GIE Today: Established Sales

Nearly 150 landscape contractors attended Mike Rorie’s “Establishing a Sales System” session sponsored by STIHL on Thursday morning. Rorie is president of GroundMasters, Cincinnati, Ohio.

Contractors were engaged and took notes while Rorie presented the knowledge he has gained over his 25 years in business and 12 years as a member of the Associated Landscape Contractors of America (ALCA). During his search for the perfect software to administer the system he was creating, Rorie says he experimented with a number of the software systems on the market.

“We never found anything that worked for us, so we developed our own system,” he says. However, he added, contractors just might find an existing software program that will work for their purposes.

REASONS TO ESTABLISH A SYSTEM. Rorie opened his presentation with reasons contractors should establish a sales system. Among them, he said the biggest advantage is the ability to monitor the system rather than watching every aspect of the business that goes into that system. He likens a good sales system to a thermostat. Rather than going to the furnace to tinker with it every time you need to make an adjustment, the user can just monitor the thermostat to get the same results.

“A good system also frees time for you to work on other problems in your business,” he says.

Other reasons contractors should establish a sales system include:

• As an owner, consider delegating sales.
• To add sales people. “You are probably the best salesperson you have if you are the owner, and you probably haven’t documented how you go about your business,” Rorie says. By creating a system, new employees can be trained and will know exactly what is expected.
• To determine effectiveness of salespeople. An owner or manager may have uncertainty as to a salesperson’s productivity. A sales system will allow the owner or manager to see what people are doing.
• Help manage, track and direct your sales staff. “Impartial data helps to improve your coaching ability,” Rorie says.
• To better control your sales. You will be able to track warranties, guarantees and promises that are out of line or if jobs are being sold too low.
• To have more realistic control of sales inventory.
• To give operations advance notice of what is coming. This aids operations in ordering materials and increasing or reducing manpower.
• To develop a system of rewards or commissions. “You may find out that your highest-paid salesperson is your lowest cost to the company because he is generating big sales,” Rorie says. “But you aren’t going to know that unless you have a sales system in place.”
• To provide benchmarking criteria for your sales staff. “The best salespeople are competitive. The best thing you can do to your salespeople is measure them,” he says. “Recognize them at events like this or in front of clients. Our top salesman, he likes that, and our other guys want to have that. It creates competition and it doesn’t cost you a thing.”
• To allow for the ability to plan three to five years out.

SALES INVENTORY. Rorie then explained the first step to creating a sales system is completing an inventory of your current book of business. “Chances are, you won’t like what you see after your first inventory,” he says.

While you are creating this inventory separate each profit center into its own category like design/build and maintenance. Once you have a detailed list of profit centers, define them further with specifics regarding type of work, dollar value of the work, the scope of the work and the length of the contracts. This will aid you in looking at each profit center and determining its worth, Rorie says. “In our company, whether it’s a $1,000 job or a $100,000 job, I can tell you the percent of profit for each aspect of that contract,” he says. “You should know intuitively how many of your jobs fall into each dollar category. You can’t change your business without knowing that.”

Rorie adds that the type of work is as important as the dollar amount because, “All dollars are not created equal. You have to know what you pay to get the work done.”

After determining the scope of work for your various profit centers, Rorie says it’s best to drop the work that is less profitable and focus your efforts on growing your major profit centers. He adds that in order to provide those services to customers that still require them, develop a strategic alliance with contractors who perform the work you don’t want to do.

“The more things you let in the door and the more deviation (of services) you have, the harder you’re working at it,” he says.

ANALYZING INVENTORY. Developing various ways to look at your sales inventory will provide further insight into your business, Rorie says.

A sales system should enable viewing of all information by branch location, salesperson, customer, type of work, dollar value and route.

“For instance, say you want to know how much revenue a maintenance person generates in your company,” he says. “You should be able to determine exactly how many people you’ll need to add to do an extra $1 million worth of work. You’ll need to learn to identify everything in your business,” Rorie adds.

REPORTS. The sales system reports are the end result of all the work and allow you to look at your business and examine problem areas to find solutions. When Rorie looks at his reports, he says he starts with his “Customer Revenue Analysis = All Income” report.

“If I don’t like what I see in this area, then I start digging deeper,” he says.
Other reports can include, and are not limited to, enhancements, snow revenue, new sales, renewal sales, monetary reports by category and reports covering new prospects.

Rorie says his favorite report to look at, and the one that helps him in making long-term plans is the “gut report,” which remains independent of all factual reports.

For this report, salespeople are required to give a gut-instinct impression of the reality that a prospective job will actually come to fruition. For example, if a salesperson has a verbal commitment for a job, he may be 90-percent sure the proposal will be signed. A proposal that has been with a client for six months may rate 30 percent, and new proposals might rate 50 percent. The dollar amounts for the proposals are then adjusted based on those gut-feeling percentages.

By doing this, Rorie says he is able to get a more realistic picture of projected income. “I have $4 million in proposals to add to projected income,” he says. That number might be lowered to a realistic $2 million to account for those proposals that are dropped.

He says he keeps all old gut reports to determine whether his salespeople have good instincts. “A guy who is way off on the gut report needs to be back in front of the customer,” he says. “That or he just has bad guts.”

Rorie also suggests salespeople keep prospect folders on their computers that track “every single bit of activity you’ve ever done.”

Such a folder can be pulled up in lean times to find leads that may have been dropped or forgotten and to find clients that may not have only completed a partial job because of financial pressures at the time of the install. Rorie adds that these folders can prove their worth when a new salesman needs to come in on a previously serviced territory.

In closing Rorie says, “Having a sales system for you and your sales department can help change your direction, grow your business and people. It can help alert operations as to what is coming as well as what’s here. It’s the ability to quantify and factually respond vs. guess and react to your business.”