The Home Service Expert Podcast - How to Adopt a Menu Pricing System to Solve Your Pricing Woes

Episode Date: March 26, 2021

Danielle Putnam is the president of The New Flat Rate, the first menu pricing system for home service contractors, and an Advisory Board Member of Women in HVACR, an organization that provides professional avenues for women growing their careers in the industry. An opinion columnist at CEOWORLD magazine, Danielle has experience in business development and management, operations, and related fields. In this episode, we talked about business development, marketing operations, pricing...

people want the value that they want, and it's not about setting the budget for them. And so you're going to go there and you're going to look at that menu and say, oh, there's a Big Mac on there and that's what I want today. And it might be $5 and you're going to choose to spend it. But the person behind the cash register, it's not their job to sit there and say, oh, but there's a 99 cent burger, Tommy. Aren't you sure you want to just spend less money? No, you as the customer, you want to spend more money. So number one, it's really important to offer pricing with options so that you're not out there being compared to everybody else. Oh, they have a $99 tune-up over there or duct cleaning over here. Sure, you can use some of

that stuff to get in the door, but then you've got to give your customers options so the customer can choose the level of service that they want without the sales pressure. And that's a big differentiator there is you don't want to put sales pressure. And that's a big differentiator there. You don't want to put sales pressure on the homeowner. You want to allow them to buy. So it comes down to giving them a pricing system that lets them do that. Welcome to the Home Service Expert, where each week, Tommy chats with world-class entrepreneurs and experts in various fields like marketing, sales, hiring, and leadership to find out what's really behind their success in business. Now, your host, the home service millionaire, Tommy Mello.

Welcome back to the Home Service Expert. My name is Tommy Mello, and today I have Danielle Putnam on the line here. She's an expert in business development, marketing operations, business strategy. She's based in Dalton, Georgia. She's the president of the New Flat Rate Incorporated from 2011 to now. Rovian Incorporated, strategic accounts director from 2010 to 2011. Digital post interactive director of business development from 2005 to 2011, Magengill Clean and Air Climate Control Marketing Director, and Teen Mania New Business Development and Marketing Manager. Danielle is the President of the New Flat Rate, the first menu pricing system for home service contractors. She is an advisory board member and the past president of HVACR, an organization that provides professional avenues for women growing their careers in HVACR industry to establish connections.

She's an opinion columnist for CEO World Magazine. She has experience in everything from business development and management to operations and technology. Danielle, it's a pleasure to have you on today. That's quite the history. That was interesting. I tell me, thanks for having me. You know, I'm used to people just saying, it's Danielle Putnam, president of the new

flat rate. And as you kept reading, I was like, oh, wow, that was a long time ago. Those other things. Yeah. My team does a pretty good job. And a lot of times when you go back into someone's history, you find some pretty cool stuff that kind of made the move today. Yeah, it all does.

It all adds up, doesn't it? It does. It does. You've got a lot of experience in the home service industry. So I guess you could just start by walking us through your journey of how you got into home service. And then I'd love to hear a little bit about the new flat rate. Awesome. Hey, I appreciate the opportunity. I was born and bred in the industry. Really. My father was a contractor. He was an electrical contractor and then ended up buying plumbing and HVAC businesses. So throughout my early years, when I was seven, we would pass out flyers when he started his own electrical company and go door to door. My dad just started a business. Here's a flyer. And then of course,

when I was in high school, it had very much expanded. So I spent summers working in the office thinking I was the office manager because that's what bosses kids do. They think that they're the boss. I don't know. Little snots is what we were really. So I grew up all around it. I love that we had a scissor lift in the warehouse. And of course we had a big old rope swing hanging from the rafters. So it was always fun to hang out in the shop and swing off the scissor lifts through the shop. Inventory was cool because you could get whatever you wanted from dad's office anytime. You need to borrow a trailer, borrow a truck. You always have it.

So I grew up around that. But, you know, I left when I was after high school. I went out to Texas to Bible school for four years out in Tyler, Texas. And because I'd had experience working in a business where a lot of my peers hadn't at that time, and that's what I love about the trades, service businesses, there's so much family unit. It's like everybody's a part of the family business. You get to experience working at a young age. When I went off to school, I was the only one that had any work experience at all. And so they put me in a marketing department right away. And I was able to do a lot more things that my peers weren't able to. Fast forward, I worked for an HVAC company out in

Oregon. Then I did a lot of tech out in California. In 2011, I moved back to Georgia because my dad and I kept talking about these ideas he had. But Tommy, to be honest, the reason we were talking, we were friends and we talked all the time. I'm very, very thankful to have a dad that we can be best friends together. But as a contractor, he was struggling. And I know so many of your audience maybe can relate with the feast and famine syndrome. You have a big job and you can make payroll and then you don't have a big job for a while. And all of a sudden, you've always talking to a contractor today and it's just turned into March right now. And it's slow season here in Georgia. The weather is easy. It's 70 degrees. There's no business. And so that whole feast or famine mentality can be difficult for the young

contractor. So in 2011, when I moved back to Georgia, it was because my dad and I wanted to start the new flat rate. He had discovered how to use menu pricing to increase profitability in the home services. And we wanted to be able to duplicate that to help more people. Long story short. So it's interesting. I had a guy on the podcast a couple of years ago. His name is Alan Ferguson out of, uh, I know Alan. Yeah. Great guy. Great company out there. Yeah. He's in Sydney, Australia. And he, he showed me this chart that I do a presentation where he just had 30 guys show up today. They're coming in from the airport all day. Funny. Cause my assistant books, these flights and my whole calendar, because it's on my account

shows flights coming in. But anyway, you know, Alan was like, look, he's like, just go through this exercise. It's really old-timey, but it's a pretty cool one. And this one says, like, beeper bill and, like, back when they had pagers. But it goes through everything and it says, look, people are off a certain amount, even in the home service space. We take a couple of weeks off. And so all the different times that you're in meetings, getting inventory, drive time, we still got to pay those hours to our people. We've got CSRs, dispatchers. We've got hopefully a decent building.

