Do THIS Now to Make Your Home Service Business Profitable

You own a home service business, but you know you're missing something. Something that is holding your business back from reaching its full potential. And in the next hour, I'm going to go over the six most important systems, plans, steps, and rules in business that most people completely forget. These are the same tactics that helped me scale my business to 5 million in just 2 years. And by the end of this video, not only will you know exactly what you need to do, but you'll make this year your most successful and profitable year in business ever.

So, number one is going to be lifetime value and retention. [music] And this is one that a lot of people have a lot of questions about, but they don't actually understand how to pull it off. And I'll give you a little hint. It's about memberships. And I've used memberships in my company the entire time. But before you can understand the membership, we need to understand the importance of lifetime value and holding on to your customers. While lifetime value is one of the most important things, it's not the most important thing. So, make sure and stick around to the end of the video cuz the last one is probably the one where most of you were messing up.

So, lifetime value just means over the lifetime of the customer, how much money do I collect from that customer? So, if you held on to your customers on average for 2 years and you served them each year and your average ticket was $500, your lifetime value would be $1,000. And what we want to do is we want to extend that lifetime and then extend the value that we get to build those customers for in that lifetime. So basically saying, hey, how can we keep our customers longer? And then during that period, how can we build them more money? Instead of holding them for 2 years at $1,000, how do we hold them for 6 years at >> [music] >> $3,000?

So you can kind of imagine this. So let's say your average ticket, excuse my bad handwriting, is $2,000. average ticket that all of you guys could probably strive to have. And let's say you can hold customers for the average time that they live in a home. So average customer lives in their home for six to seven years. Let's say 6 years. And then let's say out of those six years, they call us on average our like our entire customer database calls us on average every other year for a problem. Some customers are going to call you way more often. Some customers are going to call you way less often, but we're just talking averages here. So, if we took the $2,000 average ticket and if somebody's living in their home for six years and they call us every other year, that means they're going to call us three times in that six-year period, which is going to equal to a total of $6,000 for that customer, which is kind of crazy because if you can do this with 50% of your customers, right? Get them to a 50% conversion rate, then you have a 3,000 average lifetime value across the board. Let's say half your customers use you one time and half your customers use you for a six-year period, not including the one-time ticket prices for the other customers. Let's just say we're at a $3,000 lifetime value overall for our customers. Well, if we're at a 10% marketing budget, that means that we can spend $300 to get that customer. So, that would be our CAC, our cost to acquire a customer. So $300 is likely more than what you're spending now, and it's likely more than you need to spend, especially if your marketing is efficient, and it's likely more than all your competition is spending. So you can literally explode yourself in the market just by increasing LTV, making sure these customers are returning. And then you can just outspend everybody on their marketing spend.

The other way you could think about this is just through your return customer rate. So your RCR, I made that up. I don't know if it's a real thing, but it is now. So, return customer rate. So, if you think about for an entire year, let's say you could get to a 50% return customer rate, which is totally doable. I think at Prospector over a three-year period, we got to a 60% return customer rate. So, customers [music] were using us again every year. So, if we served a,000 customers last year, 600 of those would reuse us the next year. And then if we added another thousand, another 600 plus, you know, well, 60% of the 600, I don't know that math off the top of my head, and then another 600 customers would use this the next year. And so you can see it kind of has this snowballing kind of compound effect, right? So if you think about this kind of this way, you got a 50% return customer rate. And let's say your goal or you're projecting that you're going to do 2 million in revenue that year. And this is 2 million in revenue, okay? total revenue and you're projecting based off last year that you're going to have the same $2,000 average ticket. Boom. That right there means that you need to serve 1,000 customers. Okay? So 2 million / 2,000 equals 1,000 customers. Okay? Now, if you're looking at this and you have 50% return customer rate, that means you only need 500 new customers. So, if you can track your convert your RCR year-over-year and you can say, well, typically we have 50% return customer rate, then you can come in and say, I want to do 2 million this year, and my average ticket is this, and that means I need 500 new customers.

[music] And so with 500 customers, if I want to do 2 million in revenue this year and I set aside a 10% marketing budget, that is $200,000 that I have set aside in my budget to to get these 500 customers. So the question is then, how much can I spend per customer out of this $200,000 budget to get these customers? So let's do the math. All we do is take 200,000 divide by 500 and you have a whopping $400 per customer. So that would be again your CAC cost to acquire a customer. Okay, $400 to acquire a customer is more than enough to to make that happen. Now you can imagine if you didn't have this 50% return customer rate, well then you're stuck. Then you only have $200. So if you think about two companies side by side, one company has 50% return customer rate and the other one has a 0% return customer rate. The one with a 50% return customer rate can outspend can spend double to get customers than the guy who has a 0% return customer rate. That means that he can outmarket that year the guy who has no return customers and just cream him, right? That's how like these big businesses are able to grow and come in and take massive market share. they just get a really good at making their customers come back to them and use them again.

