In our latest episode, we sit down with Tom DeSantis, Redwood Services’ director of field sales, for an in-depth discussion filled with actionable insights. Whether you're a seasoned HVAC professional or just curious about the industry, you won't want to miss this!
Key Takeaways:
Don't miss this revealing conversation on HVAC Success Secrets: Revealed!
Find Tom :
On The Web: https://redwoodservices.com/
E-mail: tom@redwoodservices.com
Mobile: (914) 837-1293
YouTube: https://www.youtube.com/@redwoodservices1910
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On Purpose Media: https://onpurposemedia.ca
In our latest episode, we sit down with Tom DeSantis, Redwood Services’ director of field sales, for an in-depth discussion filled with actionable insights. Whether you're a seasoned HVAC professional or just curious about the industry, you won't want to miss this!
Key Takeaways:
Don't miss this revealing conversation on HVAC Success Secrets: Revealed!
Find Tom :
On The Web: https://redwoodservices.com/
E-mail: tom@redwoodservices.com
Mobile: (914) 837-1293
YouTube: https://www.youtube.com/@redwoodservices1910
Instagram: https://www.instagram.com/redwood_services
Linkedin: https://www.linkedin.com/company/redwood-services-llc/
Join Our Group: https://www.facebook.com/groups/hvacrevealed
Presented By On Purpose Media: https://www.onpurposemedia.ca/
For HVAC Internet Marketing reach out to us at info@onpurposemedia.ca or 888-428-0662
Sponsored By:
Chiirp: https://chiirp.com/hssr
Elite Call: https://elitecall.net
On Purpose Media: https://onpurposemedia.ca
The things we have to think about are, first of all, since leads are precious, then every single one of them, it's critical that we get them in the right hands. You think about what is your batting lineup?
Evan Hoffman:Welcome back to another HVAC success secrets reveal with Thaddeus and Evan. We have conversations with good people and any good conversation worth having is worth having drunk. Cheers, my friend.
Thaddeus Tondu:Cheers.
Evan Hoffman:Abstaining for right now, but
Thaddeus Tondu:it happens sometimes. I feel like I'm, our household sick again. Like, Ah, you know what, let's just stick to the H2Os.
Evan Hoffman:Yeah. Take care of yourself. Boy. Don't age yourself too much there, bud. I know you're going gray, but take it easy. I'm excited for today's show. We got Tom DeSantis on. He is the director of field sales at Redwood Services. They're a home service firm that is focused on the leading residential HVAC, Plumbing and Electrical service companies in growing us markets and Tom has spent the last 15 years in the industry at a variety of different positions. Most recently he was the general manager leading a company up into acquisition, which is then. Now created Redwood Services here. They partner with great companies. They help grow those companies and develop the leaders within them. Something that I'm really excited to dive into today is someone who has as much experience and knowledge, and then being able to collect all that data from the multiple different businesses that they help and they work with and partner with to be able to bring that information forward and to really make an impact through today and bring some actual application of knowledge is something I'm excited to get into today.
Thaddeus Tondu:And even chatting a little bit beforehand with him about the topic that we one of them anyways, of what we want to get into is positioning for 2024, both on the operational side, but also how do you make more, most of the at bats that you have. When it comes to installs of installs are down. How do you make the most of it? And excited to dive into that topic, but our show would not be possible, but we wouldn't be able to be here without our sponsors and in no particular order. Chiirp, Elite Call and On Purpose Media. So have you ever thought about it, but in your databases to fill your dispatch boards with lucrative service and sales appointments and boosting your memberships to enter an elite call a U S based call center that does just that. For over 20 years, their dedicated teams don't just make calls. They directly integrate appointments into your CRM and fill your dispatch boards. Don't let your competition get ahead. Let elite call connect with your customers. First visit elitecall.net to learn more about them today.
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Thaddeus Tondu:Perfect. And if you're like, I need more customers guess what? Reach out to On Purpose Media, your go-to home service marketing experts for everything, website design, SEO and PPC. They give you beautiful, stunning user-friendly websites. Increased visibility on the search engines. Engine engines, and targeted traffic through effective pay-per-click ads. So let's turn your online presence into a lead generating powerhouse visit on purposemedia.ca to start your digital transformation and watch your home service company thrive in a digital world. Without further ado, we'll be back on the other side with Tom.
INTRO:Welcome to HVAC Success Secrets Revealed, a show where we interview industry leaders and disruptors, revealing the success secrets to create and unleash the ultimate HVAC business. Now your hosts, Thaddeus and Evan.
Thaddeus Tondu:And
INTRO:we're back
Thaddeus Tondu:with Tom and he has the nice pink background, which matches us perfectly. I love it.
Tom DeSantis:Yeah, that pink background is part of the branding of one of our one of our 15 partners, and they do a great job of it. Everybody, everyone in the city knows exactly what kind of truck is coming down the road or one of their employees walks in the building so.
Thaddeus Tondu:Even better and branding is such a key part of running a successful business, in my opinion. It's the foot in the door helps with the brand new traffic. Let's start off with the hardest question of all walk us through your journey in the trades. I know that's a tough one.
Tom DeSantis:Yeah, so not a special background. I I've been in home services, home sales and services, and some of that time operations for my entire working life and then I. Was recruited to work for a, an organization in the Memphis market and gosh, that was 20, over 20 years ago now and that led me, some of the executives there left, bought a a business in the HVAC and the rest of the trades, plumbing, electrical. and then they brought me over to their business. That's how I got started. Didn't have a background on the technical side when I first started more on the sales and operational side. but I did get into the operational side on HVAC and I loved it during my 15 years here. First five or six were sales and operational support in our corporate office and then another five actually running one of our businesses and then a few years back in the corporate office and left there to go with Redwood services. Great move, a great bunch of people and right now, one of the, probably the fastest growing consolidator in the industry. So I'm excited to be here.
