Owned and Operated #178 Leveraging Discounts and Inside Sales for HVAC Growth

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In this episode, discover effective strategies for keeping your business profitable during slower periods. Learn how to implement discounting tactics, optimize inside sales teams, and the importance of proactive planning.

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🌟 These actionable insights will help businesses in industries like HVAC, plumbing, and services navigate slower seasons and stay competitive for long-term growth.

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Shout Out to FieldPulse! 🚀

FieldPulse is an incredible Field Service Management platform that helps you save hours each week while keeping your operations running smoothly. If you're looking to streamline your processes, stay competitive, and focus on what truly matters, FieldPulse is a game-changer!

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Special Thanks to Hatch!💡

Hatch has been an incredible partner in our outbound journey. Since starting with them, we’ve ramped up with powerful automations that keep every lead engaged and every invoice followed up. Hatch’s AI Agents, ready to handle follow-ups, reminders, email blasts, have saved us hours.

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Episode Hosts: 🎤

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John Wilson: @WilsonCompanies on X
Jack Carr: @TheHVACJack on X

Owned and Operated #178 Episode Transcript

#178 - Leveraging Discounts and Inside Sales for HVAC Growth

John Wilson: [00:00:00] Choosing to not optimize. It's like a ridiculous mindset.

Our closing rate's pretty good and I'm like, what is it? They're like 50 percent. Okay, so half of your jobs are not being closed on. Well, can you close an extra 20 grand a day? And the answer is absolutely. It's so ridiculous.

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Welcome back. Welcome back. We haven't had one of 

Jack Carr: these in a long time, John. Just John and Jack. I missed you. Yeah. But April's coming up too soon. So I'm excited for that. I look forward, I look really forward to the workshop, um, not like actual April, like the workshop in April. I was like, bro, what are you 

John Wilson: talking about?

Jack Carr: April is the worst. I'm referring to like, missing you. And you're just over there being a jerk and hurting [00:02:00] my feelings. 

John Wilson: I know, I know. The workshop's gonna be a lot of fun. Um, that'll be a lot of fun. But yeah, April, aside from the workshop, April 

Jack Carr: is the literal worst. Yeah, it definitely is. Um, except February last year was the worst for me.

And I post on Twitter. And we're up 236 percent year over year, which means absolutely nothing because we should have only been up like 50 to 60. But still, February wasn't a bloodbath, it was just 

John Wilson: like, it was just like so bad last year. It was so 

Jack Carr: bad. With the same amount of HVAC people I have today, last year I did 60, 000.

Yeah, I'm sure 

John Wilson: we could like somebody should link back to that episode because I'm sure you talk about that. 

Jack Carr: I'm sure I'm probably crying But like just like weeping blood. So the good news though is We're starting to track everything We've been talking about gross margin and gross profit nice kind of crazy Crazy stuff over the past like six months on [00:03:00] the podcast and I have numbers I came bearing numbers and those numbers are do 

John Wilson: it 

Jack Carr: We hit breakeven, which is huge.

John Wilson: Okay, like net, net breakeven. 

Jack Carr: Net breakeven. So, I think we made like 14, 000. Like, it wasn't a bad month. That's a win. That's a win. Like, not losing 30k is a big win. What is a, 

John Wilson: what is a budgeted net profit per month? Like, what do you expect? To, to breakeven per month? No, like what, you said 14's a win? Is, is it a, like, what, what are you expecting for Um, net profit per month.

Jack Carr: I don't think we granularize that much. We're more focused, like if you look, think back to when you were our size. We're focused on growth a little bit more than profit. So we want our revenue numbers to be high while keeping our gross margin kind of. 

John Wilson: Okay. 

Jack Carr: Solid. Yeah, I 

John Wilson: basically ran breakeven. So we 

Jack Carr: shoot, we shoot for like 10, 10%.

Yeah. Like [00:04:00] that's what I want is gross profit. Okay. Or excuse me, net to be 10% net. Yeah. Um, 'cause we're shooting for 15% o over on the year this year, but like 10 would be awesome. Um, sweet. 10%. But, but yeah, HVAC saved the day and I don't know how my saleswoman did it. Amazing, John, amazing. So she sold most of that, 75 percent of that with a gross, um, a gross margin of 59 percent in HVAC installs, 59 percent in February.

That's great. And then, um, my sales service listed 57 percent in February, which is awesome. Plumbing sat around 60. Which they did great, but they didn't make a whole lot. Um, we had a lot of people that were out. So they did about, I think they did like 60 or 70, 000. Um, and so we ended the year, or the month with, uh, [00:05:00] 57 percent blended, I believe.

all nice company wide. 57 percent blended non weighted. Um, but really excited about that. Like that was huge. And it's huge. And you can feel it. Like you can see it in the bottom line. Like, Oh, we actually have like, More money 

John Wilson: Yeah, no, that's awesome That's not dude. That sounds like a huge win 

Jack Carr: Yeah, and then the backside of it is then we we went through and said, okay Well that that sounds like a huge win, but let's make sure was like what was our close rate on HVAC install?