When you add it all up, he showed me that why he charges $450 an hour. Right. That's what he's got to get labor wise to pay for everything and leave a little bit of profit. And people think that's a shock. They're like, $400 an hour? My lawyer doesn't even make that. We're like, but the lawyer is one guy or one guy. It's not the team of everybody that went into that call. I actually made a really cool video. I actually copied it from my buddy Keegan in Naples, Florida florida he said here's what's going to happen with your job the dispatchers take your call and then we got our

permitting team and then we got this we got this we got this and we got our marketing team that made this video happen and we've got our accounting team to make sure that your your bill gets paid properly and we don't double charge you all these these things. And the whole point of that video is home service is just not. There are some businesses that are one guy taking all the calls. I've been that guy. You've probably dealt with that yourself with your dad. But what is the big problem with pricing? I just feel like most of these people that start a business start out as a technician.

And they can't understand charging that much but then again that's why they do it all that's why they work 80 hours a week is because they said i don't need a csr well i remember the phone it was a really old phone but it was still 2006 by the time i 2009 and i heard that phone ring, you would think I'd be excited. Like, Hey, that's another job. I started to despise that phone. I started. Right.

I'd walk out of a movie theater and it was all the time. Yeah. And so I just, a lot of people listening are like, yeah, we know we need to charge more, but when my competitors charge less and I'm like, I'd love to hear your point of view on this.

It's a big one. This is a big one. Yeah, definitely. We can talk price. I love talking price and I don't want to talk too much about new flat rate. I want to provide value for everybody on here. You know, the whole, we can't charge more than our competitor. We want to be careful not to make it about commodities. So you can charge more than your competitor. It's not about commodities. It's not about pieces to pieces, apples to apples. It's about the services that you're providing and being a professional. And so no matter what, we believe in scripting. You have to have a script, right? So that your employees, your team, your technicians can follow a process. We're out there in the home to provide

great service every time. And then price-wise, it's all about giving options. Because when we go to McDonald's, Tommy, you go there, you know that there's a 99-cent hamburger, and you probably don't ever order it. Do you? Maybe you do. I get the dollar menu every now and then. Sometimes. Maybe not every day. I mean, maybe you do.

But then every once in a while, yeah, you'll order one above because people want the value that they want, and it's not about setting the budget for them. And so you're going to go there, and you're going to look at that menu and say, oh, there's a Big Mac on there and that's what I want today. And it might be $5 and you're going to choose to spend it. But the person behind the cash register, it's not their job to sit there and say, oh, but there's a 99 cent burger, Tommy. Aren't you sure you want to just spend less money? No, you as the customer, you want to spend more money. So number one, it's really important to offer pricing with options so that you're not out there being compared to everybody else. Oh, they have a $99 tune-up over there or duct cleaning over here.

Sure, you can use some of that stuff to get in the door, but then you've got to give your customers options so the customer can choose the level of service that they want without the sales pressure. And that's a big differentiator there is service that they want without the sales pressure. And that's a big differentiator there. You don't want to put sales pressure on the homeowner. You want to allow them to buy. So it comes down to giving them a pricing system that lets them do that. Yeah, I think you're right. I think, you know, I hear these people and McDonald's is a pretty good analogy. I always say, look, and this is true. Thursday, last Thursday, we went to a place called Steak 44. We had to set reservations. There was four of us that went to dinner, you know, six, $700. We waited 10 minutes

to get sat. The server was, it was the most amazing meal. Everything was great that I had a dirty martini. It was amazing. My point was we paid $700. now there's a million spots in phoenix arizona that we could go and pay a 10 price but we set a reservation and the place was packed yeah and the difference is they differentiated themselves they're not just selling a meal they're selling an experience and i think that that's what we got to do and And then, you know, as far as the menu pricing, I like options, but I always say when people say, sell me a pen or sell me a, uh, sell me a watch. First thing I'm going to do the right answer to that is never, ever, ever say anything about the pen. Right answer is to start with asking questions. You know, you mentioned you lived

in this home for 10 years and I can tell this is the way you're going to plan on raising your family. How do you anticipate staying in the home? Do any of the kids have any issues with allergies or ask a million questions and say, based on what you told me, this is what I would do. And I always start, I've taught every one of my technicians to do best, better, good. Because when people hear that first price, they automatically lock in their minds. They can always say no to the best. It's hard to go back up. It's easy to go down. Oh, based on what you told me, I thought this would be a good price. And if I could get it to you for cheaper than a cup of Starbucks a day, wouldn't that make sense? Why don't I buy it for you? And you can just pay me back. We've got same as cash financing. But tell me a little bit more about figuring your pricing out, because I think that I want

to spend some time on this because I just got a 7% increase in two weeks before that. I got a 5% increase. Biden just passed a $1.9 trillion bill, which is going to push a lot of money. What happens when a ton of money hits? Inflation happens. And this is a critical time to talk about pricing because the guys that change their pricing the last usually end up on a business. Yeah. You know, right now it's so different because plumbing went up. You know, we service right now HVAC electrical and plumbing contractors. And we're just now, we just

did an IAQ module and pest control and chimney. So we're moving into those as well. But with plumbing, because of what's going on in Texas right now, all the plumbing pricing went up 20% this week. So we automatically, within our system, raise prices for our customers every year, and we recommend them doing it. But the majority of contractors nationwide have not raised their prices in years. So to your point, Tommy, A, yes, you have to increase your prices every year, at least by 5% across the board. This year, even more. Like right now, we're doing material increases because of equipment and manufacturing for 9% right now, which is a big jump. And you have to do it. So to your point, you have to raise your prices so that you don't

become obsolete, but you don't want to raise too much, right? Because you want to still be competitive in the marketplace. A lot of people do time and material. Some people do flat rates. Some people do a little bit of a menu. So looking at your costs and then making sure that you can still be profitable. And that's where options is so important because how you presented it is exactly how we train and teach too. You build value in the top option and then the customer takes a look based on their budget. So if they can't afford the top one, but they want it,

that's okay because they can still get in their door down here. And all of a sudden that looks more affordable. If you give them options, if you only give them one price, then they say, hey, I can get it done over here from Joe Smith for so much cheaper. But if you give them multiple options, they can see, oh, I want that top one, can't afford it, but that bottom one looks more reasonable and comparable.