So then the question is, well, how do we actually pull this off? And the answer is [music] memberships. This is probably when I make social media videos about memberships, this is probably the most common asked question. They're like, I don't [music] understand like how do you actually do that? And I and I get it because I was in the same boat as you guys. I didn't know how to pull this off and I would have been confused if I saw a social media video. But it's so incredibly simple and easy that anybody can do it. Okay, so first you need to come up with your membership plan. Okay, now a lot of these guys confuse membership plans with service agreements. And service agreements work, but I think that membership plans are better. And the difference is that a [music] service agreement, you're you're you're charging them a monthly fee and there's some sort of future work. Okay? So it's like a payment plan for future work. So, a good example of this, something that I did in my business in Alaska was we did $49 a month. We called it a membership plan. It was called the Prospector Gold Club. And within that membership plan, you got a complimentary tune and clean. So, we did a lot of heating equipment. We'd come and we'd tune up your heating equipment and it would cost you $49 a month. You would get basically everything I'm going to pitch to you in this membership plan plus a complimentary tune and clean. That's a great way to go if like you're in HVAC business or if you're in heating or any of those kinds of things because the customer needs that anyways and so it kind of keeps you coming back year-over-year and it splits the payment up for the customer. It was super cool, right? So the problem with it though is you're on the hook for a tune and clean. Okay. And that sucks because at scale what happened to us in Alaska and I'm sure what happened with HVAC companies down in the south is that everybody wants their tune and clean done at the exact same time. So, what happened to us is we got like 1,500 members, all paying us $49 a month. And then there was like a two-month period where 1,500 people would call us. And mind you, we only had eight technicians out in the field. And our eight technicians would be scheduled to go do 1,500 free tuning cleans. So, you can imagine what happened to our revenue during those two months at scale. [music] It just took an absolute nose dive. So, it was super cool for like getting the business launched and off the ground because we got to run ads that was like, "Ask us about our free tune and clean that. People were like, "Wo, yeah, I'll check that out." Like, talk about good marketing. But then at scale, it caused all sorts of revenue problems.

So, we ended up doing is we shut that down and switched everybody over to a membership plan. At my new plumbing company, Wahoo Plumbing, you can see it on my hat. We're only going to do membership plans. And this is how ours is going to be laid out. So, we have a membership plan. Ours is called the Wahoo Club. You can call it whatever you want. And you're going to get 15% off all services. Can't spell today for some reason. So 15% off all services. We'll call it VIP, priority scheduling. So this is one that trips up a ton of people. So if we have 20 people call our business on Monday and 10 of those are members, we're going to get to the members first. That's it. A lot of people are like, "How are you going to get to all the members if they're all members?" Well, you're not. But the members get service before the non-member. The other thing with this is like you're not just going to drop a water heater call because a member calls and they've got a leak on their outdoor faucet, but they've got the shut off valve closed and they're in no hurry. Right? If the non-member is in no hurry to get that work done and you want to go serve or sorry, a member is in no hurry to go get that work done and you want to go serve a non-member for a high ticket job, by all means, go get that high ticket job, go chase that money. That would be expected of you. But if a if a if a member calls and has a water heater and a non-member calls and has a water heater, they're both high priority jobs. You need to go to the member water heater and serve that customer. So, this just gives members some a feeling of priority like they're going to be able to you're going to be able to get to them quickly and serve them when they need you. And for the most part, that's true. So, 15% off services, VIP priority scheduling, and then we have Z trip fees for us. There's a couple ways that you can do this. In our company in Alaska, we had $0 trip fees for members and then non-members would pay a $96 diagnostic. So, same thing just labeled differently. When we mention it on our membership plan, we mention it as like, good thing you don't have to pay this cuz this trip fee sounds like a negative thing. It's like, yeah, you don't have to you don't have to pay that like a normal customer would. If somebody's not a member, we don't want the trip fee to sound like a super negative thing. So, we call it a diagnostic charge. Okay, so just a little word smithing for you. This worked out great in Prospector. Number one, we'd sell a lot of memberships by going to the customer's home and it's a real simple, you know, fix like flipping a switch on or or turning a valve on or something that was off and it's not really worth billing the customer and we'd say, "Hey, instead of paying us our $96 trip fee, why don't you just buy our membership plan? It's only $99." So we would sell this for $99. Um, and so then we gain a member out of the deal. Plus, we get a few more bucks out of the call than if we just sold them a trip fee. It's a little trick there.