Because I don't want you know a hundred and twenty percent A gross margin with like a 2 percent close rate, right? Yeah. It can, can hurt you in some instances. But we still had a 75 percent plus close rate. So like, it was beautiful. Very, very happy. Um, but now the name of the game going into March is we don't want our March to be our February.

Right. 

John Wilson: Okay. 

Jack Carr: So we're really trying to stay on top of it because it's moderate. We [00:06:00] went into like hard, moderate weather, like 60 degrees. Same here. 

John Wilson: Yeah. Same here. Yeah. We've still been selling. We're actually, I mean, we're three days in, but so far we've sold the budget every day, which has been good, which is 120, but we're like, we're ripping some discounts to do that.

Jack Carr: I want you to go back and listen, John, to like earlier episodes when you're like a hundred K day. Yeah, we finally are getting a hundred K days or five. I know. Oh, my budget's 120 a day. Yeah. Yeah. 

John Wilson: Yeah. I mean, it's, it's, it does feel like a big deal. Uh, So if that helps, it doesn't, it hasn't totally rolled off yet, but yeah, it's good.

We've been selling the budget, which is, which has been a big win. Uh, revenue in February was not good. We did not execute as well as we would have liked primarily in electric. Um, and we had a bunch of sickness. Our sales were pretty close to what we expected. It's just, we actually didn't complete the work.

Uh, so that was pretty lame. And then for March, what we did, [00:07:00] we do a BOGO. So, you know, people have mixed opinions on this, but like. My opinion is I don't really care. Like, our job is to keep our installers going. Basically any cost. So, a BOGO is like thousands of dollars off a system during a very specific period of time.

So we did that this year, and what was really interesting is we ended up doing a large equipment purchase for a huge amount of money off from one of our vendors. Um, cause normally we just have like, I'll tell you how it usually goes. usually we go and we tell a vendor, Hey, for this 45 day period, I need an extra five to 8 percent rebate, uh, payable at day 60 and that's going to allow me to be more competitive for our shoulder seasons.

So we do that in March, April, and we do that in September, October 

Jack Carr: for HVAC 2 or just plumbing. 

John Wilson: This is exclusively HVAC. 

Jack Carr: Okay, 

John Wilson: awesome. So we've, this is our third or fourth shoulder season doing this and it's been a big win. [00:08:00] It allows us to shave like 20 points off. Retail price without it impacting our gross margin.

So we get to get way more competitive, which helps us win more deals during shoulder, but because we negotiated so effectively last year for HVAC equipment, which we've talked about on here, I actually was not able to secure the BOGO. Programs again, uh, good and bad. So what we ended up doing was we did a bulk buy of equipment, which we got the price 30 percent off our retail price for equipment.

So we did a pretty large acquisition of equipment and instead of an 8 percent rebate, we got 30 percent off. Oh, so. It was really interesting. We were able to, I mean, we didn't plan for it. We now know to plan for it. It kind of fell into our lap, but this is now another tool that we're going to use in our toolbox.

Jack Carr: I guess what scares me, right, is like we, [00:09:00] there's so many different types, sizes and types of equipment. Like how did you plan? 

John Wilson: Two and two and a half tons only. 

Jack Carr: Okay. Interesting. No, I mean, that's, that's the way to go. Split two and a half tons only. All heat pump or gas or I guess you guys only do gas in this.

Uh, Ohio's 

John Wilson: not, yeah, Ohio's not a heat pump market. That makes it 

Jack Carr: easy. So we, we actually just launched something not the same but similar into March, hoping that we can drive traffic. Is we're doing essentially a 7, 000 heat pump split, any size, all March. And that's, that's the, that's the plan. That's the game.

And we've secured with a vendor special pricing to make sure that that works across the board. Um, higher pricing on the lower side, just slightly, but slightly lower pricing on the bigger units so that we can even that out. And I mean, there's really no five ton heat pump splits anyway. Like nobody uses those.

So our hope is that we're going to drive a ton of two, two, two and a half [00:10:00] and three ton heat pump splits. Um, and we've just launched that yesterday and we've already seen some decent traffic. 

John Wilson: Yeah, dude, that's awesome. 

Jack Carr: March. 

John Wilson: I think, I think the big, the big, uh, probably lesson here is like be proactive with shoulder season, like this, we spend a lot of our time thinking about how to survive shoulder season.