Is that answering your question though? Because you're talking about how do you make sure that you're priced right in your market is what you want to know, right? Personally, I don't believe in price right in a market. I believe you got to cover your costs. Ellen Rohr. Yeah. But a little book. How much should I charge? Right. Then I'm going to show up back there. And basically she says, guys, I don't care what you suppose. And I like the word you brought up commodity. I don't care what anybody says. You got to cover your costs. And let let me tell you everybody makes a lot of money here we have great vacations we have great things that we do but that ensures that we're

going to be around for a long time yeah i love the facebook groups and i'm sure you're familiar with them of like the ones for the certain niches like they got the garage door of america and all and these guys get on there and all you can see in these forums, they're all technicians. Even the owners. The owners are technicians. They only post about how they were able to fix this 1980 Stanley opener to the Topps Elite and how they were able to

MacGyver something. And I was like, are there any owners in this industry? Because obviously not. They don't care. They think a healthy margin is four to 6%. They think if we could walk with four to six and that's, that's what they pay themselves. There is no pay for the business. There is no profit for the business. So, you know, I'm a big fan of 15%. I think 20 should be the 20 should be the goal. I think if it's okay in HVAC, why can't

it be okay? A lot of people go, Oh, that's, but that's HVAC. You said you're getting into chimneys pest control. I don't care what business it is. Why is it okay for one industry, but not another? Why is it okay for someone to be able to afford billboards, but we can't? I just can't get that in my head. So I think you got to cover your costs. You do. And this is tough though. Honestly, if you were to do this, you need to be pretty good at Excel. You need to put it all out. But here's one thing that I think, Danielle, is I got to look at last month's financials. And I got to say, at what point marketing was 14%. Okay. I need to work on that because I could probably still 5% for marketing. I don't want to get rid of marketing.

A lot of people get rid of that first, but 14 is high. My labor costs. Okay. My parts cost is an interesting one because I always examine that. And I'm like, guys, we've got to do another price increase. We're going to do 3% because this is where our margin comes in. Yeah. And it's studying your financials. And I'll tell you what, that's like a four-letter word to entrepreneurs, isn't it? Oh, of course.

Financials? Yeah. It's a horrific word. Hey, have you done Prof first or read it yeah yeah michael mccallow it's i had him on the podcast too and i did the uh profit first for contractors with uh van damme sean van damme okay cool yeah yeah well what i love about it and you know so many people are familiar not everybody is what i love about it is the whole you have to take the profit first so that we can start to be honest with what our costs really are. Because like you're saying, you have

to watch your costs and manage your expenses, but it's easy to not be honest about what those really are because it hurts. So we do, we have to make sure that we price enough to make money. And so many of our owners were technicians, started in the truck and then went out on their own. And I know it in the depths of my heart that our industries, service industries are good people. They're nice people. And what do they like to do? They like to fix things and help people. And so it's very easy to view things in their own lens of, oh, I can just fix this really cheap. It's really simple. It's not a big deal. I don't have to charge too much. And they do it through their perspective and they want to help people, right? So they don't charge enough because they know that

they can do it real quick and easy and really cheap, but the homeowner cannot do it real quick and easy and really cheap and they need their expertise. And so you have to be charged or paid for what you're worth, which is your expertise, your talent, your skill, your wisdom, your years and years of experience. And so we call it leaving your mother in the truck. You show up at a job. It doesn't matter what kind of cars are in the driveway, what kind of house you're at. You leave your mother in the truck, leave the emotions at the door.

I've got an inbox on my wall. It says emotions on it. Leave your emotions in the box. Don't bring them to the table because we need to be able to offer our services and then let the customer choose what they want instead of pricing because, oh, I think this is going to be the budget or this is what I think it's worth. I like that. I just saw something on social media earlier that said, I stopped venting and I started praying because I don't need sympathy, I need strength. That's what it said. And I thought that was pretty cool. It's kind of like, everybody tries to do people favors. And this guy, we were on a call strategy call

the other day and he said, I'm so sick of it. He goes, this happens to me all the time. He goes, I'm at a house and then the neighbors will come get me and they don't want to pay the service call. Then I go, I would never pay you a service call if I was a neighbor.

Why would I pay you a service call? First of all, people feel bad about paying a service call. I don't want to pay a service call, especially if you're in my neighborhood. I call that a tune-up. I'm like, all it is, is what you got to, it's the vocabulary. We need to change the name of it. We need to take our time when we do it. Customer will be happy to pay you. Right. It's pretty interesting to me that it's just the smallest little tweaks in somebody's, some of this stuff. this stuff. But you talked about profit first. And what I love about that book is there's a Parkinson's law. And Parkinson's law says, we're going to use everything we have. And he uses toothpaste. And if you barely got any left, we make that toothpaste, we roll it up and we make

toothpaste last three more days. And I mean, it happens with everything. But the same thing happens in our bank account. Yep. You know, for the people listening that might not be an owner, well, owners too. I mean, a lot of my employees get paid. And the day they get paid, it's filet mignon and the top wine. And I'm chill. The last day, it's McDonald's and ramen noodles.

So we're going to use what we have. But what I love about pay yourself first is why not use what you have to pay your bills? Because you start looking at your bills a lot differently. You start going, okay, wait a minute. When you pay yourself first 20% and you look at your bills, you go, I never noticed our Verizon bill was this high.

Right? Let's work on this Verizon bill. I know. And you start, but when you pay yourself last, you don't look at the bills the same. You're like, well, we paid our bills. Now let's see what's left. Yeah. And it's a completely different mindset.

Yeah, it is. I've got a 10 month old baby and he loves to sneak into all the bathrooms and of course, dispense all the toilet paper all over the floor. You know, and the other day I did that whole thing. And as simple as of an analogy as it is, I knew that in the pantry or whatever, the cupboard, closet, whatever you call it, there was tons of rolls of toilet paper. I didn't really care. I was like, it kept him entertained for a minute. Awesome. Go into all the bathrooms, waste it all. I don't care.

