A real challenge for service companies is convincing customers they’ve been servicing for years that it’s time for an upgrade. You customer possibly has trusted you for years as you service and maintain their equipment. However, there comes a time when you see that continuing to service the equipment is not in your customer’s best interest. Instead, you think they need a replacement.

The question then is how do you shift from the role of fixer to the role of replacer?

Many times your customer sees the quote and is afraid or unwilling to pay for what their business or home needs, but that mean’s it’s your responsibility to help them think about what’s important in the long run. You may know what your customer needs, but that’s because you are the expert. You also have to convince your customer of the benefits you’re offering.

Selling replacement equipment is easier after you have built up a relationship with your customer. However, if you haven’t yet come to that level of trust, then you need to point to your company’s history of similar work, how long you’ve been in business, examples of customers you’ve helped, testimonial statements, and references to call. You have to make sure your customer is confident that you know what you’re doing with replacement as well as with service. When talking about other replacements or installations you’ve done and other customers you’ve done work for, be sure that everything you say relates back to your customer’s situation.

Finally, when shifting the focus from service to replacement, don’t get hung up on price. And don’t let you customer get hung up on price. Instead focus on value and the long-term benefits of replacing their equipment. You know the value of what you are offering, but you must be sure your customer sees that value too. Otherwise, any price you quote will be too high. Also, focus on the positive benefits of what you are offering rather than the negatives of not buying.

If you are like many contractors, you put a lot of thought into your pricing. When you are quoting a price, you are not just pulling a number out of the air. You probably based your price on your costs, the time you put in, and the profit you expect.

However, as fair and as justified as your prices seem to you, you continue to encounter price objections nearly every time you quote a job. Dealing effectively with price objections is a necessary business skill and one to develop for your bottom line.

Leave room to adjust, but don’t.

When quoting a price, you usually leave yourself some wiggle room, so the sale does not stall and fall apart because of the number at the bottom of the quote. However, just because there is wiggle room does not mean you should play that card first. The wiggle room is a security blanket. Do not be dependent on it.

If you find yourself discounting most of the deals you close, you may need to revisit your pricing or selling tactics. Be confident and know, in easily expressible and easily understandable terms, why people should buy from you.

Price is probably not the main concern.

To find out if it is, ask. It could be the only hold up, but many times price is only one of several concerns.

Your prospect probably has other concerns if he is balking on price. If you can identify and adequately deal with the other concerns your prospect has, the price issue will become less significant, will play less into your prospects decision-making process, and might even go away entirely.

Price matters most when you’re not getting what you want.

Any price you quote that is not for the work your prospect wants done is going to be too much. That does not mean you should not include add-on and valued-add additions in your quotes. You just have to be prepared to justify their presence and show how they will create a lasting and long-term benefit for what they are trying to accomplish.

Quote prices based on what your prospect wants accomplished – no more, no less.

Discover why they buy.

Unfortunately, not everyone buys for reasonable reasons. People buy emotionally. Nevertheless, you can also appeal to reason by asking good questions throughout the process. This will let you know what benefits of your service you should highlight.

Discounts come off your bottom line.

Remember, if you discount your price, that is money you do not get to keep. Sometimes it is better to walk away from a deal than to discount it so much that you are just creating work for yourself that does not pay.

How do you deal with price objections? Let’s talk about it on our Facebook Page.

Nine to five scheduling can be very limiting for your customers and your business.

Chances are your customers are also working nine to five, meaning they will have to take time off to wait for your technician to their house. When factoring the time they have to take off work, it can mean they are paying twice as much for your services. If your company were available for longer hours, that would mean you are able to give your customers the best possible service when it suits them.

However, to provide these extended service hours without hiring several new technicians or paying lots of overtime, flexible scheduling might be the best alternative. By giving your technicians flexible schedules, you can extend your service hours without increasing your overhead.

It is difficult to discover what the best policies and procedures your company will need to make this work, but it is definitely something important to consider for your service company. It will take more time to create a good flexible schedule, and there may be some trial and error, but if it lets you provide better service to your customers (more sales) and a better work environment for your technicians (better retention), it is a win-win.