Like when we're in peak season, we're preparing for the next shoulder season. So like in the middle of July, what I'm going to be focusing on isn't July. I'm going to be focusing on, okay, September is coming up. What special promo do I have? How can I make sure I keep moving boxes for this 30 day period from hell?

And that's what, that's how we focus on most of the year. Also, for like February to the end of April. 

Jack Carr: Yeah, that idea changed my business, by the way. So, we restructured pretty much everything to understand like, hey, we need to be taking pictures at every job site, not because like, hey, it's the right [00:11:00] thing to do.

We need those photos, we need that data. So that we can actually actively go after certain customers in the off season and subsequently also like anything that we run, any kind of promotion that we run, the goal is collecting data and not necessarily for the middle of summer. Like we don't need the extra, I guess we, we love the extra jobs.

Don't get me wrong, but like we don't need the extra jobs in the middle of summer when we need them is to call them later on. right? Call them for the fall maintenance or the spring service. And so that, that's really changed how we function and like the switches we flip and pull to survive shoulder.

Like that one, that one thought that I remember sitting in a, uh, sitting in a storage unit talking with you about. 

John Wilson: Anything you can do to prep yourself for slow season is the win. There's actually, I think it's right here. Yeah. Oh my gosh. It is. I get to reference a book on the shelf. [00:12:00] Uh, I read this book like 10 years ago, HVAC Spells Wealth.

Let's go. HVAC Spells Wealth. Yeah, it's good. So somewhere in here, they talk about this concept. 

Jack Carr: For those that didn't see that awesome thing that just happened on live, John and I both 

John Wilson: happen to have the same book right behind our heads. That was not intentional. We are not being paid by Ron Smith to do this.

Um, anyways, there's a part in here where it talks about. It talks about that, like, Hey, they spent, they're working on shoulder season six months ahead. Yeah. And what I'm seeing right now, what I'm seeing on like LinkedIn and like Facebook groups right now is like good sized businesses that were not working on shoulder season six months ahead.

Like there's a 20 million business in our market and like 40 of their 50 texts are sitting right now. And they are normally like a good, I don't know where [00:13:00] they whiffed because they're normally good. Um, like solid executors. So that was, yeah, it was pretty interesting, but like you got to prep. So are you taking calls?

What's your outbound strategy? What's your inbound strategy? Um, and is it robust enough? Uh, we've spent a ton of work on that over the last two years. And then like, how can you go to market in a way that drives leads? So for us, that was the BOGO. We're going to drive leads through BOGO this year. We're not doing it through BOGO.

We're just doing it like, Hey, we have this crazy cheap system. You want it. It's like a good man, you know, and for us, it gave us a full system at like 8, 300, which puts us on pace with like the chucks in a truck in our market. And for us, that's still a full 67 percent gross margin because we got it for so cheap, 

Jack Carr: which is crazy when you think about purchasing power in that sense from all like the people in the private equity groups.

Yeah, I bought air conditioners for like 

John Wilson: 400 bucks. Yeah, these air conditioners are [00:14:00] like 400. 

Jack Carr: So jealous. When you say BOGO, what, what are they getting one free normally? Like the 

John Wilson: furnace. So you buy an air conditioner, you get a furnace for free. Now we still charge for the install. So basically it would take a 10, 000 system down to like 8, 500.

Jack Carr: Good deal. 

John Wilson: But, but you sacrifice margin to do that. It's actually, this is a better one because one, because the price is so big, the discount's so big, we don't sacrifice any margin. We actually make a higher margin, less gross profit dollars, but a higher margin. Um, and we've already started closing the sales and because we own it, we get to, you know, we can make this a longer runway of a deal.

So if we still have some leftover going into May, then we're gonna use it for September's deal. 

Jack Carr: Yeah, I was gonna say, that's interesting because if you don't sell them all, like they, they don't go bad either. You get to keep them and sell them. Still at it at a full price now going into summer with the cheaper thing if you had the capital Have you ever [00:15:00] thought about that buying in bulk and storing in your warehouse if you had the capital?

John Wilson: This was the first time we've ever actually done Well, we did it one other time for generators like three years ago, and that was a mistake But it's because we didn't have a mature enough like marketing and sales process because it is a big risk I mean you you bring on Hundreds of thousands of dollars of equipment, uh, which is how much we brought on.

And, like, you have to believe that you're gonna put it in. Uh, cause that's a, that's a big load. Um, we believe we're gonna put it in. Uh, we know how to move boxes, we know how to mark it. So, yeah, but I, I think, I think it is intimidating. We're, we're thinking about doing it again with generators, cause we've started to push, uh, more and more generators.

Um, like two a week at this point, which is kind of crazy. That is crazy. And we're, we're starting to like really hone in on selling them and how to price them and where to get them. And, uh, so it, it, it's kind of [00:16:00] fun. I think generators this year will do like a few million dollars of generators this year, which is just nuts.

