Enough is enough. I’m tired of hearing from too many contractors who are simply leaving money behind on the table, especially as install work trends down. So, hot take, here are 5 best practices to maximize your service work and make more money.
Check your rates.
If you’re one of the contractors who raised their rates again this year, then skip to #2. If you didn’t, then STOP and READ. Top contractors have been increasing their rates every year, to the tune of 30% over the last 2-3 years. You need to raise prices. And before you raise prices, you need to do your math.
How much is your labor? I’m pretty sure you’re paying more in labor than you were last year! What’s your service rate compared to what you’re paying? How much do your most common materials cost (and how much have they increased over the last year)? Have you priced your materials so that you make some margin on them?
Don’t forget about your overhead (the cost of your building, internet, phones, website, marketing, truck, equipment financing, maintenance, insurance, etc.)! The simplest way to do this is to sum up what percentage of your business is service work, and assign that % of your overhead to the “service division.”
When you add up your costs (labor, materials, and overhead), you should be able to set your price on labor and materials such that you’re in the 20-30% margin range.
Use System Scorecards
Upselling, y’all. It’s a critical component of service work, and the easiest way to do it is by using a system scorecard. There’s a very simple version of how that works here. These scorecards demonstrate your professionalism, increase consistency with your technicians, and give them the ability to upsell simply by pointing out areas that could be improved (i.e. they’re not “selling” they’re just pointing out things that could be better).
Incentivize your technicians for the revenue they bring in. Many contractors tell us they treat each service truck as its own small business, and each tech as their own entrepreneur.
Set targets for them to hit (because we all need goals!) around material sales, controller upgrades, billable hours, or total revenue. Pick the 1 or 2 metrics most important to you, and easiest to explain and track.
Have set dollar amounts for threshold, or % of revenue. Something simple and generous. To quote a friend of mine, “You want to under-pay the underperformers, and over-pay the overperformers!”
Have a scoreboard! We’re competitive people, we want to win. Seeing who’s leading on the scoreboard will motivate others to pick up their game.
This comes in two ways. First, you’ll get service calls for non-core clients. When your techs come back, take a look at those system scorecards. Some will be pretty bad, and highlight basic things that a previous contractor probably should have done differently.
This is the time for you as the owner or service manager to personally give them a call. “Hey, I noticed there’s a lot of things we could do to improve the quality of your yard, and a lot of it starts with your irrigation system. I’d like to come out and talk not just about your system, but how we can help you save money every year.”
Second, if your techs have time (because we know that many companies are still very tight on labor!), use those door hangers to give a great deal to properties that can fill in your routes. A few extra homes or businesses in close proximity to your normal neighborhoods will make a massive difference when it comes to getting more done with the team you have.
As we said, we know labor is still a big issue for much of the green industry. Obviously, we’re biased, but we can’t stress enough how important it is to have well-crafted routes. Reducing drive time is the #1 way you can maximize your time and money, without adding more labor.
Make you (or your office manager or service manager) are glancing at the routes each day. With the right technology, this is a “check the box” process that takes mere minutes. It’s guaranteed to save you time and make you more money.