Evan Hoffman:Excited to have you. In your journey, cause obviously you've been through quite a bit. You've seen highs and lows in the market. You've seen different we're in an election year right now. So marketing is incredibly expensive.
Thaddeus Tondu:Which by the way, DeSantis, no relation to the DeSantis, the Florida governor, just full disclosure. We want to put that out there. I know you mentioned that before that, you know,
Evan Hoffman:that might help you with most of our audience, but
Tom DeSantis:Yeah, I'm a fan.
Evan Hoffman:No, absolutely. He's outspoken and he's not afraid to to go against the status quo, which is definitely something that's worth noting and when you look at running an HVAC business, run the business that you're in right now. With a bright pink background. It's not something that you would normally see and so when you can go against the status quo, you often win because you find your people. Walk us through a little bit of what some of your biggest setbacks or hardest lessons to learn have been, especially when you were a general manager and running one of the companies that you were working in cause that's oftentimes where some of the greatest shortcuts that some of our listeners can take is from those lessons that you learned so that they don't have to go through it and pay the lumps themselves.
Tom DeSantis:For me, personally I'm not sure if it's what everybody else has experienced, but on the operational side, one of the harder lessons to learn or most challenging parts of it were trying to hit some of the margin goals that we needed to hit on a regular basis this business, there are a lot of moving parts under one building. You could have four or five service lines. You're literally running four or five different businesses and You've got to have reliable managers, depending on the size of the business, you've got to have reliable managers in each service line. Basically, someone who's running that business for you effectively, and your labor can get out of control pretty quickly, or your material rates, or both and obviously, that can really hurt your gross margin for the month and your profits. There were times where we were challenged to achieve that and, you think you're on the right track for that month and then you get surprised if you don't have the right controls or processes in place where you're monitoring it more carefully on a daily basis. So in the beginning, that was a challenge for me. After a while, we got those processes in place. You get, if you have a good operating system I did not have that in the beginning to help with that, but that did get better over time and that helped us to keep a handle on it on a regular basis.
Thaddeus Tondu:So operating systems are a key thing for really any business. I always default like the entrepreneurs operating system and probably not what we're referencing here in terms of the actual operating system to be able to have the controls and processes to monitor frequent changes on a day by day basis and so looking at that transition, what were you guys doing from an operating perspective to before to then what changed to be able to get a better, more granular level of control of the margins?
Tom DeSantis:We were at the time that I was running a business, the company I was with, we were actually developing our own operating system. It's a little different than probably we're listening. So it was odd and in fact, I was the lucky one to be testing it for a while for three years to be exact. So it was a bit of a nightmare. So we had success where to help us with some of that. But as we were transitioning from success where to the new system, it was a bit chaotic. So I don't know if I'm a good example for others to learn from most people are not going to go through what I went through. We had a lot of our tracking on Excel spreadsheets. So not probably not a very good answer for most of your audience, but I don't think I'm a good example for you on that question. Sorry,
Thaddeus Tondu:I would actually well, because if you're doing it on Excel and you move to something else, I think there's actually a lot of people that are probably stuck there and they're doing it in that way and depending on obviously the size of the business and in where a person is at and utilizing some of those things we had previous guesses did, a few of them have actually said this, don't wait to have the system in place, just start putting something somewhere, start tracking it somewhere, whether it's on Excel or yellow pad technology and as you progress, now you add this level of the software and what you have on there. So I actually think you might not think so, but I think it would be a perfect example of the lumps along the way for moving from Excel to technology.
Tom DeSantis:One of the things that helped me a lot then, using Excel simply was we had started using a job costing spreadsheet we where we just basically entered every job every day on the install side as best we could labor materials and all of all the necessary inputs on the expenses based on the sale and then, of course, we would true it up after the install was completed, because some of those expenses could change if the install. So the point is we kept a running tally of what our margin was for the month when we started doing that, then we had a little bit of a better handle. It wasn't perfect. It wasn't exact all the time, but it was directionally close enough where we can make good decisions on a daily basis on, if we needed to discount a little bit more on an install to fill the board the next day at least we had some reliable data to take a look at with this job costing spreadsheet. So I would say that was a key part of me growing a bit more in that role.
Thaddeus Tondu:And hey, if you listen to this podcast and you're like I just shoot from the hip and write some numbers down that I think makes sense. Stop doing that because this improve in the pudding, right? You just have to write it down and keep track of it and even, historicals and backdating it and to be able to say, okay, now we know what we actually need to charge to remain profitable.
Evan Hoffman:And performance tractors, performance improved, right? If you're not keeping track of it, you're not going to be able to make any changes and I love the important point that you threw in there, too, around, we've got some room in the margin. We can discount a little bit more if we need to fill up the job board because we don't have, two days worth of installs, five days worth of installs booked out already. We need to get that job board filled up, sales guys, you've got a little bit more room here to be able to play with that. What was the margin goal that you were trying to hit? What was your percentage goal?
Tom DeSantis:At least 40% as a minimum, but 45 or 50 was the target.
Evan Hoffman:Got it. Okay, cool. So when looking at the upcoming year here, and we had Matt Mitchel on the show when we were at AHR and looking at manufacturers numbers that are down shipment numbers that are down in terms of new equipment coming in both on the heat pump side and the air conditioning side. We looked at the Hardy studies that were given out a couple weeks ago at EGIA as well, and they're saying the exact same thing around shipments being down when we're looking at still trying to hit our margins, but knowing that new installs are down a little bit this year, what are the things that companies need to be focused on? What are you coaching your partners on to be focused on when it comes to still? Having your eye on the target and knowing what your margins need to be and how many calls we need to be running.
