Welcome to the MoreCheeseLessWhiskers.com podcast.
If you've ever thought you’d like to take the lessons and experience you've learned in growing your successful business and helping other people grow theirs, then you're going to enjoy this episode.
We're talking today with Randy Redinger from South Dakota, and Randy has a desire to help plumbing contractors build a successful business by helping them avoid the pitfalls that he knows how to help them avoid by setting up the operational systems as well as the marketing systems that we’re talking about today.
This all fits into a category that’s one of my favorite things… syndication.
Essentially what you're doing is taking a proven model, when you've figured something out for a business and then shortcutting the process for them. It’s almost like a franchise prototype, by creating an operating manual for them to follow, a roadmap to get a result.
Randy's at the very, very early stages of setting this up, so we had a conversation about how to think about it, the baby steps to set this up. I think you’ll enjoy the conversation if this is something you've ever thought about.
And why wouldn't it be something you think about? If you've got a successful business and there are other people in the same business as you, it's a great idea. Nobody is ever going to appoint you to the position of leader in your field, but guess what? Nobody's going to stop you from taking that position either!
Come into this one with a sense of possibility, and I think you might enjoy what we're going to talk about.
Want to be a guest on the show? Simply follow the 'Be a Guest' link on the left & I'll be in touch.
Download a free copy of the Breakthrough DNA book all about the 8 Profit Activators we talk about here on More Cheese, Less Whiskers...
Transcript - More Cheese Less Whiskers 077
Dean: Randall Redinger, I presume.
Randy: Mr. Dean Jackson. Yes, it is. How are you?
Dean: I'm so good. How are you?
Randy: I'm doing great. I'm just so excited to be on this phone call with you.
Dean: Well, that's awesome. Where are you calling from?
Randy: I live in eastern South Dakota.
Dean: Eastern South Dakota. Did you know there's a little known fact about Dean Jackson that I used to live in South Dakota. I don't remember it, of course, because I was 6 months old, but my dad was in the U.S. Air Force and there was an Air Force base somewhere in South Dakota, but I have pictures to prove it.
Randy: That would be western South Dakota, and there was an Air Force base by Rapid City.
Dean: Well, there you go, and I've never been back, but I would love to come and see what you've got there.
Randy: Well, if you ever go back, Mount Rushmore is about 15, 20 miles from where you lived when you were 6 months old.
Dean: Yeah. That's what I have pictures of, me at Mount Rushmore, so there you go. Now, that's in North Dakota, though, isn't it?
Randy: No, no. That's South Dakota.
Dean: Oh, okay. I thought that was in North Dakota. So we are recording right now. We've got the whole hour to hatch some evil schemes, so why don't we talk about what you've got going on, what you're working on, and what you think we could watch out for you today.
Randy: Okay, so a little bit of background on me, so you know a little bit where I'm coming from here. I learned the trade of plumbing. I'm 47 now so this would have been in 1990 when I first started that trade. I did that-
Dean: Okay, Randall. First of all, are you on a speakerphone? Because you're a little bit hollow.
Randy: No, I'm actually on my phone with headphones on.
Dean: Oh, okay. Well then, I guess we'll do with what you've got. It sounded a little echoey. Okay, so plumbing.
Randy: I'm in an office. So anyhow, yeah. I learned that trade and then over the years, I learned a few other trades. Heating and air conditioning, so electrical and boil work in different things, and I had businesses during that time as a contractor. So what I'm doing now is I'm starting a business and I've got it ... I don't know, 90% of the way formed how it will be, and I want to help other contractors avoid the pain that I went through as a contractor, and the typical story of ... I don't know what the percentage is; it's got to be very high ... of people who become contractors as they do like I did; that is they learn a trade, they get good at it, they get tired of working for other people, so they go on their own, and the mindset is that because I know how to do plumbing or HVAC or whatever, I know how to run a business that provides that service. It's prototypical E-Myth. If you guys have read that book, it's exactly that.
Dean: Of course, of course.
Randy: Yeah, so my mission in life as far as work is concerned is to help people not do that, not go through the pain of being all excited getting things set up, and then not realizing how many moving parts there are to a business; that you can't just go out and do plumbing and expect to succeed, so that's where I'm coming from. So my business, the way I'm setting it up, is that I'm going to have five modules within the business, and I'm going to ... each module will have price points within it depending it on need and ability and desire to pay, and then I will set it up a la carte in the next little visit and provide the different parts that they need.
So these are the five parts: financial and then there's marketing, which is why I'm talking to you today, sales training, operational and organizational stuff, and then what I call "mindset". It's really coaching but he doesn't like that term very well, so I had to kind of rename it, but it's basically that part of it is teaching them that if they don't approach their business right, all the rest of it doesn't matter, if that makes sense.
So that's what I'm trying to do as far as setting up my business, as far as marketing my business ... I've kind of got that path figured out. What I would like from you, if possible, is to come up with a good system to help my clients market their business as service providers.
