Performance Pay Plans That Actually Work for ServiceTitan Contractors (HVAC, Plumbing, Electrical)

All right. Thanks for joining me on a Wednesday, everybody. I'm Bill with Service Titan Hacks, and I've got Ryan Schenk from Share Willow. Just a quick heads up before we start. I know that Jennifer was going to join us, but she had something come up on her end. So it's just Ryan and me. Now we're going to talk about performance pay today. And as a contractor, I have lived this problem and Ryan for a living builds performance play, performance pay plans for everybody.

By the way, I, everyone that's here, I think, you know, let's get a little bit of an early engagement going. Can any, can everyone put their business, you know, their company, number of technicians and your location into the chat so I can just kind of see who's here. So company, number of techs, location. So, you know, you could say 30, Tampa, Florida, Atlanta. I just talked to a 40 technician company in Atlanta earlier today. So yeah, so I would love to see that coming in the chat. Jessica, what's up, Jessica? Jessica, BC, Canada, 4 techs. Awesome. 40 techs, Indiana, Michigan. We have 8 techs, Tulsa, Oklahoma. Boise, Idaho, 8 techs. 50 techs, Gallegos Galot, Gallegos Plumbing in Ventura, California. Howard, we should definitely chat. 50 techs is awesome.

Cool.

Yeah. So again, if you're just joining, company, number of techs and location would be cool. But yeah, we can dive right on in, Bill. 7 techs, Charlotte, North Carolina, Tyson Services. Cool.

Fantastic. So let me just ask a simple question for you to start. What is performance pay and how is it actually different from commission? Because I think those kind of get confused a little bit.

So at a high level, performance pay is when you, you make money from certain performance actions instead of just hours. You know, one thing that a lot of companies come to us and they say like, you know, I just feel like my guys could, could maybe care more or do, do more things. You know, I think a lot of these companies are spending a lot of money on trainings and, you know, KPIs and, and all of this stuff, but then like the pay is sort of decoupled coupled from it, right? So it's like, hey, present a good, better, best, but they're not like incentivized with increasing average ticket, right? So it's basically creating pay that is more aligned, you know, with the company's, instead of just hours worked. I talked to one guy and he was saying, you know, my guys, they kind of need to make a certain amount of money to support their life and they make their money on hours. So they kind of think of, oh, I need 50 hours this week, even if they could have done the work in 30. Right? It's kind of just like stretch it and it might even be subconsciously. So that's performance pay. It's like you're paying them for the performance that happens instead of, again, just running up the clock. And it's different. I think commission is typically like a percent of sales. I think commission can be a component of performance pay, but it doesn't always have to be, right? Like a lot of people don't want, you know, not all techs sell, right? A lot of times installers aren't selling. They're sort of just going, they're doing the install jobs. But what What about installers? Well, you want them to maybe do the job in a certain amount of hours. Like you kind of know ballpark what it should take, right? And if it takes twice as many hours, that kind of cuts into your profit that you expected for that job. So it could be based on that. It could be based on, you know, doing the jobs faster, but then you don't want 'em to do a bad job. So then you have a, a, a component of a callback or a recall, right? That, by the way, in ServiceTitan, you might tag it as ST recall. You know, or we'll have, you know, so callbacks, it can be average ticket. You know, a lot of restoration companies, they basically do a percentage of a profit over an expected profit number, right? So there's a bunch of different variables that can be inside of a performance pay plan. And what we've seen, by the way, is that the companies that actually move to performance pay and they're using incentives, and it's not just the structure, it's really also getting the technicians to understand how they make the money and to change their mindset, change their behavior. But the companies that do that, like all their metrics improve, you know, it's like, it's crazy. Once you change the, uh, sort of like the reward, you see like the jobs get done faster. There's less callbacks because, you know, you start to put those numbers on a scoreboard and yeah, everything improves with the same number of people.

So yeah. So it's, I mean, it's very simple to explain hourly rate to someone, right? Hourly rate. Plus overtime, here's what you get paid. They can calculate it on their phone, no problem. Commission is also pretty easy to explain, especially if it's just like a percentage of the sale. But then when you get into performance pay, there could be a lot of, there is a lot of moving parts because for me, it's something where I wanted the customer and the company and the coworker, that's from Ron Smith, to all win at the same time. So like you said, the technician has to either sell if that's part of his job or fix things in a certain amount of time, and that could be, and fix things in a certain amount of time, which means his truck has to be stocked properly. So there's so many moving parts to it that at that point, it gets difficult for managers and owners to explain how it works to somebody. So whenever you bring up performance pay, it gets complicated and people get very, very nervous if you talk to them about getting paid differently at all. Very, very nervous about it. So when you, when you're talking about how you, uh, help the techs understand what's going on, tell me a little bit more about that.

