Know Your Numbers
I hope this finds you well!
First, Isaiah Industries is excited to announce the Metal Roofing Summit 2022! This year’s Summit is back in-person and better than ever. An event full of speakers with tried-and-true best practices and ample opportunities to network with leaders from across North America will equip you to grow your metal roofing business.
This time, we’ve chosen a site with upgraded facilities, just an Uber trip from the airport. Our packed agenda includes Frank Farmer, Chuck Thokey, Joe Talmon, and more. We believe that there is no better event on selling, marketing, and installing specialty metal roofing, all for $249. View the agenda and register here.
Don’t delay! Register before March 7, 2022, and be automatically entered in our Early Bird Sweepstakes. The winner will be reimbursed for up to two tickets.
Now, on to this edition of the Residential Metal Roofing Executive Report.
“You can’t manage what you don’t measure.” – Peter Drucker.
This famous quote from “the man who invented management” summarizes a key difference between successful home improvement companies and struggling ones. We all face similar challenges, demand, supply shortages, lack of skilled labor, etc. Ultimately, the companies that know their numbers succeed while those that don’t continue to decline.
Industry leaders track EVERYTHING. Their dashboards are extensive and income statements detailed – often tracking to a tenth of a percent! So, when new challenges present themselves, they immediately see the impact and adjust accordingly. This awareness instills confidence in their ability to sustain success through any conditions. Very different than flying blind, haphazardly making adjustments, all with no clear picture of success.
If you don’t know your numbers or have any systems for review, you cannot guarantee longevity and success. However, by tracking and identifying opportunities for improvement, you can immediately gain multiple points of profitability. These benefits compound, and the best day to start is today.
Marketing is the least efficient sector of a typical home improvement company. Businesses spend way too much money without clear results. And to make matters worse, vendors distract with impressions, likes, and views that don’t truly represent how effectively the method generates a lead. Only the largest retailers can justify spending dollars on “branding;” the rest of us focus on generating hard leads. Below are the numbers you should track, each tied to the specific marketing campaign or initiative (AdWords, SEO, shows, events, radio, etc.). Landing pages, unique phone numbers, website traffic, and asking how the customer heard about you are common methods of distinguishing between initiatives.
Lead Cost – dollars spent divided by the number of leads generated. $150 – $200 per lead is the current industry average.
Set Rate – percent of leads generated that schedule an appointment. 30% is average, while some methods are lower and others, like referrals, are higher.
Close Rate – percent of leads generated that result in a sale.
Lead Cost as Percent of Revenue – dollars spent compared to total revenue. Established companies do their best to keep this number between 10 – 12%, while newer ones can drive it lower.
Most companies claim to track their closing rate, which usually means they measure the percent of issued leads that sell. Unfortunately, this doesn’t identify areas for improvement in the sales process. Instead, by tracking each step, you can quickly pinpoint opportunities for improvement. Now, certain metrics rely on the salesperson self-reporting where they lost the sale. Self-reporting can be difficult, but it will be much easier if you create a culture of trust and openness.
Demo Rate – a demo is the percentage of appointments when a price is presented. The industry average is 75%. The other 25% accounts for one-leggers, no-homes, and customer who demand a price with no demo. If a salesperson falls below average, narrow down where they lost the customer or examine your appointment-setting process. Encourage self-reporting after every unsold lead with how far they got in the demo.
Closing Rate – When tracking demo rate, compare the closing rate to demos, not appointments. Industry average varies greatly, but companies selling premium metal roofing with a professional sales process (average sales over $45,000) are closing between 25 – 30%.
Cancel Rate – the percentage of sold deals that cancel within three days or are declined for financing. This number is rarely tracked but holds great insight. The industry average is about 8%. If a salesperson’s cancel rate is higher than average, they might not be giving a customer-centric presentation or closing too aggressively. If their cancel rate is lower, they aren’t closing like they should, leaving business on the table. Abnormally high finance rejections might indicate an ineffective marketing method.
When establishing their selling price, most companies include a factor for unexpected expenses, but few are disciplined in tracking costs beyond the initial order. This lack of organization costs companies dearly. For example, many omit the cost of support staff and constantly chase extra material during installation, all opportunity costs that could be invested elsewhere. Track all your costs, and review each project upon completion, so you know your true gross margin.
COGS – the cost of goods sold, including all materials and direct labor to complete a project.
Gross Margin – the difference between selling price and COGS.
I hope this is a helpful starting point if you want to truly know your numbers and get a handle on your business. The leading CRMs like Lead Perfection, Marketsharp, and others are well equipped to help you build these systems, though few companies take full advantage of their functionality.
As always, I would love the chance to connect with you and help strategize your next steps. You can reach me at firstname.lastname@example.org or 937-214-5585.
Todd Miller has spent his entire career in the metal building products manufacturing industry. He is president of Isaiah Industries, an organization recognized as one of the world’s leading metal roofing manufacturers. Todd is currently Vice President of the MRA (Metal Roofing Association) and a Past Chair of MCA (Metal Construction Association). Through his website, he strives to raise the bar on standards and practices to provide property owners with the best possible products for successful roofing projects.
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