Improving Your Business
Is Our Business

Everyone these days is looking to incorporate video into their Internet efforts. With the advent of video e-mail and YouTube, not to mention video being shot directly for corporate websites, there are an abundance of methods to get your message across. The mistake that a lot of companies make is believing that they need to budget thousands of dollars to take advantage of these marketing tactics.

The reality is that you can participate in all of these marketing channels with a powerful and visually attractive video while spending less than it would cost you in one direct mail campaign.

The added benefit is that while a direct mail campaign is a short term lead generator. Video that is developed for Internet marketing is constantly working for you, nurturing prospects and creating new relationships.

Now make no mistake, this is not a “bash” on direct mail. We still believe in direct mail as long as it is used in concert with other home improvement marketing tactics. The purpose of the comparison is to get you thinking about a new way to attract prospects. Many of your competitors are already utilizing these tactics and those that aren’t will be in the near future. It is critical that you don’t miss out on this competitive advantage.

In order to create an effective viral video campaign, we recommend the following steps:

1. Map out your overall strategy and goals. What do you want to accomplish with your video campaign? Would you like to sell more of your product or service? Get more prospects to your website? Generate more referrals?
2. Decide how you would like your video filmed. In most cases you don’t need to invest in an expensive videographer. See if anyone in your organization has a quality video camera. If not, you can purchase one more affordably than ever before. Websites such as TechBargains offer discounted camcorders, and also scour the Internet looking for the best deal possible.
3. Block out a half a day to shoot your videos. Barricade yourself in your office or leave your office to avoid distractions. This will allow you to finish the project quicker.
4. Take the time to edit your videos. Why is this critical? Because your videos should ideally be no more than 5 minutes. Research has proven that the average viewer will lose interest in anything longer than this. Of course there are exceptions, but wouldn’t you rather be on the safe side and make sure that the majority of your prospects watch the entire video?
5. As stated earlier, there are an abundance of ways to market your videos once you have created them. However, you always want to start with YouTube. Out of all the methods it is by far the quickest and easiest, and remember, you want to get this content on the Internet as quickly as possible.
6. The next step is to post your videos to your website. Videos on your site are effective for multiple reasons, but their biggest benefit is that they keep the prospect on the website longer. The longer they are on the site the more likely they are to buy something or give you their contact information.
7. After you accomplish these first two tasks, you want to look into other ways of getting your video out to the general public. Keep in mind that the video content you post on the Internet will not go away, so it is always out there, working for you to create new leads.

In the next blog posting I will go over in detail how to market videos effectively. But the onus is on you to take the first step and shoot some valuable and entertaining content.

To hear from experts in utilizing video marketing in your business, don’t forget to attend the upcoming home improvement summit in Baltimore!

Regardless of your political beliefs, there is a health care bill which has just passed through Congress that will have an unbelievable impact on our industry. Section 9006 of the new health care bill has a provision requiring every business, charity and even state and local governments to file a 1099 tax form listing every purchase of goods or services or accumulated purchases which exceed $600.

In past years, this requirement was strictly limited to payment for services. This is not the case anymore. Now, if your phone bill is greater than $600, or your purchases at Home Depot or a similar store exceed $600, your business is required to file a 1099 tax form.

It is unthinkable the amount of paperwork that this will create for manufacturers, distributors, service providers and retailers within this industry (not to mention the IRS).  As such, you can count on a massive increase in the number of IRS agents and supporting staff which will be hired to respond to this requirement.

Furthermore, the added costs to most businesses will be tremendous. Estimates of up to $23,000 annually have been calculated.

Senator Mike Johanns (R-Neb.) has written an amendment to repeal section 9006.  It is suggested that concerned business people write their senators asking for support of this repeal.

There is also an alternative amendment submitted by Senator Bill Nelson (D-Florida), which would exempt businesses with 25 or fewer employees for compliance with this section.  However, with the current movement to reclassify independent contractor status, a majority of the companies in the home improvement business who are affected by section 9006 will not find much relief in Senator Nelson’s amendment.

