At Contractor 20/20 - Plumbing, Marketing and Advertising, HVAC Marketing and Advertising & Electric Marketing and Advertising is our Specialty. Contractor 20/20 serves over 100 independent contractors in 40 states with complete direct mail. TV and radio advertising agency services and consumer research services. We have developed, researched and tested the "most successful" marketing techniques. We are the largest advertising agency serving independent contractors in the nation. If you wish to maximize your sales to prior customers and new customers - if you want to learn how other contractors hav achieved 15-20% net profit, give us a call at (607) 770-8933, ext. 80 and request a referral list.

NO MAGIC LABOR RATE
In the past 3 years, I have studied the financials of over 200 companies in 25 states and Canada. I have also conducted consumer awareness and market share studies for the same. This is a complicated issue so I will try to keep my analysis in plain language and grossly simplified.

#1 Labor rates are locally driven. To pay a technician $50 an hour is not uncommon in some cities, while a technician with the same skill level may get $15 an hour in other cities.

#2 Market share is driven by, multiples of labor rates & a company’s top of mind awareness level.

#3 The market share levels are predictable. Given the population within 20 miles, the average age of the home, a company’s labor rates, labor costs & qualitative and simple formulas I will accurately predict market share and potential, 9 times out of 10.

#4 Hourly Efficiency is driven by traffic patterns and your technicians ability to sell additional tasks. In effect the more tasks done and the less time spent in traffic, the higher the hourly efficiency. Higher Hourly Efficiency = Lower Real Labor Costs So let’s say you’re a FLAT rate company and your DIRECT labor goal is 25% of gross. It’s not just a matter of taking your technicians pay including benefits and multiplying by 4. example: $20 X 4 = $80/hr You have to figure it by actual working hour less (assuming)50% efficiency. example: $20 X 2 X 4 = $160/hr Now figure in call backs. example: $20 X 2 X 2 = $160 + 10% call backs = $176/hr But here’s the kicker: If you can raise your hourly efficiency and lower your call backs you can charge customers less and still keep your labor at 25%. Example: $20 X 1½ efficiency X 4 = $120 + 5% call backs = $126/hr The benefit to you of charging less, more customer retention, more referrals, better word of mouth, equals lower customer acquisition costs equals lower overhead.

#5 One time out of more than 50 studies, have I seen a T/M company with a direct labor cost of less than 35%. Now don’t get me wrong T/M companies often have higher call to appointment ratios and appointment to sales ratios. But the plain fact is, that it is very rare to see a T/M company clear more than 8% profit. It’s very common to see flat rate companies that are properly managed, to be in the 12 to 18% profit range.

#6 Overhead is the Killer. Companies that maximize profits keep their overhead below 40%. That is next to impossible to do unless you tie your sales goals and tech staffing to multiples of your overhead. Also, you must tie your advertising/promotion budgets to cover the gap between your actual sales and your necessary sales goal, as demanded by your historical new customer acquisition costs.

RULES
1. Flat rate pricing does not forgive the sins of bad management.
2. Low hourly efficiency will push up real costs.
3. Higher prices will eventually equal lower market share.
4. Wasted dollars on bad advertising will increase overhead.
5. Badly trained tech with low average tickets equal higher real labor costs.
6. Excessive call backs eat profit and destroy customer retention.
7. A badly trained CSR that waste leads, kills your advertising results.

CONCLUSION
It’s not just about some magic ad. As an advertising pro I can tell you, most times getting the phone to ring is the easy part. IT’S EVERYTHING YOU DO AFTER THE PHONE RINGS. It’s not just about some magic labor rate. IT’S ABOUT WHETHER YOU RETAIN CUSTOMERS AND HOW YOU EXPLOIT THE LEADS YOU GET.

NOBODY BATS A THOUSAND I know first hand that not everything you do works every time for everybody. But I can also tell you first hand how Frustrating it is to be blamed for bad outcomes from people who only completed half a program or supple half the information or the time needed. Recently, I have been recommending a certain sales trainer. I have heard from 3 clients the same story. “HALF OF THE MEN HE TRAINED MORE THAN DOUBLED THEIR SALES”. The moral- The training was a success for the ones that applied themselves and had the right personalities to succeed. For the rest it was a waste of time. So there you have it.
No magic labor rates.
No magic advertising.
No substitute for great management.
No substitute for hard work.
No perfect consultant or organization.

THE REALITY – SUCCESS IS A RESULT OF HARD WORK AND PRAYER.
Like Ghandi Said? “Before enlightment I carried water and stacked wood . . . after enlightment I carried water and stacked wood.” Like John Pope (my favorite business planner) said “We all learn from mistakes . . . but they don’t have to be our own mistakes.”



I am proud to be associated with the largest and most respected contractor groups in the nation as a
PHCC/QSC (Quality Service Contractors Industry Partner) and as a Service Roundtable Consult Partner.

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A Final personal note.. The marketing industry has a long dark history of disreputable operators. If you have been in business for a time, no doubt you have your own story to tell. That is why I urge you to check our referrals … see for yourself how our counsel has been a blessing to contractors from Coast to Coast. If you do, you will learn how faithful to our clients' interests we are, so different from too many clients' past experiences. Click Here to E-Mail Mike