Um, and, uh, So I think it'll be the same thing. I think we'll end up bulk buying a couple hundred grand at a time. 

Jack Carr: How did, how did electrical flop in February? Was it because of, um, there was snow on the flu. Oh no, it's the flu. Literally 

John Wilson: the 

Jack Carr: flu. Yeah, our install team, 

John Wilson: yeah, we got wrecked. Yeah. We just got absolutely wrecked.

I mean, they basically missed an entire week of revenue. 

Jack Carr: No, I'm with you on that one. I mean, it wrecked me and half of our team as well for like four days. And mostly the plumbing division. And so our plumbers, like, we, we're not big enough to have, like, the, the capacity to continue. Like, we just pretty much shut down.

Like, sorry, we have one guy who can kind of run some stuff. Push it out. 

John Wilson: Yeah, and I'm, I'm feeling especially grateful for this year, this year, like last year, it'll be interesting to have a Q1. So last year, I'm gonna look this up, our electrical was still [00:17:00] really pretty small last February, and we were doing like layoffs for electric, and, uh, that's been our big like celebration this year.

Is like plumbing and electric. We're typically talking about like, okay, we might have to reduce the team size. We're, you know, we're thinking about like what levers we can pull. We haven't even begun those conversations this year. We haven't needed to like full schedule on every single team most days.

HVAC included. Yeah. So that, that has been freaking awesome. So the electrical team is like really vibing because they're like last year, a lot of them were here. Like it's all the same team. And they're just like, Oh my God, like last year at this time, we were doing layoffs and like we didn't this year.

I'm like looking up, I'm looking up last year's revenue. 

Jack Carr: So what other kinds of levers are you BOGO, but it's really not a BOGO this year. Uh, we actually. accidentally did the same one, but what other, especially across different service lines, like electrical and plumbing, what other kinds of specials or outbounding [00:18:00] or what, what, what levers are you pulling to keep the board full and to keep sales coming in?

John Wilson: I mean, discounting is our really big one and inside sales is huge for us. People probably have mixed opinions on this, but our, like our cost structure is built to be variable. If I have an empty plane seat, I was actually talking to somebody about this the other day in one of my peer groups and her business is amazing, um, and like better than us gross margin, which is pretty cool.

And I was like, how are you guys doing this? Uh, like you're a mid. 20 million chop and your gross margin is like 60, like that's crazy. And, um, they just like really hold tight to gross margin, which I think is good. And I think totally works for them. For us, what we have found drives the bus and continues our growth, which is important to us is.

Not being that tight to it, like we want to hit 53 to 55%, we will give discounts to fill the [00:19:00] board, like we're a big believer of the ultimate enemy is an empty plane seat. So if that, if that plane's taken off, regardless, and I have empty seats and I didn't want to sell them because I was like holding tight to my gross margin.

I believe that's a mistake for us, for other companies, maybe not for us. I think that's a mistake. So the big lovers we pull is like we built an inside sales team. I think we talked about it a bunch of the, on the show. We have five inside salespeople. Uh, we built, we use hatch like crazy for. Outbounding those estimates and messaging them.

And that's been a huge win. And, uh, we get like, we have this whole like code system. I'm sure we've talked about where it's like code green through icy blue. That's a really important part of us maximizing every day is our inside sales, our hatch and our code system, which I made like a year ago. 

Jack Carr: That's incredible.

I mean, I, I see what you're saying because we, we, for those who don't know, my wife and I just went on a cruise with our kids and, and we, we gambled in the [00:20:00] casino teeny bit and what's crazy about it was they had the same belief. They said, hey, an empty cruise seat or an empty cruise room is worth nothing.

Um, and actually hit some negatively. So what they do is they give out these free cruises. If you gamble a little bit because they're saying, Hey, we'll get it back. And rather than putting just anybody in, we're going to put somebody who's going to lose money in the casino inside that room so that they lose the enough money that it makes sense.

Yeah. I mean, it completely makes sense. You know, I think last time I was there though, you only had three inside salespeople. 

John Wilson: Yeah. We added, we added, we're up to five. Um, And it's been a really interesting lever inside our business. I, I don't know anybody else. Um, like even folks like three, four times my size do not have the number of inside sales people we have.

I was just 

Jack Carr: gonna say, yeah. 

John Wilson: Yeah, but we leverage it in really interesting ways. Um, [00:21:00] so like we'll do live closes. So if a tech is in front of a homeowner and maybe it's a newer technician, they're just getting used to our pricing. They'll actually call in and Inside Sales will present their options for them and live close it.

Um, so that's been interesting. We started selling over the phone for inbound leads. We're experimenting with selling water heaters over Zoom right now. We sold two on Monday. Um, so that's been interesting. Lot of rehash like there's not an estimate that goes unfollowed up because we we have all this capacity with five agents To do it.