Next thing on the list would be member or yeah, member only promotions. So, these are promotions that you can run throughout the year and you can provide access to them just for your members. So, a good way to think about this, like what we're doing in Wahoo, is we're putting promotions like $99 drain clean only available to members. We're also doing, you know, things like a faucet install. So, one of the things that we had a really hard time converting in Alaska was faucets. And if you do the math on a faucet, you need to go to somebody's home. Even down here at Wahoo Plumbing, it's like 400 or 500 bucks to put in a customer supplied faucet. But so rather than taking the, you know, $0 when we don't convert those, we dropped our price on that to make it convertible, knowing that we're not going to hit margin, but in order to get that convertible price, you're going to have to be a member and set up for a $99 membership. So, we dropped it down to just like a couple hundred bucks to install an owner supplied faucet. Now, at that price that we put it at, we don't make any margin, but we at least break even. So rather than going to the home, quoting the customer, making them angry, and then losing money because we paid for marketing and sending a guy to that home, instead we go there and we priced it just at break even. So now we convert the majority of them. We can continue to keep the customer. We sell them on a membership plan that keeps them coming back next year and we at least break even instead of not hitting margin. So things down here would be like $99 drain clean, you know, $250 faucet install and whatever else you want to include in here. Maybe you've got a complimentary plumbing inspection. We're doing that at Wahoo. Uh maybe you've got like a really cheap water heater maintenance so that you can go get in front of more water heaters and hopefully sell more water heaters. That's the way you need to think about these memory promotions. The beauty of this is that when you go to somebody's home and you're pitching them on, [music] you know, some repairs and you're giving them some options, which we're going to talk about later, this allows you to get them a discount. So most people want a discount. you can immediately say, "Hey, I'll save you 15% off." Usually the $99 is is cheaper than the money that they're going to get off. So, the savings on the discount more than pays for the membership. So, it becomes [music] like this no-brainer deal for the customer. The second part of this is that then they don't have to pay [music] a trip fee. And then the third part of this is you actually get to talk about your member onlyly promotions. So, another good one that we're actually doing is $1,000 off whole home water filtration. Now, all we did was go in and raise the price of our whole home water filtration $1,000. So then we can discount it $1,000. But since we're going to pitch these membership plans on every single service call, when we get to this member only promotion spot, we're like, "Hey, some of the promotions we're running this month are $99 drain cleans, $250 faucet installs, $1,000 off whole home water filtration." Do any of those things interest you? or we at least get to have the conversation started about whole home water filtration or drain cleaning. And we all know drain cleaning leads to a lot of upsells. We get to go jet, but we get to jet lines. We get to dig stuff up and repair it. The whole nine yards. So, we get those conversations starting helping us get in front of bigger items and raise our average ticket. And we all see what our average ticket does based on the last slide here, right? If if we can go from a $2,000 average ticket to a $4,000 average ticket, that means we can spend more to get customers. We can spend $800 instead of 400. And we're just going to cream everybody on marketing because we can outspend them. Okay, so this is very cool.

Now, in order to pull this off, membership plans, $99 a month, okay, 15% off services. Number one, you have to raise your prices 15%. So that when you discount your members, you're not losing money. you're still hitting the margin that you need to hit. Here's the beauty of it. Not only are you going to hit margin, but you're also going to sell them a $99 membership. So, this $99 that you make on every single customer is just extra revenue. Okay? Not only that, everybody who doesn't take you up on the deal and doesn't want the $99 membership, they're going to pay you an extra 15% for all of the work that you do for them. So, you just bring in even more money, bringing up your average tickets. Okay? And what we found is that this extra 15% and this $99 from the members will actually cover it's about 8% of your marketing budget. And when I say that, what I mean is if your marketing budget was 10%, then [music] it covers 8% and you only need to spend on the extra 2%. Okay? So, it's a really great way to be able to structure your business in a way that that is a good deal for the customer and a good deal for the business, helps you market for your customers, helps retain customers longer, also helps increase average tickets so that marketing is no longer a problem. Um, I've talked to probably thousands of home service companies at this point in time and marketing is always the biggest deal. It's like, I don't have the money for marketing. It's costing me 150 bucks to get a customer. Well, the reality is it costs a lot of money to get customers. And it's not that you have to sneak in and find these sneaky marketing tactics or these marketing companies that are magical. There is no magical marketing company. They're all doing the same crap. The fact is it costs money to get a customer. And so you need to run your business in a way that can handle the cost of marketing to customers. That's the difference between businesses that grow really fast and businesses that just kind of struggle forever. they figure out all this kind of stuff to run an efficient business. So, efficient marketing spend, efficiently getting higher average tickets, the whole nine yards.

Second part of pulling this off is you need a good CRM to track all of your members and to automatically apply these discounts. So, I think you can do membership plans in House Call Pro. I believe you can do them in Jobber even maybe. Don't quote me on that one, but you can definitely do them on Service Titan. That's what we use. highly recommend them. You can set up multiple membership plans. I would just stick to the one. It's a great way to grow your business, but ultimately it's a great way to retain your customers long-term is just set up a super simple membership plan.

So, another good way to retain customers and raise your LTV is actually with your branding. [music] And so, that leads us into our next topic, brand awareness. And specifically, how to use brand awareness to [music] retain customers longer. This is something when people are putting together their name of their business and the branding of their business, they don't really think [music] about. Some people think about it from a marketing standpoint, which is totally normal, right? If I have a name that's memorable, it's going to be easier to remember it. Okay? Sounds really stupid when I say that, but you wouldn't believe how many people come up with the dumbest names [music] like TCM Plumbing, right? Or like my business name was JRods Plumbing. Nobody remembers J-Rods unless they're a baseball fan or something.

So [music] if you if you think about it like this, right? If you're especially if you're starting your business, like you've got a fresh slate, let's at least pick a good name. Okay? So let's pick a good name that's easy to remember. So rather than my initials are JLW. So rather than JLW Plumbing, we chose for our business down here, we chose Wahoo Plumbing. Okay. Wahoo Fish is very well known around here, but it's not really outused in brand names. And we didn't even use the fish. We were thinking like Wahoo like Mario Brothers, right? So, not only did we use Mario Plumbing, we put an avatar with Mario Plumbing in our branding and we created a little story about how I used to work on stuff with my dad in the garage and every time we would get something fixed or put together, he would high-five me and say, "Wahoo." So, we created a memorable name for the area and then we created a brand that's memorable via the story and the kid saying wahoo on the van. Okay, so we kind of tied it all together and then we added a tagline that says guaranteed to make you wahoo. All those things make this brand very memorable. Now, the other half of memorable for and this doesn't really apply to this video, but the other half if you guys are getting going is attention. So, you need a name that's memorable or people won't remember you. And then you need a brand, meaning the colors and the imagery and the textures of your business. You need one that grabs attention or your marketing isn't going to grab attention. Again, sounds stupid when I say it, but that's the truth. Like, you want people to remember you and you want to be able to grab their attention. If you can get those right out of the gate, your marketing is going to work so much better. Okay.