Again – we urge you to become familiar with this provision and write to your senator asking for support of Senator Johanns’ amendment. Forward this to any of your suppliers and other companies similar to yours.

For more information on how this legislation will affect your business, don’t forget to attend the home improvement profitability summit in Baltimore, where our team of experts will give you the latest legal news regarding our industry.

There are those who seem to adapt to the sales role as if they were born for that very reason. There are those who are charismatic, who meet and get along with others easily and those who have the gift of language.  To those we believe their form of selling is an art.

Despite all the latter, what works best is understanding how prospects think and feel, why they say what they do and how they truly like to be treated.

If you or someone you know enjoys the act of selling, and particularly if they sell products to or through home owners, click here to access our latest recorded webinar which describes the science of successful in-home selling.  Best of all – it’s free!

There were over 1,000 participants on this webinar.  We received rave reviews.

Then check out the 7 Myths of In-Home Selling.  To download that MP3, click here.

And – if you still want to know more about our 17 years study on the use of effective language (Power Linguistics©), click here.

Remember they’re all free.  However – once you listen to them, we’d like your feedback.

To those who were on the webinar on Tuesday, I wanted to thank you personally for joining us online for another successful home improvement program.

Over 1000 companies were registered for the event and nearly 85% of them were present – a remarkable amount for an online event.

Also, huge kudos are in order to Hanley Wood and Marketsharp who were our valued Sponsors and also helped to facilitate the event.

In the coming weeks we will be posting answers to a number of questions that we did not have time to address on the webinar. Make sure you sign up to receive e-mail updates regarding a new blog posting so you don’t miss any of them.

If you were not able to make the call, then we hope that you will be able to sign up for one of our future programs. We are planning on holding another webinar before the end of the calendar year, and registration fills up quickly so make sure to sign up ASAP.

If you have any suggestions for an upcoming home improvement webinar that you would like us to hold, please let us know by clicking here.

This is not an easy question to answer, particularly when our economy is so turbulent. However, contrary to popular belief, the economy is not the biggest factor in the decline of entrepreneurial selling organizations.

It is extremely complicated for most business owners to make the transition from an environment where they are at the heart of everything that goes on within the company to one where there are multiple levels of organizational structure.

Within the home improvement industry, this becomes even more complex as many companies that are looking to grow consist of no more than a few employees, and the principal owner of the business may be responsible for the majority of the “selling” that takes place.

As you are looking to take that next step to grow your business, keep these points in mind:

Hiring the right people and avoiding the wrong ones is the first step you need to take before you can undertake significant growth

As I stated in the last blog posting, “Turnover is the death knell of any small to moderately sized selling organization.” You need to decide what positions are most critical that you hire for first. Do not make the mistake of attempting to grow your business by hiring extra sales personnel, a canvassing crew and a marketing manager all at once.

Once you determine what position(s) you want to start out with, you need to invest the time and resources in hiring the right people. I have yet to meet a manager who was perfect at pinpointing the right person for every job. This is why we recommend the use of tests and behavioral profiles during the process. The test determines whether the individual can do the job that they will be assigned to (i.e. if they have the skill sets). The profile will determine whether the individual’s behavior matches the job. Behavior is neither right nor wrong, it just is, and we have identified specific behavioral types that fit best in certain job roles.

Stop thinking like a salesman

Easier said than done right? In all likelihood, if you are reading this blog entry, then you have been a salesperson (or someone in a selling role) for most of your professional life. The problem is that when you make the transition from a “salesperson” to a business owner you need to change the way you think. It takes a different mindset to manage sales than it does to manage people and you will frequently find yourself struggling to relate to your employees if you do not abandon some of the behavioral traits that made you a sales superstar.

Plan more structure

Some of your employees may like structure, others may hate it, but the truth of the matter is that all of them need it.

