Build a Profitable Service Department
Best of Success Seminar: Christian Madsen and Chuck Chapman
Do the math: If 15 percent of leak calls result in follow-up maintenance and the average maintenance ticket is $2,000 with a profit of $1,000 per job, then 500 leak calls result in 75 jobs — and $75,000 in profits. “Are you missing out on this?” asked Christian Madsen as he kicked off the Best of Success session titled “Building a Profitable Maintenance Center.”
Madsen, president of Madsen Roofing & Waterproofing Inc. in Sacramento, Calif., and Chuck Chapman, president of Tecta America Arizona in Glendale, Ariz., drew on their own experience to give contractors tips on starting and building their maintenance business. Both stated it was imperative to set it up as its own profit center. “You have to have a dedicated service department,” said Madsen.
Chapman agreed. “It has to be a stand-alone department,” he said. “It’s different than new construction and re-roofing. Service and maintenance is a totally different animal.”
In the final analysis, handling a leak call is really a sales tool, according to Chapman. “It can lead to re-roofing work and maintenance work,” he said.
They both recommended having a dedicated service manager run the department. “He has to be well-versed in all sorts of systems,” said Chapman. “And he has to be able to understand that his job is all about customer service. If a customer has a problem, he needs someone to hold his hand. You not only need to solve the problem, you have to hold the customer’s hand.”
Service technicians must be professional in appearance and be armed with a digital camera, according to Madsen. “You already have the initial investment of having the service tech out there,” he said. “You might as well let him take some photos and propose work that will add to the bottom line.”
Chapman and Madsen have found adding two or three pictures to proposals greatly increases the success rate. “Pictures are worth 1,000 words,” said Chapman, who urged contractors to keep proposals simple. “You can’t talk to the customer in a language they don’t understand.”
It’s important that the service manager contact customers promptly, but only after proposals have been reviewed by an experienced estimator. “Follow-up is everything,” Chapman said. “Provide maintenance proposals while the leak is fresh in the customer’s mind.”
Service work can have a higher profit margin than other types of work, but only if it is priced correctly. “Don’t be the low-cost provider,” Madsen advised. “If you’re providing excellent service, charge for it. Your years and years of experience are worth a lot of money.”