So it has been a very big win for us earlier this year We started an outbounding campaign and we really didn't know where to begin. So we were using dialing on the phones We were sending text messages We were trying emails tried a couple different softwares and ultimately we ended up with hatch hatch has been an awesome Awesome partner for us.

We started with them about five or six months ago, and we've just continued to ramp every month We add three or four more [00:22:00] automations and my personal favorite thing about working with hatch is hatch comes out of the box Ready to go with hatch you get automated multi touch outreach across text voicemail drop email and a ton more so every single lead that you have gets worked every invoice that you leave gets retouched and rehashed and It's freaking awesome.

Check out use hatch app. com 

Jack Carr: That's 

John Wilson: incredible. And 

Jack Carr: so talk about this, this, these live closes. Um, what is the close percentage? What does it look like compared to, you know, a comfort advisor or sending a salesperson out there or even just an experienced tech? 

John Wilson: I mean, it depends. There's some comp, you know, we use it for live closing HVAC.

Average ticket and close rates pretty much the same as a CA and obviously more convenient to the homeowner. So that's cool. We also use it for newer techs, like I said, that don't know how to present options yet. 

Jack Carr: Yeah. 

John Wilson: Uh, and that's been a really big benefit or like if someone's struggling in service and their close rate is like [00:23:00] 30 percent or 20 percent or something, then like we just assign them to an inside sales agent.

They're like, Hey, your close rate isn't good. Like you will work with this guy until you get. You're close right back up like you're just you're wasting our leads and it's March and it's 60 degrees like you can't waste our leads We spent too much money on that Like honestly a lot of guys end up really liking it because it takes a ton of the pressure of the clothes off of them They don't even have to close anymore.

They just hand it over to inside sales. 

Jack Carr: That's interesting. I We do a pretty terrible job at following up on on leads Or on estimates and so I wonder if we tried to To get that SOP down and the scripts down and pull those levers. Oh yeah. Because it feels, it does feel like wasted opportunity. 

John Wilson: huge. 

Jack Carr: It's 

John Wilson: huge.

Jack Carr: Yeah. Do you 

John Wilson: have any inside sales at all? 

Jack Carr: We, I mean like half and half, somebody who's doing outside sales or outbounding is our inside sales person. So they're like running dual. 

John Wilson: Yeah, you should, you could focus that up. It, it was one of our [00:24:00] big growth levers for last year. Was adding an inside sales component, literally just from rehash places we had already been to call them back.

And the big thing is like, Hey, if I have empty seats tomorrow, if I have open install, what do I do? Yeah. And it's sort of, it's the same playbook. Like we, we, I think we talked about this, but our company is divided into, uh, sales and install. So, Hey, if, if service is empty. You have a playbook probably, right?

You're gonna outbound, you're gonna turn up your PPC, you're gonna send some mailboxes, you'll knock on doors. Like, you have ten things you're gonna go figure out how to do. You're gonna advertise on TikTok. Like, you're gonna do something in order to attempt to get stuff on the service board. People seem to miss the back half of that.

Which is, okay, but what happens if install's empty? And like, hey, shocker, install is 80 percent of your revenue, [00:25:00] probably. So like, we care a ton about the thing that's 20 percent of our revenue, and we're like choosing to not optimize the thing that is 80%. It's like a ridiculous mindset. So yeah, so build a, build a series of levers that looks exactly like what you've built for your service team.

If your service team is empty, you've got 10 things you're gonna do. If your install team is empty, you've got 10 things you're gonna do. And like that mindset is what helped us drive. And honestly, I think is helping us. I wasn't super excited about revenue in February, but like. Gross margin was big.

Revenue was 20 some percent, 25 percent over last year's February. We were net profitable January and February. Um, and we just don't have a lot of dead days. Yeah. 

Jack Carr: So, 

John Wilson: it's 

Jack Carr: a win. It's definitely a win. And, and the last one that I'm curious about is cross sales. Are you guys focusing a lot on cross sales right now and trying to get the other groups in?

I know it's a thing that Not really. One we always [00:26:00] do. You're always supposed to do it, but is there any additional focus? 

John Wilson: That's like one of our service things. So if, if the service is in code red, like we will mention like, Hey, everybody, HVAC slow today, HVAC service slow today. If you see something, say something, but that is one of the levers we have.

Like, it's a pretty robust call board management system that we put into place last year. We add more onto it every month. I don't think it's 20 steps, but there's a lot of steps. Like we do a lot of shit, which ultimately is, I think why we don't have very many like slow service days is like, we really.

Even now, March 60 degrees, like our HVAC service team is full tilt running. 