Without clearly defined boundaries and goals in place, there is too much freelancing and your employees will have a tendency to abandon reason in the face of personal priorities.

Furthermore, there needs to be organizational checks on this structure or it will be changed and altered within weeks of their training.

System selling

A common question we get when conducting a client observation is: “How many steps do you recommend in your sales system?” My response is that the steps aren’t as important as “sticking to the system”.

Too many people get hung up on a number, when that is not the key in closing a prospect. The key is a scripted sales methodology that you are comfortable with and becomes part of the organizational philosophy.

Structured price (formula – application)

I recently covered this is another blog posting. Too many companies arrive at a price based on what their competition is doing, what will give them a “competitive advantage”, or some other arbitrary number.

The fact is that in order to achieve a healthy profit margin, there is a formula we developed that is foolproof. No matter your product/service, by sticking to the numbers you will assure that you don’t miscalculate your profitability.

Log and track every lead

Yes – it is important to qualify your leads, but it is also a huge mistake to not log and track every single lead that comes into your business (by any form of communication).

Just as important is what you are using to track your leads. Without a strong system in place to manage, organize and follow up with your prospects, you are increasing your administrative time and costs exponentially.

Delegate, delegate, delegate

Staying involved in all facets of the business is critical for all business owners, but just as important is delegation.

As your business grows, so should the number of tasks that you assign to other employees.

What? You say that you don’t have faith in them? Go back to step 1 and get your hiring system up to speed to make sure that you have a team in place that you can count on to do the tasks that you simply don’t have time to do anymore.

Before you lay too much blame on the economy and the government (I’m not saying they aren’t responsible), you need to examine your internal processes, because unless you are sticking to these guidelines you are setting yourself up for failure.

Contrary to popular belief, the call center is not dead. Some of the methods used to ascertain prospects may be outdated, but we have a number of clients who still effectively produce business through their call center.

First, you have to hire the right people for the job. To assure maximum success we recommend the use of a behavioral profile. From our experience they can decrease turnover by 50% or more, and turnover is the death knell of any small to moderately sized selling organization.

Second, you need to train these people effectively, and my son David, who is also one of our Senior Account Executives, endorses a 4-step process:

• Focus on the customer’s welfare
• Control the direction of the conversation
• Create an adviser’s position
• Base your appeals to action on emotion

Does that sound complicated?

In most cases it is easy to enforce at the outset of call center training, but it falls by the wayside as representatives slip into their bad habits and begin to go off script.

Because of this the final step is a strong call center manager who can enforce these rules and replace personnel who are not willing to “stick to the system”.

What are the key factors affecting the home improvement industry? From our experience, what our clients present as their primary problem(s) typically end up being far different from what they actually are.

Here are some of the notable issues that our clients reported that they are facing:

• Leads are down, but the “cost per lead” is up
• The demand on one’s time seems overwhelming
• Interested parties are harder to get together (leading to one-leggers)
• Keeping up with home improvement regulations is difficult
• Hard to find workers without “baggage”
• Higher turnover in sales force
• Customers seem to complain more than ever

This is a wide array of issues that paints a picture far worse than what may actually be occurring. After conducting a client observation, we typically find that:

• Selling methods are incongruent with the customer’s decision making process
• Improper training is taking place, stemming from a lack of coaching
• Salespeople are being hired with the wrong criteria
• Business owners spend their time managing instead of leading
• Improper compensation methods are in place

So what are the keys to improvement? Here are just a few that we stress our clients to abide by:

• For every ¼ HOUR spent in planning – 1 hour is saved in operations
• Find the right people and systems to improve the bottom line
• Balance the amount of time spent on calculating the cost of your home improvement leads, the type of products/services being offered, the potential profitability of each, maintaining cash flow, and lowering the turnaround time of production. Putting these things in the order of importance is key for the company to prosper.
• Remember the 4 P’s: Pricing – People – Products – Production

Contrary to what you might hear or believe, these elements do not change depending upon what geographical market you operate in or what products/services you offer. There is a proven formula for success within the home improvement industry, and by following specific guidelines you increase the likelihood that your company will flourish for years to come.