Flexible scheduling is about using the resources of people and time in the best possible way to create a positive work environment for your technicians and an effective way to service your customers.

For example, rather than having all your technicians working nine to five, five days a week, you could have two technicians share a truck. One could work 10 hours a day, four days a week, the other could work 13 hours a day for 3 days a week. This can extend your service hours and reduce overtime. A method like this is great for employees that want to do other things during weekdays, and do not mind fewer but longer workdays. However, it is important to figure out what works best for your company and your staff.

Having your technicians work flexible hours can benefit your service company in several ways:

With a well-planned flexible schedule program, it is possible to make it so you have the right amount of technicians available to match the amount of work. That will mean less technician downtime during the week, and less expensive overtime in the evenings and on weekends.

Flexible scheduling and longer service hours will also give your company an advantage over your nine to five competitors. Your company will be ready to help new customers while your competitors are closed.

You may also discover an increase in productivity. Employees go above and beyond for companies that consider their needs. They may also be more motivated and engaged with the flexible time.

Another benefit to flexible scheduling for your technicians is that they will probably take less paid time off. The flexible schedule lets your employees work around family needs and personal errands. The flexible time can also mean less absenteeism, less use of sick leave, and less days in late.

What are your thoughts on using flexible schedules for your techs and installation staff? Let’s talk about it on Facebook.

Many HVAC, Plumbing, and other service companies that have been in existence for years and have never used software to manage their dispatches, quotes, invoices, or service agreements. However, in this fast-moving business environment, even traditionally low-tech industries can no longer afford not to use technology in their businesses.

Change is difficult, and keeping the fear of change from influencing your boss’ decision about introducing new technology into their business is difficult but necessary.

Some owners of HVAC, Plumbing, and other service companies are gung-ho about using new technology to advance their business, but others are more technologically averse and need more coaxing and convincing. If you have determined that your company would greatly benefit from service software, but your boss is hesitant about introducing new technologies, here are a few tips to pitch your idea to your boss.

When you know what technology your company needs to move to the next level, you need to get your boss not only accept your point of view, but act on it. To sell your idea to your boss, you have to communicate how your software choice will help your company accomplish what it has set out to do.

For instance, if one of your company’s goals is “same day service,” a dispatching tool that lets your dispatchers schedule your technicians efficiently is necessary. Alternatively, if you company loses money because of lost or illegible invoices, mobile computing tools might be the answer.

To get your boss to listen to your idea for software, you must select the key points and deliver them in a convincing way. Here are some quick ideas for presenting your idea to your boss:

1. Make a one-page handout for your boss that makes the case for the software you want.
2. Set an appointment to discuss the document.
3. Go through the document point by point to persuade your boss of why your company will benefit from your idea.
4. If you cannot get a commitment from your boss right away, schedule a time to follow-up and get a final decision.
5. If you believe that your idea is the right one, do not give up after an initial “no,” but instead, focus on communicating the bottom line implications of not going forward and keeping the status quo.

The most important part of selling service software to your boss is that it meets his needs. Your software idea has to solve your boss’ problems, not yours. Your boss cares less about how it will make your life easier and more about how it will contribute to the bottom line.

To sell your boss on your software idea, you have to demonstrate how it will help him reach his business goals.

The service business climate is competitive and constantly changing. That means your company need to be willing to adapt to the current business climate, plan and budget, focus on customer service, use benchmarks, and be open to new ways of doing things. The ideas below can give you some direction of what to do or reassurance that your company is on track.

Be willing to adapt to the business climate around you

Today is different from yesterday, and you may not even recognize tomorrow. Running a service business means making the best decisions with the information you have. The service business climate is always changing, so keeping abreast of the current climate is an important part of making sound decisions for your company.

That does not mean just to do what everyone else is doing. Sometimes that is the worst strategy of all.

Plan and make a budget

Even though you cannot know what tomorrow will bring, it is critical to have a plan and budget. It may only serve as a guideline, but it is better than going in blind. In running your business, you can only improvise and go off script when there is a script to begin with.

