The more things change, the more they remain the same. As some of you may recall; I’ve been writing about, talking about, working in, and working on installed sales for many years.
In the ‘90s when I first began to work in this arena, our primary focus was installation services for consumers: windows, doors, kitchen & bath, decks, etc. These were our product offerings for that occasional consumer wanting an upgrade to existing products.
Over the ensuing years, that original idea has morphed to installation services for our professional contractor customer. Whether that customer is a design-build remodeling contractor, custom homebuilder, or one of the national builders, they all have the same needs. And those needs revolve around increased jobsite efficiency, higher quality installation of critical components, and simply finding qualified labor to perform work.
So, all that being said, here are my top 5 rules for a successful, profitable installed initiative:
1) Labor: Provide qualified, trained, licensed, insured labor for your customers. Due diligence is absolutely required here to ensure you are providing labor that will enhance your builder’s jobsite, not exacerbate the current situation.
And speaking of that labor—don’t get caught in the misclassification of labor issue. Over the past 10 years the federal government has become very aggressive in prosecuting companies who intentionally misclassify employees as sub-contractors. There are somewhat clearly defined rules regarding this practice. I say ‘somewhat’ because we are dealing with the government. However, regardless of whether or not you fully understand the rules governing this practice, if you are investigated and deemed to have intentionally misclassified employees as subcontractors versus employees, you are liable for back taxes, penalties, interest, and fines pertaining to this rule.
2) More Labor: Doing due diligence background on your installers is more than simply knowing what kind of truck they drive or where they enjoy taking a vacation. This is a very touchy subject as you can imagine. When you approach a contractor asking him/her to perform labor, or a contractor approaches you asking about working with your program, you need to pause and ask several questions.
- What do I really know about the quality of work performed?
- What information do I have about a safety record on the jobsite?
- Is the contractor financially stable?
- Would I want this individual to represent my company?
- Will he/she stand behind the work performed, and will he/she install/build to my specifications?
3) Product offerings: Listen to your customers and offer installation of products that they are having difficulty with, not simply products that you wish to install. While this sounds painfully simple, you would be amazed at the number of companies that determine they want to install windows, then go about finding customers who want windows installed. Doesn’t work that way.
Your customers are experiencing issues on jobsites related to qualified labor—framing, siding, windows, doors, etc. You need to listen, discuss with your staff the options available to you, secure a source of labor, and offer a package containing material, ancillary products, tax, labor, and profit. If you can assemble a package that is attractive to your customer group, effectively manage that process, and be profitable, move forward. If any of these components is missing or questionable, stop and re-evaluate. Efficient management and profitability are two of the most critical items here.
Do you have an employee who is qualified—with both time and experience—to manage jobsites for your customers? Will this individual find himself/herself overwhelmed by the amount of work or will they manage smoothly? As importantly, will they work well with your team of outside sales and operations?
4) Profit: What’s that? We’re in this for profit, not practice. We practice enough every day. Offering installed sales is not simply a method of moving more material through your operation, although that will happen. We’re a profit-driven industry, and those numbers can and should look really good with a healthy installed sales effort.
This is a value-added service and should be approached as such. While you probably can’t knock it out of the park on labor margins only, the combined cost of material and labor, if sold properly, will result in substantially higher gross profit margin than simply selling a lumber package alone.
5) Customer Satisfaction: We interact with our customers every day—at the sales counter, on jobsites, at a favorite lunch stop—but do we really know how we are doing serving their needs?
Now that you’ve become a labor supplier to your contractor, customer service is ever more important. If your crew fails at any point in the process, you back up the following crews, miss deadlines, increase construction costs, and fail to provide the level of service you promised up-front.
How do you measure customer service? Simply communicate with your customer throughout the entire process. Have a recognized presence on the jobsite at all times, manage your crews, and deliver all of the material that is needed, on time and in full, every time. Clean up your accounts payable so that your crews are paid on time and don’t fail to show up because of late payment. Clean up your accounts receivable so that you process invoices on time and can provide accurate billing through the entire cycle.
In short—be a solution for your customer, not a part of the problem.