Adam Bensman shows that a 2% price increase boosts net profit by roughly 20% on a 10% margin. Rather than chase more leads, roofing businesses can double revenue by improving set rate, close rate, and average sale price through better processes and tools like proposal software.
If I increase my prices by 2% and I have 10% net profit, how much profit did I add to the company? I'll see it again. I know. By the way, I was in the same math class 4 years in a row. If you're struggling, it's okay. I'm going to show it all to you, but I just want to get the wheels greased. Assuming your company is at 10% net profit and you increase prices by 2%, which is less than a credit card fee, mind you, How much net profit does that add to the business, to the bottom line?
20%.
Is anyone else's mind blown that didn't know that?
20%.
Now I'm going to show you an example of this, but here's the reality. The reason I shared this, because what I'm about to tell you in my personal advice in today's economy is not to lower your price, but to do what instead? Raise it. Because if you drop your price 2%, again, assuming 10% net profit, you're nuking 20% of your profit. I don't know about you, I would just rather serve less customers and make the same amount of money because then I have a whole lot less liability out there. So let's take a look at what this means in real numbers, real math. With a 2% price increase, have a statistically significant difference on your close rate. If you sat in the home offering a $15,000 roof versus a 2% price increase at $15,300, do you believe it would have a statistically significant difference on your close rate? Yes or no?
No.
If you're losing the job at $15,300 versus $15,000, I would be— I would doubt that there's a statistically significant margin. And by the way, this is an important lesson for salespeople out there, because I've done what you're likely thinking. You'll lose one. Then you go back to the office, you're like, we gotta lower our prices. I lost one customer over $300. It's gonna happen forever. No, no, no. We have to look at data. And as salespeople, and as owners, by the way, we are as guilty of this too, my owner friends, because we react. We're like, oh, we gotta fix it. It doesn't need fixing. We gotta look at the data. You will lose one or two, but over the course of an entire year, that's not a statistically significant difference.
Right.
Business is a numbers game. I don't have it up on these slides, but I can share with you that 4 KPIs can literally double your business. For the note-takers in the room, I'll just tell you them. Number 1 is your set rate. And some people in here have heard me say this over and over again. Your set rate is the number of appointments or leads that come in that turn into an appointment. Door-to-door friends, that's the number of people whose door you knock on that turns into allowing you an inspection. That's your set rate. So that's number 1. Number 2 is your close rate. Close rate, what percentage of those deals— actually, I can write these up. So number 1 is your set rate. Again, number of appointments that turn into— excuse me, number of leads or conversations that turn into actual appointments. Number 2 is your close rate, what percentage of those you actually close. Okay, uh, number 3 is your average sale price. John, what am I missing on this? Set rate, close rate. Oh yeah, and then your total leads. My apologies. Top of the funnel. These are the 4 numbers. Most people, by the way, all they want is more leads. If you increase the set rate, let's say you have 50% set rate, meaning of the people that reach out to your office, only half of them turn into an appointment. Most people say, well, I need more leads. No, you don't. Secret shop your company, improve your systems, and figure out how to convert more. When you're spending, true story, $600,000 plus a year on leads and they're coming in after hours or on the weekends and no one's staffing them, what do you do? You plug that hole. Suddenly it goes up to 80%. You just got a boatload more leads. Out of every 100 leads, you just got 30 more appointments without spending any money. Close rate, you could adjust from a 20 to 25%, 30 to— excuse me, 25 to 30% lift. This is massive. If your average sale price goes up, if I can have a lift in my average sale price, which what SumoQuote shared with me, by the way, and this was research they had done years ago. Tamco has not validated this claim, but I'm going to share with you what was shared with me. And they said that people who used SumoQuote in a best, better, good option for an upgrade or any upgrade period that was built in their proposal software, they showed a 10% lift to To their average sale price. 10%. $20,000 roof turns into $22,000. So imagine you don't get any more leads, you just improve your systems to turn more leads into more appointments. You get 30 more. You increase your close rate from 20% to 25% or 25% to 30%. By the way, I know that there's folks that are doing much higher than that. There's not a lot of them. John Brose, one of the mentors inside the Roofing Strong Alliance, which all of you TAM Close certifieds have access to. Side note, raise your hand if you accepted your invite yet. Awesome. If you didn't, get in there because what we are going to do today will carry over in the community. And as a reminder, all you now have access to my sales training system, all that, it's all inside. And in fact, I even have a training to help you increase your set rate called the Inbound Leads, the Phone Selling Strategy. So you can hand this to your admin to go through so they know how to run the calls. And then if we can again implement what I'll be teaching you to increase your average sale price, I will show you the difference with these numbers. You can go from a company that's doing okay with 100 leads, they'll be at about $2.4 million a year. Good company will improve just a few of these a little bit. They'll improve the set rate a little bit, close rate a little bit, average sale price will be up 5%. Suddenly they're over a $4 million company, $4.2, $4.4. That same company, if they can get that set rate up to 85%, close rate up to 30%, and and a 10% lift on the average sale price can turn into a $6 million a year company. What's the difference? Execution, not more leads. This is roofer thinking. And the problem with today's roofers— do you know what the problem is with today's roofers?
They're lazy.
They're lazy because they think like roofers. I'm going to say that again. By the way, I am a roofer, but I'm just going to tell you this. The problem— and I would write this down because it'll change how you think— the problem with roofers is that they think like roofers. The problem with roofers is that they think like roofers. And roofer think is more leads equals more sales. Throw bodies at the door, get more people out there, see what sticks. But when you start playing the same game as every other roofer who's thinking like a roofer, you will not win. Business is a game of strategy. Sales is a game of strategy. And if you're using the same strategy as everyone else, what kind of results will you get?
The same.
The same as everybody else. So if you actually want to be different, you just got to play a different game.