Tom DeSantis:Yeah, great question. Obviously a critical question in this particular market this year and coming off of a very challenging year for most businesses in the industry and we're still dealing with a lot of those challenges now, but to answer your question, as I think about that. Whole topic to me there's a series of, there are ripple effects. There's a domino effect on some of the things that start to occur. For example, all so the business is challenged, the hit is profits goals and depending on the size and your market, you might even be struggling to break even or make any money in months like this, for example, as you're transitioning from the winter to the spring and to the summer, the demand calls are down and anyway, the whole point is that. Yeah. The mood in the building may be a bit sluggish, sales people are on commission that there's they need to sell obviously to feed their families and of course our installers, they're hoping to get that phone call that they've got an install for tomorrow, otherwise they don't get paid unless they're getting a job and of course, in the summer or the winter, when the temperatures are extreme, that they don't have to worry about that, but this time of year they do. So every department is feeling it and then of course, there's a little more pressure on the service department on some of the calls that they get. If there's an opportunity there to turn over a lead for a customer who's considering an upgrade, then obviously there's pressure on them to get as many of those done as possible because leads are precious right now, right? So anyway, and by the way, with all of that said, that whole mood, then the objections, I noticed this is magnified a lot more objections. You're hearing your sales. People are hearing from customers this time of year, about the price being too high and of course, inflation, they're feeling the pinch at the market when they go to the store and buy anything. So customers are screaming a bit louder on the price and so if you're in a, if you're the leader in the market in terms of price, where, in other words you're. Charging a premium for it because you deliver hopefully a premium service. You're going to hear that even more and then your salespeople start to believe that because sales are down, leads are down, and they're hearing it more and louder and they're not even as successful because they're not making as many sales. That whole, I guess the best word is challenge there is for us as leaders, as business leaders, whether you're a sales manager or the general manager or the owner you're constantly having to arm your salespeople and kind of help them mentally stay mentally tough because that kind of thinking that, yeah, we are overpriced, that kind of thinking hits you like carbon monoxide, you don't see it coming and all of a sudden you succumb to it and you start believing it and that, can affect your close rate even more and as well as the culture in the building. Know I'm stating, what we're all feeling here, but I'm trying to paint a picture for, but maybe those of you who are new to this. Where, the challenge starts to grow bigger and bigger because of all these things that are going on simultaneously. So the change you question now the things we have to think about are, first of all, since leads are precious, then every single one of them, it's critical that we get them in the right hands, right? You think about what is your batting lineup? I don't know how many, depending on the size of your business, how many salespeople you have, how many comfort advisors you have in the building. You want to make sure that you're giving the right Lead to the right comfort advisor. There are different types of leads. We all know there are marketing leads. Where customers may be getting multiple quotes and shopping around versus a tech lead where maybe they're your customer for years and they may not shop around, but the whole point is it's a different skill set on those leads. So if you're giving those precious leads to somebody who's not closing as well, then on a, say, on a marketing week, for example, because maybe they don't know how to justify the additional cost of the higher price and if you give those leads to them and they don't close them, then obviously the squeeze becomes even greater. You have more installers who aren't going to work tomorrow and obviously we may not hit our profit goals for the month. So point there is make sure that you are clear on what your batting lineup is, who is going to get leads and in what order and how do you do that? It's lot of people will just base it on hunches or who they think is the best salesperson. But if you're tracking it properly by lead channel and you have good historical data, not just for this current month, but for the year to date totals, then you're going to know when I first started. In the industry, we didn't have tracking as effective as it became over time and once we got it really sharpened up, then we started looking at data a lot clearer and results and we started to realize, this technician that we thought was our best lead generating tech, he was probably number five, and then this salesperson who we thought was our best closer. Well, It's because he got a lot more tech leads and, and when you start to put the whole thing into a good tracking system, then you start to realize who your best people are and then you've got to follow that batting lineup. So now that you know who the clear, it's a clear picture, who's number one, who's number two, who's number four, three, and four, and so on, then stick to it in terms of distributing leads. The second point is, the idea of. Margins versus volume, so in other words, you're in a tough month where, you know I answered your question earlier about what kind of margins I'd like to 45 or 50 percent is ideal, but, in some of the more challenging months, you might not even get 40, you might have to settle on the thirties just to fill your install board because. Now, you've still got overhead, you've got to meet, right? I don't care if you have a 50 percent gross margin, if it's on a very low volume, you're still not making enough money to meet your overhead. So the whole point there is you, it's now you got to be thinking about gross margin dollars as well and now you've got to get some installs on the board, even if it's a lower percentage lower margin percentage plus you've got installers who need to work tomorrow. You've got now, how do you make those decisions? That goes back to that job costing spreadsheet that I talked about, or some sort of a system that you might have where you are tracking and, say on the 12th day of the month that maybe, because I've been fairly successful so far, I'm running at a 43 percent gross margin roughly for the month right now and we've got no installs on the board tomorrow. The weather is mild, leads are down and I've got, Eight installers and I don't have a single board on the job on the board. Now it's time to dig deep and discount a little more deeply and make sure that your people know to call you on every single opportunity that they're in and you're willing to play let's make a deal today to at least get three or four jobs on the board, even if it's at a, 30 some odd percent margin for tomorrow your installers will appreciate that as well. So you gotta be thinking about that and make sure that you've got some reliable tracking in place to, to make those good decisions another thing to think about too, by the way, is if you are doing that and if you're doing it successfully on those days where you don't have installs, we all know that in some good days come along, right? Maybe you do get a little shot of some good weather. Maybe you do get a shot of some leads. Now when your salespeople run those leads. We've got to be making sure that they stay true to their prices and that when they can make those sales at a higher margin that they don't discount too easily. So is your pay plan in line with that? In other words. Does the sales team share in the discounted price? In other words if they don't win as much, the company can't win as much and vice versa. The company doesn't win as much than the salesperson doesn't either. We're in this together and the whole point is then now they're motivated to make sure that they maximize profit as well and then you're getting some of those days where you can do it. You're getting those 50%, maybe even 55 percent gross margin jobs and that kind of makes up for those days where you're in the thirties.