I needed him calm and quiet for a little bit so that I could work on something. But it's such a bad, it was such a wasteful mentality. And we bring that into our business. When we keep the profit in the business, we're wasting our own money. And the number one job of the CEO, Tommy, is to protect the company profit, to grow and to protect the profit. And these days, working on your business instead of in it, that's the first place you could start is by protecting the company profit. And we often don't do that. No, we don't. What we do is I have, and I wrote about it in my book, I call it creative justification.

We're so good at creating reasons why we do stuff. And I mean, all of us have it, but my creative justification would tell me, well, this year I'm focused on revenue, not profit or whatever it would be. And I got to tell you how the CEO that sees behind corners, there's a guy I was just watching the other day. He came on my podcast too. I'm just waiting for it. Jay Abraham.

He said, listen, it was another social media thing. It was on LinkedIn maybe. And he said, guys, there's only three ways to make money in the world. And he didn't say what they are, but I think I know they are. You get more customers, you keep your customers coming back more often, you charge them more. That's right. No, you get them to buy more frequently. Yeah, it's just three things. Get them coming back more often, different things or more of them to raise the price. But he said, you know, guys, it's way easier for me to show you guys how to make more profit than more

revenue. And I don't know if I necessarily agree with that. I think what he sees is in most businesses, like he just looks at their financials and says, let's work on these things. What is your take on that? You know, you got the greatest question of all time. Do you want a small piece of a huge pie or do you want a bigger piece of a smaller pie? And I don't know if that's a fair analogy for this, but what is your take? Yeah, well, I love Jay. He helped us start our business because we were coaching with him when we started the new flat rate and needing help, needing direction. Hey, we have this idea. What do we do? And it was him that said, well, you have to test it. You have to test it. And he

forced us to beta test, which we would have not done. And so we did a beta test with our pricing system in eight states with all different size towns and contracting businesses. And so we had credit a lot of our beginning to Jay. And when he says the three ways to make money, you can get more customers or get your existing customers to buy from you more often or increase the average transaction to your point. Yeah, you can go out and increase your revenue, but with your existing revenue, if you make a few tweaks and for example, marketing, you know how much money we spend on marketing to gain new customers, it would be so much cheaper, right? If we would just spend better marketing dollars to our existing customers, we could spend less on that marketing and just reach out to them every six weeks with reminders

of our new services or new offerings or other things that we do because we already have a relationship with them. And so that margin could be increased with less expense and less effort. And so no matter which side of the coin, I see Jay's side of, it's just easier to be more profitable with what you've got right now. You know what I'm saying? Yeah, absolutely. You're a hundred percent. I mean, they say it costs 10 times more money to get a new customer over an existing one. And you're right. I look at garage doors in a certain way. I'm like, if we did everything we could out there, the only thing left to do is replace it. If we run a tune-up, I know I don't make money on tune-ups. I know 65, 70, 50, whatever it might be. We've already done everything. Everything's lifetime warrantied.

The only thing left to do is replace it. So- We call replacement the year we killed the golden goose because with HVAC, the whole industry pushes replacements. Get the replacement, get the replacement, get the replacement. And so many companies have a replacement model business where they're spending so much money marketing and they're doing these big replacement jobs, but they don't have as much margin. And so we do a lot of coaching saying, ah, love the service, love the service. I have a house in Chattanooga. I live here in Dalton, but we have a house in Chattanooga, Tennessee, and it's a hundred yearyear-old home. It's like a bungalow style up in the woods. And the system, it's every bit of 25 years old, the HVAC system is. I can't even tell you what brand it is right now. But if somebody was out there today to do a tune-up,

I would never get a new one because it's trustworthy. It still works good. It hasn't broken yet. But you know how many people come out there and want to sell us a new one. Here's my point. They will eventually sell us a new one, but they could in between now and then keep getting all this money on the servicing and the repairs and all that stuff before doing it. Same with garage doors. You can go out and you can make a big buck on the replacement, but can't you service a lot longer and a lot more before doing that repair? So what else could you do in between those? So we started out, I'm in the middle of the housing crisis, 2007, 8, 9. And I didn't know how to do new installs.

They're like, I'm getting kicked out of my house. We just don't have the money. Never a new sale. Now I'm in the best economy I've ever been in. I think it's still great right now. We do have a really, really, really strong turnover program. Although the margins aren't as much because my cost is 27% on a door versus 12% on service of my parts, that's not fully burdened with labor. You go into this and you look at the average ticket

and i know a lot of hvac guys it really is the gold of goose though because a lot of these guys are getting fifteen thousand dollars and then they'll get it they're redoing the ventilation system they're putting on a nice expensive uh thermostat whatever and i'm like what do you would you rather have a nine hundred dollar call or a $2,000 service call? Or they're getting 20 grand for $3,700 worth of materials. And although I know their service work in there, I love to know what you see because when we started doing turnover, you're right. Our margins went down a little bit because we're doing a lot more new installs. But I'll tell you what, what if I told you this? This is interesting. I got a 2007 Honda Civic. Okay. I'm just making this up and you bring it. It's your car and it's got a broken windshield crack. The tires are bald. You know, the radiator hoses need to be done. It's got a timing belt that

we've got to change out. The engine just went bad. You know, it's, it's, it's beaten a little bit from the sun and it's got a couple of dents. And if I'm going to charge you eight grand to fix it, at what point do I say, look, we can fix it and I will fix it. We can make it look good. I don't know if I recommend painting it and doing everything to it, but we'll make it dependable. Let's just say I get you out the door for 4,500 with the engine and everything. You're still driving the same Honda Civic the next day. When I get you a new car, all of a sudden you're paying more, you got finance, it's more fuel efficient. You definitely feel like a thousand bucks. It makes you internalize and feel better about yourself. But also you've got pride of ownership. I never get anybody complaining about their bill when they own a new door service call, man, they're going to

call around and we are the best at service. I'm telling you, hands down. We're a service company. I could go back to 90, 10, 90% service 10. We're at 55% new install now as far as revenue. And you got to get it while the getting's good i guess but i truly believe that analogy and i said to my guys i'm like the pride of ownership the deal is the garage door is the only thing that gives 102 return on investment and right now you made 25 on your house last year most likely especially in phoenix wouldn't you want to just, it's a drop in the bucket, really. You get 100% plus on your investment and it's 40% of your curb appeal. So when you look at a balance sheet and an income statement, what do you see? What do you see that just says, get more service? Because I'm just curious, because this is a really, really good conversation because I'm all about,