Dean: Yeah, so in this marketing module here. Now, so when you look at it, what's the thing that you're going to be able to get as a result for people? How are you going to kind of position this for them? What's going to be the dream come true for them? Is it the education or are you going to provide some services in those areas?
Randy: Well, I think it will depend. I'm kind of approaching it like Russell Brunson teaches, and that is I will offer a fairly inexpensive part within the module that says, "This is how you do it. This is what you can do to succeed." And then at the most expensive end, I will do a forum, but it's going to cost them a lot of money, because it takes a lot of time to do it. So it'll be in my mind, accommodation, for either/or.
Dean: Right. Okay. Now, when you say "starting up" now, have you done this for anybody yet? Do you have any clients, or are you literally just starting up right now?
Randy: I am just starting up right now. I've actually been planning and scheming on this for a while, and as you know, we can only do that so long it's time to actually do something, so that first step is kind of the hardest one, and I guess with the marketing thing, it's probably the weakest part of what I have to offer, because the rest of it, I've been through it. I know how to help these guys with the marketing.
Dean: You know how to help the guys with all the operational stuff and the financial and all of that, but the marketing thing is the weakest link of that. Is that what you're saying?
Randy: Exactly. However, I think it's got to be almost the most important thing.
Dean: How do plumbers ... yeah, when you look at right now, how do plumbers get business right now? What's the best ... if you were to take what you learned from being a plumbing contractor, what's the thing that predictably got you new clients here?
Randy: Well, that's a little bit of a difficult question because in my mind, there are two different types of plumbing companies or two different situations. One is the one I was in, and that is when you are at a small area and you have virtually no competition. You might have some, but it's pretty easy to overcome if you do things correctly. The other one is in a bigger area where you got lots of competition that you're fighting for in a red ocean, basically. You're fighting for the same customers. So my experience has been in the small market, and it's basically really hoping that people call.
Dean: Right, and just getting your lottery ticket out there, right? Getting on the map, getting on Google.
Randy: My experience is from years ago it was really not Google. It was more Yellow Pages.
Dean: I got you. Yeah, yeah.
Randy: And advertisements above urinals in bars and that kind of stuff.
Dean: Okay, so when you start thinking about that now in the modern world, who would be ... because you don't have any clients yet, so who would be your ideal client? Would it be people who are trying to compete in a tough market or people who are in a marketplace where there's little competition and you can help them organizationally?
Randy: Yeah. Well, first of all, I think that the people in the smaller markets aren't without competition. They just don't have very much, so they still need the marketing thing to overcome what competition they have. That's where my experience lies, and that's where probably I will focus my initial ... I know I need to kind of drill down and get fairly specific with my target market. My thing is with even those people, their goal in my mind is not to get a bunch of customers. It's to get a bunch of customers that are customers they want, so the people who want to use them, they want to pay what it takes to get a quality job, not the people that are tire kickers and that nickel and dime you every time you do a job and they go, "Well, you weren't here that long." And so on and so forth. And I get that from you, actually, in listening to your various podcasts. I think it's important.
Dean: Yeah, absolutely it's important to figure out who your ideal client is. Part of this thing, because I'm listening to you and it's not unlike a lot of people who have had some experience in a business and think, you know what? I would really like to help other people in a business, and so what I look at is you have to have a prototype. You have to have something that you can point to as the shining example of what you have, so when you look at it, where your argument is that you've got ... if you had a successful plumbing business that runs on its own with systems and procedures and all of your best things in place, that you can point to as the proof that this works, that becomes your very best marketing tool, because otherwise, and it sounds like right now what you're having to do starting from scratch is going out to these plumbers and then figuring out how you can help them.
So what I would recommend is do you have one plumber ... like it sounds what you're looking for is if we could articulate this in terms of the way we think about it with a "before" unit, a "during" unit, and an "after" unit, what I'm hearing you say is that if you could come in maybe and run the "before" unit and the "after" unit for somebody allowing that plumber who was a contractor and really likes doing that and wants to do it on their own, just like you're talking about the typical E-Myth guide wants to do the thing, the technician element of it, that you can come in and support them with entrepreneurial kind of surroundings. Entrepreneurial support for that, where you could implement or run ... I can share with you that just teaching them how to do the marketing is going to be an uphill thing because for exactly the reasons that they need the help, they're probably running busy doing plumbing, if that's where they're coming from.
In the E-Myth, Michael talks about the technician and manager and the entrepreneur, and that what perhaps where people would really see an opportunity is if you could come in and offer the management layers of that, the structured layers of it.
Randy: So you're saying in general to be more involved with the actual thing and not teach them.
Dean: Well, I'm saying that if you're going to be able to get the results, the first place and best place would be to have your own prototype that is the-
Randy: Oh, okay.
Dean: You know what I'm saying? Like "this is how we run this system". I just spoke at an event with a gentleman who has a big company that coaches and trains home service people, but he has built that on the back of a $28 million service business that he has successfully built using his own systems. It's Mike Aguilera.
