CONTRACTOR PROFIT ADVANTAGE
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phc April 2022 www.phcppros.com
However, remember the old saying, "Haste makes waste." You want to control callbacks that might be the result of techs hurrying through tasks to bring in more money. Incentive amounts take into consideration callback rates and the costs of those callbacks, so techs don't just rush through tasks - leaving a wake of callback costs behind each job done. While incentive pay increases what each tech can earn, callbacks can reduce that amount. It's the old carrot-and- stick theory and it's logical and fair. The reason any tech makes more money than another tech is because they bring in more money and have fewer callbacks. At the same time, all techs will be able to make more money by just applying themselves and embracing the delivery of excellence. It creates healthy competition while avoiding the argument that one tech may have if another tech makes more money than he does. It also reverses the propensity of a tech doing less because he is paid less. If techs want to earn more money, all they have to do is emulate the performance of Star Techs.
Professional ethics
Here's the caveat - your techs must adhere to principled ethics. They must never tell a consumer she needs something so they can make a sale and earn more money. They can offer suggestions on the services your business offers. After all, they are your salesforce. But telling someone they need something they don't could be considered fraudulent. For example, after only seeing the consumer's dripping faucet, a plumbing tech tells the consumer he needs a new faucet when, in truth, repairing the faucet is a possibility that might solve the problem. When the word "need" is spoken by a plumbing professional, as in this example, there could be a misrepresentation of the facts when replacing internal faucet parts may solve the problem. The plumbing tech should, instead, offer the possibility of repair with the caveats as to why an attempted repair may not solve the dripping problem, and tell the consumer the benefits of a new faucet replacement. The tech can say to the consumer: "I can attempt to repair your existing faucet by replacing the removable internal parts and installing new parts. However, if your faucet body is flawed, the drip problem may not be resolved. I can perform this task for $X with no guarantee of the results. You could be paying for this service and defeating your purpose. Most often, the repair works, but there are those instances when it doesn't." The tech may add: "Before you make up your mind, allow me to give you the prices for replacing your existing faucet with a new faucet. This includes a warranty from the manufacturer for the faucet and a warranty from our business for the labor to repair or change the new faucet." In this instance, the consumer can make up her own mind as to which way she wants to go - and there is no potential fraud.
Peace of mind
As a PHC contractor, I found that the price to replace the existing faucet with a new one, plus a warranty, was often not much more expensive than attempting a repair to an existing faucet when the price to repair was properly calculated. And if the repair attempt didn't solve the dripping problem, the cost of the new faucet replacement was certainly less than the consumer paying for both the attempted repair and a new faucet replacement. Techs must know the products and services their company offers, give consumers options, and provide pros and cons of each option so consumers have all the facts and can decide what they want to buy. As a contractor and a tech, I always preferred to change a faucet rather than repair an existing faucet. A nice, shiny new faucet makes the consumer feel better than paying for a repair and still having an old faucet that might not be so shiny. In addition, the warranty gives the consumer peace of mind. I learned this from a customer when I first started my PHC service contracting business so many years ago. At that time, I used a time-and-material pricing method because it's the way all the other contractors billed for their services. Sound familiar? That's the definition of ignorance being bliss. As I entered her home to address her faucet drip, I quickly went to the faucet and visually saw the problem. I took out my tools and the replacement parts for the faucet, did the repair and handed her the bill. I thought I performed the service in the most expeditious and excellent manner. She looked at the bill and said, "Rich, what would a new faucet have cost?" I gave her the price of a new faucet with installation. She said, "I would have preferred to replace the faucet with a new one." She was absolutely right. I hadn't given her the options available to her. That was the last time I used the old T&M pricing method and switched to giving consumers options and a contract price (upfront price or flat rate price) in writing before commencing any task. And I had the consumer authorize in writing said tasks at the agreed prices before starting the job. I hope I have addressed your request, George. If you or any contractor needs assistance setting up an incentive program, call me. Have a healthy and wealthy life. l Richard P. DiToma has been involved in the PHC industry since 1970. His Contractor Profit Advantage podcasts, Solutionars and programs show contractors how to improve their business results. DiToma has authored books on contracting business management as well as customized contractor price guides. Contact him at 845-639-5050, richardditoma@verizon.net; or R & G Profit- Ability, P.O. Box 282, West Nyack, NY 10994, www. contractorprofitadvantage.com. For podcasts, check iTunes or other major distributors.
As a contractor and a tech, I always preferred to change a faucet rather than repair an existing faucet. A nice, shiny new faucet makes the consumer feel better than paying for a repair and still having an old faucet that might not be so shiny.
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