Evan Hoffman:So when you're paying them on that commission, then would you recommend doing a higher percentage of commission, but it's based off of instead of total sale, just the margin.
Tom DeSantis:Just based on the margin. I'm sorry to follow the question.
Evan Hoffman:Yeah. So if it's a 10, 000 sale, 50 percent margin, their commissions based on that 5, 000 margin, not based on the full 10, 000.
Tom DeSantis:We would pay them. I think most people in the industry depending on what organizations they may train with, but most people will pay based on the entire sale, but they would base the percentage of the commission on the gross margin that they achieved on the job. I definitely agree with that approach.
Thaddeus Tondu:It's almost two factor when you think about it and in it, like daily break even point is the one thing that I pulled out. There's two that I pulled out, but daily break even point is one of those things that you alluded to in there and understanding, okay what does it cost me to run my operation? On a daily basis and what do I need to bring in on those slow days? And another way to spin that and look at it and okay, how much do I need to bring in to be able to cover just my overhead this day, right? And then the other parts of your cross margin and things. But the one part is the the mood in the building and I want to pull on this a little bit because I think that's an important distinguishing thing, especially right now. But it alludes and you've said it a couple times in between the lines. Reliable managers was the first time that you said at the beginning of the show and I think that's a big cog in the puzzle, right? And so I guess there's two ways I want to go is one, how do you keep the mood positive in the building? What does a person need to do to be able to constantly remind people to stay in this positive mindset, because. Let's be real here human nature is to focus on the negative. What do we need to do to be able to change that?
Tom DeSantis:Yeah, good question. I think one of the, one of the important things to do and not just this challenging time of year, but I think all year round, I think it's a constant battle for us as business leaders to remind our people about the value that we offer. So I'm speaking in terms of our business. We have now 15 partners and every one of our high end service companies, their premium, they deliver a premium service at a premium price, and it's we earn it because we do really good work and if we're not perfect, of course, we do make mistakes and when we do, we own up to it, we will do what's necessary to take care of that customer and so we developed that reputation every one of our businesses are 4. 8, 4. 8, 4. 9. Star reviews on Google and I'm talking with 5, 000 plus reviews. That's almost perfect. 4. 9 out of five is almost perfect and when you've got 5, 000 people weighing in, that's pretty hard to be that perfect and so my point is we're clearly not perfect but when we make a mistake, we own up to it and the reason. I'm getting into that point is because to answer your question, you've got to remind your people of all the value that we offer and this is why we're more money. And what I'm trying to always do with myself, in fact, I just had a meeting with a sales team this morning about this very topic, about all the value that we offer. We, we listed all of the things that we do, not just in the install process, on the financial side of the business on the customer care side of the business, on the guarantees that we offer on the quality of the people in our building, the vetting process, our people go through before they get hired and how many people we have to turn away because of that vetting process anyway, this, we listed a whole lot of things and we put an approximate value on that for the customer. If, for example, if a competitor cut corners on an install on, on these 20 items, what are the ramifications, what are the possible issues that could come up with that customer in years ahead? And we've seen those, we go on service calls where we actually see those happen occurred the customer had an install seven years ago from a competitor. the condenser pad was. Was crooked and buckling and because they reuse the pet, and then that causes issues for the condenser and the, major repair bill and that customer actually had, this was a few years back, but the point is that, we see these mistakes that these competitors make and that doesn't mean every one of your competitors in your market is going to make all those mistakes. But the whole point is you're showing the, your employees first, and then arm them with that material. When they talk to customers every day, and if they help the customers understand all of these things that we're not going to cut corners on and the value that we offer and what it costs us to do it, that helps the customer understand why we are charging a premium price and why we're better and it makes the employee feel a lot more secure about where they're working and they understand it themselves. They have to be reminded of it, because like I said earlier, they're all they're hearing all the time is, wow, that's a lot of money. You guys are too much, and again, after a while they start to believe it. So you've got to remind them of all this value we offer, justify it in their mind and that helps justify it in the customer's mind and so that just helps them stay strong and helps them stay positive and if you can get a few of your key people feeling that way, first of all, they become more successful as a result of it. Where they are battling for a sale, they'll win it a few times more often than they may lose it now because of the conviction they have in what they're selling and so when they're starting to win, now they're feeling better. Installers are working a little bit more. So all of that starts to help contribute to, keeping the culture and and the whole mood in the building positive, of course, then you gotta stay on top of it with, company events, social gatherings, whenever you can make sure that, if you have a calendar of events plan that you stick to that that you're making sure that your people are getting together every once in a while and having some fun. That helps obviously with, the relationships in the building and people just feeling good about where they work and that the company cares and that you care and, stay connected to them on a regular basis. Those are just a few of the things that I've noticed that our partners do really well and when some of them aren't, that's what we try to remind them of.
Thaddeus Tondu:And that, whole message starts at the top down, right? And that goes back to the second part is the reliable managers and making sure that you're putting the right people in the right seat to be able to drive the bus forward in looking at that whole aspect of things and getting the right managers in place for a business and I think there comes a point where the business transitions from leading technicians to leading managers, and then the managers lead the technicians and other people in the office at CSR is everybody that makes the business run, not just technicians. But when you lead managers and lead leaders is a different game than just leading people, right? When you look at getting those reliable managers in place, what are you looking for and what are you doing to ensure that they also understand? The whole message in that they're the right people for the bus.