Randy: Oh, okay, okay.
Dean: Yeah, so Mike has built a $28 or $30 million business using the systems and that's a completely operating business that's out and thriving and growing, and what he's teaching or what then he's sharing with people in other markets what he's done, and so he can always point to his business as the example of proof that this actually works. He's what these people are aspiring to grow to. So if you look at it ... if you're coming into a business where you're looking at a business who is either busy and too busy to do marketing or they've hit that ceiling where there's more work than they can handle, that's going to be one thing, or if you're getting somebody the moment they kind of startup, open up their business, that you are helping to get them off the ground and get them going. Where do you think that your sweet spot is?
Randy: Well, because of the story, based on my experience and my experience as a salesperson selling to contractors, which I've done, and contractors, when you start out, you have the world by the tail and you got it all figured out. You know exactly how it's going to work and deciding on ... you don't need help with your marketing. Typically, for the first two years, when you go on your own, you keep busy just with friends' and family's project, and so that's part of the story. And then a whole bunch of crap raining down on your head. Part of it is that; you run out of work because you've burned through all the work that you had to start. Part of it is that your bad decisions financially are starting to catch up to you. You're buying things that you really couldn't afford because you didn't know how to make that decision; so that kind of stuff.
So where I'm going with all that is a startup company, unless they're a seasoned businessperson, they're not going to make it. It's the person that's already been going for a little while that's having issues, and it's a combination of things that could be the person that's super busy and disorganized and they need help getting organized, then it could be that they're not beating the competition in the marketplace and need help with marketing and sales training. It's a mishmash of different things, so I hope that answers your question.
Dean: Mm-hmm (affirmative). Okay, so I'm looking at it that if it's somebody ... because this is part of getting crystal clear on your target audience, so not somebody new. Trying to get a picture of this person, and what does their company look like? Are they one truck kind of sole proprietor kind of ... maybe an assistant and an office person? How many people are in that business?
Randy: Yeah, I would say thinking about this because of the thing that is most important. I would say between 3 and 10 people, and that would be a combination of service people, office people, and possibly some general labor type people. Yeah, because if you're a one man stand, which I have been, you have your fingers on everything all the time. Try to grow employees and more work and more overhead and all that kind of stuff, that's when you start needing help. From a marketing perspective, if you are super busy but you're doing work that does not pay well because you're not targeting the right customer, that's when it happens.
Dean: And so at that level, what kind of revenue would they be doing?
Randy: Well, when I had I think 5 people working for me, I did just under $1 million, so I'm talking from $500,000 to $1.5 million, maybe $2 million.
Dean: Okay. Boy. I'm having a harder time hearing you, Randall. There's something going on with your headset. It's very-
Randy: Maybe I'll just take this out and hold this phone up to my head the old-fashioned way.
Dean: Oh, wow. That's so much better. Wow. It feels like you're here now.
Randy: Is that better?
Dean: Okay. Much better.
Randy: Sorry about that, Dean.
Dean: No problem. That's awesome. Okay, so, yeah. When you look at that, that half a million ... so they're up and running. They've probably got some consistent business going but the problems that they're running into are time issues, really, right? Where they're busy enough just keeping all the wheels rolling, and you can't imagine scaling that way. Harder to imagine that. What would you do if you came into a business like that? What's the first thing, if you were to look at it and say, "That's the person that can help?" And if they would just get out of the way and let you help them, what would be the things that you would do? What would you enact first, kind of thing?
Randy: Sure, sure. Well, the very first thing that has to be done is to get my hands on a copy of their profit and loss statement and their balance sheet, and run some numbers just to see how they're doing financially and where the money's at.
Dean: Okay, and then what?
Randy: Well, depending on what that shows ... it's going to show different things. It's going to show they have way too much overhead and they can't afford it. It's going to show that they're too top heavy in office help, for instance, which would kind of be part of an overhead issue. It could show that they aren't charging enough, which is often an issue. They're not basing their pricing on anything other than a gut feeling, which is super typical, and I was guilty of that myself. It just depends on what I've found out based on that analysis and then from there, if they're having a hard time closing sales, for instance, I'd do some sales training with them. If the people that they’re serving aren’t the market they really want to be serving, I hope with marketing and get that figured out. If they are sticking their head in the sand regarding making decisions in their business based on the right stuff, I would tell them, "Okay, we gotta visit and you need some help figuring out what mindset you need to be successful." So I would go down that road. It would depend on what the numbers told me.
Dean: Okay, and you've already ... I guess what I'm looking for is do you already have systems in place for this to install, or you're just kind of starting as you go, too, working to create this kind of-
Randy: Well, I have lots and lots and lots of papers with writing on it, and I've got-
Dean: Oh, okay, right.
Randy: And I've got other ideas and I haven't-
Dean: And there's the thing, right? You've got lots of ... yeah, you've got ideas, and I think that what you are gonna find is that that's gonna maybe an uphill situation, and I wonder if you're looking at it, the thing that you have to have in mind is that you have a prototype. You've obviously have read the E-Myths, so we talk about as going to work on the prototype just like Ray Kroc did with his McDonald's. You get the prototype and you create the system that is ready to install.