In making your company’s budget, remember all the unplanned expenses and make sure there is money available to take advantage of new opportunities for growth.

Focus first on customer service

Your customers determine the success or failure of your business. Serving their needs always has to be the top priority. Without their trust in your company’s ability to perform, they will not come back to you the next time they need service and they certainly will not recommend you to a friend.

You want your service company to come to mind first when your customers need service. The way to get there is to make sure they are the first priority in every interaction they have with your company.

Set benchmarks to measure company performance

We live in a digital age. You can measure everything your company does. With benchmarks, you can also determine if what you are doing now is better or worse than what you were doing before.

With these benchmarks and measurements, you can see what parts of your company are making you profitable and which parts are holding you back. You can see where success is happening and replicate it, and you can see where there is still work to do.

Never say, “This is how we’ve always done it.”

What worked in your business before might not be working now and certainly will not work forever. A business that makes decisions now based on what they did five years ago is looking for trouble.

Instead of saying, “This is how we’ve always done it,” try, “We tried it that way before. How can we do better?” An attitude that you can do better is self-fulfilling.

Running your business by the principles above will not only keep your company in business but will set it up for growth and development. It is not possible to do business like you used to, but new techniques and new tools mean your business can still get ahead.

Consumers now-a-days are getting smarter. They’re learning to see through tricks and gimmicks, and they are better informed and more educated than ever when making purchasing decisions. They want to get the most for their money, and that’s a good thing.

As a service contractor, it’s important to understand how and why your customers buy.

A good way to discover what they’re looking for in a service contractor is to look at what they’re learning. There is an abundance of “how to” articles on the internet that home owners are seeking out and reading before calling your business.

A few searches on Google will show what they are learning to look for. For example, if you’re an HVAC company, search, “How to hire an HVAC contractor” or if you’re a plumber, search “How to hire a plumber.” With those searches you will find the articles and information that your customers are researching and reading before they call you.

Your customers are training themselves with these how to guides so they can get the best value for their dollars. By reading these articles and becoming the company they describe, you will be making yourself into the company your customers are looking for.

Here are a few examples of the types of articles I’m referring to:

• How to Hire a Contractor
• How to Choose a Heating & Air Conditioning Contractor
• 10 Tips for Hiring a Heating and Cooling Contractor
• How to Get Your Money’s Worth When Hiring a Plumber
• How to Hire an HVAC Contractor

The articles above can offer some guidance and a starting point, but make sure to do the searches and read the articles your customers would look for when teaching themselves how to hire your company.

Almost all the sites recommend their readers to get references. Is your company ready to offer references for your work? The best sources of references are your happy customers, but after you help them, it’s important to ask if you can use them for a reference.

The articles also recommend comparing prices but to not necessarily settle for the lowest price. Are your prices competitive? Are you sacrificing quality to offer low prices or charging more and giving more? You can see where your company stands by mystery shopping your competitors to get quotes over the phone to see where you stand.

How much of the criteria in the articles you found reflect your company? Does your company reflect any of the things to avoid? What things do you have to do to match the advice your prospects are reading before they pick a company to work with? Is your company what they are teaching themselves to look for?

Customers are getting smarter and are doing the research so they know what to look for. Fortunately for your business, you can see the same things they see and make your company into the company they are looking for.

Capital budgeting is the process where a business decides if a long-term investment is worth pursuing based on its long-term benefits. These types of capital investments could be in vehicles, buildings, tools, or technological improvements.

Usually, businesses will look at the lifetime cash flows (both in and out) that will be associated with the investments to determine if the returns make sense. For instance, when purchasing a new truck for your business, you may also have to hire a technician to drive it and to go to job sites in it.

The cost of many larger capital investments can be spread out over time through financing. However, for some investments there will be a larger investment up front, but then benefits that continue indefinitely.

Capital budgeting decisions can become a key factor in the long-term profitability of a company. Therefore, owners and managers need to compare the benefits and costs of the various capital investments they can make in their companies. There are many techniques companies can use to determine the long-term value of an investment.