now my brain is shifted. I'm a completely like those HVAC guys. I'm like, look, don't start strutting up and putting all this extra metal. And if it needs everything and the door looks like crap, replace it. I say it's all about the long tail. So we want to keep the relationship and we want that replacement, but we don't always want it today. We want it when the customer wants it. And that's where it comes to leaving your emotions in the truck, leaving your mother in the truck. And hey, Mr. Customer, it's going to be $8,000 to fix your car today, but I'll do it for you. Or I've got this brand new one over here for $12,000. Which would you like? And it's the customer's choice. And who cares which one the customer chooses, right? Because we want the customer to get what they want. And what you

want is that lifetime customer. You want that customer for life. So if they're, hey, today I'm just going to spend the eight grand because that's all I've got. Or my grandmother left me this car and I inherited it. And I'm sentimental value. I'm going to keep it till for forever. I'm going to give it to my kids, whatever. It doesn't matter, right? They have their reasons for wanting it.

So we want to, it's our job to give them the opportunity to choose. Would you like to service it? If so, I'm going to maintain that relationship with you forever. And when you have to have that new car, that new garage door, that new HVAC system, I'm going to be the one that's there to provide it to you. That's what we want. We want multiple service options and the repair versus just one repair. And now we've got to wait 20 more years before they need something else. Yeah. The deal is when I look at turnovers, I will tell you that we've created forms to make sure we've got the right pictures. We've got everything correct in my system to give us. The deal is if I say, look, I don't know if I'd replace it. It's working if I fix this,

this, and this. that's the shittiest turnover you've ever seen. If you're talking to another customer to our turnover team, it's bad. Like, look, the deal is I'm the doctor. Okay. I am the only guy that's certified to be in that garage. I've got my licenses, the right tools. I'm going to diagnose the person before I don't diagnose the problem. And I'll tell you this, if they're flipping the house, I'm going to say, look, let's build a relationship. I want you to get this door painted. I'm going to diagnose the person before I diagnose the problem. And I'll tell you this. If they're flipping the house, I'm going to say, look, let's build a relationship. I want you to get this door painted. I'm going to make it work for you. Or I'm going to get you nothing insulated.

Let's just get some new panels that look really sexy from the outside that'll help sell the home. But do the right thing for the customer. And my claim to famous line is, this is from my mother's door. This is what I would do. And obviously, she's going to pay less than you. She's my mom, but this is exactly what I would do. And in fact, my mom moved in a house two years ago. It was a decent garage door. We added struts on every panel, redid the springs, put new rollers in and put a brand new opener in. She had a lift master. I just put a nicer one in. That was the day they moved in a brand new house.

So zero use of the parts. And I just decided, you know, I, this is what I do. So, but I do think there's a skill that says, look, people don't understand. And this is another question I have for you is what are some tips that you have about selling for people who aren't salespeople? And then most of them are like that. Most of them are like, well, I'm a technician. I'm not a salesperson, but you are, you are. I'm sorry. The day you chose to get this job, you've got to smile at the customer. Smiling is selling. You've got to ask questions. That's selling. You've got to be your tonality. If you're unsure of yourself, if the doctor says, oh, maybe try this prescription. It might work. You don't want to go to that doctor. Well, 80% of technicians do not sell, can't sell, won't sell. 20% are superstars and they might all work for you. So I know that you've got a great team, so they might all work for you,

but 20% can do it. They can smile every time. They can be great. They can sell. They can tell the customer exactly what they would do for their mother and they'd be perfect. And they're going to get a high average ticket for you when they come back to you as the boss. They're going to say, hey, Tommy, this is my average ticket for the day. And you're going to say, why can't everybody be like that? It's so awesome. But 80% are not that. And that's where it comes to systems and processes.

So for that 80% that they are not in their DNA, a salesperson, although we want them to be, but they do fix things very well and they're good technicians. That's where we have to have everything scripted to give them a script for how to greet the customer, how to put on their booties, how to put on their face mask these days, or whatever it is that it is. There's a script for every single thing. And then when it comes to your pricing, that's all scripted too. And they present it to the customer. With our pricing system, we have a lot of customers who have Spanish-speaking technicians and our app is not in Spanish yet. And so it doesn't matter. If they don't speak English, they'll still just present the options to the customer. The customer

will choose an option. And ours has percentages too. The customer chooses the level of service they want. So now all of a sudden you didn't have any sales required by the technician, but the average service was able to go up because we used a process and a system. So whatever process and system you want to use, it has to be systematized so we can scale and not make it dependable upon a personality. Yeah, I agree with that. I agree. You can't build it around a guy.

You got to build a system and get your guys into that box. But you're right. If you think about it, my guys are really, really good at what I tell them to do because we go over it and we train them and we drill them and we role play to the point where they're just like, it's so easy because we tell exactly what to do. And the difference is, is nobody likes to be sold, but people love to buy. And with that being said is I don't have a guilty conscience at all of what we do. I really don't. Every other competitor, and I say this as the majority of them, they're going out to the home every year. And that's bullshit.

If you're fixing it just enough to break every year, my average time between jobs is seven years. Wow. So the difference is we're going in there fixing, look, I'm going to inspect everything. When we go in there, we've got a 29 point safety inspection and we go through every little detail. And you know, a lot of guys, they just don't like doing bottom rubber. They're lazy. They don't like doing spring pads. They don't like doing these things. But with our checklist, we look at every single picture. We've got a quality assurance team and say, you see this spring pad? It's got a hairline crack in it.

That's a potential liability. We got to go back there and replace that. So I do think there's a big issue with a lot of these companies going, you don't need to replace that right now. Yes. And the thing is, that's like saying you're not going to need to replace the belt. You ever hear of a 100,000 mile checkup? Oh yes. I bought a new car this year during quarantine. I know all about it. And they go through and they replace all these parts.

