Six Keys to Selling Energy Efficiency
I hear a lot of passion in our industry for building performance and doing good work. Most people get into this industry with a construction background rather than a business background. I came into it from the opposite direction, with a passion for the cause and a lot of business experience, but no construction experience. So what I think I can provide are my thoughts on the business side of running a construction company.
Specifically, I’m going to share some insights into our sales process. Whether you are a one-man shop or a larger operation, I think giving ample attention to the sales process is critical to the success and growth of any company.
First and foremost you need to help your salespeople become comfortable with selling. Over the years, we have had many talented sales people at Advanced Home Energy. I don't think any of them actually called themselves salespeople, though. Most came from a home performance background. That usually meant that they weren’t very good at sales because they didn’t want to come across as too pushy. That mindset is one of the first things that I had to work on with my sales team. There's no shame in selling work to people who want to improve their homes. We are helping them to make a good decision. To get the right sales mentality, our salespeople needed to get comfortable with that. Beyond that, below are six key practices that defined our successful sales process:
1. Same Day Reports & Proposals
When we first started testing, we provided a very robust report with detailed pricing. The time it took to produce it required our team to go back to the office after the appointment to finish. After sometimes several days, it would then be e-mailed to the homeowner. One of our best sales process improvements was to simplify the report and pricing so that our staff was able to present them at the conclusion of the audit. This can be done 90% of the time without much difficulty. After the change, our close rates increased significantly. Approximately 15% of our clients closed right on the spot. And it was not uncommon for a homeowner to sign off on jobs over $25,000 after we were in the in the home for only four hours.
Don’t Worry about Multiple Bids
We all know that people want to get several bids, so how come we were able to close so often on the spot? I challenge the notion that people want to get three bids. Yes, it’s something that they have heard they need to do, but they don’t want to. Think about it. Getting multiple bids take a lot of time and it means saying ‘no’ to multiple people. If you are able to build enough rapport and trust with a homeowner you can overcome their need to double check you (and your price). Plus, sometimes a homeowner already has other bids when you walk in the door. Providing a proposal and pricing on the same day allowed our salesperson to immediately compare against other bids and get a feel for any possible objections. On top of that, closing on the same day would save us countless of hours of back-and-forth communication.
2. Track Sales Close Rates & Job Size
Before we set up a sales tracking system, I had no idea what our close rate and average job size was. These are simple numbers that are easy to track. For our industry, a good close rate target is 40% or more. A good target for an average job size depends on the portfolio of services you offer, but for us, $15,000 was a good goal.
Of course, salespeople may not always hit their targets. It's more important to track and focus on their average and provide on-going feedback and support. But it’s not just about having a known target, salespeople also perform better when they compete against each other. I've seen this time and time again. When I had weekly sales meetings with my staff, we would go over individual sales numbers together. Everyone knew how everyone else was doing. It made for healthy competition.
Once you have a tracking system up and working, commissions should be pegged to individual performance. We had a minimum threshold that needed to be met each month to receive a modest commission on top of base wages for each salesperson. On top of that, when a salesperson beat their sales target they got a significant bump in commission. Regardless of how you structure your commissions, though, salespeople need clear targets and goals to meet their potential.
3. Prequalify Leads
To help set up our salespeople for success, we diligently prequalified our leads during phone intake. In addition to the standard home performance questions, there were a few key pieces of information that we would try to learn:
Are There Other Bids?
We needed this information so that the salesperson knew what they were walking into. We wanted to know if we were the first contractor in the door. If we weren’t, it was also helpful to know if the client had other proposals. And if they had other proposals, which of our competitors were they from. This helped our team members think about challenges they might face while presenting their proposal.
Is There a Budget?
This has to be asked delicately during the course of the conversation. We wanted to make sure that clients had a realistic idea of the cost of the work they wanted to be done. If they told us that they needed to insulate their attic and install a new water heater for $1500, we would discuss with them more realistic pricing and gauge their reaction. If they weren’t receptive, we would tell them that we probably could not offer them the solution they were looking for. When the phone was ringing off the hook during peak season this would be easy to do, but when it was slower it was a challenge to turn away potential work. But, whenever we accepted a questionable lead and did a site visit, inevitably we ended up regretting it. Don’t waste your time.