It's not unlike all the things that I do with the real estate agents, so I started out as a real estate agent, and figured out some marketing strategies for my own business, so I started licensing that successful system to 40 agents around me in non-competing markets, and then we built a big coaching company all over North America on the backs of all of those systems, so when it was all based on taking the seed of a workable proven algorithm ... I use that word now. What you are really gearing towards is setting up what I call your scale ready algorithm. How many of these plumbers are in that situation, where they're at $500,000 to $1.5 million. They've got 3 to 4 or 5 people. They're reaching a point of complexity or they've plateaued at that level, and they can't really get beyond it, and there are frustrations that go in it.
It's not unlike who our target market ... I just kind of shared those kind of things with you just to maybe shine a light on some of these. With us in the real estate world, we've broken down the ideal clients as there's basically four categories, and these would probably be applicable to plumbers as well, that we've got a brand new agent that is just getting started in real estate and is bright-eyed and optimistic and hopeful and hopes they make it and doesn't know what to do, and they're just kind of getting started. Everything is new but they've got high hopes.
Then there's the agent who has been in real estate for a couple of years. They've made it. They've kind of survived the first couple of years. They're doing business, they know how to do business, and they're good if they just had more people to work with. They're competent real estate agents, they just need a system to help get them in front of more people. Then there are the next level up from that are the agents who are perpetually busy. They're the prototypical successful agents. They've been in business for a long time. They've maybe got some assistance. There's just constant activity all around them, very busy, time is an issue, and then there are the agents who are building a whole team concept, an organization, around their stuff.
Now, our sweet spot for our GoGo agent platform is the second category; the agent that's been in real estate for a couple of years. They're approaching six figures or they're at six figures, and they're ready to go to $1 million. That's our sweet spot, to get somebody, and then they can use our systems to grow their business rather than trying to get to an agent who is already at $1 million or already approaching $1 million and then try and retrofit our systems over top of what they're doing, so I think that there may be the same kind of opportunity for you to break that down. Like if you think about a plumber who's got the 3 to 4 people and the $500,000, that might be what we would call that category, too, for you. An experienced person, not somebody just getting started, and not somebody who's got 3 or 4 trucks already and a big business going forward. Does that sound about right?
Dean: Okay, and so if-
Randy: Real quick, Dean. I just wanted to throw one thing out. I've been dying to say it, but I didn't want to interrupt, and that is that this concept of the prototype is exactly what I've been wanting to do, but if I go to somebody with my system and I have a weak marketing system, it doesn't make any sense, so I've got some thoughts of people I know that I think would say, "Yeah, you bet. I'd love it for you to come in and help me fix stuff."
Dean: Yeah. Perfect.
Randy: But I don't want to go in there and say, "Well, I think marketing ... we could try this or we could try that." And have them spend a bunch of money that's not going to get them anything.
Dean: Right. Yeah, perfect.
Randy: Yeah, so.
Dean: That's job one, is to ... when you look at it, all of those other things that you were talking about, the financials and the sales and the operational stuff and the mindset stuff, those are all things that you have the ability to help them with right now. Is that what I'm hearing?
Dean: And what kind of a difference do you think those things could make before ... getting those as the foundation before somebody even starts with the marketing?
Randy: Oh, a huge difference, depending on what their needs are. Yeah, and if they're already busy and they're actually doing the work that they want to be doing for the people who they want to be doing it for in general, but they're struggling with whatever it might be, then yeah, absolutely.
Dean: Yeah, and that has value in itself. That would be something that when you start to look at, about what a difference that can make, you're going to get a sense of what the value of that would be, how to charge for something like that, or do you already have a formula for how you would charge for it?
Randy: I've got that pretty much nailed down. What I did was I started out with what do I want to make initially, and I guess you can tell me if my thought process was right, but I wrote down a figure. I want to make this much a year. It's not a huge number but it's not wages, either, and so breaking that down and trying to be realistic about my projections on who would pick what program and so on and so forth based on my experience and knowing other people and whatnot, I came up with some pricing. So for instance, just a for instance here so you know kind of how I'm thinking on the financial side, the least expensive package would cost someone $297 and what they would get is an analysis of their situation based on their P&L statement and their balance sheet, and that would take me a couple hours to do. So that would be the least expensive thing, and it just goes up from there.
The more I get involved, the more it costs them, so the most expensive thing there would be for me to come to their site and go through it with them, teach them how to use it, teach them how to do their ratios and that kind of stuff, and that would cost them maybe $2,500 plus expenses to get there and stay and whatever. So that's kind of how it goes.