Jack Carr: Have you guys started maintenances yet? 

John Wilson: Oh yeah. 

Jack Carr: Oh yeah. Yeah, we were trying to wait until the 15th or the 20th. I mean, once the 60 degree weather hit, we just said, hey. Yeah. Full speed ahead. 

John Wilson: We flipped as fast as we possibly could.

Yeah, shoulder season is tough. Beast. You can proactively manage [00:27:00] it. So like, I think we just talked about a bunch of ways to different practically manage it. You can plan your promotions, work with your vendors on what those promotions are, maybe do a pre buy. Um, set up, set up a rehash system so you can try to close stuff.

Set up an outbound system so you can call your customers, be like, Hey, it's time for that tuneup. I'm gonna do that 

Jack Carr: one. Let's circle back in a month on that. I'm curious. I'm gonna track the shit out of that and see which, which one inside sales re Yeah. Rehashing. It's, it's like a ca in the sense that you can bring them on Yeah.

As like a commission only structure as well, right. In a sense. Yeah. Well, yeah. It's a salesperson, so it's a salesperson. If they don't sell, it's not really a loss. If they do sell, then it's a win. 

John Wilson: Right. I mean, there's a base comp, um, but it's a low base comp. I mean, they're a sales person. Their job is to sell.

Uh, and it's, it's just like a different bucket. So like, if, you know, if I've got this bucket up here, like, Hey, this is jobs that we went and [00:28:00] sold on site. Okay, great. If you have a 50 percent closing rate. You have 50 percent of your jobs that you didn't close on site. Cause every, every time I bring this up to somebody that's never done it, they're like, ah, our closing rates pretty good.

And I'm like, what is it? They're like 50%. I'm like, okay, so half of your jobs. Are not being closed on. What are you doing about that? And they're just like, I'll train in RCAs. And I'm like, that's not the point, bro. Like you have to do something else. You got to go one more step. You have to actually like think, and how do we close another 10 percent of those jobs?

Because, and the, you proactively discount you, you use a code system like us, like, okay, hey, I'm empty tomorrow, 20% off. I gotta fill the board. I got installers sitting, let's get this thing done. Um, so that's how our structure works. Like we'll, we'll rip all the way down to 30 

Jack Carr: is so obvious and simple that it actually hurts.

'cause we we're it hurts. Especially 'cause you called me out like we're at 56%. I'm [00:29:00] thinking he's right. Yeah. Like 10%. Like you, you could make. Yeah, 50, 100 calls a day, maybe not that many on inside sales, but still you make, and you, you do 10 percent more. I mean, our estimates are hundreds of thousands of dollars.

Like that's totally, that's just money. So, 

John Wilson: so there's a, there's an interesting, if you guys use the service Titan app, there's an interesting component at the bottom of the homepage. So today we have 327, 000. I don't know if you can see that. of OpenEstimates and it's one. So, for us, a normal, like, we consider it a good day of OpenEstimates is like 700, 000 Um, and that's gonna include every single option.

Right? Like, every single So, like, if I went out to a customer's house for HVAC, I probably left 100, 000 of options at that house. If we didn't close it, so that's a, that's a good day. That means the board was full and then it's like, okay, well, can you close an extra 20 grand a day? And the answer is [00:30:00] absolutely.

And especially during shoulder season, like this is probably one of the biggest levers that we pull is we rip discounts. And, but the only reason we can go so low on discounts is because we proactively handled. A code system, we have a variable cost structure, we set negotiations with vendors. There's like 10 other steps in there, but it allows us to, you know, full send.

Jack Carr: I love 

John Wilson: it. I love it. This is how you survive shoulder season, everybody. This is how you thrive. I mean, year to date, we're net profitable. We're at like 11 percent net year to date, and we're in March. 

Jack Carr: That's amazing, because normally, right, you start off low, and then you, in summer, you pick back up, and you survive, or you recover those percentages.

Well, our 

John Wilson: big, our big, like, North Star is we are going to be profitable 12 out of 12 months this year. We give we give zero fucks. So we're gonna give 12 out of 12 months, man. It's happening So we we did a ton of work and we've talked [00:31:00] about all the different like components of this over the last couple months But like okay, what's our vendor negotiation system look like?

What's our cashback system look like? What's our rebates look like? How do we make sure we're doing just in time? Can we bulk buy so our gross margin goes down? Can we put our our installers on task rate that way? Uh, there's no like sitting labor cost, like, how do you make as much of your P and L variable?

Can you put your call takers on commission? Like it's all these different components. It's all the same thing. We don't want a single negative month. I actually think we're at month 10 

Jack Carr: of like straight, never hitting a negative one. Yeah. Oh my gosh. Which like my previous 

John Wilson: record was seven. So like 10 straight months, especially in February, we're just like, all right, 

Jack Carr: that's awesome.