When Do They Want to Get the Work Done?
Most people will say they want the work done soon. But when we dug a little deeper there was usually a truer answer to the question. Some people indeed needed the work done as soon as possible. For example, they were having a baby, or doing other remodeling, or having an in-law moving in, or they were intolerant to heat right before the beginning of the summer. These people sincerely had a time pressures that were important to understand. At the appointment, the salesperson would reiterate the deadline and state that a quick decision could help get the work done on time. This saved us a lot of back and forth.
On the other hand, some leads would tell us that they were interested in doing the work in the far future or that they were just starting the long bid process. In cases like these, we would sometimes decide to walk away if we were already very busy. I preferred giving my staff a medium amount of high-quality opportunities rather than flood them with lots of low-quality ones.
4. Time-Sensitive Offers
We would include a time-sensitive offer or discount on the last line of all of our proposals.The expiration date would either reflect their own time pressures, a manufacturer's discount, or be an arbitrary end-of-the-month incentive. I liked our discounts to expire within two weeks of the date of the proposal which gave the client plenty of time to ask questions and get other bids if they wanted to. If the sales cycle took longer than two weeks then I found our close rate went down and the amount of time going back and forth went up. It was simply better to move on.
Another important differentiator for us was that we were extremely good at following up with the clients. We had automatic e-mails sent out and made on-going phone calls as clients went through different stages of the sales cycle. Many people commented that the reason they chose us, even though our prices were higher than others, was because we were so responsive.
Again, don't be scared of being too aggressive or too salesmen-like. I had one salesperson who came into my office feeling very low because a client had chewed her out for being too pushy. The client said he was going with another company whose salesman was much more hands-off. I told my salesperson that she had done a great job and to not worry about it. Every so often there will be a client who really doesn't want any follow-up and doesn't want to have the salesperson push them at all. These potential clients are infrequent and it's much more important to have a strong sales follow-up with all your clients.
6. Respect Your Salespeople's Time
Those of you who are running your salesperson to three or four site visits a day, I question whether you are using their time optimally. Having less but more qualified leads will make your salesperson more successful and bring you larger jobs that are more profitable. One of the ways in which we protected our salesperson's time was by sending out automatic emails the day before and the day of the scheduled appointment. In that e-mail, we would give the client important information having to do with giving us access, time of our arrival, and what to expect. Those e-mails were part of the sales process, they set the expectation for the clients to be home and to make a decision. And with those e-mails we made it clear that if they needed to reschedule to call us ahead of time. There's nothing worse than having a salesperson show up at the house and for no one to be home.
One Step at a Time
I know how difficult running a construction company can be. For many of us, the easy part is knowing how we can improve people's homes. But in order to be successful, a well thought-out sales process and an efficient and motivated sales team can make all the difference. If any of the above items resonated with you, I recommend trying just one out and seeing how it goes. Then as things improve you can continue to make incremental changes. (And share how it goes.) I wish you all the very best of success!
Image of Ori with a homeowner.
About the Author
Hello, everybody, my name is Ori Skloot, the president of Advanced Home Energy and a Board Member at Efficiency First California. I've been in the home performance industry for about 10 years. Recently, though, at Advanced Home Energy, we chose to transition away from single-family home performance work. It was a bittersweet decision but it doesn't mean my time selling and completing those upgrades wasn't time well spent. I have learned a lot over the years and I want to share some of my knowledge and experience with the EFCA community.
I graduated with an undergraduate degree from UC Berkeley Haas School of Business. But, my passion has always been in social and environmental justice.
Right out of college I cofounded a nonprofit called Rising Sun Energy Center which trained and employed high school and college students to do energy efficiency weatherization in their communities. It started in my small apartment and eventually grew to a staff of hundreds during the summer throughout the Bay Area.
In 2006, I partnered with my cousin Dvir Brakha to start Advanced Home Energy in Berkeley, CA. I was in charge of the business backend and he was in charge of operations and running crews. Originally it was just us, two other guys, and an insulation truck.
Sometime around 2007 we took a California Building Performance Contractors Association (CBPCA), now Efficiency First California, 10-day course with home performance guru Rick Chitwood. It was an eye-opening experience. Because of it, we decided it was time to shift our services. We slowly built up our company offerings beyond insulation to include full-service home performance.
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