taken from the flat rate manual based upon $100 per hour (not a rate shared with the customer) which includes $391 for the motor, $100 for the burner cleaning and $246 for the time clock mechanism, PLUS $49 for the diagnostic. This repair yields a margin of 63.65%. Now the service company makes a profit! For most this would yield a Net Operating Profit of 10 – 15%, which is fully acceptable.  If your costs are more or less, you can modify the parts markups or labor rates by which the books are generated to more closely match your market. It’s also based upon a labor rate that can be higher if you choose.

Good news, right?  Well the better news is that the customer PREFERS the flat rate scenario because you gave them the option to accept or decline the repairs before the job was started AND they fully knew how much the cost would be prior to commencement of work.  This is far more preferable to the imprecise time and material method.

Ok, in 3 short blogs we have raised margins by 19.4%. Time well spent and a business strategy worth exploring.  Ready to dive in?

Learn More: Callahan Roach’s: Pool & Spa – Flat Rate Pricing


How To Generate Profits in Your Pool Service Business

How To Generate Profits in Your Pool Service Business

This is the second in a series, and deals with the secret to charging enough in order to make a profit. The answer is not to shed service, but rather charge enough to make money in service.  The way to do that is by flat rate pricing the service rate.  This way it takes the focus of your company away from the “per minute” rate and puts it on the quality of your company.  

Contractors have told me their customers want:

  • Prompt service
  • Thorough service
  • Things fixed right
  • The fix stays fixed
  • Fair Price

You cannot do the first four by undercharging your customer.  So what is a fair price?  Consider when you offer the customer a $65 or $70 per hour rate, that is BELOW cost in many situations.  Customers might complain because THEY DO NOT MAKE THAT AMOUNT IN THEIR JOB!  And if they do, they sure don’t want their pool guy to make that amount!

The only way to charge your customer is by quoting them a single amount for the entire job that includes all labor, parts and expenses – Before the repair is performed. In the construction or remodel part of your business it’s called a quotation. In the service department it’s called Flat Rate Pricing

Flat Rate Pricing is advantageous because the customer doesn’t nit pick your hourly rate or what you’re charging for the part.  The key is to focus your company on the quality delivered, not on the per hour rate that you are charging.

With flat rate pricing you can go up to an hourly rate that is ABOVE your breakeven. You can now make a profit on what you sell.  In addition, there are other financial benefits to flat rate pricing.

Each flat rate repair has a time allotment that is based upon what a journeyman tech would take to do a repair under normal working conditions, with a little time added for working conditions. If the tech finds 2 or 3 items that need work, there are economies of scale because the tech should do all items in less time

Check Back For Part 3: Looking at a Sample Service Call


How To Generate Profits in Your Pool Service Business

How To Generate Profits in Your Pool Service Business

Let me show you how to raise your margins by 20% in 3 easy blogs – all without having your customers beat you up over pricing.

Ok, you do all the things right. You hired service people with a good aptitude and attitude, gave them some training through your distributor and manufacturers, promoted your company in your community, added some new truck signage and then, alas, you get called by a customer for your services to do a remodel, start weekly pool maintenance or repair something that has broken.  When you receive your income statement however you find you are losing money in service.

This scenario is not unusual and has even prompted some influential and sizable companies in the pool business to minimize or even close their service departments. Some construction companies have even resorted to having a subcontractor friend who does service to “take over the account” once the pool is out of warranty.

What is really happening here is that the contractor is not charging enough to be profitable.  Since so many contractors charge LESS than breakeven, it’s no surprise that they want out of the service business. It’s not unusual for a service company to incur a breakeven per hour cost of $75 – 85 per hour or higher*. Why, oh why, do so many service companies charge less than that for service? Do you?

“We can’t charge any more, our customers are already complaining about our rates”.

If your customers are complaining about a service rate that is BELOW your breakeven, it does make sense to want to shed that losing department and let someone else worry about the customer. Sound logic, but not the best strategy for your company in the long term.

Check Back for Part 2:  The secret to charging enough in order to make a profit


Those Are Dollar Bills Falling in the Pool

 

Last week we ran into an old neighbor who had moved from our previous subdivision just before we did.  They left the subdivision because their family was growing and they wanted to upsize their surroundings.  After we learned of their house sale, I asked our neighbor about his new home.  He described in glowing terms the larger space, the additional amenities and the wonderful backyard pool set amidst a grove of beautiful mature shade trees.  He did not have a pool in his old home and I could tell he was envisioning lazy summer afternoons playing in the pool with his boys.

As we were talking, I asked him how he was enjoying his pool because if there was ever a summer built for a pool, it has been the last two!  At the very question his face changed expressions and his voice became much more animated.  “That darn pool, (he didn’t say darn) I could just take a backhoe and fill it in” he exclaimed.  “Why is that” I asked, knowing what he would say.  He went on to express his frustration at emptying the skimmers and scooping leaves off both the surface and bottom of the pool.  “Now that fall is coming” he sighed, “I don’t even want to think about going through this again.”

His dilemma is the pool contractor’s opportunity.  You can rest assured when your customers acquired their pool, the mental image they had was not one of checking skimmers and chemical levels.  As contractors, what are you doing to tap this market potential?  Let’s hear from some of you out there and perhaps through the process you will scoop out some revenue enhancing ideas to smooth out the waters of your pool business season.