Dean: I got it, and so part of that is looking at it from their perspective, and that's always the best perspective to take initially, is to start looking at it and to see regardless of what it costs, what's the best thing? There's so much about kind of reverse engineering it from what your need is when it turns out that maybe that $2,500 process that you're doing for somebody could yield an extra $100,000 for them or something. What kind of a difference would it make? That's what you want to look at and keep that ... because pricing it based on your time is really ... that's not optimal. When you can price something based on the value that you're bringing and the result that you're bringing, that's really where you can get into, regardless of how long it takes, people have an insatiable appetite for the result.
Randy: Yes. The ROI.
Dean: Yeah, exactly. An ROI type of thing, where if somebody was guaranteed at 3:1 ROI on bringing you in that it's almost like those companies that do financial analysis for their utilities and any kinds of things and take a third of the savings or basing your fee roundabout on what the result is going to be, that's where you get into the things. I wouldn't want to tie your compensation to time. Time and effort. That's not really the winning formula. The winning formula is to tie it to results that you could then deploy through other people at what Michael Gerber would call the lowest skill level.
Dean: Right? If you're valuing your time at $150 an hour because you're saying it's a couple of hours to do the $300 financial analysis, if you know what you're looking for kind of thing, if you've got a protocol for how to do that, and you could show somebody how to do that for $50 an hour, a trained ... you could probably find an accountant that you could outsource that stuff to, what you're looking for is documenting and creating your algorithms, your way of doing things, and that your way is going to produce a consistent and predictable result. But let's talk about the marketing side because that's where you can definitely have an impact for people and one of the things that you may be able to start with them is what they've already got. Starting where they are, and if somebody's in that situation ... they've been in business for a few years, 3 to 4 people, $500,000 to $1 million, how many clients would they have? How many ... we talk about it as homes under management or pipes under management. How many homes would they be the incumbent plumber?
Randy: Sure. Well, that would depend a little bit on exactly what kind of work they're doing. So if you're doing new houses for instance, you're gonna have fewer because it takes a week to do a system or whatever. If you're doing service calls, maybe multiple a day, but a small town, the target market we talked about earlier where you have a plumber or an HVAC guy in a small town, they're gonna do pretty much everything because that's what you have to do because it's not that big of a market. I would say ... now, you're talking about-
Dean: But not just plumbing, you're saying all the services are what they're doing.
Randy: Right. Well, some of the companies are going to do plumbing and heating. Some are just going to do heating. Some just plumbing. Whatever, but if it was a mix of the two and say on the HVAC side, you're going to do some furnace change outs and ACs, and you're going to do some service work, and you're going to do some new homes, and just a mix, most of these guys are not good at the after unit as far as retaining customers-
Dean: That's my point. Yeah.
Dean: So, basically…
Randy: Yeah. They're going to have not very many that just call them automatically. Let's put it that way.
Dean: Right. Yeah. And there's no value in getting-
Randy: And they're not going to have people that are going to call them for anything preventative because they're not telling them that they should be doing that.
Dean: There's the big opportunity right there. Without ever even facing forward, this whole thing is starting with what they've already got. This is how I would look at this and say ... when I'm looking at those financials, it's not even so much about the details of the financials or the efficiencies that you can put in or adjustments and pricing and all that kind of stuff. What I would be looking for is to see how many clients do they have, how many homes under management if we call it that, and what is their return on relationship? We look at their situation and we say they've got ... would it be fair to say maybe in some amount of time they've been in the 500 homes or 1,000 homes or what it would be? What would you guys?
Randy: Yeah, before 500 and 1,000, for sure.
Dean: Okay, so let's call it 1,000. That they've been in 1,000 homes, and they are ... you hear me use that word, they are the incumbent plumber or the incumbent HVAC service worker. They've been the last company in there. They're the one that is right now the mayor of that home. They provide that need. Now, most of the time, most plumbers, most service providers never communicate with people after they leave, so when you look at it, you could go in and this is what I'm always looking for is you could go in and create some magic tricks for them, where you can come in to say, "Okay, well let's gather up all of your clients, all your households there, and then what ... " If you start showing them ways to maximize the return on relationship that they can get with those people through repeat business and referrals, profit activators 7 and 8, that's really gonna be a nice foundation for you to work from.
First of all, helping them get that organized and thinking through a way, so we're coming into the fall, and we had a plumber come to my Breakthrough Blueprint event in London, and in the fall, what he did was send just a simple nine word email to all of his clients saying, "Have you had your boiler serviced yet this year?" Coming into the fall when they're gonna need that, and that is ... if we take that equivalent here, "Have you had your furnace serviced this year?" That coming into the fall is a really great opportunity. He was booking servicing as fast as he could answer the phone, as fast as he could get them scheduled, so you're saying when you just send that out to all the people from the HVAC person, that because it's a good idea to have it serviced how often? Annually? At least?
Randy: Yep, yep.
Dean: And most people don't, and most service providers don't suggest it or encourage it or schedule it or make it easy. They don't presence it. They leave, and then they wait until there's a problem and then somebody calls them.
Randy: Yeah. Yep.