I mean, if you look at enough PNLs too from HVAC companies, you realize that's so difficult or like, yeah, you know, [00:32:00] 

John Wilson: I mean, that's taken like the Lord's freaking work. Yeah, that's wild. I just looked at where we're actually 14 percent net year to date. So I under underestimated it slightly. Gosh. Yeah, it's pretty awesome.

Jack Carr: Straight jealous, straight jealous, 

John Wilson: all the work implement half of what we talked about in this episode and you should be fine. Well, the other thing that was really like really interesting is we did reach the point where we outgrew our costs, which is a very important distinction. I had a feeling it happened last year, but we were still like investing in like in the height of it.

But our overhead for January and February of this year. Was below our overhead of January and February last year. We actually spent 50, 000 less This year than last year, and that's with driving about a million dollars more in revenue. Mic drop. It's sweet. [00:33:00] 

Jack Carr: Yeah. You know, the crazy part about all this, to me, is all of these implementations that you, don't get me wrong, there's a ton of nuance.

They're all simple. None of them are easy, but they're all so simple. It's like, hey, you got to focus on this and just drive this lever, this lever, and this lever, and you'll get there. And we've literally talked 

John Wilson: about it. Like, just listen to the show. Yeah. Yeah. Like, I think I've talked about inside sales on here.

I'm, I'm, we had to have, 

Jack Carr: yeah, we definitely have. But it was like back when you were still, I don't want to say still figuring it out, but it was still fresher. It was like late last, late last year, like maybe October. Yeah, 

John Wilson: yeah, 

Jack Carr: yeah, man, that's wild. That is absolutely wild. 50, 000 less, a hundred, a million more in revenue.

Yeah. And 

John Wilson: then we were able, you know, February was a miss for us. for flu. And we, um, we did discount substantially, but even after all that discounting, we still had 47 percent gross margin. So like, we don't like it to be below 50, but I mean, we ripped [00:34:00] some discounts to keep going. So 47%, whereas last year our gross margin last February was like.

30, but we just, yeah, we learned how to play the game a lot better 

Jack Carr: because now it has me thinking like the same thing. Like if I were to have ripped a bunch of discounts and call back all those open or open estimates in February, what would we have said? What would we have sat at? If we could have cleared another 5, 400k, it would have been, did you have dead 

John Wilson: days?

Yeah. If you, if you had installers sitting. Then like you should have done that 

Jack Carr: HVAC for sure plumbing. It was not as straightforward just because of all the sickness, right? You could, you know, get as many leads as you want, but I can't run them or, or sales. 

John Wilson: Yeah. I mean, I think that's, I think that's the really just big question here is like, did you, if you had sitting days, what could you have done?

What could you have done with those sitting days? How can we fill them? Is it going to be creating urgency? Is it going to be limited time [00:35:00] pricing? Like what are we going to do? To, to make this better. 

Jack Carr: Where did your inside sales people come from? 

John Wilson: Man, all over. Um, Like all over. Just any industry, just like, hey.

We, we optimize for people that have sold before. Yeah, 

Jack Carr: especially 

John Wilson: phone sales, 

Jack Carr: right? 

John Wilson: Yeah, it's a different, it's a different thing. Like, it's harder to pick up queues. I mean, they closed 35, 000 today so far. 

Jack Carr: Like I, John, these conversations hurt so much, like I'm being such an idiot right now, but at the same time, just go do it.

I'm just going to go do it. Like I said, March, we're going to March or April 5th, April 5th, I'm going to check back in on this that week, hold me to it, mark it in your calendars. We're going to go hire an inside salesperson and then we're just going to run it as hard as we can. 

John Wilson: I mean, it's so good. It's so good.

Yeah. Yeah. Yeah. Yeah. Today. Um, just to like, really rub this in, I guess. Yeah, see, [00:36:00] I'm already in pain. It's 120, and we're at 91, 000 for the day. Um, pretty, pretty actually good split across all trains. Which usually like Ideally, each trade does like 40 or 50 grand each, right? But yeah, before I walked in today, not before I walked in, but like a few minutes after I walked in, it was like a few minutes after eight.

And like there was already like 30 grand on the board and it was inside sales closing up an HVAC system that we put in today. Like we literally closed it this morning at like seven thirty. We're installing it today because we've got a sitting install crew. And then we did the same thing with excavation.

Jack Carr: Oh my God. For people in the trains who actually knows what it takes to sell 50, like 50, 000 in HVAC a day is like what four, five to seven units. Um, plumbing 50, 000 days, like excavation, or, like, that's just so much work going on out of your place that I just can't even fucking, excuse [00:37:00] me, can't even fathom.