It's what they replace all these parts. They might not be bad, but they're saying this is about the life they should be replaced or something bad's going to happen. And I just find it funny with the technicians that know better. And they all think that they're like God's gift to technical. But what about the people that made these parts that rated? It's just, I can't get over it. Yeah. Interesting.

It's crazy when I think about the technicians and a lot of people say, well, how do you train your guys? And the biggest secret I could tell everybody is spend more time in the ones you pick from the get go. You've got to have a process to get the right people. I mean, we go through thousands and thousands and thousands of people a month. We use the thing called Spark Hire. Spark Hire is really, really cool because I ask all the questions in the interview and then they record themselves. So I'm recording myself going, hey there, my name is Tommy Mello.

I'm the owner here at A1 and I got a couple of questions for you. I'm excited that you interviewed. Very excited to get you part of the team. First of all, we love recruiting friends. We love friends, neighbors, family. If you were to come on and you love this job, like we know you're going to love, that you have a lot of friends and family that you could probably get to come on. And we give them $1,500 for every person they get. But I love finding, I love finding that a few of the techs

that just super popular, just they're younger, got a lot of friends and they'll get 10 guys. And A players love A players. So it's just spend more time in the process, picking the right people. We do predictive index. We take them out to lunch.

We take them out to dinner. We have a ride along for them. We do all these things. And then if they make it through their apprenticeship, now they got to come to Phoenix. Like they're all came today. Then they got to make it through this. And we sent two to three guys home every single month,

because if they're going to be late more than once, they're not going to make it through this. We send two to three guys home every single month because if they're going to be late more than once, they're not going to make it through here. This is the one time you can't be late. Yep. And I like to nip it in the butt. And it's way more expensive to do it this way, but it's way cheaper after two months in the long run. Totally in the long run.

Yes. And everybody says hire slow, fire fast, but we don't because we emotionally get involved, right? So what would you say to the smaller, like you guys have a well-oiled machine, very clear, very successful, very great model for us to all try to get towards your hiring process. Majority of contractors these days don't have a hiring process. They don't know where to start. They don't have an onboarding process. So what would you say to a smaller, like, you know, somebody that's only got one to five trucks on how they can start implementing and hiring better?

Well, number one, I say you shouldn't start a business from a $5,000 loan from your mother-in-law because you're going to have to put 10 years of sweat equity in. And that means you're going to have to work every position. That means it's going to be really hard to grow out of that five-person company. But if you did, I'd say, come visit me, come visit a company that has these processes in place. It's not complicated. There's a few books I could recommend, but basically you are the recruiter. Okay. Like as an owner with five people in your company, you're the recruiter. The difference between an A player for me, top guy here will do $2 million. The bottom guy will

do 300,000. So that's a big spread. And you know what? A good CSR will make you an extra million dollars a year. And I always do this exercise. It's just somebody booking 60%, someone booking 90%. 300 days of year, 20 calls a day, $500 ticket average, that's $980,000. So it's crazy, but you got to take your time on all of these and you got to measure this stuff. And I would say, come visit a business. The big mistake I see all the time is the small companies, they'll go, well, I don't understand, Danielle. I'll say, I spent $25 a week on Craigslist. And I just, you know, these guys are jokes. And the first thing I say is, wait a minute, you spent $20,000 a month on advertising. You spent $100 on recruiting?

So first of all, be in all the right places. Do some media. Get your family involved. Always be recruiting. I don't say always be closing. I say always be recruiting. And here's the good thing about the small businesses is that they're around a lot networking. I mean, you're at Denny's, I'm recruiting. You're at a movie theater,

I'm recruiting. You're at a shopping center, I'm recruiting. I'm always recruiting. Costco's a great place because these employees are amazing. But yeah, I'd say you don't need a full-time person. But first thing I would do if I was 15, 20 people is I'd get a full-time recruiter because I'd say, if I get one good employee or top grade a few employees, this person pays for themselves and they pave the way for my growth and my company of what I want to become. So I'd go through and I'd take an Excel sheet out and I'd rate every single employee. And I'd say, if I were to replace these with my top employee, what could I be doing? What would happen? Oh, interesting. No one does that. No, they don't. I've never heard

anybody say it like that. So you just matrix it out on an Excel sheet and you rate your employees. So for example, your 3 million guy next to you, did you say the top was 3 million or 2 million? 2 and 300,000. Okay. Yeah. So 2 million next to the 300,000, what would happen if you replace that guy with another $2 million guy? Or let's just take the mean of that, which is, what is that? 1.7 divided by two is eight and a half. It's 850,000.

That's 550 more. You do that a few times, you find a lot of money. And I always say you need your campers and you need your hikers. Campers are good. Campers serve a purpose. Usually my campers will work later and they'll work weekends and they'll pretty much do what they have to do because they understand that they're not as motivated.

And the hikers, most people don't love the hikers because they're prima donnas. They call their shots, but that's all of them. We've asked them to become that. I said, you can't teach a lion to kill and then just take it easy on a little puppy or whatever you know what i mean it's yeah you train them to be something i think the biggest problem with small businesses and i i done the same thing is we all want everybody we want the sarah that sits up front you're the csr the dispatcher the book By the way, I want you to call these customers and get reviews. And hey, listen, can you drop my stuff off at the cleaners?

She's not going to do anything well. It's going to be all horrendous. She's the back of all trades, a master of none. Yeah. So what I've been hearing from so many companies that are in that exact same state, Tommy, is, hey, are you doing happy calls? Are you doing thank yous?

Are you doing this? Well, we can't. We don't have time. We're at max capacity. Then you have to go back to your org chart and be a little bit more creative and say, okay, I don't have the people right here, but the people do exist.

So that's where you might be outsourcing things to a virtual assistant where you're just paying a couple hours a week or to a friend over here or regardless. It's just an excuse. Oh, I don't have the time or we don't have the resources. You do. You just have to step away for a minute and look, these things have to get done.

Going back to that matrix, if I made these changes, it's not emotional, it's business, making those business decisions. It sucks because being family businesses, we love people, we love our company culture so often, and it hurts to have to make some of these big business decisions. So it goes back to what do you really want? Do you want to keep griping about it and have event sessions about your business? Or do you want your business to be someplace that you love that's running profitable so that you as the owner, why you went into business anyway? What do you want to be doing on the weekends with your family and friends? Not stressing about your business. Yeah. It's a lot of work. People don't understand it. If it were easy, everybody would be doing it. And most people that are listening are most likely they're a slave of their business.