Tom DeSantis:Yeah a good manager is 1st and foremost, they have to be a real good people person and they've got to care about their people, because if they don't care, then. There are people sense that pretty quickly and after a while, they're not going to want to follow that person. They are the kind of person that is just focused on themselves and what's in it for them and what's then, that kind of a person probably, they might be a successful manager for you. But long term it, it may be tougher to grow with that person. So you want somebody who's really good with people, who wants to be part of a growing, at least that's what we're looking for, because we are growing at a very rapid pace right now and so we need people who are really committed to putting in the kind of effort that's necessary to grow at that pace and that's a commitment to your people, a commitment to the, the processes that we have in place and the hours that it's going to take to grow to that level. We talk, one of the things I get into first is, I try to figure out what are their goals, what are they interested in what point are they at in their life in terms of growing themselves personally and what they would like to do for their family. Usually if they have some good personal goals for themselves and their family, then, you can figure out a way to help them get motivated. To, relate the goals to the business goals, to their personal goals, and how they can achieve that. So I'm looking for someone who's, a guy who's a, or a gal who's a winner who wants to grow and is willing to put in that effort, not only in those processes, but with their people to help them grow, because if they put that effort in with their people and their people are more successful, obviously they're going to grow as a result of it and that's what our best sales managers do for sure. They're committed to their, the growth of their own people. We'll invest in these people, through next star training as well as some other personal training programs that are out there and and you can see it's really exciting to see these people grow over time and become more successful and you're, you can tell the leaders who enjoy that the most are usually the most successful. I'm talking about the enjoyment of watching their people grow.
Thaddeus Tondu:And even the part that I like of when you train people in else issues is more common on a question, Evan. When you get the people to grow and you can teach them to be better than you were, that's what leadership. I mean that I love when that happened, when I was in, in sales and in coaching salespeople, when they outperformed and beat my records of what I sold, I'm like, fuck. Yeah. That makes you feel good. Anyways, Evan, back to you.
Evan Hoffman:And
Thaddeus Tondu:I love
Evan Hoffman:that the idea of identifying great people and being able to promote them. What are some of the mistakes that have been made around this? Because again, that's where a lot of the lessons lie, and if we can help people shortcut. Their journey to where they want to get to by learning from your mistakes or the mistakes of other companies that you've seen it's going to help them to get there quicker. So when looking at the hiring managers, hiring leaders, promoting them within, do you recommend promoting people from within? Do you recommend going and finding people externally for those leadership type roles and What would have been the biggest pitfalls there? What did they not do when they were trying to choose that person? And it ended up costing the business more than actually helping them grow.
Tom DeSantis:Yeah. So the part, the question about hiring within from within promoting within or externally. I think it could go either way, depending on obviously the quality of the people you have in place and are they the right fit for that next level? In other words, we've got some really good salespeople, for example, who would be terrific sales managers, but. First of all, do they want to do that? That's the first thing they may want to do it maybe for the change in hours, if they have a family or something like that.
Evan Hoffman:Or even for the vanity of it, right? Like that ego side, I get to be the leader. I get to be the manager in some cases, which is the wrong reason.
Tom DeSantis:It is exactly. Generally it's, for the hours and and maybe just a new challenge in some cases but they're going to take a cut and pay. If they're one of our top salespeople, one of our better salespeople, they're certainly going to take a cut and pay anybody in this industry, you were a comfort advisor, Evan, and a good comfort advisor can make a heck of a lot of money. And so can a good sales manager. point there is that are they ready to take that cut and pay? Are they willing to so in other words, or are they just strictly money motivated and that's okay if they are, maybe they're just better off staying as a salesperson but back to the question on, mistakes that are made. So I think that. One mistake that I've seen over the years is just because they were one of the best at this particular role, whether it's a salesperson or a technician or whatever position they're in right now, just because they were one of the best in their department in the rank, so to speak, does not mean they're going to be the best. A good leader, a good manager. Some of the best managers I've or leaders that I've seen were maybe average to above average performers. In some cases, maybe they were one of the best, but quite often I've seen some really top performers fall on their face as a manager and it's, by the way, it's not at all a criticism of those people. They're still great people. It just wasn't the right fit for them in that role. As a leader, maybe they were so good because they were, I think a good salesperson is, has a certain amount of selfishness to them and that respectfully that's part of the reason they're so good, when they are to the extreme that way, then they don't always become a good manager or a good leader because they're not invested in their people enough, You know, because there'd be a good leader, a good manager, especially on the sales side. I think we all know that we've got to invest the time in developing people. It's, I relate this to sports, sometimes the best athletes the all stars out there don't always, we've seen a lot of them become managers and just fail miserably at it and maybe it wasn't because they couldn't do it, but maybe just because they weren't willing to put in that time to maybe get down to the basics again, maybe some of those skills came to them so easily or so naturally that they don't want to go through the work and the processes of going through the basics, the ABCs. To develop somebody from the beginning, there's various reasons why, but to, back to your question and my point is that, the best in those positions don't always become the best managers or leaders. So that's definitely a mistake. Some make then another is that maybe just not properly vetting. I've made this mistake myself, years ago when, when I'm trying to hire somebody, especially if you're, in a pinch and you really need to hire somebody fairly quickly and you really need to get that role filled. Maybe you're a little too quick. If the person looks good, sounds good, interviews well, maybe you don't take enough time to vet their background or find out a little bit more about their skill sets and what motivates them there are different, exams you could put people through and different analysis. You can put them through now today. There's even better materials out there to help support that, whether it's the color coding or the disc assessments or things like that. So I would say just be a little bit more thorough in making sure that this person is the right fit for your organization as well.
