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Keys to Better Profits in 2012

February 24, 2012

Congratulations, you have survived the worst economic downturn in 70 years. Now let’s make 2012 a great high profit year! I know that some of my friends are in states with higher-than-average foreclosures and unemployment. Both the competition and consumers are so desperate that high profits at this time are just impossible. I am told in these states, for example, you will find the terrible challenges of out of work new construction guys driving down prices and consumers doing “just the minimum” driving down average sales. Even with the best targeted marketing and cost controls, success is desperately difficult.

In your situation any profit is a high profit.

The good news is if the economy improves, your situation will improve. If the economy does not improve, then as your weaker competitors go under, you will grab their customers and your situation will improve.

The last man standing wins.

If you use the advice below, then time is your friend. The fact is that the long term trend is that more men are retiring out of the trades than entering them. This fact by itself means that regardless of the economy in general, better times are ahead. For those left, the only thing that stands between you and high profits is you.

The Keys to High 20% net or Better Profits in 2012

1. Keep overhead in balance with sales

  • Maximize sales to existing customers:

To do this you must retain as many customers as possible by

a) Mailing 1/3 of them each month

b) Building extra value into the sale by reminding customers, at the time of job completion, of the guarantees that they received

c) Leaving stickers, magnets, and outside window thermometers to “brand“ the home

d) Making happy calls to make sure the tech was competent, friendly, worked clean, and left the customer satisfied

e) Making sure your tech has the right sales training and the right sales tools to maximize his average ticket

f) Using an effective message on hold that keeps customers online and upsells your products and services

  • Set a sales goal for new customers

To do this take your overhead percentage goal, let’s say 40% for example, and divide it by your current overhead. $400,000 in overhead divided by .4 would set your sales goal at $1,000,000. Now take the sales goal minus your repeat customer projection equals your new customer sales goal. Now compare your last year’s advertising budget to the amount of new sales it generated and the result is your new customer percentage cost. Take that number times your new customer sales goal and the resulting number is the EXTRA ad budget needed to hit your sales goal. Now build that cost into your pricing. Then research and test what methods are best to get new customers in your particular market, then master those methods.

a) Radio and TV, with a jingle and easy to remember phone number. It’s the lowest cost way to build your top of mind awareness

b) Internet marketing … the lowest cost way to snag customers ready to buy

c) Billboard and movie theater advertising to build name awareness

d) Direct Mail … works only with the right art to an extremely narrowly targeted group

e) Yellow pages ads and stickers … You need the right ad at the right price in the first six pages of the right sections.

f) Door hangers … a plastic bag filled with goodies and a letter talking about work you have done for neighbors with coupons

g) Mailers to new movers into your market area

h) Buy the phone numbers of competitors gone out of business

i) Consolidate and purchase weaker competitors

j) Trade or pay for leads from other trades, online sources or civic associations.

Key fact: for every $1.00 you can cut in unnecessary expenses you can cut $2.50 off your sales goal, that is why good consult from a real overhead efficiency expert pays for itself

2) Get your labor and material pricing right …. To keep gross profits at 60% of sales

3) Keep your operations delivering high quality service efficiently… so you can keep prices low enough and quality high enough to retain a minimum 75% of past customers

4) Branding your company … as the one that guarantees their work , has drug tested security screened techs … that give an upfront “no surprises “ price , that is a positive force in the community … that is an ecological , ethical leader

5) Consistent Prayer

-Mike Morosi, President