Dean: So I think that little system alone kind of thing, if you're looking at maximizing the value of the people that they already have and then systemizing that ... so if you take that one person that you are thinking about doing this with, that you want to maybe come in and do your initial kind of structuralizing, getting everything ready for ramping up, you wouldn't want to come in and just start with the marketing because that's probably going to be more of a tax on the system than it would be a help, in a lot of cases. So you want to get everything structured and set up properly first with the financials and with the things and make all those adjustments and give them the sense of solid foundation.
Dean: Go ahead.
Randy: I was just going to say, alongside what you just said, I absolutely agree with you. In especially the HVAC, somewhat the plumbing, and not very much the electrical industries. Especially HVAC. We'll stick with that because it's the best example. It's a huge thing if you're doing any online reading, reading the trade magazines, following kind of the latest methodologies I guess you could say, to have as big a list of what they call service agreements or maintenance agreements as you can.
Dean: Yeah. Right.
Randy: That's exactly what you're talking about so what you're doing there is you're selling ahead of time. You're selling a maintenance agreement that I'm gonna come here, once in the fall and once in the spring, and service your equipment, and you're gonna pay me a fairly minimum amount, and that gets you in their house. You're the go-to guy from now on because you're tied to them, and you give them a little bit of a discount, you move them up on the list to a sooner service time and all that kind of stuff, so that would be part of what I would recommend also.
Dean: Yeah, and that alone, when you start thinking about that with 1,000 homes, and how long do ... because differently than plumbing, you're gonna have an HVAC situation more often than a plumbing situation. Plumbing can work and just be there. You can have that problem-free for a long time, right?
Randy: Well, that depends where you're at. Out here in the mid-west where the houses are all 80 years old, that's not really the case, but you're right. In most cases, it's probably more of an HVAC issue.
Dean: Yeah. Most people are not thinking about preventative plumbing maintenance.
Dean: You're not going to service your toilet or nobody's thinking that way, so when you think about it, plus, they have a functional lifespan in their handler or air conditioner unit or whatever the components are going to break down. They're going to need replacement. How long do those things typically last? What would be the things if you look at an HVAC system, what would be the things that kind of break down first?
Randy: The very first thing is the outdoor coil on the air conditioner gets dirty and it can't get rid of the heat, and then your various different things happen, but it basically shuts it down. It could actually ruin it if it goes on long enough.
Dean: And that's what annual servicing ... can remove that problem.
Dean: Yeah, and I look at it that I have had, in the last 36 months, I have replaced three air conditioning units and two air handlers in 36 months, and not once did any of the people ever communicate with me again. It was really-
Dean: It's fascinating to me to see the way that works, and I know that this next season, I'm going to have to replace another air conditioning unit at my office, and that ... I'm not holding my breath that any of them will have recognized that because literally, they sit side by side outside. The two units are right there. It's funny, but that's just interesting psychology, that people are kind of on to the next thing, and even if it's the best of intentions. So I would look at this as your kind of ... excuse me ... baseline marketing thing, to be able to go in and show somebody what they can do with starting with their "after" unit, which is often counterintuitive to how people think about marketing.
They think about "before" unit and getting out and finding new people, but if you take this idea where you can go into somebody and you've got a system, depending on whether it's postcard or letter or email, that you can deploy at a couple of times throughout the year to encourage the annual things, where if you send a nine word email to a client just asking, "Have you had your furnace serviced this year?" Then in the fall, leading up to when it's going to be a thing, to then when people say "no", then saying, "We're scheduling servicing over the next two weeks. Would you like us to get you on the schedule?" That's how simple it can be. That would be a surefire repeatable marketing system that you could document and then deploy in any business. And if you've got the records to show ... you think about that one business, that prototype that you're going to be able to work in, to implement that, record that happens, and document it so that you can do it again, so that you can deploy it somewhere, that'll be a foundational thing for you.
Randy: Yes, yes. Yep. Okay. Very good.
Dean: And you can show the improvement on that because if they look at it that when you're doing your financial analysis, in addition to looking at the things that you're looking at in terms of pricing, margins, and expenses, and overhead, and all that stuff, to also look at where the business came from. So if they had ... how many invoices would somebody have in a typical year? How many clients would they see?
Randy: 200 times 3. Probably between 600 and 1,000.
Dean: Okay, so there's 1,000 ... if you look at that, whatever they had, a 1,000 invoices that came in, 1,000 jobs, and out of that, to break that down and to say, "How much of that, how many of those 1,000 jobs were people that we've already done work for, and how much of it was new people who came from the "before" unit or some magical way found us?" If they're calling from the Yellow Pages or doing whatever, just to have that awareness to overlay "before", "during", and "after" unit metrics on people is an eye-opener.
It's easy to show that if they have 1,000 clients and they saw 600 people this calendar year or in the last 12 months because you can set things up as a rolling average, 12 month rolling, that in those last 12 months, they saw 600 people, and of those 600, 300 of them were repeats; people who had come in before, then that would peg their return on relationship at 30%. 300 out of 1,000.