The following case study was conducted as an outgrowth of a turnaround effort by one of our Account Executives, Brian Smith.

More than anything, what this shows is that a few minor tweaks in the sales and marketing system can have a dramatic effect on your bottom line.

For more case studies from Dave Yoho Associates or information on how we can do this for you – - feel free to contact us at (703) 591-2490.

Revenue is up. Your marketing costs are down. Employee morale is at an all time high. Despite all this, your business is barely staying afloat. How is this possible?

Frequently, it has to do with a miscalculation in the pricing formula.

From our experience, many business owners set their prices based upon arbitrary formulas, what the competition is pricing, or frequently they simply arrive at a number in their head that they believe will yield a strong profit. None of these methods are effective, and frequently they can have a disastrous effect on your bottom line.

Over our 45+ years of industry experience, many things have changed about the way businesses should be run; however, one thing that remains the same is the pricing formula.

With the right system in place, specialty home improvement companies can earn 10-15 (and sometimes) 20% pre-tax net profit. Full-line home improvers (including design and build) can earn 5-8% pre-tax net.  It’s all in the formula and the control(s).

In most cases, direct costs are not clearly defined, and fully loaded marketing costs are not defined, allocated or managed. Because of this, a company’s profitability may appear to be in better shape than it actually is. The first step is to make sure you are classifying all of your costs properly; for example, even if you are the only individual who sells business in your company you still need to separate all of the costs that are attributed to the selling process.

Once this is accomplished there is a formula to assist you in calculating your selling price (all of the numbers are estimates based on an average home improvement company that sells replacement windows):

Sales Costs (fully loaded)                               13%
Marketing Costs (fully loaded)                        15%
G & A Operating Expenses (overhead)         20%
Anticipated Net Profit                                        10%
TOTAL                                                                  58%

As you can see, the goal is to achieve a 10% net profit. Once you have performed this calculation, the total percentage (in this case 58%) is subtracted from 100% to arrive at your direct cost calculation.

Direct (L&M) Costs    =  42%

The final step is to apply this percentage to the cost of your product/service (again all costs are estimates):

Cost of window (incl. shipping)                  $150.00
Trim and Miscellaneous                              $  15.00
Labor to install (incl. re-measure)             $  70.00
(Direct Cost) Total labor & material  =      $235.00 = (42%)

Next, divide 42% into $235 = $560.00

The $560 represents the minimum selling price of your product/service that is necessary to achieve a 10% anticipated net profit.

A couple things to keep in mind:

• There are always unanticipated factors that come into play that will affect your bottom line (we call them G.O.K. – God Only Knows).
• Depending upon what business/market you are in there may be a slight variation that is necessary; however, the basic calculation will remain the same

By using this formula to arrive at a selling price you are taking all of the guess work out of the equation and assuring that high revenue will equal high profitability in your business.

We developed a package that delves into this formula further along with all of the other elements you need to know to run a profitable business. As you may guess, the package is called: How to Run a More Profitable Business. If you have any questions about how to implement this in your organization, call me directly at (703) 591-2490 or e-mail me at dave@daveyoho.com.

In continuation from my last blog posting we will examine the most common errors made by home improvement companies. Incredibly, the most common error that we find when we do a client observation is the lack of a business plan and operational model.

Now, this is not to say that the company did not draw up some sort of a document stating their “corporate purpose and direction”, but frequently it has very little if any structure and as a result the employees rarely adhere to it.

The below slides are examples of what a typical home improvement business plan might entail. Keep in mind that depending upon the nature of your business, things may differ greatly for you.

Take a look at your overall business operations. Things may not be running as smoothly as you thought. Frequently this is due to elements that are missing on either the front end or the back end of the business.

In the next blog posting I will cover how incorrect pricing formulas dramatically affect your bottom line.