So now how do we take this good name and then how do we take our brand and how does that apply to retaining customers? So one thing that you should be doing is you should be remarketing to your customers. So first of all, if your name is memorable, they're probably going to remember you. So, if my business name was JLW Plumbing and I went out to your house and [music] I serviced you and I didn't sell you a membership and then a year later you had a plumbing problem, even if you just really loved my service and you thought I was the greatest plumber in the whole world, you're probably not going to remember my name. However, on the other hand, if I've got a name that's memorable with a brand that's memorable and a story to go behind it and I come out to your house and I serve you really well, you're much more likely to remember my name because it's actually memorable. Okay? So, chances of them calling you back go up just because you invested some time into your name and your branding. The other half of this is that you can retarget your customers like people that already spent money with you. You can just keep in front of them and market to them again but for very very very low dollar. And I think a lot of people miss out on this. So with Wahoo Plumbing, we're going to do two things. So we're going to do Facebook ads and these are going to be retargeting campaigns. Okay? So, every time a customer comes into our CRM, which is going to be Service Titan, we're going to get their name, their address, their phone number, and their email. Okay? Now, that information is going to go from Service Titan. It's going to get exported via a customer list report into a program called Go Highle automatically. Every single week at the end of the week, our customer list is going to get pulled and it's going to get imported into go high level. go high level is going to take that customer list and sort it by new customers and pull the new customers out of the list and it's going to go put it in a Facebook audience. Okay? And it's an already existing Facebook audience called existing customers. [music] So in Facebook, we're going to have an audience. Now an audience is something you can select and say, I want to market to these very specific people on Facebook. So, we're going to have an audience built into Facebook [music] that's automatically updated with customers we've done business with. Okay? And we're going to retarget [music] those customers with Facebook ads. Just reminding them that we exist, showing them fivestar reviews, showing them the culture of our business, just having a good time, making some videos, giving them some updates. Okay. Retargeting ads on Facebook are one of the cheapest ways [music] to reach your customers. They're incredibly low dollar. If you have a,000 customers, [music] then you could probably reach them four times a month for like 20 or $30. That's insanely cheap for them to be able to pick up their phone and see your ad four times a month for an entire year for $20 a month. Thousand customers. That's insane. That's one of the cheapest marketings you can do. So, I would highly recommend doing this. It's it's insane to not do.

The second way we're going to retarget our customers [music] is through email. Okay. So, what I did is I took the FAQ that we produced for our website. So, we went to Google and we said, "Okay, what's the most searched [music] questions around plumbing in the Pensacola area? We took all of those questions and I put them into chat GPT." And I got answers for those questions and I went through and kind of edited them a little bit to make sure they were proper. And then out of this FAQ, I think we had like 68 facts. All of these are going to go on our website, by the way. So, every service page, we'll have a FAQ section with the questions that are applicable for that service. So, like if we have a water heater installation service page on our website, we're going to have water installation FAQs on that page as well. Now, what I did is I took these 68 FAQs [music] and I had Chad GBT take I think it was we did 24 of them. So, I handpicked 24 of them and we had Chad GBT turn them [music] intoformational educational emails that we can send to our customers. So, now we have this bi-weekly email that we can send out to our customers and we've got an entire year's worth done in like 10 minutes. These get scheduled out within GoHigh Level. So, our customer list comes in from Service Titan in to go high level and then they automatically get entered into our email campaign and our email campaign every other week is spitting out a question that most of our customers are having and answering those for the customer. So, now we're popping up in their inbox every two weeks, which helps them remember us. Plus, they're seeing our Facebook ads on Facebook four times a month. And so now we get to just stay top of mind. And this email is free and the Facebook ads only cost us 20 bucks. It's a great way to grow your business.

All right, we talked about lifetime value, customer retention, how to retain your old customers using Facebook ads and email, and having a good brand. The next thing you need to do is have a good customer experience. Now, now I'm not talking about bringing donuts and pizza to every call or bringing a gift to your customers in the very beginning or giving all your customers hugs or sending out thank you notes. That might be a nice thing to do, but what I'm really talking about is what is the experience that the customer has with your company from start to finish. So a good customer experience would be basically just doing what you do but doing it very well and smooth. So the overall customer experience is really good. So for example, if a customer needs a plumber and they grab their phone and they look up a plumber and he looks legit and he's got reviews and they give him a call but he doesn't answer his phone. That's like no bueno. Okay? And that's literally probably 90% of the plumbers out there. or they go to your website and they fill out a form on your website and then somebody reaches out like three days later. That's no bueno. So, when I say customer experience, it's not a bunch of like weird fluffy, I don't know, goofy hurrah bull crap, right? It's literally just the basic steps of how to handle the customer from the time they contact you to the time you say thank you. And in my opinion, this is what makes a good customer experience.

