For those of you who figured out how to do “service” right, I need to apologize. I’m letting the cat out of the bag and sharing our secret. But to be fair, when Roofing Contractor asked me to write about why roofing contractors should care about service — I just couldn’t refuse. There certainly are a lot of reasons why you would want to keep “service” a secret.
First, I realize that you don’t want me to tell them how much money roofers can make. Yes, you sit there and chuckle knowing most of them look at their service departments making 35-50 percent gross margins and think that’s fantastic. They’re comparing their service margins to those they make on project work, so they think they’re doing really well. I promise I won’t let them know how high their margins should be or how high your margins have been.
Secondly, I won’t need to reveal how much more project work a roofer will get when they truly get good at service, or how much more profitable that kind of negotiated work can be. I can let all that slide. Most roofers are really busy right now. They won’t think about service as long as they have all the project work that they can handle. They’ll wait until the economy turns again and then be suddenly “inspired” to try to get more service work. As you know, it takes time to build a service organization that really rocks. They don’t realize the ideal time to grow a service department is when the economy and their business is doing well.
Building owners are also doing well and many (well, at least the smart ones) are looking for better ways to manage their properties. So, by the time your competition starts to figure service out, the economy will start to improve, their attention will go back on bidding all sorts of new construction, lower-margin project work with those general contractors they claim they don’t like working for, and they’ll forget all about service entirely. While I promise not to let them in on all this, I really do have to share something. So, I’ve come up with something new, even for those that are already great at service.
In the mid-1990’s, a fundamental shift occurred in our economy. We transitioned from an economy where the majority of business was based on hard goods (like roofs) to an economy where the majority of business was based on information and services. We will never shift back. Here’s why: In 2014, Google generated $264,000 in net profit per employee. (This isn’t a misprint. Run the math on what your company would look like if you did this.) What do they sell? Information, virtually all of which is “free.” They just get paid — and paid very well — to make it easy for you to find.
In today’s world, information and services are, truly, more valuable than hard goods. This economic shift has many different names. Some call it “the information age,” or a “knowledge-based economy,” while others have called it a “service economy.” So, if you’re running a knowledge-based business and can generate $264,000 in net profit per employee, why would you want to get involved in a business that can’t even generate that in gross sales? Our knowledge-based economy is here to stay.
So, you’re sitting there going, “Yeah, well it’s great that Google can generate that kind of money, but I’m a roofer, what does this have to do with me?”
Answer: You can do this too!
Virtually all roofers with a focus on service already use database programs like Dataforma, FCS or Roof Logic. Many of you bought these on with the idea that if you had a customer’s data on your servers you would have a customer for life. It’s a great idea. And I’ve yet to see any of you actually doing that. You’ve figured out that this software can make you a lot more efficient, but you haven’t figured out how to “leverage” your data into work with much higher returns.
Professional building owners/managers crave data. For instance, on a very simplistic level, they’ll want to know how long a certain kind of roof will last. Which type of answer do you think they’ll be more drawn to? (A) “Well, about the most you can expect from a 45 mil TPO roof here in the South is about 12 years.” Or (B) We’ve studied the life expectancy of roofing systems. Every time we bid a roof replacement we make an effort to determine when the roof was installed. From that, we have a database of over 200 45 mil TPO roofs that were replaced in just the last 4 years. They were being replaced, on average, in 11 years, 8 months.” (Note: You can collect and record this data on every reroof you look at, even if you don’t get the job). “We’ve also recorded that the primary reason the roof was replaced wasn’t because the membrane failed, but because in 62 percent of the cases, the owner had never properly maintained it, had experienced lots of unnecessary, avoidable leaks and was replacing it because “it leaked too much.” Another 25 percent of failures were due to the aging of the membrane, and the other 13 percent were due to things like hail, fasteners backing out, contamination of the membrane, etc.”
Or, how about this? “Sir, are you aware that you have spent $15,000 so far this year on roof leaks on your shopping center?” Answer: “Yes, but it’s a big shopping center and that really isn’t all that much to spend.” You: “True, but are you aware that almost all those leaks are occurring on just one roof that’s probably 25 years old and will only cost you $75,000 to replace?” Or, You: “True, but are you aware that over $12,000 of it was to repair punctures that were occurring within 3’ of mechanical units and probably were caused by the HVAC techs working on the roof? A lot of our professional building manager customers will back charge the tenants for those expenses? Is this of interest to you sir?”
Isn’t that exactly the sort of thing you hoped to do with the data you’re collecting? What are you waiting for?
In a recent ad for database software, Jack Scalo, president of Burns and Scalo, RC’s 2015 Commercial Roofing Contractor of the Year said, “We learned that what we were really selling was data. We’re no longer viewed as just a roofing company, but partners in facility management.” These ideas being shared here are not pie-in-the-sky. You have competition already doing it.
How to Shift
So, I’m imagining that at least one of you reading this will say to yourself, “You know what? He’s right. This has been gnawing at me for a while now. I know we have untapped potential in our service department, I just don’t know how to go about growing it.”
What we’re going to do now is layout the real obstacles standing in your way and how you can begin to approach this process differently.
It’s in Your Head
The first thing you need to realize about developing a dynamic service department is that you need to think about it differently. True service isn’t about fixing leaks in roofs, it has nothing to do with it at all. Let me give you one real-world example that you can relate to. You take your pickup truck in for service Monday morning. They call you on the phone Monday afternoon and say, “We have your truck fixed. We’ll have your bill figured out by Thursday. Why don’t you plan on picking your truck up Friday morning?” Would this be OK with you? No? Well, then why do you think it’s OK to finish fixing a leak on a Monday afternoon and not have the invoice in their hand by Tuesday morning? I can assure you, all my building owner clients care about the speed with which an invoice appears. Most care more about that than whether you actually got the leak fixed the first try or not. Service is about prompt communication. Communication has nothing to do with “roofs” or “leaks.”
Or, you call the truck place Monday afternoon and ask how the repair is coming along and they say, “We aren’t sure. We’ll find out and let you know.” Then they call you back Wednesday and say, “Your truck was completed Monday afternoon.” Would that be OK with you? Would you consider that to be good service? Yet, it’s incredibly common for my clients to call roofers to ask for progress reports on repairs and not be able to get timely answers.
The only way you get away with this is because all your competitors are crappy at it too.
Building a true service department requires you to think like your customers think. In fact, to think like you think, when it comes to what you define as “great service.” It’s an attitude and an approach.
The second, and perhaps the most important thing you need to understand about growing your service department is this: You can’t delegate its growth to others. You, the owner, have to be personally involved and engaged. We’ve been training service departments for over five years and, without fail, when the owner attempts to delegate the implementation to others it’s never as effective as when the owner is appropriately engaged. The difference isn’t small, either. Here’s why: The people you have running your service department are actually terrific at what they do and well-suited to doing it. But they’re also the wrong people to grow it. We do DISC behavior assessments on those we train and if you compare the DISC assessment report of the typical, good service manager and reports of the three best implementers of our training initiatives they’re polar opposites.
If you’ve been unsuccessful at growing your department so far, this is almost certainly one of the reasons why.
The world is changing. The contractors who are going to flourish going forward are those that start thinking about the nature of their work differently and shift the emphasis of their companies to address the changing needs of their customers. Will you be one of them?