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Thank you to everyone who was on last week’s home improvement webinar on leads and obtaining financing. We received an abundance of questions, many of which we were not able to answer during the program. As such, we are going to address many of them in this forum.

Q: Can you provide us with “slicks” of the ads you showed?

A: While we do not provide “slicks”, you will have pictures of the ads on the MP3 and can arrange your own from these examples.

A caution – be sure you check with some authority in your state (or your attorney) regarding the disclosure needed in these ads – regarding the size of the contract, the APR, etc.

Q: How does the advertising you’ve shown work with canvassing, shows or events?

A: Think about it – one of the most common reasons your canvassers or presenters can’t build a lead is because the prospect says “we can’t afford it now”. Have a pamphlet or brochure available to explain how you make this type of financing available.

Q: Is print media dead? If not, what are the most cost effective ways of using print media?

A: Print media is not dead, but it is in trouble. Circulation is dying.  Many people in the age range from 30-50 get their news via the Internet and don’t read the paper.  Many dealers are buying print media on a P.I. (per inquiry) or similar.  This takes knowledge of how advertising is sold, but it’s worth a try in any market.

The form of advertising mentioned in our recent webinar (utilizing financing/payments) is working a lot better than most.  Check the ad samples from the recent webinar.

A reminder – we have an abundance of free articles on this topic and others on our website.

Q: Do you hold new salespeople responsible for generating leads?  If so, how do you recommend they procure them?

A: Create a job description defining their responsibilities – and policies – then train the new hires on “how to self-generate leads”.  It is a great idea to make lead generation part of a new salesperson’s responsibility.  If nothing else, have them work around your completed jobs that were sold by veteran salespeople who won’t work around the job.  These are an excellent base in which to develop new leads.

Incidentally – you asked the question regarding “new salespeople”.  It probably fits all salespeople if lead intake lessens self-generated leads.  If you don’t have a database recovery system – have them start with old (recycled) leads from “no sit” – “no demo” or “no sale”.

12.  Q: Is direct mail around the house we are working on a good source of leads?

A: Direct mail is one of the options for using the job under construction or just completed.  Have someone visit 5 houses on each side of the new job and 10 houses across the street on every installation you do.  Make sure they are using door hangers. You can usually get the names of the people from the owner of the house where your current job is being done.  All actions such as this have a learning curve.  The more you do it, the better you will get.

Q: We just regrouped our canvassing program.  The trouble we always have is getting canvassers in the door.  The ones we get in the door show up for the interview but never return.

A: I would probably need to know a lot more about your company and operation before I could answer you completely.  It may have to do with the ad you’re placing or the kind and style of job you are offering (good canvassers in many markets make upwards of $60,000 a year).  Today’s great canvasser isn’t just “looking for prospects”, he or she is hired based on having some sales acumen. They are tested and profiled, and only the best are selected. They are trained and supervised by someone in the field with them.  They work on tight scripting.  The leads they make are relayed into a call center.  Someone else sets the appointment.

A behavioral profile can aid you in determining (1) adaptability to the sales role, (2) how the individual will respond to the stress, (3) manageability.

You probably have to rethink your program and see what you are missing.  In all probability, you may have to change the “model” you set up for this (the canvassers’) job.

You also may need help in your process regarding interviewing salespeople.

Q: We are in the roofing business. When it rains our prospects need a solution (usually they have a leak).  When it isn’t raining, we have trouble getting leads and closing.

A: You are in the same ballpark as those in basement waterproofing.  You are waiting for “nature” to help deliver a prospect that has a “high need”.  The truth is that the roof has a weak condition when it isn’t raining as does the basement.  Your job is to develop leads on an inspection basis, detect the weaknesses and convince the people to consider before it rains.

In your business (roofing), if the roof reaches a certain age, it’s time to think about replacing it before it leaks.  An analogy: when your tires start to lose their tread, you don’t wait for them to blow before you replace them.

There are many studies on why roofs are leaking (or will eventually leak) and the same is true of waterproofing.  If you can get a prospect before the roof leaks, you are ahead of the game and the competition.

Q: What are the best headline grabbing words and phrases to have in a magazine ad and where should they be located in the ad?

A: A couple of reminders first.  People don’t read ads.  They read what interests them and sometimes it’s an ad.  Your prospects aren’t looking for your product for the most part.  They’re looking for what your product does: protects their home – saves them money – avoids/eliminates maintenance – increases the value of their home.

The eye reads from left to right and top to bottom.  The headline captures the attention, the bottom line tells them what to do: “Call today” – “Visit our showroom” – etc.