So, number one, we actually answer the phone. Like I just said, too many Like I just said, too many people don't answer the phone and it's a really, [music] really low bar to grab, right? Have a cell phone. When it rings, you pick it up. If you're a plumber and you start to get too busy and you can't pick up your phone, hire a CSR to pick up your phone and book calls. You're going to make more money than you pay [music] her, and your customers are going to have a better experience. If you guys are still too busy and can't pick up your phone, there's a company called Plumline. plumbingers.org. We use them in all our businesses. It's a 24-hour answering service and it's phenomenal. So, you don't have any missed calls ever. Your phone always gets answered and your calls are always getting booked. Number one, answer the phone. Number two, actually greet the customer. You wouldn't believe how many people answer the phone. Hello. It's and it's horrible. So, I called somebody to get some work done at our office here. I think we got to get a sign installed outside. And I called the company and they were like, hello. And I was like, "Hey, yeah, I need to get a sign installed." And he's like, "Okay." Say, "Yeah, so I was hoping to get a quote for a sign." And what should have happened was, "Hey, this is so and so sign company. How can I help you today?" Something as easy as that. Oh, I was hoping to get a sign installed. Awesome. We can definitely help you with that. Have we ever done work for you before? No, you haven't. Awesome. Let me grab your name, phone number, and email. Let me grab some information from you. Get you in our system, and then we'll see if we can get out to give you an estimate. Great. And then great. Looks like we have an appointment from 8 to 10. Does that work for you? Yeah, that works. Awesome. Cool. I got you down between 8:00 and 10. The technician is going to text you when he's on his way. If we're going to be late for any reason, we'll make sure and give you a call and we'll see between 8 and 10 on March 17th. Thank you. [music] Have a great day. Done. Like that's a great phone experience for a customer.

So, you need to greet the customer and then you need to ask them, "Have we ever done work for for you before?" It's a great way to take control of the conversation, get their information. Third one on this list is I would say provide them with a time frame, like date and time. You wouldn't believe how many people [music] can't do that. They say, "Yeah, I'll call you maybe when I get a minute." Like, no joke, the first business that I had called J&J Mechanical, I had a partner and that's what we did. We had a whiteboard in our shop that had like a giant list of customers names and their phone numbers that were just waiting for us to call them when we had a minute to come over to their house. And so whenever we were done with our projects, we'd look at that list and whoever called us first, we'd call them up and say, "Hey, can we come out to your house right now?" And looking back on it, I can't believe we did that did that. Like what a horrible experience for the customer. They had no idea we were coming out. And then we just call them randomly and hey, can I come out right now? I don't care what's going on in your life. I need to come out right now. Terrible. Like find a date and a time that works [music] for the customer and works for you. Set the date and time and let them know when you're going to be there. Number four would be to show up on time, right? So, make sure that you can have a technician that goes out there and be on time. And then before he goes out there, call the customer um on dispatch. So, when that technician is about to dispatch, call that customer and say, "Hey, this is Jared with Wahoo Plumbing. I got you down today uh between 8 and 10. Just wanted to call you and let you know that I'm headed out your way." And they say, "Awesome. I'll see you there." But one of the best things you can ask is, "Do you have any parking recommendations? Is there anywhere I shouldn't park? Because a lot of the times people have a driveway and they have garage doors or there's an extra car and somebody's getting ready to leave and the last thing you want to do is park in the way because that interrupts your service call. So if you can get that information out of the way on this dispatch call, awesome. [music] Like way to go.

Okay. Third part of this would be send them a text message. Okay. After that, when your technician hits dispatch on his iPad, again, you should have a CRM, preferably Service Titan, will do all this stuff for you. It should text the customer a photo. And what's cool about Service Titan, it texts a photo. It texts that that technician with his name is on the way. That way, your customer has a visual identification of the person that she should be expecting. And then it also gives them a link to be able to track that technician and where they're at. So, if the technician runs into some bad traffic, like he told the customer I'd be there in 20 minutes, they can see real time updates [music] on like when he's going to actually arrive to your home, that's such a good experience for the customer that most people don't provide. And all it requires is a good CRM. Number seven, the technician should simply say hello. So, this should be part of your sales process. And really, number seven could just be follow sales process. So, this technician should be going up to the door. You should have a process that tells them to knock. How to stand at the door, back up, let the customer say hello, actually listen to the customer. You should have a set intro for your guys to use, like, "Hey, I'm Jared with Wahoo Plumbing. How can I help you out today?" And they're like, "Oh, my toilet's backed up and blah blah blah blah blah blah." And I can say, "Sweet. Awesome. I'm like toilet backup master and I got you covered." So, just letting them know that whatever problem you're having, I'm a professional at it. and I can definitely help you out with that. Now, let's go look at the problem. Now, you're going to want to properly diagnose this issue and look at the whole thing. Not just look at the band-aid fix, but um try to get to the root cause of the problem. We're going to cover that in a little bit. But once you've discovered, you know, the problems, you want to present solutions to your customer, and then you want to help them pick an option that works best for them. And then you want to do the work exactly like you said you were going to do it. And when you're done doing the work, you want to go back to the customer. Show them the work you did. Make sure they're good with it. And then [music] collect payment on site. That's a great experience for the customer. Okay? They call the plumbing company. The plumbing company answered the phone. They told them exactly when they're going to be there. They felt very confident that that company was going to take care of their problem. The technician showed up on time. He was kind. He texted and called before he came over. He was polite and said hello. He diagnosed the issue properly. He gave me multiple options and then before he left, we got to take care of the bill. And now that problem in the customer's mind is completely gone. Super seamless. Now, if you can shorten the time frame from when the customer [music] calls to the time your technician gets out there, that customer experience gets even better. I used to tell my I used to tell my team in Alaska that the goal is for the customer to be able to snap their finger and their problem is fixed. So, the closer we can get to that, the better off we are. So, I want you to get as close to that as humanly possible. Because when a customer wakes up in the morning and they've got a plumbing problem, the last thing they want to do is call a plumbing company. The real thing they want to do is they just want that problem to go away. And so, if you can be the solution that makes that problem go away with as little resistance as possible, you are a hero in their mind. And if you're a hero in their mind, it's going to lead to more referrals and more return customers. And we already saw what happens when you increase your lifetime value. This is a really good thing.