Thaddeus Tondu:The two great points don't hire the best performer because oftentimes they're not the best leader and don't what is it? Higher, higher, slow fire fast is the other essence of things and so I think we're all guilty of that one at times. I do want to jump into our random question generator. So the random question generator as brought to you by young perps media, where we know the only time success comes before work is in the dictionary. So the random question generator, Tom. So we have three questions pulled up on the back end. You actually don't get to know what the questions are. You just get to choose. Do a, if you want question one, two, or three, I read it off. It has absolutely zero to do with anything that we're talking about. So do you want question one, two, or three?
Tom DeSantis:Question two, I guess that's the good, better, best usually people choose the one in the middle, right?
Thaddeus Tondu:I guess I would actually, would be curious to know if going back and hover podcasts, what's the average of what most people choose is one, two or three, but how do you think the world is going to end? That is the question. How do you think the world is going to end?
Evan Hoffman:How far down the rabbit hole of conspiracy theories do you want to go?
Tom DeSantis:I don't know. I don't think about that very much, but
Thaddeus Tondu:there's all the apocalypse or aliens.
Tom DeSantis:I don't know. I think what the Bible says, it's gonna end by fire tend to tend to let that lead me before anything else. Let's put it this way, we better hit our profit goals this year, or or our world will be shaking a little bit. I think it's we're all focused on that right now, but I don't know. I'm sorry. I can't help you on that other question.
Thaddeus Tondu:Hey,
Tom DeSantis:it's all
Thaddeus Tondu:good. I believe that it'll be a zombie apocalypse. That's my opinion. That's how the world will end. Evan, what about you? What do you think? How do you think the world's going to end Evan?
Evan Hoffman:I'm going to say, what's that show? The last of us where it's the mushroom zombies that take over and it's the fungi that are controlling people, but yeah we'll go the road of the dinosaurs and massive asteroid and then leading to fire and volcano and all that fun stuff so.
Thaddeus Tondu:All very applicable,
Evan Hoffman:either that or the new world order.
Thaddeus Tondu:There's so many different ways that I could go. They'll send a spaceship out on Elon Musk's rocket X to Mars. And that'll be the new earth.
Evan Hoffman:There
Thaddeus Tondu:you
Evan Hoffman:go. Question I have for you, Tom is around, you were talking about data and. I was just at the ServiceTitan marketing summit this last week, best data wins in large part when it comes to businesses, especially as they get up there in size our access to data is infinite as long as it's good. How did you start going through and filtering through the data that you had as you were transitioning from one software to another Going through even in the bringing on of new partners to be able to filter through the data that they have to see if it's actually good quality data, or if it's stuff that needs to get filtered more and get better quantified. What is your team's process in looking at the data to be able to make better decisions?
Tom DeSantis:That's a good question. So when we're looking at a company that is going to partner with us long term or, any consolidators looking at an acquisition target, the, obviously most of these, especially in the HVAC industry, there's all kinds of ways that people are keeping records. Some it's literally on the back of a napkin and some some are pretty thorough, pretty darn good. But anyway, to answer your question I think our team and I'm not involved on the acquisition side, but we've got a really good team of people. So I think our team is really solid. In terms of, how they approach that. I don't know the details of that process, but obviously, they collect as much as they possibly can. From what I have learned and, a previous company I was with a lot of it is already there in Excel, then, of course, there's different types of reports out there and we'll start to cross reference some of the different data points and we'll start to figure out, what this percentage is of that on these different reports and you'll start to find gaps here and there and holes in the, what you're finding on one report or another and obviously, you start asking questions about helping you you to make sense of, why these are different and if they're, if they're not too far apart, then, you don't worry too much about it, but if they're really far apart, then obviously one of them is off for whatever reason and yeah, I have to start digging and find out why and I think the best answer to that is just take your time. Be thorough and when you have different data points on different sources, different types of reports, start to make sure that you're talking to one another the team is talking to one another in terms of what they're collecting and I don't know if they have, but 1 of the things I used to do myself is I would take. When we bring on a new business, I would take this simple template that I had made in terms of, what and how many leads they have or how it's broken down by channel and what their close rates were and what their revenue and what their margins are in these different things and I would start to put things together and turn and put some formulas in place where, this should be X percent of that. And, I start to plug these numbers in and I would start to realize in some cases how the data was, pretty far or vice versa. It was pretty solid, pretty close and so that's when you get a feel for how much this company has their stuff together and in some cases it's not necessarily that anybody's being dishonest in any way, maybe they are, but in most cases, I don't think that was it at all. It was just different people manually entering different figures and you just, after a while, when you start to peel back the layers of the onion, you can start to make sense of it all and find out what the what the more accurate numbers are. It just takes time, effort, and yeah, obviously it's got to be people who know the business, and know that when they look at a number or a percentage, they start to realize that doesn't make sense at all, starts with that.
Evan Hoffman:No, and I love the breaking down of business units and where is the revenue coming from? How do our technicians perform on each one of these calls? He also mentioned earlier that being able to send the right tech on the right call. Using data, be able to make those decisions that we can best serve the customers when leads are running low at any given point in time and in the business, how do you fight against that?
Tom DeSantis:Distribution
Evan Hoffman:of leads.