Randy: Sure. I got you.
Dean: Yeah, that metric alone, if you show to somebody that we've got these 1,000 and in the last 12 months, 300 of them came back again, and let's try and get that to 600 in the next calendar year, or let's try and get that to 400 or 450 or whatever the number is, how can we improve that return on relationship? How can we get that? How can we move the needle on that?
Randy: Sure, sure.
Dean: And that can be a foundational thing that as you're going here, nobody else ... it's competition-free because you're already ... they already know you, they already like you, they already trust you, assuming that you did a good job when you were in there. They already know that, and as a matter of fact, they can feel comforted that they've got somebody if anything did go wrong.
Randy: Sure, yep.
Dean: But most of the time, what happens is that something does go wrong, and because they didn't keep in touch with them, they forget who it was, or they call-
Randy: They're constantly starting from scratch on everything.
Dean: And they call whoever is available to come out right now.
Dean: When they have the need, whereas making people feel like they are handled, and people, we want to grant a monopoly. We want to have our plumbing and our HVAC situation handled. We want to have a guy.
Randy: We want to have peace of mind about it, yes.
Dean: Absolutely, that if anything happens, I know exactly who to call, but if you're only in their home-
Randy: And I know they're going to take care of me. Yep.
Dean: Yes, exactly. But if you're only in the home and you do the job and then you leave and that's it, that you never ever communicate with them again, then what are the odds that they will remember you or that they'll think of that fondly if it's two years later.
Randy: Yes. Yep. Makes total sense. Makes total sense. I remember, I was just gonna say, I remember when I was in business, I had a guy that constantly called me. He had a lot of issues and I was always going out there, and every time he called me back, I was shocked. I didn't really expect him to because I wasn't even trying, but I think he was in that situation where, "Okay, I found a guy that's taking care of me. I'm just gonna keep calling him."
Dean: That's exactly right.
Randy: And I think that's a mindset that a lot of contractors have that well, I don't really deserve this, or I don't know if I did that great of a job so they probably won't call me.
Dean: Well, that's all part of that mindset thing, is that lifetime value is thinking about this ... like imagine if there was a law passed that you're not allowed to advertise anymore as a plumber, they've already got their 1,000 people. What if all they could do was communicate with those people? And it's like so much less expensive to do that.
Randy: Yeah. Right. I've seen the studies on that, where as far as finding new versus selling to your existing customer base. The percentages are-
Dean: So give me the recap here, Randall. What have we decided here? It's the top of the hour.
Randy: Okay. First of all, we're gonna be visiting again because I'm gonna hunt you down at some of the functions and meet you face to face, so you have to call me Randy instead of Randall.
Dean: Perfect. Okay, perfect. Randy. All right.
Randy: There you go. Well, I guess ... yeah. You confirmed what my thoughts have been, but my mind plays tricks and says, "That's not good enough. You need to be better." But anyhow, yeah, basically, when I go in and talk to these people, if they're having an issue with their marketing, with having customers start there and we could even ... if there's an issue with ... we would like to do say less of one thing than another, target the customers where they've already done that work for them, maybe, or if there's been an issue with getting payment or satisfying them, just don't target those people. Make sure they're not on the list and focus on the ones that yeah, this was a good customer, I want to keep going with them, and so yeah, using nine word emails, selling service or maintenance agreements as much as possible, and the ones that don't buy it, follow up with those ones with the nine word email I guess is what I was thinking.
Dean: Yes. Yeah, you're on track. When you start thinking about that you can then show a measurable increase, because you've got that thing. Go in and show somebody that metric and they've never thought about breaking it down as a return on relationship number, where they've got ... this is how many people we have and this is how many came in in the last 12 months. That number is eye-opening for most of them, and so to be able to just with some simple things and that nine word email being the same thing and then in the spring, "Have you had your air conditioner serviced yet?" There are two annuities that are just waiting for them to send out, that that is worth way more than $150 an hour. You show them that that's going to bring in thousands of dollars, and it doesn't take you much time to do that right now. Think about the results and getting paid on those.
Randy: Yes. How about a form of the world's most interesting postcard for referrals?
Dean: That too.
Randy: Your customers that you did a furnace change out for.
Dean: That's exactly right. Yes, absolutely. I would definitely start with that. Start with building out two or three "after" unit things that you have documented and can prove that now ... they're zero cost to implement a nine word email campaign like that. It's all upside, and so then just have people use that to maybe fund then doing some things like let's take your top 150 and your top clients and let's just test with this sending a monthly postcard to them, and see if we can orchestrate referrals from that group.
Randy: Okay, that's right, because you talk about.
Dean: You're thinking along the right-
Randy: Okay. Good deal. Yeah. One more thing before you let me go, I should say. If you would, real quickly, my son-in-law and his brother started a roofing business in the Pacific Northwest, and I thought of you with my question here because I remember listening to an episode with a guy up in Vancouver, B.C. that had a power washing company-
Dean: Yes, exactly.