The fourth thing we're going to cover is upsells and [music] options. One of the most important metrics in your service business is average ticket. And we already covered marketing costs, right? It cost a certain amount to get to the customer. And then [music] if we have return customer, we can spend more the whole nine yards. But let's just say that it costs you $200 to get a customer. Okay? So your CAC or CAC is $200. That's your marketing spend to get a new customer. Well, if your average ticket is $1,000, okay, this CAC is 20% of your average ticket. That means if you want to grow your business, your marketing spend is going to be 20%. So, a $1,000 average ticket for this company unless you have 50% return customer rate isn't going to work. Most businesses can't operate on a 20% average ticket. What's going to happen is you're going to have to raise prices and then your close rate's going to struggle and then you're not going to bring in enough revenue and your CAC is actually going to go up because if you close less jobs then the jobs you get to keep are fewer which means the money you spent on marketing doesn't go as far towards your CAC. So this is like a vicious cycle downward cycle of higher CACs lower average tickets lower close rates. Now, if you can get your average ticket up to 2K, so 2K average, all of a sudden a $200 CAC is only 10% of your average ticket. So that means if you had to acquire all of your customers, you're going to have a 10% marketing budget, which isn't bad. Now, you mix that with a 50% return customer rate, you can get that marketing budget down to 5%. That's how these big guys are getting such low marketing budgets, by creating high average tickets [music] and getting return customers.

Now, you can get higher average tickets just by raising your prices. However, you really need to watch your close rates. If you can increase prices and close rates stay the same and average tickets go up, it's probably a good move. Now on the flip side of that, there might be a scenario where you can actually lower prices, which this is what nobody talks about. You can actually lower prices, increase your conversions, and increase your average ticket. That's what we did at Prospector Plumbing at my last company. We lowered prices, [music] increased conversions, increased average ticket, and added a million dollars to our top line with the same amount of technicians and the same amount of customers. So, how do we get our average ticket up without just raising our prices? Now, for a lot of you, raising prices is definitely going to be the thing that you need to do. So, if you're super cheap already, like under $300, not marking up materials a couple hundred%. You need to probably raise rates or mark up materials more. We'll go over that next on exactly how to do that. What are some ways that we can get our average ticket up? Okay. Well, upsells and options, right? These are probably the two best ways to get your average ticket higher without raising prices. So, let's go over options first. Good example of an option is if I go to your home and you have a toilet flapper that's leaking. If I were to just sell you a toilet flapper, let's say that's a $300 fix and the flapper cost me 15 bucks. I walk away with what is that? $285. Yeah, that's good math. $285 in my pocket, but I had to buy that call for 200 bucks, which means that I'm only $85 ahead on that call. Okay, now you could raise that flapper price. You could double your prices and now you're 600 bucks for a flapper. You pay 200 bucks for the call and you're 400 bucks ahead. You could probably make margin on that, but close rates are likely going to go down on a $600 flapper versus a $300 flapper. So, probably not the best way to go. better thing to do is to go to the customer's home and rather than just offering them a toilet flapper, offer them a toilet flapper, a new flush valve, a new tank rebuild, like rebuild everything in their tank. Or offer them a whole new toilet, right? The weird part about this is if you think about it through the customer's perspective, okay, most plumbers are like, "Ah, that's ripping people off. I don't want to do that." But if you think about it from the customer's perspective, sometimes selling them a tank rebuild or a new toilet is actually better for the customer. So, let's say you're trying to charge them $300 for a flapper, but your toilet price is $700. So, for $400 more, they could have a brand new toilet sitting there. Now, if their toilet was super old and janky and junky and it was short and it was round front and the lid slammed shut and the lid was wood and it was all rotten out and there's a bunch of stuff in the tank and the internals are all just going to crap. Well, if you had to come out there and fix a flapper and then come back the next month and replace something else, they could have just bought a new toilet. And so, in that situation, they might be better off just spending a little more money with you and buying a new toilet. When you sell a $700 toilet verse a $300 toilet flapper, your average ticket goes up from 300 to 700, right? So, at 700, you take the 200 bucks off for the CAC, maybe 150 bucks off for the toilet, and you're still left with $450. That's a doable thing that you can do. Other thing, like, you know, maybe it's better for them to just replace all the guts in the toilet. Maybe the toilet's fine, but all the guts are bad. What I'm getting at here is if you don't offer them those options, you're never going to sell them. So, if you just go into the home and you're like, "Yeah, your to your flapper is bad. You need a new flapper. It's this much." Number one, the customer feels like you got them over a barrel. And number two, your average ticket is going to stay low. And number three, you didn't really do that customer a good service. So, I think if you can structure options around doing the customer a good service, it's a really good way to go.

Now, a good example of upsells kind of piggybacking on that toilet example. Let's say you get to that point where they [music] say, "Yeah, let's just put in a new toilet." Now, most homes don't have just one toilet. Most homes have three toilets, maybe some with two on average. Well, if you put in one toilet, if you think about the

time frames involved. If you don't carry that toilet on your truck, you're having to go drive to the customer's home, diagnose the problem, communicate with the customer, drive to the part store, grab a toilet, come back to their home, take their old toilet out, put a new toilet in, build a customer, whole nine yards.