Well, and 

John Wilson: then it takes, it takes a, it takes a ton of back end too, cause what, HVAC's been really interesting, cause like the, uh, equipment that you need on site, like if I want to be able to do same day next day, like a same day HVAC install, or even next day, like what do you need to be able to do that?

And the answer is a lot. You need all the equipment on site. You need specific inventory ready to go. You need custom packouts ready to roll. Like, it takes a ton of freakin work to make this thing happen. But, once you get it cruisin you can, you know, drop 13 grand before you go in the office that day and you can have a crew working.

So, like, juice is worth the squeeze. 

Jack Carr: I'm gonna, I'm gonna take a video and post it on the Facebook group here soon of our office, cause we are just starting to implement the packouts for, um, Nice. for water heaters. Same day, next day, water heater. It's super easy to do. So it's like right up front and we're just getting our electrical side down for the pack out for HVAC.

Cause that's where we start the big, [00:38:00] big items. And then. The, the, the warehouse just got organized and we're still building and stuff, but Heck yeah. It's at a spot where I'm ready to show it. It doesn't look like super ugly anymore. Just looks like a little bit ugly. So I'm really excited to, um, like the MTV Cribs HVAC plumbing home services style.

John Wilson: Dude, I love it. I love it. Yeah. We have our, we're bringing on a second VMI, uh, like right now and it's HVAC exclusive so that we can better support. Like packouts for HX service and install because it is just such a beast. 

Jack Carr: That's so wild Is that what you guys are using? I don't know if I'm able to talk about is that what you're using the other building for?

John Wilson: Yeah, 

Jack Carr: yeah. Okay. Well, 

John Wilson: when's the workshop? In 

Jack Carr: a month 

John Wilson: and ten days you guys actually might be able to see the second VMI going Yeah, it goes like it goes live like early April 

Jack Carr: Okay. So, 

John Wilson: but we're going to see some moving. We're going to see some jaws hit the floor because we're going to walk in [00:39:00] and see 400 pieces of equipment.

I was just gonna say it's going to 

Jack Carr: be a warehouse in there. I'm just like, dude, it's going 

John Wilson: to be, it's going to be crazy. It's going to be crazy. Um, so huge amount of equipment and then an entire second BMI rolling. I'm 

Jack Carr: wondering, man, I'm going to talk to you offline about this, but I'm wondering if we were to go to some of the really small vendors, if they would.

If they would think about it, like, like super small distribution warehouses, like the ones that are trying to get footholds and, uh, like they could use our facilities as VMI, but also like an app, like, like you were saying, ship out of, technically it's a, it's a location, like it's in someone else's walk into your store and buy something from it.

So why, why wouldn't we allow the same thing? Um, and they just service us a little bit better. I'm wondering if I could convince one, because I have a small distributors in mind who, uh, they're itching for some more business. I think you just found a great [00:40:00] way. Man, that'd be nice. Show up. Jack's got a little VMI going on too.

That'd be good. That'd be good. But yeah, I think 

John Wilson: it's gonna be, they start construction like next week. Uh, and so if it's not done, it will be so close to being done by the time workshop's here. Maybe we'll even host workshop over in that building. That'd be kind of fun. Cause there's like a classroom section.

That'll 

Jack Carr: be neat. I'm excited to see it. That's gonna be, that's gonna be wild. It's crazy because like when we started these workshops too, you were just moving into the building you're in now and now you're getting another building and you're 

John Wilson: moving into 

Jack Carr: that building like three workshops later, two workshops later.

John Wilson: And like hopefully this time we have some fun like enhancements. So we added like, uh, like an employee swag shop. Uh, so that's kind of cool. We're doing a bunch of the walls, which is cool. We've just like enhanced building. 

Jack Carr: It's 

John Wilson: been good. 

Jack Carr: It's been good. Culture stuff. 

John Wilson: It's been good. 

Jack Carr: Sweet. Well, this has been an awesome episode.

I'm going to leave [00:41:00] here with like some big to do's, um, surviving Q1, not only surviving Q1, but like sell 

John Wilson: stuff. I mean, net profitable in Q1. Yeah. I mean, we're, we're at 12 and a half percent. 

Jack Carr: That's amazing. Amazing. I love it. Awesome. If you like what you heard today, come take a look at us at the website owned and operated dot com.

Join the Facebook group. Facebook group is amazing. It's amazing. Um, love you guys on there. It is a lot of fun. Good information all the time. Uh, and then if you haven't, I know there's like a few seats left, like what, three seats, four seats, not many are left at the workshop. Uh, this will probably drop right before the workshop, so you won't have much time to get there anyway.

If there's any left seats, April 15th through the 18th, come take a look at John's new shop. Yeah, I'm so pumped up and leave us a review wherever you leave reviews at appreciate it guys. [00:42:00] Thanks

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