And unfortunately the business was never designed to be that way. It takes time. But I think the definition of insanity is continuing to do the same thing over and over again. That's why people are like, well, I do have a lot of routines. The routines are what creates success. Your wake up patterns, how you, your day. But for the most part, my weeks aren't exactly the same because there's new problems I'm working on. I'm literally going after huge, huge, huge obstacles in the business. And one of them was the recruiting six months ago. One of them was getting the vans out in time. And I'm literally obsessed right now. I'm working on our turnover program actually. And

I've got probably four of my top managers all focused on this one thing. And you see, like it's crazy, just little tweaks here and there could make a difference. But I appreciate you saying that because it's easy from the outside to take a look at a company your size and to say, oh man, I'll never do that. Or that's so awesome. But even you are still tweaking and fine tuning problems in the business all the time, but you find what's the most profitable thing to be working on highest and best use your time. You tweak it, fine tune it, you get it scalable and you move on to the next thing. Right. And there's always, believe it or not, there's always issues always. I mean, like the other day, my buddy buddy called this is three weeks ago and

he's the guy i started the business with but we went several ways in 2010 and he goes hey dude is there any chance i could just quote you on your insurance and you know adam my coo knows that me and this guy are best friends and he's like well we got a good insurance company but we'll look at it he came back and not only did he out got a good insurance company, but we'll look at it. Came back. And not only did he outdo the other insurance company, found some holes in them, but he saved us 300 grand. Wow. And Adam and my other senior management, we couldn't believe it. But that just always says to every single year, shop every single thing you're doing.

Yes. Shop your insurance, get your merchant services, gas cards. Every single thing should be, as much as you trust people, I've got a financial planner. I mean, you should be checking in with everybody. There's so many things right now that as a big business I look at now, I don't know, I buy a company and I go, first thing I'm looking at is what's their EMOD score? I'm looking at all this stuff because I'm like, where can I save a bunch of money? Because I get a lower merchant fee. I pay less fees on a lot of the financing we do. And these are the biggest wins is even when I look for like buying from our different merchants we buy from, I save a ton of money because we buy more. And I think

here's, what's really cool. If I buy them and they're saving more on here, then I put that into my business. It's always a win. Yeah. That's interesting. You know, it's interesting because you know this business so well. And I don't know if this is true, but 1.4% of businesses in the home service, maybe the HVAC are women, which is a small number, less than 2%. What do we got to do to get more women in this industry? We need more. Well, number one, we got to invite them and let them know that there's a place for

them. I've been on the board for so many years now for women in HVACR, and I just rolled off of president, past president, and now I'm just on the advisory board for women in HVACR. We've got a great scholarship program. We do a lot of events and networking and things. And all the different trades, a lot of them these days do have lot of events and networking and things. And all the different trades, a lot of them these days do have pockets of women that are trying to do things. But I believe that we just have to keep inviting them, letting them know that we got a place for them. And there's cool opportunities in the trades. In the past, they just didn't know that they were invited into it. It's changing. The culture and the trades is really changing for the better right now. And there's a lot more diversity and people coming in, but there's a lot of great women that

can do a lot of great things. And even as sales, as marketing, as advertisers, there are some really great female techs, but not all of them want to be, and not all of us are cut out for it. I'll say this is that there's a stigma in this industry and i've tried to break it so many times oh and i just friday had one of my gals who i love and is awesome quit and i've still got my list to call but i'm like why what did somebody offend you what happened i just yeah like the thing is is you gotta have thick skin when you work with guys all the time because they cuss you know i can't i can't do anything cuss, you know, I can't, I can't do anything behind closed doors.

You know what I mean? If they're going to go out and they have beers afterwards, I can't control that as much as I like to control everything. It's just not possible. So it's tough. It's tough. I'm not the only woman in this, in the trades,

because usually I'd say you have to be raised around older brothers or something. Yeah. You hear a lot of crap and, but I, you know, I have a couple of other women technicians and they're doing great. And I do love the people. See, you were kind of born into it, which is awesome. And there's a lot of people out there that, that are, I mean, my, my,

my cousin is a better fisher and a better hunter than I'll ever be because she was raised around it. She could have three poles going at once and everything. It is. You do have to have thick skin and then demand respect. I mean, you know, I believe people will treat you how you ask them to be treated. I don't have any problems. I love the industry. I love being around everybody.

I work with predominantly like mostly men. And I mean, you know, all the trade shows, that's everywhere. All the podcasts, visits, everybody. And I think it's great. I don't have problems with it. I love it. And I love inviting my girlfriends into the industry. Hey, there's places for you.

Come join us. When it comes to marketing, you work with a lot of companies. And, you know, I'm a big fan of direct response marketing. I got to tell you, though, I've came around now from the first podcast ever to where I am now. If your Google's dialed in, your social media is right, everything's right online as far as your ratings. I think billboards, radio, and TV work. And there's a certain way I do it on Mondays and Tuesdays heavy for TV with bookends. But as far as what's working for you, Jay Abraham says,

partnership marketing. Find your partners. And it's the gift that keeps giving. And it's an affiliate way. And it's amazing. I agree with him. What do you think you've seen out there that's really working well right now with this? The pandemic's coming to an end, hopefully. But what are some of the things that are going well? Partnership with the trades is so awesome because you can cross promote and it's not competitive. Right. So I'm on there working on garage doors and I noticed you need this. And hey, my buddy does that.