If you were to do three toilets, you still go to the home and do all the same stuff. You still drive to the hardware store. You still have to build a customer. The only extension in time is that the time of putting the second and third toilet in. So now if one toilet was $700, you might be able to do all three toilets for $1,400.

And so at this point, a good upsell for that customer might be, "Hey, what are the conditions of your other toilets?" Because if they're in the same condition that this toilet is, it's likely that they're going to need work done. And if I can install three toilets instead of just one, I can get instead of one toilet for $700 and then you having to replace the toilets for $700 each throughout the year for a total of what is that $2,100. I could get all three done now if we did them all today for $1,400. That'd be a great upsell to that customer. Right?

If all their toilets were in terrible condition and you're like fixing to save them money, you could have charged them $300 for a flapper where they can pay $1,100 more and get three new toilets. Like that's a great deal. And your average ticket just went up to $1,400 bucks. That's badass, right? You only paid $200 $200 bucks to get that call. You're at $1,200 minus three toilets. Maybe that's $450. You're up $850 on that call minus the labor. That's a doable business. In fact, that's probably the most doable business out of all three of these scenarios.

So, offering them options is super important. You're never going to sell it if you don't offer it. And then also offering them upsells when it makes sense. And teaching you guys how to structure the pricing on that is very important and can make you a ton of money, increase your average ticket, and increase your ability to do marketing to get new customers and grow your business.

So, in order to do these upsells, we need to talk about pricing. So, next on the list is pricing correctly. This is probably the most important yet most underestimated, most misused, and probably most misqued topic on the planet. Okay? And the longer I do this, the more I realize that pricing cannot be black and white. That you need to have a system around your pricing that varies for certain circumstances, which makes it even more complicated.

So we have tried, well, we've been working probably for the last four years to figure out how to streamline a pricing process that is can be variable for different situations, that is easy to understand, something we can train our technicians on, and that maximizes close rates and average tickets. And here's what we've come up with. This has been four years in the making. Okay.

And so to understand this topic, by the way, I think we do this differently than probably anybody else I've ever seen price their company. Most people take all of their expenses and they boil them into an hourly rate or they just say, "I need this much margin on my P&L, so we're going to multiply everything by that margin." Well, we think it needs to be a little more fluid than that.

So to understand what we do, first you have to understand that all businesses buy and resell stuff. And in the home service world, we buy and resell materials and we sell skilled labor. Let me move this over to the middle so we can see it. Okay, I saw this, stole that from Ken Goodrich. He was like, "We buy and resell skilled labor and materials." And once you understand that and you understand that all businesses in the world buy and resell stuff, it makes so much more sense. Okay, so all we have to do is mark up the skilled labor and the materials enough to where we have enough money left over to cover our overhead and make a net profit. It's pretty simple.

Where it gets confusing is that we have scenarios where if we were to look at efficiency, meaning the efficiency of how we sell these materials, we have times where we have high efficiency materials, but then we also have times where we have low efficiency materials. And then we have times where we sell our skilled labor very efficiently and then we have times where we sell our skilled labor very inefficiently.

So, an example of materials being used efficiently. If I've got a bathroom sink faucet in my price book, okay, and we only offer one and we carry that faucet on the truck and it's a very specific faucet and it's the same faucet every time. I should know exactly what the cost to install that faucet is, the cost of that material. Okay, that would be an example of a very efficient material, right? We can price it and use it very efficiently.

Now, something that's inefficient would be any sort of thing where there's multiple materials such as under a kitchen sink, right? So, even just on like let's say you're going to replace all the drains under your kitchen sink, just the basket strainers could go from $5 to $30 depending on where you got them, right? So, if your guy was running out there, normally you stock $5 basket strainers in your trucks and that's how you built your price book, but then he runs out of basket strainers and stops at Home Depot when all they got is $30 basket strainers. All of a sudden, you're $40 behind on your material cost on that very simple job of repiping all the pipes underneath the kitchen sink, including the basket strainers. Right? That'd be an example of inefficient use or inefficient billing tracking of materials. Okay? You ask any business owner who's been in business for a long time, where's the opportunity to lose most your money? It's right there on materials. It's insane.

Now, when it comes to labor, we have times where billing out our labor, we do it super efficiently. So, water heaters for us is one of those. If you can put four hours on a water heater task, that's enough time for your technician to get the call, drive to the call, talk to the customer, sell the water heater, install the water heater, probably pull a permit and schedule an inspection, and collect payment for the water heater. Okay, plenty of time. That'd be a very efficient use of your skilled labor. Another one would be if you sell like full day jobs like HVAC installs or whole home repipes. You're going to be there for multiple days in a row. If all you sold were whole day jobs, you could likely sell out 100% of your time throughout the year.

Okay. However, if we're going to go out and let's go back to the faucet replacement, what does it take like 30 minutes to replace the faucet? Well, if we were to try to attach drive time and time talking to the customer and time billing the customer, it really takes us like 2 hours to run that whole process. And so if all we're going to sell is 30 minutes, but it takes us 2 hours, well, that's really inefficient labor. Okay?