Think of the words that relate to those issues and think of how best to get their attention.  An ad in any printed format is in competition with other reading matter on the same page (frequently another ad).  So you have to work at your headlines: “Save ___% today” – “Sale” – “Free” – “Low or no cost” – and, of course — how you will make it affordable for them.

We will answer more of your questions in the next blog posting.

For those of you waiting for the remaining Q & A from our latest home improvement webinar, we appreciate your patience. Now that all of our Spring programs have wrapped up, here is a summary of questions that were asked which we did not have time to address:

Q: Where do you find potentially high performing salespeople? (Robert,  Mr. Sunroom Professional Remodeling)

A: I’m glad you added the word “potentially”, Robert.  Some companies spend too much time trying to hire their competitors’ salespeople (usually a big mistake).  A behavioral profile (or similar) taken accurately will usually determine whether an individual has strong sales traits (behavioral).  Once defined, a strong interview process is suggested and then a training regimen, which assures the newly hired salesperson is selling via a successful (proven) sales methodology.  Think about this, Robert – a great sales manager takes an ordinary person with sales/behavioral traits and trains him or her to be an extraordinary salesperson.

Q: What interviewing questions do you suggest to weed out the less qualified salespeople? (Kevin, Evergreen Window & Door)

A:  Similar to the last question, Kevin.  If you’d like to see part of the process in action, we have a video that demonstrates many sales interview tips.

Q: How do I pay salespeople on commission if they bring in a GPM of 40%. The problem I have always had is they want 10%. (Jim, Murphy Window & Sunrooms) and What percentage of the sale should I pay in commission? (James, Heartland Exteriors)

A: Directing my answer, Jim and James, to both of you – If you have a 40% (gross profit margin) there’s no reason not to pay 10% since your G & A and marketing costs should be allowing for a fair net pretax profit – however – the formula has to be regulated so the job is sold correctly.  It is wise to combine it with a control so that if the salesperson doesn’t sell it, when the lead is turned back, it goes through a rehash by a third party.

Another however – to James – 10% commission should not be the standard for big ticket items (i.e. $25K to $50K and up).  The commission should be worked out versus a sales goal which permits better than average earnings for the salesperson, but not sufficient to destroy their initiative. For example, a salesperson selling windows, cabinet facing or similar where the average sale is $8-$10,000, being paid 8-10%, has to be disciplined to sell 1 to 2 transactions a week minimally.  The salesperson who is given leads to sell sunrooms, metal roofing or basement refinishing sells a $40-$60,000 transaction, so they should have a commission in the range of 6-8%.

Q: Should salespeople be compensated by salary or by  commission? (James, J&A Associates)

A: When salespeople become truly accomplished, they tend to want an incentive system which compensates them for extra effort.  In many organizations when a salesperson is hired, they are given a training compensation for 1 or 2 weeks (which is termed a draw) the intent of which is to make them feel secure during the training period.  However, James, it all comes down to performance.  If you have a specific percentage built into your pricing formula for commission, salespeople should understand they have to operate within the parameters to produce enough profitable revenue to cover the cost of what they are paid, no matter what you call it – salary – commission – or draw.

Q: What are your thoughts on paying overages to salespeople? (Gary, AA Home Improvements)

A: Usually a bad idea, Gary. Reason 1: an overly aggressive salesperson may overprice a contract purely to earn additional commission.  Ultimately this is not good for customer satisfaction, which brings me to reason #2.  An attorney general (any enforcement agency) will often single out a company and publicize the fact that salespeople in the company are incentivized to charge more to one company than to another.  We have numerous case histories to support this, which show companies that have been driven out of business.  Reason 3: if a salesperson makes more on one transaction it could incentivize them to sell fewer transactions earning higher commissions for fewer sales.  The solution (except in extreme cases, where there are what we deem “God only knows” factors in price development) is that salespeople should be trained to use standard estimating practices, and if they run into special situations, they should call the office for a supporting price change.

Q: How do we successfully vet applicants? (Cheryl, Alcher Interiors, Inc.)

A: Each applicant should be subject to 2 kinds (forms) of job application.  The first is a pre-employment application where you get specific information enabling you to ask interview questions which are pertinent to the information received.  The other is an employment application.  Here is where the applicant is under serious consideration.  References should be checked and a background check drawn on the individual.  To do so requires a release by the applicant giving you permission to seek out this information and draw such a report.

Q: Do I really want a salesman to do a HARD close? (Gary, Ferguson Industries)

A: I’m not sure what you mean by hard close.  No one bearing the title of a salesperson should ever proceed into an attempt to get a sale without asking for it properly.  This can be done without using tactics you might consider “high pressure”.  The most common reason salespeople do not get an order is because they don’t ask for it – or – they don’t ask for it properly.  Salespeople are not estimators (estimates are part of their job role).  Salespeople have to do more than hand out written pamphlets and allow people to see samples, they have to be taught a sound sales methodology.

