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Managing Your Restoration Business

Evaluating Sales Performance in Your Restoration Business

The Chicken & The Egg

By Tom Cline
Evaluating-Sales-Performance
Evaluating-Sales-Performance
Evaluating-Sales-Performance
Evaluating-Sales-Performance
June 20, 2016

Are you on track to meet or exceed the revenue targets you established in your 2016 business plan? We’re almost halfway through the year, and you should analyze your year-to-date results to determine the answer to this critical question. Equally as important is how you interpret the results.

Depending on your geographic location, you may have benefitted from early-year weather events that drove job opportunities and increased sales. In any case, now is a good time to evaluate the performance of both your sales strategies and your business development team in developing new referral sources and driving revenue growth.

Your assessment begins with reviewing the overall sales revenue compared to your plan. If actual results are at or above expectations, congratulations! However, regardless of the sales results, you should continue your analysis by moving to the next level of business development results. Weather events, and the resulting surges in revenue, can mask underlying weaknesses in sales and marketing strategies and efforts. Don’t let your guard down just because business is good!

Answering the following questions will improve your understanding of the sources of referrals and jobs, and of your company’s effectiveness in converting leads into signed jobs:

  1. How many customers and referral sources are represented in the jobs completed?
  2. How many jobs were received from new referral sources (first time jobs)?
  3. How do the new referral sources align with the focus of your sales plan?
  4. Does any single source/customer/program represent more than 20% of total revenue?
  5. What was the “close rate” on leads your company received? (In other words, what percent of leads became revenue-producing jobs?)

When your responses to the above questions reflect performance below expectations, specific action plans should be created to address the areas of weakness.
Question #4 focuses on an area of risk of which you should always be mindful. Regardless of the overall level of revenue, overdependence on any single source of business must be avoided.

Once those areas have been addressed, the next step is to evaluate the selling activities and the results from your business development resources. Your weekly sales meetings are focused on week-to-week sales calls, meetings and their outcomes, networking and participation in organizations, and development of relationships. Now is the time to step back and take a broader view of the results from your marketing and sales investment. Depending on the strategies included in your plan, you are looking for answers to questions like the following, though other questions may be pertinent depending on the focus of your plan:

  1. How many jobs originated through your website? How does that compare to the previous quarter? How does that compare to the first quarter of 2015?
  2. How many new referral sources were the result of sales activity?
  3. From how many new plumbing contractors did you receive referrals? How does that compare with the number of presentations made?
  4. How many insurance agents sent you a first-ever referral during the first quarter? How does that compare with your call and meeting activity?
  5. How many new ERP (Emergency Response Plan) agreements were signed during the first quarter of 2016? How many jobs originated from accounts where you have ERPs in place?

While three to four months is a relatively short period of time to track the effectiveness of sales efforts, the cumulative effect of work begun in 2015 and carried through the beginning of 2016 should be driving improved results.

At this point, you’re probably wondering “where was he going with the ‘chickens and eggs’ title of this article?” Sales people will always claim that an increase in jobs or revenue is due to their hard work and expertise. We’re therefore faced with the question of which came first? Or, what is the real driver behind the business we’re seeing? The answers to the above questions will increase your understanding of the facts as they relate to your business. On that note: When there are no harsh weather conditions or events that drive business, the sales team will be the first to point out that revenue is down “due to circumstances beyond our control.” That is exactly the time when you have to attain your revenue goals through increased share of your markets. “No winter” is not a valid reason for missing the mark.
The other purpose for examining both sales activity and jobs/revenue results to this point is to evaluate whether your sales plan is working. If falling short of your revenue target, you have to determine if it is a matter of execution or if the plan is faulty. Again, the chicken or the egg?

Those who have multiple business development representatives in the field have something of an advantage here, because the answer can be found through comparisons. If several people are executing the same strategies and there is success in one territory, that would indicate that your plan is valid but not being executed well by all of your reps. However, the challenge of correction is no different than it is for an organization with a single sales person. It is a matter of understanding how your reps are approaching customers, conveying their understanding of the customers’ businesses and probing for problems and challenges, and how well they respond with effective differentiation from your competitors.

In my experience, the weakness usually rests with differentiation. Either you have failed to identify the true differences in what your company offers and the resulting value for the customer, or your sales people are ineffective at communicating the differences. 

The best approach for getting to the bottom of this is to travel with your sales reps. Make calls with them. Attend meetings they have scheduled. See how prepared they are. Hear the questions they use to probe for information. Most importantly, listen for their ability to effectively differentiate your organization from your competitors in areas that generate value for the customer.

Effectively marketing your business requires a lot of different elements working together. Your challenge is to understand which ones are working, and which are not. The problem might be the plan or it might be the execution; the chicken or the egg. But don’t wait until the end of the year to analyze why you aren’t meeting your revenue targets. Find out now and make changes so you’ll see results before the end of 2016.
 

KEYWORDS: restoration management

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Tom Cline is a Business Development Advisor for Violand Management Associates (VMA), a highly respected consulting company in the restoration and cleaning industries. Tom is a leading expert in sales, sales management, and business profitability for the restoration and cleaning industries with over 35 years of experience in those areas. Through Violand, Tom works with companies to develop their people and their profits. To reach him, visit Violand.com or call 1-800-360-3513.

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