Yeah. So look, I think, I think that's generally true. I do think like, you know, messing, not messing, but changing someone's pay structure is like a big deal. And it's worth it. I, you know, I would say that, or I'd say, you know, I'll ask all the companies, you know, Toby Mellow's company is all performance pay, right? A lot of the big guys who are, you know, seeing a lot of success are, you know, on performance-based. So like there's a reason why everyone's doing it like this. Right. But it also is what you're saying. It's difficult. It's not just a flat 20% commission, you know, it's like, that's easy. Yeah. So what we found, it's kind of interesting, you know, when I first started here at Willow, I was so focused on the company and the owner and I was like, we're going to help them, you know, create the plan and calculate it. But then what I realized is that like you, the company wins when the employees actually understand it, they can see their earnings, they trust it. Right. And that's when you you get the behavior change. And when you get the behavior change of like, hey, I'm gonna like do certain things every single day with my jobs, that's when the metrics improve, which ultimately is what you want as the business owner. So, you know, we launch an app, you know, for the technicians and it's pretty simple. It's like, we'll show them their earnings, but then one thing that I love that we are doing is we show them their base hourly rate and then their effective hourly rate. And their effective hourly rate includes all their incentives. So a guy might be $20 an hour, but get, you know, another $1,500 in incentives. So his effective hourly rate is like $38, you know, and we show him like, hey, you're making $38. So then he's not going to leave to go to a $30, right? And he's going to tell his friends like, I'm making $38 or, you know, $38 and he's pulling people over. That's what Ron said in the last webinar, right? Like he's pulling techs. And by the way, the techs that want to come for that upside, they're A players and they attract A players. And then the culture changes to this just like culture culture of winning, doing things right, putting numbers on the board. They wanna see the leaderboard. So I think like, again, focusing on the techs, 'cause look, ServiceTitan, by the way, has configurable payroll. If you just want like a calculator to calculate it, just use ServiceTitan's configurable payroll. I'll tell you, I'll, I'll show you how to do it. Jess in here from Titan Advising Gurus, she'll show you how to do it. But like, if you wanna like create a culture where like the techs understand every single day where they stand, they have the leaderboard, like all of that, that's when I felt like it unlocked things for us and our customers. And that's when they're getting the behavior change. That's when Ron, by the way, is moving his average ticket from $800 to $1,800, you know, going live with this because the techs understand it. And I think that's important. And by the way, like, I'm going to ask another question if it's all right for the comments, you know, if you guys are doing— put what you're doing for pay right now in the comments, you know, are you doing just hourly, hourly plus bonus? Are you doing performance pay? Like, I, like, I'm curious what everyone is currently doing. Obviously, if you're taking time at 1:00 PM Eastern on a Wednesday, you're either interested, you know, there's some level of like interest, you know? So I'm curious like what you're doing and then like what, you know, what's maybe holding you back? Like, and I say that because I think a lot of people want to do it, but it's like, there's like this barrier. I don't know like how to structure it, you know, is it going to mess things up? I don't know how to message it to my team, all of that.

You really don't want to get it wrong though, right? It's, you can't, you can't just easily go and change it. So you want all the metrics to flow in correctly at the beginning. And I mean, that's what happened for me. I, I added commission. So at first I paid straight hourly, I think like a lot of companies do. Then I added a small commission and that was pretty easy because it was just on the sales. And just like a lot of companies, even companies I see that are very large, I had an Excel spreadsheet and this was back before ServiceTitan, calculated the commissions, paid them out. And when I paid them out, had a checklist that I checked it off and then I got to the point where I would only pay out after the job was completed. So then I had to make sure it was on revenue and that got a little bit more complicated. But when I added performance pay, man, I'll tell you, like tracking the metrics accurately was really, really tough for me. It took a long time. It was a lot of manual work and I would get people's payroll wrong a lot. And I had, I remember I had a really, really good technician quit. 'Cause he is like, you keep messing up my payroll every week. And it, it sucked. And I was like, yeah, I know. I, I can't keep track of this, man. So I think that's great that you guys help with those kind of things. But, uh, when it comes to rolling out performance pay, what kind of, other than the sales, what kind of other metrics do you guys have in there? How long it takes to do jobs, Google reviews, callbacks, what kind of, what, what's that, what's thrown into the mix as far as those metrics go?