Q:  How can a small company (1-2 employees) hire great salespeople?  Most of them want to work for a larger company (at least 8-10 and up)? (Jim, Manley Enterprises)

A: This is more of a statement than a question, Jim and the statement may be colored by your history/experience.  Great salespeople want to work for companies that have a good product, a sufficient supply of leads and a fairness in dealing with them.  We have dozens of clients who have as little as 3 salespeople – all of whom sell over $1 million a year for these small companies with a strong local reputation and a smart selling system.  Their incomes range form $80-100,000 a year and to say they have satisfactory employment is an understatement.  You may be equating larger companies with more leads and that might make the company seem more attractive.  Yet smaller companies can develop a satisfactory lead getting and sales program in which their employed salespeople do extremely well financially.

Q: What do you do when you have a great (your best) salesperson but their arrogance and personality continue to rub others the wrong way? (Nathan)

A: Nathan, we intentionally excluded your company name in case someone should see your response.  However we received at least 3 or 4 similar questions.

If this is your best salesperson it says something about how the customer perceives that person.  Great salespeople are frequently enjoyed and appreciated by their customers and disliked by their managers, those in production or even the office staff.  The reason stems from what is known as “behavioral use”.  Salespeople like this are often charismatic and articulate.  They “light up” the conversation in the prospect’s home.  They are loaded with anecdotes, stories about life and simple “chatter” that intrigues their prospects/customers.

Frequently they are the top producers.  Management doesn’t have to love, admire or become social “bosom buddies” with them – they have to understand them.

I suggest you have this person behaviorally profiled to get an insight as to why there is such an appeal to the customer base while frequently a lack of appeal to management.  They are not necessarily role models to other salespeople, but some aspects of their behavior, if replicable, are beneficial.

As long as this salesperson sells profitable contracts and doesn’t offend customers, you have to find a way to understand and deal with the behavior.  I used to tell a funny story that went like this:

A client called me and said, “We have a salesperson who is constantly late for meetings, interrupts the sales manager when he’s talking, doesn’t get his paperwork in on time, makes outlandish statements about his ability and treats the production crews as if they were his personal ‘hired hands’.”  He ended by saying, “What can I do about this?” My answer was, “Get rid of him!” He responded quickly by saying, “I can’t! He’s our best salesman!”

If there was a question which we did not address please e-mail our office at admin@daveyoho.com, and we invite those of you who haven’t already to sign up for our home improvement webinar series.

We recently met with a client who was producing more business than he ever had. Revenue was up nearly 6% over last year (and they are not a small company). Nevertheless, profitability was down.

Now if this was a function of increased marketing spending then that would be one thing, but upon examining the operating statements from the last 5 years we saw a disturbing trend. Every year since 2006, revenue had increased and profitability had decreased. Worse, no one in the business seemed to know why.

They had not made any radical changes in their business model, and marketing expenses had remained relatively consistent. So what was happening?

We asked the client whether or not he knew the number of salespeople that had left the company over the previous calendar year. He said he did not. It was of no surprise to find out that turnover was through the roof.

I should point out this is not an attempt to denigrate our client. The situation that is being presented is not an isolated incident; in fact, there are more companies that we work with who do not have a handle on their operating statements than there are that do.

Because sales were increasing, and marketing costs were stagnant, the client figured that there was nothing wrong with turnover among his sales force. To a certain extent he was right. Some turnover is healthy, because it weeds out non-producers and keeps people focused. However, too much turnover will lead to exorbitant costs that in many cases are hard to track when you are calculating your year-end operating statement.

Let me ask you a question: do you know the average cost of a mishire? This relatively standard projection catches a lot of companies off guard.

The simple fact of the matter is that while the science of selling can be taught, not everyone can exceed in it. This is where behavioral profiling becomes useful.

The profile does a better job than any hiring assessment we have found at matching someone to a job and predicting future success. In our 40+ years of using the DISC Classic behavioral profile, we have found their to be a 80-85% success rate in determining an individual’s behavioral style.

Behavior is neither right nor wrong, it just is – - and every behavioral type has a specific match when it comes to a job role. The question is whether or not it is the job you are hiring for.

Or, you can choose to go by intuition, and experience has taught us that even the best HR personnel can make significant hiring errors – - and these errors can lead to exorbitant turnover costs.

For more information on behavioral profiling, you can contact Brian Nelson at brian@daveyoho.com or call our office at (703) 591-2940.