Webinar Recap: The Expansion Trap with Jon Ryan & Homepros
Learn about the challenges of growing a home service business, and the tools and mindset it takes to maintain profitability and the right culture.
We recently hosted a conversation on the challenges and solutions of scaling a home service business—with respect to customer experience, staffing, KPIs, leadership, and more. There are so many great insights here on automation, AI, and beyond. Read on for the:
This one-hour webinar had three core parts, which we've distilled into this recap. Here's who was in attendance:
Processes break down. As you grow, processes break down, in field management, finances and forecasting, and customer communication.
Profit dies down. The money you’re making from that growth is going back into solving for those process breakdowns, through hiring and tools.
Customer experience declines. The more leads and customers that come in, the harder it is to keep up with those conversations, resulting in poor customer experiences and missed opportunities.
Culture evolves. Not to mention the soft skill challenges of the leader in maintaining the right culture and employee health.
This is the expansion trap. Without the right solution, you get stuck growing but not making any money, and eventually, losing money.
Buy more leads. As you see profit loss, you try to add more leads. But this actually fuels the problem. Because it’s a process problem, not a lead problem. You’re not converting those leads or retaining those customers because you lack personalized attention to them across the customer journey.
Add more CSRs. Instead of creating a new process, you just try to scale the current process by adding more bodies. But staffing has two challenges: the first is that capacity needs ebb and flow by day, season, and market conditions. The second is that the CSR role has so much redundancy, with a lot of people hanging up on you and making demands at you. It’s hard to find someone to take that role without having to pay a higher salary—and even harder to get them to stay.
Tell your CSRs to work harder. This makes an already-demanding role
Process change. Take no lead for granted. Every lead need to be nurtured through to the end, and existing customers need to be constantly re-engaged with.
Automation is a must. You cannot do this without automation. A tool for speed to lead, estimate follow-up, and nurturing customers and aged leads is a must if you’re serious about growing, or even maintaining stability.
Dedicate a person to the tool. You need to have a person dedicated to using that tool.
AI CSRs. The trend is toward level 1 AI CSRs, who can take on the repetitive work, the grunt work, detect sentiment and needs and triage to human CSRs who can do the level 2 and 3 stuff. This way you can scale up without having to increase headcount, scale back without having to fire anyone, and the high performers you are paying can focus on what drives revenue.
Watch on YouTube to access the time-stamped table of contents
You used to have one person that kind of kept track of everything, or a handful of people that kept track of everything, and all of a sudden their time is divided and their energies are divided. And that's where you find that your systems that you thought were solid, aren't solid.
And you start having money fall out, typically right away in your gross margin. And then you start throwing money at just about anything. You throw a person at something. Because you think that's the first thing. And so those are the things that cause you to get stuck.
The larger you are, the longer it takes for a mistake to really become apparent to you. We are learning these things as we go, and you don't know that you need help typically until it's too late.
I think it's that middle layer of supervision that I think is the biggest struggle.You struggle in this industry in gaining credibility with a manager or supervisor that you bring in. Joe Montana, just because he's a great football player is not going to be a great football coach. So it's not always your lead tech.
Most people make the mistake in two ways relative to KPI's. They either don't have the right KPI's, or you get them right and you look at them but you don't do anything about it. That's a common thing that I think every, every company has, not just in our industry. So you really have to be diligent about it. And I think that's where complacency is probably your worst enemy.
And then there’s your financials. End of the month shouldn't come as a surprise how it turned out. You should know by the time you get into the second week of the month, whether or not what the month's going to turn out to be.
Once you get to winning the week, then you got to get to winning the day. And that's where you're looking at all the metrics from the call center, right on down to the marketing and field performance. And those are hard things to learn. You think you can do it, but I promise you, it's a lot harder than it sounds.It really is. And it takes m good people and a commitment by you and the rest of your organization to get behind it.
Everything that John is saying I think I've probably heard a couple thousand times as I’ve built this business, which is you hit this point at around 10 or 15 million where you can keep growing but you actually don't make any more money for a while, because you're putting all that money back into building the management layer and the systems required to get to that next level where you can make money again.
And that feels weird. And if you don't know what to measure along the way you can really sort of mess it up. So what he's talking about absolutely resonates.
So we're helping people that are really growing to that next stage and want to do it quickly and they're thinking about things like, can those same people that got me here, get me there? If they can't, what are the systems I need? Can I have one system that does it? Do I need to build a tech stack? What do I need to automate? What can I automate? What shouldn't I automate?