So where I'm getting at this is that we need to have multiple price points in our business. Okay? So at Wahoo Plumbing, we've got a price point for efficient materials and efficient skilled labor. We have a price point for inefficient materials and inefficient labor. And we have a price point for efficient materials and inefficient labor. And we have a price point for inefficient materials, but efficient labor. So we have four different price points at four different efficiencies. Sounds confusing, but it's really relatively easy. Okay.

The way this works, if you guys want the spreadsheet that just shows you how to do all of this, you can join our school group. Go to links in the description and down in the comments below. You get a 7-day free trial. It's called our margin calculator. So, we base all of our pricing off of margin and then we develop four different pricing points based on efficiency. It's literally too complicated for me to sit here and show you how to figure all this out because it's a lot of math. So, we got all that math done for you in the spreadsheet. Again, grab a 7-day free trial. Go grab the calculator. If you don't like the wealthy plumber community, just leave. You don't have to stick around.

Now, outside of just pricing your business based on efficiencies and coming up with multiple price points for your customers, one thing that this allows you to do is to bundle items together. So, bundling is a great way to take what's normally an inefficient task or inefficient materials, bundle them together, increase the time and the amount of materials and turn it into an efficient task.

So for instance, if I were to go to your home and you have five different items that need repaired and all and each item is an hour per se. Now that hour-long task is going to be inefficient skilled labor and so it's going to be at a higher hourly rate, right? So I could show you the price for all of these individually and let's say they're $500 a piece. You'd be sitting at $2,500. If we were to do these over the course of a year, $500 per visit, $2,500 to get all this done.

Now, if I can create an estimate that has all five of those wrapped up into one task, all of a sudden, I have 5 hours on site. When I'm at a job and I sell 5 hours, that's pretty efficient. I just sold the majority of my day, about 60% of my day, which is almost double the efficiency that most plumbing companies get. And so I can afford to lower my price. So I might go from $500 for those tasks to $300 for those tasks. And so bundled together into one five-hour task, that might be $1,500 instead of $2,500.

So now I can go to the customer and I say, "Hey, here's some estimates to get this stuff done. Here's the five things I found. Here's how much they cost to fix. If we can get these all done today, we can actually lower the price quite a bit on you because it's a lot more efficient for us as a company. We only have to drive here once. We only have to talk to you once. Not that that's a bad thing, but the deal is if we can get them all done today, it's way more efficient to us. And we're willing to pass that savings along to you, the customer. So, if you want to do them all today, we can save you $1,000."

Now, all of a sudden, the customer feels like they're getting a deal. And you didn't have to give them a discount. All you did was bundle it and make it more efficient, which allows you to offer at a cheaper price point. And now your conversion rates and your average tickets go up, okay? Just because you have this pricing based on efficiency installed into your business.

Aside from that, something to think about is that we all have these things in our business that if we were to price at full margin, we would just never convert. So, a good example of that for us at my business in Alaska was toilets. So, if we were to It's very expensive to run a business in Alaska. Very expensive. Much more like almost double the cost in Alaska versus Florida. It's actually pretty wild.

So, for example, our hourly rate in Alaska was $437 and down here it's $280. Massive difference. The materials down here are way cheaper. The materials in Alaska are insane. The fuel costs are insane. The labor is insane. The benefits are insane. Everything's expensive in Alaska. Okay, so you can imagine our prices were pretty stinking high. When I started saying my prices online to people in the lower 48, that's when I blew up on social media.

So for us, for a toilet, for us to go install just a regular old normal toilet, it was like $1,800 at full margin. Okay? So you can imagine if you call me up and you're like, "Hey, I need a new toilet installed." and we send a technician out to your house and he's like, "Yep, I can install a toilet. It's $1,800 bucks." You're like, "$1,800 for a toilet?" Like, I'd poop in this thing. That's insane. And so our conversion rate on an $1,800 toilet was like probably 10%. Okay, which means that 90% of the calls we went to, we probably paid $200 for marketing. Uh, we probably paid $50 to send a technician out there for one hour, and all we collected was $0. So we would lose, we'd be in the hole $250 bucks on those jobs.

Now what we figured out is that rather than selling them an $1,800 toilet, what we should do is lower the price on this toilet to what it costs us to install. So that rather than losing money on 90% of the toilet calls, we can break even on 90% of the toilet calls. So if you think about the marketing cost at $200, the install cost for the technician, if he's there for 2 hours installing a toilet, it's $100 bucks. So we're at $300. The toilets up there were $250 bucks. So if we can sell a toilet install at $600, we can get 80% close rates on that. And now we turn this money loss into a break-even scenario.

What that allows you to do is to stop losing money over here, which means you don't have to make it up over here. So if you have items in your business that you're like, "Man, I can at full margin, I never convert these." Go back and consider, well, what can I convert them at? Now, you have to be super careful with this because a lot of the times you can't convert items because it's a sales issue, not a pricing issue. Okay? So, I would make sure that you guys are well-versed in sales training before you start just slashing prices. It's not a slash price game to see what we can sell. But if you're selling everything else well and you've got one item that you just have the toughest time moving and you can't get rid of those calls, it would probably be good to go, well, let's just sell this at cost and at least break even instead of lose money.

Hey, if you found this video helpful, you're going to want to check out our coaching community, The Wealthy Plumber. It's freaking awesome. There's 850 plus business owners in there, all winning a business. You can go in there and you can learn. It's an awesome resource to be able to ask questions. Uh, go check it out. Link in the description and in the comments.