Tom DeSantis:Yeah a couple of different things that we look at 1 is. you look at the number of incoming phone calls in the business and I think most companies will agree if they're tracking that, that we're definitely seeing a decline in call volume into the building year over year and, a lot of people say a lot of that call volume is noise anyway. It's not customers. It's, it's. technicians, it's solicitors yeah, of course, that's all true. But still, on the whole, let's just say, I'm just making up a number now, but let's just say 45 percent of the call volume is noise and not, maybe it's even duplicate calls from the same customer on an ETA or something like that. Let's just say 55 percent of them normally are. the point is, relatively speaking, year over year, you just still have more calls coming in the billing period. So if my whole point is the calls are down. All right. So then obviously every single call is precious. So where would I look first? In the call center. How well am I booking the calls that I get? There are booking percentages in every one of our businesses that we're all tracking. Hopefully we're all tracking, and if you have. Just two CSRs that are booking, at a few points off where they should be, then, over the course of the year, that adds up to a lot of revenue, am I coaching these CSRs properly? I'm not suggesting we just automatically start terminating people, just coach them, are they trained properly? Have we invested the time into helping them become better at booking these calls? Have we given them the tools Overcome the concerns and the objections that customers are expressing on the phone and why they're not booking. So start there, make sure that you shore up the skill set of the CSRs that you have, if you need to bring in some new CSRs, do that, because that's, it's just, it's such an important starting point of the whole process, right? So that's the top of the funnel. How many calls am I getting in? And what am I doing? What's my booking percentage with the calls I'm getting? Then by distributing,
Evan Hoffman:Okay. One other quick introduction there are you paying high enough to attract the top talented CSRs in your market?
Tom DeSantis:Good
Evan Hoffman:point. Excellent
Tom DeSantis:point. Because, that's the first impression that your customers receive of your company. So that's a great point, Evan are they representing you the way you want to be represented and a good way to find that out, by the way, is just listen to some of the calls, call into the building, have someone call into the building yourself themselves, and listen to some of the calls, or use your software to listen to the calls and. When I've listened to calls over time, it was eye opening for me. I found that some of the CSRs that I thought were not so good were a lot better than I thought, when I listened to them and then vice versa. Some of the ones I thought were rock stars were, a little disappointing in some cases. So you really don't know for sure. It's not just a matter of walking through the call center and listening. It's. Listen to the calls. Listen to how they're handling these customers on the phone. Listen to how they handle on our rate customer that'll tell you a lot as well. So anyway, booking percent call volume booking percentage start there. Then, of course, how am I distributing those? How are dispatchers distributing service calls properly to the right text? Are they, of course, are they lead coordinators distributing the leads properly to the right service? To the right Comfort Advisors or Project Managers? Another very important point on the dispatchers distributing these calls to the service techs is the whole tech generated lead process. There are, if you're, are you tracking just like you do with Comfort Advisors, are you tracking the performance of those technicians on how well they turn over leads and I'm not suggesting you just get technicians that high pressure people and try to sell. It's not all about making the sale. It's about following the proper process on the service experience to create a five star service experience for that customer. If you do that, the revenue will follow. You don't have to high pressure people. You don't have to be dishonest with people in any way. In fact, people are smart. They're going to see right through that anyway. So the whole point is, just do the right thing, take care of the customer and follow the process and the technicians who do that usually tend to turn leads over at a higher rate for customers to consider an upgrade that doesn't mean they're all going to, and then when they consider the upgrade, that's the lead, right? That's the lead for the comfort advisor. So a really good service department. Trained, led, they will generate a good amount of leads, even in a tough economy, doesn't mean they're all going to close, but, at least it starts with the lead and, obviously the more leads we get, even if your close rate's a little down versus last year, you're still going to get more sales if you can generate enough leads over last year. We have been challenged to get more leads. In some cases, we've been successful at it, and we've been making up the difference through our service departments. Our service departments are better than they were last year. and they, and we really emphasize, follow the process, create a five star experience don't high pressure people just follow the process and if you do that, then again, as I said before, the revenue will follow and you'll get, and we do get more tech generated leads this year in a tougher economy than we did last year and the year before because marketing leads are down, and now in some cases, we've got some really good, smart marketers who are also coming up with different ways to. generate marketing leads. So we're starting to see a little bit of an uptick in that as well recently all told the leads are we are challenged to get more leads, we're close, but we're making it up in our performance with our company advisors, with closed rates and average sales. What's a percentage target that you would aim for demand? Leads to, to turn over into estimates and then also on service or maintenance leads to turn over into estimates. So on demand calls on the service side obviously that's going to vary with the time of year, whether it does help or challenge you. It doesn't mean you can't be successful if you don't have weather. It just makes it tougher. You have to follow the process properly. Some people just fall victim to the weather and the economy period and I said, we just can't do this. And again, I'm not saying it doesn't impact you. You can still succeed. It just makes it tougher to succeed, forces you to get better. So to answer your question during the time you, this time of year, we're always talking about the next our expectation of 60 percent turnover in general on, on opportunities but that varies on the type of opportunity. Is it a demand call, like you said, or is it a maintenance customer? So with demand, generally, you should get somewhere around 70 percent or so in the summertime. It could even be as high as 80%, because there's more pain there, so to speak for the customer then of course, this time of year, it might only be 60%. Then maintenance customers could be, we see some businesses in this industry, not necessarily ours, in some cases, a new one we bring on are only as low as 15 percent on their maintenance customers on opportunities to maybe as high as say 30, 35. Why? Because these systems are running, they're usually well taken care of by us and so there's not as much of a need, and we're not going to, you be dishonest with the customer. So there's just, the opportunity just is not as great. So you have to lower your expectations a bit on those types, but in the mix and, when you mix it all together and then you've got marketing tune up type calls where maybe the systems are aging and struggling, but they're still running. But there's a reason they called, right? The point is you can use a true cost of ownership calculation and show them how they're in some cases almost paying for a new one anyway, they just don't own it yet, and if you train properly and they follow the process properly, then you can still turn some of those over at say 40%, 50%. So depending on the mix of all those types of calls, we still look for an expectation of 60 percent on our opportunities to turn over. We don't always achieve that, some of our businesses are in the forties, fifties. This time of year, in the summertime, we have some who exceed the 60 percent on a regular basis or the winter time. So it varies short answer to your question is it varies depending on the time of year and the mix of calls. But I think I gave you an answer on the breakdown of each of those calls though.
