Sales and services are often used interchangeably in residential home service, but there’s a subtle difference between the two concepts. Sales are associated with full-blown home service projects like installing a brand new roof. Service is the repairs, like recaulking the silicone or patching a pesky leak.
It’s valuable for roofing companies to have diversified attention on both sales and services. There will be projects that require complete replacements and others demanding only some upkeep or tender loving care.
The conundrum is that the line between sales and services is often absent with roofing companies.
There should be a clear option between sales and services to repair an otherwise good roof. To default to “the big sale” puts the relationships with customers at risk. Furthermore, treating sales and services as a symbiotic relationship will propel roofing revenue and growth exponentially.
This begins by embracing a “service before sales” mindset.
Want to learn more? Keep reading.
What Does Service Before Sales Mean?
It’s no secret that replacing a roof is expensive for homeowners. Aside from the price of roofing materials on the rise, labor and insurance also add extra layers to the cost. As a result, roofing companies have a tendency to upsell their services and products for an entire roof replacement sale.
This is the number one reason roofers have such a bad reputation.
Roofing companies can get too obsessed with sales and not enough value is placed on service repairs. What many companies don’t realize is that this focus is detrimental to their business in the long run.
Want to stand 600 feet above your competition? Create a clear distinction by putting service before sales.
Since the roof protects the house from adverse elements, they are susceptible to water damage, vermin, and missing or damaged materials. It makes sense that roofs require regular maintenance. This means not all roofing issues require a complete replacement that cost customers an arm and a leg. Many roof damages can be solved with repair services and preventative maintenance that will save clients thousands of dollars.
Service before sales means roofing companies prioritize repairing damaged roofs that can still be fixed. Instead of overselling the damage to close a complete roof replacement, you cheerfully provide appropriately priced repairs. While this may feel like a missed opportunity, service before sales, done right, will generate a higher gross profit sale and a long-term customer opportunity.
The Lifetime Value of a Loyal Customer
When you look at the math on perpetually acquiring new customers compared to nurturing long-term relationships that result in multiple sales, it becomes quite clear where the opportunity lie.
Generating roof replacement leads is an expensive endeavor. It isn’t unheard of for a roofing company to pay in excess of $400 to acquire a new customer. After negotiating, cost of goods sold, and fixed operations, roofers are often happy to see a 10-point net EBITDA.
There is no recourse to generate further revenue from future sales, and repeat business for roofs is minimal due to their long purchase horizon. Since there is little to no communication for decades, the roofing company does not and cannot nurture the relationship, ending the lifetime value of the customer.
This means, if a roofing company charges an average of $18,000 for a new roof, the lifetime value of the customer is $18,000 at a single-digit (or low double-digit) net profit. At a generous 10%, this leaves the roofing company with $1,800 for every roof they sell.
Based on the same $18,000 sale price and 10% net EBITDA, you make your $1,800 for selling a roof. This time, however, you sell the client an annual maintenance contract to inspect the roof each year. You don’t make a profit from the maintenance agreement, but on average, once every 4 years, you find something to sell them.
For scheduled maintenance, you are selling them gutter cleanings, pest control, and anti-fungal treatments, making a modest sale, but a healthy 65-point gross margin. Over the 16-year life of the roof, you generate $2,000 in preventative maintenance revenue at a 20% net profit. This puts $400 on your bottom line.
6 years in a storm blows through a meaningful repair is needed to eliminate a leak. This is an opportunistic (uncontrollable) sale that also makes you a healthy margin. Since the customer already knows, likes, and trusts you, they call you directly and you incur no additional cost of acquisition. You put $3,000 in demand service revenue at a 30% net profit. This puts $900 on your bottom line.
16 years have passed, and strangely, these folks still live in the same home. They are looking to downsize now, but to get the house more saleable, they replace the roof. Excluding inflation, we install another $18,000 roof and make another $1,800 to the bottom line.
In total, this loyal customer spent $41,000 with your company and you made a net profit of $4,900 in retained earnings. When 20% of your revenue is allocated to service, and 80% allocated to replacements, your net profit doubles. I know, your trying to figure out the math, and it doesn’t seem possible, but it is.
In fact, as you gain so much notoriety in your marketplace for offering a trustworthy and frankly, refreshing service, you start to grow substantially. This affords you more and more economies of scale, all eventually driving your net profit to 30%.
Now you’re a millionaire.
In your roofing business, you’re always after long-term clients and loyal members. Service before sales will make that happen. If you need expert guidance in this regard, Ryan Chute, Wizard of Sales® is your Master Strategist. Book a call.
The Biggest Problem of Roofing Companies
A healthy emphasis on sales is not a bad thing. After all, it’s the ‘big sales’ that represent the lion’s share of top-line revenue in your business. However, it’s equally important to support both sales and services if you want to generate exponential gains. While most other residential home service businesses maintain a distinction between sales and services, roofing companies more often don’t.
Think about it.