And it’s interesting too, talking to customers about that because some customers I've talked to don't want to let go of that. But if you don't let go of some of the old stuff then you'll get stuck and you'll start losing money, you know, at around the, around that same mark. So yeah, it definitely resonates with me.
Around that 15 million mark and up, operators are looking to automate stuff just because you start to lose control and you know that the job you used to do day in and day out doesn't get done like you used to do it.
So you have to automate some of this stuff so that you make sure every customer gets talked to, every follow up gets made in the same way. That's caring and deliberate and you deliver that same service that you did at 5 million. Hard. Extremely hard. I'm experiencing it too. And so you've got to think about automating that stuff in some way, but still making it personal because you can't lose that either. And that gets harder as you grow.
It doesn't take as much to fill your schedule when you've got five guys or five techs in the field as it does when you've got 25. That can be a huge task. You can't turn the knob on Google fast enough for that. Between text messages and phone calls, we're doing anywhere between 800 and 1500 outbound attempts in a day right now to fill our calendar.
As you get bigger, it's how you treat your leads. And this is where you know, like, um, you know, shameless plug for Chris's company — that's where like a nurturing every lead all the way through till the very end is so important. So you can count on a certain number of leads from new customers. And then you go back and you're nurturing your existing customers.
You have to answer the leads quickly. Once you do a proposal, you're following up on it. You have to have a clear future on every customer. It’s not just “I’ll email you the proposal and just get back to me when you're ready.” No, no, no. There's a structured path for following up on those things.
Your lead makeup has to be based upon lead generation services, mining your own customer database, and then going back and making sure that you're seeing all of those opportunities that come your way, all the way through to the end.
All of these things kind of play in more and more and more as you get bigger, because the leads are, if you double your, if you double your size of your company, you cannot count on the double the amount of leads being available to you to be able to make that growth happen. It just doesn't work.
(Alec) Are there any specific templates or ways in which some contractors are designing these outbounding campaigns, or ways in which they're following up and nurturing leads that you find are working better than others.
What I see the best companies doing is, they have sort of an in-home, first sale close policy and if that doesn't work, within 48 hours, we're putting it into a process, be it hatch or whatever process they have, and that customer is going to get outreach to say, hey, you didn't move forward, we'd like to know why. And that happens for like at least seven attempts to figure out what's going on.
Because typically what happens is if they didn't buy right there on the spot, they're probably shopping around, because of pricing or financing or whatever the normal objections are. But you need to be surfacing those and doing that over and over, you can't just do it with one.Every single person that gets a quote that didn't buy a needs this experience, and the best folks are doing that and rinse and repeating it, and their close rates are, you know, going up by 5 to 8%.
So that's one. The second one that I'm seeing is customers that are targeting past quotes, like people that bought, but maybe didn't buy the whole recommendation. So these are past customers, and you're reaching out and, and you're saying, hey, what about this other thing we talked about? And if you do it in a rinse and repeatable way, they're building pipeline off that and that's how they're getting “new leads”when new leads in the market are dried up.
And then from that response rate, our biggest growing products are AI agents that can go in and figure out
the sentiment of that conversation. Is a customer still interested but price is an issue? Okay, let's get it to the right person. Is it because they are out of the market and they moved on with a competitor? Okay, get that information and move that to either right person or discard it. And so, yeah, doing that in a rinse and repeatable way, again, I'd say seven touches over two weeks is where you're going to get it.
And then after two weeks, most of those people have moved on or they're not going to do it, do anything, but they're saving those contacts, potentially for later conversations down the road. So, like, again, like John said, like, collect the data and be diligent about building that in the DNA and then create a customer journey and make sure you have touch points along the way.
The two campaigns Chris talked about, I would hands down absolutely agree with them. That's exactly what you need to do. Follow up on those leads and use as many tools as you can to help you automate it and take the, human capital out of it as much as you can back from there.
We set up a St. Patrick’s day tune up campaign and we went back to customers we worked for that we hadn't been out to in like two years. We booked 700 tune-up appointments through that campaign. That’s a lot, but we needed it at that time. And that cost us nothing but our time because we already had that cost of our Hatch platform already built up. We talked about that.
There are so many technology platforms you can invest money in these days, so many of them you don't necessarily need right away, but you do need a system for nurturing and speed to lead, similar to Hatch. I don't care what size you are, you cannot operate your business—if you're serious about growth or even maintaining where you are—without this type of a platform.