Randy: So with these guys, their target market is not new construction. It is doing re-roofs and as a very good sideline, because of the amount of shedding trees out there, all the fir trees, a bit part of it is cleaning roofs and gutters.
Randy: And in visiting with my son-in-law, they're going but they haven't been going very long, and one thing I'm going to do after this conversation is offer to use them as guinea pigs for my system here, but I guess we were talking about how to find people because they're a legion out there. They need somebody to come take care of their roof, and it's not just my roof is bad, I need it cleaned, I need the needles taken out of the gutters and I need all this stuff, and I'm just wondering ... that guy was doing neighborhoods. He was targeting neighborhoods and doing a free driveway or something, but what are your thoughts in hatching an evil scheme for them to get that kind of going, just basically. I don't want you to go into great detail because we're out of time, but-
Dean: Yeah, yeah. No, I would look at that same kind of thing. That's something that they're going to need repeatedly, and so I would listen in ... I would have them re-listen to that episode again because a lot of those things would be immediately applicable, and if they're a company ... that's a great lead generator for their roofing business in terms of, right? Everybody's going to need to get that done every year or more often, and while up there, doing the inspection and stuff to be able to tell people what's going on.
Randy: So you could do a reduced rate on the cleaning and it would be a marketing cost almost-
Dean: Absolutely. Right.
Randy: And say, "Okay, we're going to clean your gutters and you get a free roof inspection at the same time."
Dean: Yeah, exactly.
Randy: And you're going to say, "Hey, there's an issue up here with this and that and the other thing, and it needs re-roof or repair or so." Okay, that's awesome. Awesome.
Dean: That's exactly right. Yeah, and then I would recommend listening to the "I Love Marketing" podcasts. There was an episode that we did called "Yellow Pages Roulette".
Randy: I remember that. Yes.
Dean: Okay, and one of those segments, one of the business that we flipped to in the Yellow Pages was a roofing company, and I outlined this whole system for a roofing company that would be kind of my best advice on that.
Randy: Oh, okay. Cool, cool. I didn't realize there was a roofing one. I had listened to some of those but ... sweet.
Dean: Yeah. All right, Randy. It's been enjoyable. I've had a great time. Time flies, doesn't it?
Randy: It does.
Dean: I think you've got a great foundation here, but the thing that you want to lead with is something that could be a revenue generator for them, a magic trick that you can come in, show them how to send that nine word email, get them some business. So everything that you're doing with them pays for itself; that it's all ... "Wow, every time Randy walks in the door, we make more money. Let's get him in here as much as we can."
Randy: Yeah. I like it.
Dean: All right.
Randy: All right, Dean. It's been a pleasure-
Dean: Thanks, Randy.
Randy: It's something I've anticipated for a while.
Dean: That's awesome.
Randy: I look forward to meeting you sometime in the future.
Dean: Okay. I'll talk to you soon.
Randy: Yep. Bye bye.
Dean: And there we have it. Now, I love things like this where syndications are involved, and that's really where ... I set up the entire 8 Profit Activator model, the Breakthrough DNA process, as an overlay that fits on any business. Now, what I've done in syndication is set up systems for real estate agents where I've taken the 8 Profit Activators, I've applied them to the real estate business specifically. I've created turnkey systems that help real estate agents get the results that they want, which are leads and listings and converting those leads and getting referrals and multiplying their listings. All the things that a real estate agent would love to have to grow their business, but I don't talk about the Profit Activators, because I've already gone and applied the Profit Activators to get the result for them.
I talk about the Profit Activators when I'm talking to a variety of business because they're the activating ingredients. They're the thing that make this possible, so when I'm talking to a broad audience, I have to talk about the context and the principle of what it means to set up a "before" unit and a "during" unit and an "after" unit and then the individual elements of the Profit Activators of selecting a target market and compelling them to raise their hand and educating and motivating them, and making an offer so that you can deliver a dream come true result. All of those things are directly applicable to any business, and if you've got a way that you have applied those in a consistent way that gets a result for people, there may be an opportunity for you to package up what you've done, like a franchise prototype, and help other businesses do the same thing; short cutting their process, and I love to help people with that.
If you've got an idea for something like that or you want to explore doing something like that, send me an email: email@example.com and put "Syndication" in the subject line because I love to work with people who are syndicating things. I've got a lot of experience in that. If you'd like to continue this conversation you can go to MoreCheeseLessWhiskers.com. You can download a copy of our More Cheese Less Whiskers book, and if you'd like to be a guest on the show and hatch some evil schemes for your business, just click on the "be a guest" link and that will let me know exactly what you want to work on and we can schedule some time to hatch some evil schemes for you. If you'd like to see where your business stacks up with the 8 Profit Activators and where the next opportunity is for you, we have a whole scorecard set up for you at ProfitActivatorScore.com, and you can go through find yourself on these 8 Profit Activators and get instant clarity on where the opportunity is in your business.
So that's it for this week. I look forward to talking to you next time. Bye bye.