Managing the sales process
- by Ronald Coleman
01/01/2009
Many HVAC contractors do new and replacement projects valued under $50,000. These projects are often awarded based on a proposal by your sales person directly to the prospect. We hire sales people and tell them to go sell, sell, sell and we measure their performance against their sales. This works in many industries, but not so well in HVAC. The objective of a HVAC contractor is to make money over the long haul. To do this you have to achieve four outcomes. Complete every job: 1. On time 2. On budget 3. To specification 4. And keep the customer happy Treating the sales process as separate from operations and from administration is a recipe for frustration and lower profits. Meeting these four outcomes will generate much greater profits. Studies have shown that project managers spend up to 70 percent of their time dealing with trivia. Pre-planning a project will eliminate much of this trivia. The successful contractor knows that the more pre-planning that is done during the sales process the more profitably and efficiently the job will run. By investing more money up front you will save in the long run. Invest in your sales process.
On time
A timeline for the job should be identified. Allow time for all the steps in the process: - Getting permits - Allocating the installation crew - Procurement of all materials - Coordinating with the client - Start date - Key completion dates - Final completion date - Paper work sign off, inspections etc. - Final walk through
On budget
Identify dollar value for key cost elements such as:
The contractor must include in these allowances for contingencies, overhead and profit.
Specifications
This tends to be a difficult area for sales people as their strength is in their sales ability rather than their technical ability. The contractor must find ways to ensure the tradesmen can complete the jobs as sold. An analysis of your sales will show that 80 percent are repeat items. Make sure that your sales people know how to deal with those sales without having to go back for assistance. Make sure they know when they need assistance and that the necessary support is there. By analyzing what mistakes are made and documenting solutions you reduce the risk of repeat errors. Talk to your installers about what would make their lives easier; involve the sales people. The sales person should have to sell the job twice. The first customer is the one who is going to pay for it and the second customer is the installer. Both are equally important.
Keep the customer happy
This can be one of the biggest challenges. Good communication is essential.
- Ensure the customer is on side with the key dates. - Tell them, in advance, of any schedule changes. - If there are uncertainties in the bid process, show an allowance and explain how it works. Make sure they sign off on all allowances. - Do a final walk-through on completion and get the customer to sign off. - Process paperwork and invoicing promptly. - On completion, send the customer a small gift, a satisfaction survey and a letter of thanks. - Ask the customer for the opportunity to quote him/her for the maintenance of the installed equipment and to quote future work. - Ask the customer for referrals and tell him/her you will reward them for referrals. The gift could be a small picnic barbecue. Pick something that you can buy wholesale so that they will see a higher perceived value. If you buy a barbeque item for $50 with a retail value of $100 they will receive a $100 value that only cost you $50 I did a survey of HVAC contractors who identified the following eight very common areas of frustration:
1. Lack of clarity in specifications 2. Changing timelines that cause overruns. 3. Putting the right person on the right job (Sometimes we cant use the right guy because he is on another job) 4. Equipment scheduling (Supplier doesnt meet delivery schedule) 5. Material acquisition (Too many trips to suppliers) 6. Sales person sells cheap to get the order 7. Free service call done on install time 8. Estimating is rushed due to short lead times
My reaction to this was: Thats great; these are all elements that the contractor can control. In fact most of these issues should be resolved during the sales process.
Specifications: If the specifications arent clear and you accept the job you now have accepted the responsibility for completing something that is ill defined. Dont do it unless you include an allowance for the lack of clarity; preferably quote it on a time and material basis.
Timelines: Tell the client that if they change the schedule there will be a penalty and the job will not be completed on time. Dont start a job until you have done your pre-planning.
Installers: Ensure that you allocate the right people to the right job. This wont work if you have continuous scheduling changes.
Suppliers: Use suppliers who will meet your deadlines. Dont go cheap and use unreliable suppliers. You are going to pay for it in the long run.
Materials: Make sure the installers have a full material list and that they carry a supply of consumables and supplies.
Sell the job: Sell the job on the basis of value, not on price.
Freebies: Any service work or additional activities should be the subject of a change order. No freebies.
Rushed: When you are rushed you make mistakes. If the mistakes are in the customers favour you will lose money. If they are not in the customers favour he will likely tell you.
When you have too much work to quote, prioritize it and quote the higher margin/preferred customer jobs first. I know it is not easy to do these things but if you want to make money and have happy employees and happy customers you must invest in the process. Successful contractors make it happen. They overcome the obstacles. Your role as a manager is to find problems and fix them! Next month we will focus on how to develop a solid sales process.
Ronald Coleman is a Vancouver based accountant, management consultant, author and educator specializing in the construction industry. His website is www.ronaldcoleman.ca and his email is info@ronaldcoleman.ca.
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