I won’t go into them in too much detail here, but I will list and link to places to learn more:

• Accounting rate of return
• Net present value
• Profitability index
• Internal rate of return
• Modified internal rate of return
• Equivalent annuity

Most of the methods take into account the incremental cash flows or cash savings from the potential investment or project. Using these methods can help you determine if investing in new vehicles, new equipment, new warehouses, or new technology will be a wise investment.

The most important factors to consider are the total costs that will be present, including purchase price, maintenance costs, operational costs, etc. Vehicles for your service company, for instance, are good investments, but there is also the cost of running another vehicle (including maintenance, fuel, and manpower) to consider.

The process you use to budget for your equipment or technology improvements will vary based on what you are thinking of purchasing or accomplishing. However, one of the most important parts of budgeting is determining what you need and how it will help you.

Determine what the capital improvement project will accomplish or what time-consuming task it will replace. Look at the opportunity costs that not having the equipment or technology is costing both in the short and long-term. Then look at the cost of doing nothing both in the short and long-term compared to the total cost of the investment.

Finally, remind yourself why you were considering this capital investment in the first place. What are you trying to accomplish? What pain do you expect it to ease? With the costs and benefits in mind, estimate what kind of return on investment you can expect. Are you assumptions realistic? Will the benefits outweigh the costs by enough?

Thinking through all the costs and benefits of any capital improvement project will let you make the smartest decision for your company. Sometimes inaction is more expensive in the long-term than the investment in the new equipment you’re considering. Keep that cost in mind too when doing capital budgeting.

How do you go about deciding what investments are right for your company?

Many service business owners know and understand that their business would be more profitable if their technicians were more productive. The problem they run into is that many times they end it there. To increase technician productivity and profit from it, you first have to define what that means before you can go about trying to improve it.

Productivity is the act of producing.

What is it that you want your technicians to produce? What are the top priorities for them to produce? What is the secondary product? What should be left to the end or left out completely? You can only improve the productivity of your service technicians when you know what a productive technician looks like.

Productivity is a measurement.

It measures how much output comes from a given amount of input. For a technicians’ labor, it is usually measured as a ratio of output per labor-hour. More specifically, it could be the number of service calls per working day or the total invoice dollars per working day.

A technicians’ productivity can be measured in any number of ways. It is important to pick one and benchmark it so you can measure your attempts to improve productivity. However, there are weaknesses to various forms of measuring tech productivity.

Know what to measure.

You could measure your technicians’ productivity by the number of service calls they complete in a day. The more service calls a tech finishes in a day could mean more revenue and profit, but it could also mean they are just busy, running from one place to the next. They may not be doing the best job if they’re hurrying to fit the most jobs into a day.

You could also measure it by total invoice amount. But this could lead to techs trying to squeeze extra items onto invoices that may or may not help the customer and may have a very narrow margin. Just because they are able to bring in a lot of money with many large invoices does not mean they are productive. It could be that the revenue is not contributing to the bottom line.

These measures of productivity and others like them can be important, but they are not the primary goal, they are not the end game. Profit is. By making that the measure of productivity, technicians have an objective goal to strive after, one that is clear in its contribution to the company’s well being. The primary measure of a technician’s productivity should be the gross profit they bring into your company. The truly productive technician does good work at all stages and brings in the most profit for the work he performs.

Focus on what’s important.

Making techs more productive means identifying and optimizing the way they perform their core functions. It also means moving or eliminating non-core tasks like filling out paperwork, calling the office to give and get updates, and filing reports. It is important to focus on the key performance indicators but it is most important to only measure the things that are crucial to their performance. Eliminate all the tasks that are not crucial and move the rest so your technicians can focus on contributing to your bottom line by applying their unique knowledge and skills. If they’re spending time on things that are not essential to the job, you end up paying both the cost for them to do the work and the cost of the jobs they don’t have time to complete.

You may not be able to measure the productivity of all your technicians by the same metrics. Different rolls may require different standards of measurement. Also, these measures may change over time as your business strategy evolves.

How do you measure your technician’s productivity?