Roofs are a grudge purchase. It’s never an expense anyone wants to take on. As business owners, we convince ourselves that the “big sale” is what keeps the doors open. It feels great to make an $18,000 sale. But then it’s famine. There is no shoulder season revenue coming in. There are higher costs of acquiring new customers all the time. And there is constant pressure to drop your price (and profit).
But what if? What if you were able to change that feast and famine scenario from happening in your company?
Below, we’ll dig deeper into the biggest problem of roofing companies by subdividing them into three themes.
1. Few Roofers that Practice Service Before Sales
The most common sales approach for roofing companies is to go for the new roof sale. The truth is, not all damaged or leaking roofs require a complete replacement. In many cases, homeowners can still squeeze an extra 30-50% more life from their damaged roofing if repaired.
Treating sales and services distinctively through “service before sales” saves customers’ roofs and wallets. Ultimately, you become the reliable roofing company that’s genuinely concerned with fixing their roof and not after the quick buck. While there are roofing companies that genuinely care for a homeowner’s best interests, there are more unwilling to repair roofs.
Speaking of unwillingness…
2.Not Willing To Repair Roofs
Another big problem of roofing companies is that they’re often not willing to repair roofs before they replace them.
When you do this, you serve up customers with giant sales and colossal costs they have to simply deal with. This creates a negative resonance (vibe, or energy) amongst the locals. Especially when they believe there’s a way to extend the life of the roof through repair, saving thousands.
Remember that home services are an externally triggered, grudge purchase. This means customers are motivated by unwanted external circumstances that’s why they’re buying. In other words, they don’t want to buy, they have to. The homeowner may still agree to the roof replacement, but your business’s perceived value is diminished in their eyes.
Alternatively, repairs that cost less speak directly to a customer’s three underlying felt needs which include money, energy, and time. Once you leave the homeowners, they’ll be left with a repaired and functional roof with more of their cash remaining in their possession.
3. Focuses on the “Big Sale”
When roofing companies pitch the big sale to homeowners, instead of the minor repair they desire, it raises several problems. It doesn’t build trust as the homeowner feels taken advantage of. It only puts your roofing company in the bad books for seemingly trying to hustle them.
If you display an incessant focus on only the big sales, they will be turned off. It’s like your kid only being nice to you when they want something. As a result, you will have to start from scratch with a new customer time after time to grow your business.
The World Series isn’t won with only home runs.
Any residential home service business should be focused on longevity and not on short-term cash. Success is not measured by the big sales you close. The true measure of success is etching your brand as the leader in your community.
The only way to do this is by building long-term relationships. All relationships must be built on trust and mutual respect. The first step to doing this is by actively recognizing the difference between sales and services. Repair what you could repair and pitch the big sale when homeowners truly need it.
Use smaller sales as building blocks that lead up to the big ones. Establish your rapport and build your network for roof repairs, and you become the front-running roofer for full-blown roof replacements.
Here are some ways to do this:
Demonstrate Customer Care
Customer care is about building relationships, treating them with kindness and respect, and recognizing things that matter most to customers. For homeowners with damaged roofs, what matters most could be to get it repaired with the least amount of cost. Or, it might be to have the repair done ASAP so they can get their life back to normal.
You can exemplify your customer care by doing an in-depth roof check-up to see the root cause of the problem. Then demonstrate to the homeowner in detail your plans to repair the roof and how long it would take. In extreme cases, if the roof is repairable, explain why a repair wouldn’t work and discuss their options.
This is how you build trust, by focusing on the smaller details that matter most to customers. A roofing company that’s new roof sales first and service repairs second will have a hard time building trust with its customers.
Get the Job Done Right
If they agreed to the service, the next task is to assure them that you’re a reliable and trustworthy contractor. They have to ensure you can fulfill your end of the bargain and won’t waste their money, energy, and time.
The only way to do this is by demonstrating intentional, efficient, and up-to-code service. If you’re only pouring your effort into the big sales and not simpler repairs, your customers will recognize your self-serving intentions. You have to display the same intensity and work ethic whether it’s a big sale or not. Needless to say, you need to get the job done right the first time and exceed expectations.
Offer Club Memberships
Once you’ve demonstrated customer care and approached the project correctly, you can deploy a club membership. Customers who have experienced your reliability and good intentions first-hand will be keen to buy your membership. This is a fantastic way to increase sales and loyalty in the long term.
Club members will always have you in their minds for any roofing problems they encounter in the future. They may call you in for another repair, or even seek your service for a full roofing replacement.
That’s what building trust does for your roofing business, and it begins by distinguishing between sales and services.
Get Past the Short Term Thinking – Build Trust
Roofing companies looking to build long-term relationships with their customers need to focus on service before sales. This means being as dedicated to small sales as they are to the big ones, always putting the customer first. These things will result in a much better sales pipeline in the long run and a lot more customer loyalty.
Roofers, and other home services, must get past the short-term thinking. By playing the long game, you establish your brand as a household name.
If you want to build long-term trust and relationships with your customers, Wizard of Sales® can help you bridge the gap. Book a call.