Evan Hoffman:No, that's great. Thank you so much for that as we start to wrap up here we definitely want to make sure that people can reach out to you and we want to make sure in case the listeners here have not clued into the fact that you have a depth of knowledge that would be meaningful to any business that's looking for a solid partner that they can bring into their company. What is it that separates Redwood from, say, other companies? One PE firms or other partnership groups where they're coming in and making almost a merger type of acquisition where they're joining the company and still maintaining the business and just helping them grow, leverage the group. What is it that sets Redwood apart from either of those 2 options?
Tom DeSantis:It's a combination of, it's our leadership are the people across our organization. We have some really quality partners the owners of the businesses, the general managers, the key managers in place, people in the ranks, the sales teams, there really are some high quality people out there. And then of course, we've got, we're led by a really good group of executives in our partner support center. People who have been in the industry their entire lives and have been coaches in the industry, next door coaches. Great leadership at the senior executive levels just some really smart people who put good deals together. And then the model that we have is unlike any other out there. I'm pretty familiar with a lot of the other models out there and nobody has. We call it our secret sauce. Nobody has the partnership model that we have. And so we're able to make acquisitions with some of the best organizations out there and become partners with these. It's really not an acquisition. It's just a term that I've used over the years being in different companies. But the point is that we're able to attract businesses to become a partner with us. Where others they're turning down everybody else out there because of the model because of the secret sauce and the secret sauce is a combination of the way it's structured the combination of that with the people, the leadership, and the growth opportunity that they see. For not only themselves, but for their people in their business these are people, these are leaders that care about the people that are in their organization to help them get to where they are. And they want to make sure that they're when they're gone one day, that they're in good hands with the people that they're partnering with and they see that. It's exciting to me to be part of this. I think that everybody who starts to learn more about it, I don't think I know because they've all shared that with me, they're excited about the model and where we're going is even more exciting. It's where we're going to be in the next, say, 5 to 10 years. It's, the sky's the limit for us.
Evan Hoffman:Love it. When Skynet's running the world.
Thaddeus Tondu:And part of it too, and this was my conversation I have with John was, there's no rebrand. There's no change in management team. You don't amalgamate marketing, right? Like it's, you're keeping it almost like a separate standalone entity. And the the one of the risks when you look at, private equity visa via on air quotes as well. My team's gone. They're going to fire people. They're going to lay people off and that's where the difference is as well for, from what you guys in my conversations with John as well. So fascinating stuff in terms of what you guys are doing.
Tom DeSantis:Yeah. Simply put, you hear this a lot in our partner support center, it's people first. It doesn't mean that there's not tough conversations here and there, they don't just turn around and demand and command. But it's, there's a lot of coaching. There's a lot of leading and we put people first and that's not always easy to do. Trust me when I tell you that it's been a challenge to any, cause you don't always just accomplish what you want as quickly as you want when you take that approach. But in the end, it's a better approach.
Evan Hoffman:It's doing what's right and now it's easy.
Thaddeus Tondu:And I won't even say it, Evan. I won't say it. People product price. I can't, I couldn't help myself in that order. Inside joke Tom, I say people product price on almost every podcast that we do. If you guys want to find out more information on Redwood, what they do, redwoodservices.com is their URL. tom@redwoodservices.com is how you reach out to him of course, if you wanna send him a text message, you can do that or phone call(914) 837-1293. Been a pleasure having you on. But before we wrap up though, we have one last question here for you. What is one question that you wish people would ask you more, but don't
Tom DeSantis:I don't know. I can't think of anything right now. I'm fine if they don't ask me anything else. I don't know. I'm not the I'm not the witty guest that you might have on, that you might wish you had on, but sorry, I can't help you there. Nothing comes to mind. But I'll tell you if I'm ever on again we got to do this live since I'm, just visiting here right now, obviously traveling for work, but that this partner here, I'm in Northern Kentucky and if I knew that you guys are drinking whiskey or bourbon on your show, we got to do this live here and we're in Kentucky, right?
Thaddeus Tondu:We'll say we'll get it set up and we'll each have a bottle of a sample and hopefully we don't finish all three in an hour. That might be for some crazy adventures after the fact.
Evan Hoffman:Make
Thaddeus Tondu:for some
Evan Hoffman:great content I feel
Thaddeus Tondu:I
Evan Hoffman:think
Thaddeus Tondu:it would be. I think, yeah, the conversations that might happen after a few glasses of bourbon will definitely loosen lips a little bit.
Tom DeSantis:You probably get those answers from me on these other questions. I'm not answering that.
Evan Hoffman:There
Tom DeSantis:might also
Evan Hoffman:be some other questions and answers that might not ever see the light of day. Tom, tell us about the dark side of PE.
Thaddeus Tondu:Right? That is a topic that I want to have at one point of our show. Is some of the dark aspects of PE, not for today. Another topic. I know we're going to wrap up. I know that you got to go. You're in on Eastern time zone. So thank you for taking the time. Out of your day to sit and chat with us. Always a pleasure when we get great perspectives as well in terms of what to be able to do in 2024, to be able to help position the business, to be able to be there in the now with what's happening in the economy. So thank you so much for taking the time to chat with us.
Tom DeSantis:Thanks for having me guys. Great to meet you.
Evan Hoffman:Likewise.
Thaddeus Tondu:Yeah. And until next time.
Evan Hoffman:Cheers.
Tom DeSantis:All right.
Thaddeus Tondu:Well, That's a wrap on another episode of HVAC Success Secrets Revealed. Before you go, two quick things. First off, join our Facebook group, facebook.com/groups/hvacrevealed. The other thing, if you took one tiny bit of information out of this show, no matter how big, no matter how small, all we ask is for you to introduce this to one person in your contacts list. That's it. That's all one person. So they too can unleash the ultimate HVAC business. Until next time. Cheers.