It gives us a competitive advantage (10:01)Our comfort consultants get two, maybe three appointments in a day. A lot of our competitors will get 8-12 appointments per day. Those people are going in, they're writing the estimate down on a piece of paper and saying give me a call if you have any questions. They're not doing any follow up.
Their unique selling proposition is they're cheap and you can play that game, but you can only play that game for a little while.The next time you have to invest in your growth, you're going to be wondering why I can't afford to add a new person. That's going to be the biggest challenge. So, anybody can play in that cheap game when you're small, but as you get bigger and you start having to add infrastructure, it's going to be harder.
And that's when every lead is going to count. Those are your customers that you bought and paid for. The average cost for an LSA lead is about $300-400. If you had to spend three to $400 and have it be cash every time, it'd be pretty painful. But we don't think about that with our customers. Once they're ours, you already paid for them. You've done the heavy lifting. Don't let them go. And that's where nurturing your customer base is something you absolutely need to do.
And 100% I agree, all those other technology things you maybe don't have to do, but something like Hatch is something you absolutely need to do 100%.
Your call volume in the call center is not constant throughout the day. You're going to have ebbs and flows. Assign that to somebody in your call center to manage, give them very narrow guide rails to follow and don't ask the world of them, just a couple of things.
And if you're working with a company like Hatch, they will help you build these campaigns. You're not going to have to do these all on your own.They have a number of templates. So it doesn't take a lot, and a lot of them have autoresponders because you need to respond to those when they come in.
And that CSR might be the person that as you eventually scale up, becomes your inside salesperson. It might be a full time thing for them after they've demonstrated competency in doing those things.
I think everybody on the call has played with ChatGPT. AI is real. I don't think it was two years ago, not at the extent at which it is now. And so there's uh, just so much investment going into LLMs.
And the reason that's even important to this industry is that some of the communication that we're talking about here can and probably should be automated, right? The back and forth, asking questions to the customer, qualifying and disqualifying leads, figuring out if they're in your service area. These things are the so very expensive human interactions that can and should be automated.
We started this investment about a year and a half ago, when it wasn't really working. But now that it is, I spend a lot of my time really rolling this out to customers and talking to them about the trouble that they're having to staff outbound CSRs and inbound CSRs,
Combining AI + CSRs It’s tough because with inflation, the rate of pay, it's hard to staff that at $30 an hour. At $17 an hour, that kind of made sense. But, you know, it's hard to find people to work for that rate anymore. And so there comes a point where you have to augment some of that.
And so the change I'm seeing is companies, you know, like Jon’s, they're investing in $30 an hour people. But instead of hiring 5 CSRs to scale up, they're doing it 2 really good CSRs and using AI—and these folks are monitoring the AI and jumping in the right conversations at the right time, or letting the bot take it to the end zone in appropriate places.
So they have sort of more reliable high performers at a little bit higher rate, but they don't have to hire 5 people at $22 an hour, maybe just two people at $30. And the high performers, are spending time on the right things, which is driving revenue and some of the sort of rinse and repeatable outbound actions AI can handle.
And so that's like the big conversation that's happening right now, and I'm spending most of my time there, and we're building toward that to help these companies accomplish it.
Within the next six to twelve months. You're going to have an AI that is going to be able to be your level one CSR that is vetting your calls, every call as it comes in, and they're transferring a warm lead over to a level two or level three CSR.
And this AI is not going to replace people. You're going to allow your people to be able to do things that are a higher level of thinking because AI is not going to be able to do everything. So don't let your staff be scared about that.
Because look, you want to grow, but do you want to answer the phone and be yelled at by somebody because your technician, you gave them a time window between 8 and 10 and it's 8:30 and they're not there. Is that really what you want to deal with?
So yeah, it's coming and it's going to come fast. The rate of change in our industry that is happening right now is at a level I don't think we could have ever identified that it was ever going to happen. And if you would have told somebody two years ago that you could have your call center run by your level one AI CSRs, they would say, no way in hell. Now you look at it and it's a lot more acceptable, and it’s happening.
Learn about the challenges of growing a home service business, and the tools and mindset it takes to maintain profitability and the right culture.
Learn how Hatch's AI-first approach helps contact centers scale, with AI CSRs elevating human teams and improving customer satisfaction and...
Discover key insights from our webinar on how to cut costs and stay competitive in the new year. Learn strategies from industry experts to thrive in...
Be the first to know about new sales and marketing insights to grow your messaging strategy with leads and customers.