I'll have my buddy come over and help you out, which is awesome. But like you said, direct response. There's just not a lot of competition in the mailbox anymore. So I highly recommend marketing to your people in your customer list. And I hear, this is not me. This is not me making this up, Tommy. It is because contractors tell me this from their mouth. You say, do you market to your existing customers? Oh, no, they're in our tune-up club and we go out there once a year. Okay. So there's no guarantee that you're going to get the replacement or the next demand service or anything, right? We have to stay in front of our

existing customers. And statistics have found that whether you're sending a postcard every four weeks or every six weeks, it makes no difference. And so if you're looking at your marketing budget and you need to be careful and not spend too much, then send something every six weeks. It could be hello, it could be a postcard, it could be a special, it could be a newsletter. I know a lot of contractors find great success in an actual monthly or quarterly newsletter, but just staying in front of your existing customers and by existing customers, I mean this, I don't mean anybody that's ever spent a dollar with you, anybody that spent a dollar above a certain threshold. And so here's your, maybe your service charge only they went out there,

it was $79 and you didn't get any extra service work. So maybe not them, but anybody that spent any money demand service with you, market to them consistently so that you get the next one and stay in front of them. And there's a lost art in that. People aren't using the mailbox and they're not working with their existing customer base. You know, I'm going to do it. I've been always nervous because I've got Danvers 300,000 in my... You know what we're going to do? I just got to go through to do it. I've been always nervous because I've got 300,000 in my... You know what we're going to do? I just got to go through and analyze it.

We've got some pretty cool programs. At 32 cents times 275,000, it's $88,000 a month. That's a big pill to swallow. You know what? What if it rains existing jobs? The nice thing is

most of our customers that have used us that are going to recall us are not shopping. They're like, we used you guys before. They're not penny pinchers, you know? Yeah. Instead of massing it to the whole database though, do you have a way to break it down into the neighborhoods that you want to work in? Clean it up dramatically. Just kind of scrub the list a little bit and really look at where there's still big opportunities. Yeah. We call it friendship marketing, finding that neighborhood that you like to do business with, where you got loyalty both ways. They've got enough money to use your services or to wait on you or whatever it is, but picking out that neighborhood that you're going to

own. And then kind of like old school guerrilla marketing, contractors are finding a lot of success with, hey, this is the neighborhood I want to be working in. And so they'll go and they'll drop off, hey, Halloween's coming up. I'm going to drop off a pumpkin on every doorstep with my flyer. Or Easter's coming. I'm going to drop off a little Easter basket with some chocolate eggs on every doorstep in that neighborhood with my company name on it. That's actually working for people.

You know, send out cards. And there's a few other softwares that have some pretty cool ways to just include chocolates and it's just really affordable. It is. Yeah, there's a lot of good companies. And I like one idea even better is go to the customers that can keep giving you. So like a big builder for custom homes. I mean, I got a guy that spends a million dollars a year with us. That's $10 million. You could afford a nice Easter basket. Yes, you can. Yeah.

A drop off, that's something that we got to do a better job at, but it's in motion. Good. Instead of best earlier is you have no idea how much stuff we got left to do. I mean, I've got, I told my marketing guy, actually one of my developers, I was like, dude, I have enough stuff to keep you busy for two years as a developer. Like no joke, the systems that I'm pulling into one, just APIs and webhooks. Well, I'm going to wrap up here with a few last questions. Someone wants to reach out to you or look into the software.

What's the best way to do that? Our website is thenewflatrate.com. We do menu pricing for HVAC, electrical plumbing, contractors, and now moving into pest control and chimneys and indoor air quality. We've got a great new module for indoor air quality. My email is danielleatmenupricing.com. Facebook, LinkedIn, Danielle Putnam. People can reach out anywhere. And because of a couple of things we talked about on the show, Tommy, if you don't care, I'd love to give your audience, anybody that's interested,

it's maybe not dialed in as much as yours is, but I do have a seven page hiring process that I'd be happy to share with anybody. Just an idea, a template for starting the onboarding when you start a new employee for the onboarding, the ride-alongs. And I also have a ride-along pack. I strongly recommend doing ride-alongs within your organization and outside in the field. And so just the documentation on that. Yeah. I'm going to have my team reach out. Actually, I'm just going to copy you an email and we'll reach out and we'll put that on there too with a link to your pages. Cool. Yeah. If anybody would like it, I'd love to send it to them. Cool. And then three books, any books you want. Oh man, I got a stack. I always have a stack. You know, this one's called margin. It's all about, let's stop being so busy being five minutes late to this 10 minutes late to that.

So margin is making the moments count, right? That one, this one right here, automate or die. The less I do, the more I make. We're on the grand. Excellent. Automate or die. Yep. And then this one I read every the grand excellent just finish it automate or die yep and then this one i read every year and i'm reading it right now i do a book club with my team how to win friends and influence people it's reversed on the screen maybe isn't it dale carnegie all right how to win friends i i read it every year it's all about let's be nice catch more flies with honey than vinegar right that's true so last thing I do here is kind of give you a few moments. We didn't get to talk about everything we never do, but there's a lot of cool things we hit on.

Maybe you got a takeaway or a thing to go do today, or just give you a few minutes to, I know you got the other appointment, but just close us out. On a takeaway. We talked about a lot of things. We talked about pricing. We talked about process. We talked about hiring. And the one takeaway I'd like to say for the trades is leave your mother in the truck. Let's not bring our emotions into a job and make sure that you're getting paid what you're worth. My dad wrote a book on it. It's called Why Won't They Pay Me What I'm Worth? And as the trades, we go in and we just want to fix things and help people out and give discounts.

But they don't give you a discount when you go to Home Depot because you buy multiple things. So quit feeling like you have to show up on site and give discounts all the time. Trades are here for a reason because people need us. And so I just want to encourage everybody to say,

get paid what you're worth. What's your dad's last name? A-O-O-P, Cope. All right. Can't wait to read it. Sorry we ran late. I really appreciate you jumping on today.

It was fun. Thanks for the conversation. All right. We'll keep in touch. See ya. Yeah. Hey guys, I just wanted to thank you real quick for listening to the podcast.

From the bottom of my heart, it means a lot to me. And I hope you're getting as much as I am out of this podcast. Our goal is to enrich your lives and enrich your businesses and your internal customers, which is your staff.

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And I'm like, you know, the hardest part about giving away my secrets is actually trying to get people to do them. So we also create a lot of accountability within this program. So check it out. It's homeservicemillionaire.com forward slash club. It's cheap. It's a monthly payment. I'm not making any money on it to be completely frank with you guys, but I think it will enrich your life season further. So thank you once again for listening to the podcast. I really appreciate it.