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Sales Head-Scratcher

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Home Improvement

Sales Head-Scratcher

What's causing a drop in sales? Here are the most likely causes

By By Jim Cory March 22, 2017

How are the numbers for your roofing, siding, or window business looking this year? On track to make your target? Or are they off, leaving you scratching your head?

If they’re off, that’s an area of immediate concern. There could be any number of reasons, or some combination of reasons, for the sudden sidetracking of your sales effort. But chances are that the actual cause of a temporary drop in sales will fall into one of several categories, the standard culprits. In an excellent article, blogger Rhys Metler, director of client services for SalesForce Search, a recruiting firm, lists five reasons, with “Ineffective Management” topping his list. He specifies what that means: “… not holding the right people accountable, no reward system, poor metrics and abrupt changes to the sales process are all reasons for a drop in sales.”

Metrics, but Which Metrics

For a home improvement company, a drop in sales simply means that you’re not selling as many jobs as you had forecast. A forecast is an assumption, and assumptions are based on information. Among other things, poor metrics could have your forecasting wildly off the mark and into the realm of wishful thinking.

If you’re keeping daily tabs on sales and are feeding that information into your database, you probably have what you need to ask yourself a few quick questions having to do with key marketing and sales metrics.

Sales inquiries—let’s say a name, address, phone number, and product on a scrap of paper in a box from the home show—become revenue through a step-by-step process that identifies those possibly interested in buying and progressively eliminates the least serious from the rest. Result: a contract, then revenue. Each step is measurable, and when measured you can quickly see that even a small decrease or increase percentage-wise translates to big numerical changes on the top line. Here’s a simple example: If your sales are $5 million and your close rate is 25 percent and that close rate drops to 20 percent, your sales will now be $4 million. Since your fixed expenses will likely not change, at least for a while, your profitability will go up in smoke. In effect, you worked for nothing.

Where to Look

A drop in sales must have a reason, or several interrelated ones. These lie somewhere in your marketing and selling processes where disciplines have eroded. You can’t reverse the problem without pinpointing the fault. So:

Take a close look at your marketing. First off, leads. Same or fewer? “If the marketing team isn’t handing over the right number of qualified leads to your sales team, that’s going to hurt numbers,” Cara Hogan points out. “Look into whether marketing has changed gears, maybe cutting back on a successful Google Ad campaign. If you get to the root of the problem, you’ll see your numbers jump back up.” It could also be that the problem is administrative, that is, careless lead handling. You want to know how many inquiries converted to leads and how many leads converted to appointments. If the same number of inquiries results in fewer confirmed appointments, consider scripting the appointment-setting process and recording calls to ensure that procedures are followed.

Study sales metrics. If you have roughly the same number of quality leads coming in, it’s time to go over the sales metrics. The first metric your eye will go to, of course, is close rate. How many appointments convert to sales, right? And it may be that simple. Say if you only have two or three salespeople and your top guy hits a slump. Instead of closing two out of five in a week, he’s at one in five. If your average sale is $20,000, what he’s bringing in just fell from $160,000 per month ($1.92 million a year) to $80,000 ($960,000 a year). But with a bigger salesforce, say five-plus, problems in productivity and morale can extend across the team. A key metric to look at is the percentage of confirmed appointments that became “demos,” (product demonstrations), that is, a sales call in which product is presented and a price placed on the table. A plunge in demo rates could mean that salespeople are blowing off leads they feel they have little chance of closing. Individuals may be closing the same percentage of appointments—say 25 percent—but running half as many because they didn’t want to waste their time. So instead of running 12 appointments and closing three, they ran six and closed two.

Train and retrain. A suddenly demoralized sales team could be the reason why the year’s sales are off. One-and-done sales training when you hire someone fades fast. “Learning how to sell is an ongoing process,” Wendy Connick points out. “There are always new strategies and new technologies that your team must learn in order to sell effectively.” If you want to up the efficiency of your sales team, plan for ongoing train. Simply throwing everyone into a multiday sales-training situation is not a solution. One study shows that “half the content of a sales training event is lost in 5.1 weeks.” Far more effective is consistent, structured training that uses role playing to teach, or reinforce, how to overcome objections and that develops or deepens product knowledge. And you don’t need to pull your best salesperson away from running leads to train them. Many online training resources are available, including webinars. The key is consistency, but it’s also about managing the salespeople by identifying individual strengths and weaknesses and training for that. You’ll know it’s working when metrics indicate solid results.

Enhance the customer experience. Service levels typically provided by contracting companies rarely compare favorably to high-end retail—say your local BMW dealer—though the product is often in the same price range. If you’re buying a $35,000 car, you expect to be treated like the prince of Monaco. The customer buying a $35,000 siding job? Shrug. The customer experience used to distinguish boutique contractors from run-of-the-mill companies. For others, indifference didn’t matter. It does now. “Clients love what you do, but they don’t love you,” observes Chris Lonergan, at Footbridge Media. “They appreciate the quality, the price, and speed of your service, but they just don’t like you or your company’s attitude. Clients that like your work but only tolerate your lack of friendliness or professionalism keep their eyes open for a new vendor that can deliver both quality and service.”

Lonergan offers a list of suggestions for contractors to spiff up their customer service levels.

Lucky to Know You

Most businesses are in the same boat. According to a recent Online Customer Engagement Report by E-Consultancy and cScape, “only 45% of companies have a customer engagement strategy.” 

More and more, the ideal customer experience is the one that leaves those who weren’t your customers wishing they had been. That may not seem to make a huge difference one way or the other to this month’s sales, or next month’s. But long term, leaving homeowners feeling lucky they know you and your company is essential to building that percentage of your business that's generated by previous customers. Not only do repeat and referral leads convert at a far higher level, but previous customers' average ticket trends higher. Service converts them from customers into clients. And that can’t fail to boost top-line results. 

written by

Jim Cory

Senior Contributing Editor

Philadelphia-based writer Jim Cory is a senior contributing editor to Professional Remodeler who specializes in covering the remodeling and home improvement industry. Reach him at coryjim@earthlink.net.

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