Yeah. So, so all of those, obviously. The other thing is average ticket. And usually we have tiers. Right? So a lot of times, and it's gonna be average ticket based on role, right? Because obviously an average ticket for an installer is gonna be different than like a service tech. So it, so that's the other thing, you know, we have to like kind of smartly, we, it's not just this blanketed average ticket and usually it's not just over this is this, it's like usually there's tiers and kind of like even kickers at the higher level. But that's how you're, you know, you're able and how do you improve average ticket? Well, a lot of times if it's a tech that doesn't, isn't really motivated or incentivized, they kind of just tell the customer like the cheapest option, but the customer might not want the cheapest option. The customer might want a super cold, you know, air conditioner that's quiet because it's outside next to like a deck that they host a lot, right? And they might want to pay up for a more premium, you know, replacement, right? Or like, are you incentivizing them to even flip it from a repair to a replacement? If it's an 8-year-old system and it's going to be a $3,000 repair, it's like, just flip that to a replacement, right? So having, you know, incentives on flips or turnovers, as a lot of people call them, Is one factor. And then tech-generated leads is another, right? Like if you're an installer, like you might not be selling, but you might be out there installing something and you could like, you could either do a sale. So it could be a percentage of a sale from the tech-generated sale, or it could just be a tech-generated leads. Like just offer the customer the ability to give them an estimate. A lot of times if you're trusted as the, you know, the HVAC guy, by the way, sometimes I don't really, you know, this like, do you do plumbing too? Like they might not even know that you do it. You might also do it, right? You might have a division that does that thing, and if they trust you, it's like, of course, like, let's just do it all. I didn't even know who to call for that. Right? So I think tech-generated leads has been a massive lever that a lot of businesses are, are adding to their performance pay and giving guys the ability to like have some incentive. And again, if it's just off of the estimate, there's no hard selling. Don't even incentivize them to sell. Don't even let them sell. Right? Just let them generate the lead and give you the ability to submit an estimate for something that they might want fixed already. I do see some customers, they have like all these different SPFs, like every air qualifier thing, whatever, like every little part has like this SPF. I personally think that is overload. We like to have like 4 to 5 metrics max. I think like, how is someone supposed to like remember every little thing that they get? Every part in your price book has like a different commission to it. It just feels like overkill. I saw something that, uh, like that guy Victor Randon or something, uh, had this like spiff scoreboard. It looked cool. I just felt like there was a lot of different spiffs, uh, or I actually liked the idea of it. It was like, I forget, but it was like ton— it was so many of them. You know, we fundamentally just believe that it, like, you have to be able to understand it as a technician at a high level, like how you make it, or, or else it's like, it's too many different things. You know, if I work in a restaurant and you're like, you sell this wine, you get 10% And you sell, you know, upsell a steak. It's, it is like every little item just feels like overkill. And we found that again, the more simple you can make it, the techs understand it and that's where they start to actually like drive towards that metric.

Okay. Yeah. So keep it simple, right? It's easier to explain.

Yeah.

So for someone who's never done performance pay or never built a plan, how do you go about designing one for someone? Do you have like a default template that you start with and then ask some questions or do you do the, does the owner or management have a lot of information that they need to provide you in order to do it? How's that work?

Am I able to share my screen? Can I share my screen for a second? I think I can down at the bottom. So I can do it right here. Okay. Window right here. I'll just share this screen. So like, check this out. So we actually have this audit tool, audit.sharewillow.com/getaudit. So, so one of the things that we do, and by the way, this will ingest your ServiceTitan data. We ask you a bunch of questions and then we do an audit for you. So you could sign up here, you can see the audit. And then basically what that does is we'll show you, you know, an audit. So we'll say, hey, here's your revenue. Here's the opportunities. We say, hey, here's your techs, here's your jobs, here's your revenue. And this is all ingested from your ServiceTitan data, right? Here's your revenue by job category, by technician, callback rates. And then we say, here's the opportunities, right? So it's like, hey, 4 techs are sort of underperforming. So let's add an average ticket tier. Uh, you know, only one tech is selling memberships on membership eligible. And then we flip it to this plan design tab and we sort of show you, hey, here's the components that we would put. And this is all backed by like the Sharewillow engine, which has been building plans now for 3 years on hundreds of companies, lots of ServiceTitan companies, by the way, obviously we're ServiceTitan app marketplace certified, all of that. So like we know ServiceTitan and get the data in better than anyone. That's why we love You know, working with you guys, but so this engine that has all these similar companies is going to be powering it. And we're going to look at other companies. We're also going to look at your data and say, hey, we need an average ticket bonus, right? We need cross-sell bonus opportunities for these high-volume techs. They need to be able to cross-sell, upsell. There needs to be a callback penalty and a membership spiff. So basically say, hey, let's look at your data. Let's look at the opportunities. And then we'll say, like, if you do these things, like, You can add an expected $540K, right? So we'll basically give you this audit and that, and that's what we do in the beginning is like, that helps us build the plans. We ingest the data, we look at similar companies, and then we say, hey, here's the opportunities that we've spotted.

So with that audit, you use their live data?

Live service Titan.

Yeah.

Yeah. So you give us the tenant ID, we flip our app to your tenant ID, you add it on the backend. Boom. We ingest it. I wish we could do it automatically, but that's just the flow of, you know, the ServiceTitan data stuff. We have to add our app on the backend, but yeah, we ingest the data using, using your live actual data, right? So everything is, is dialed in.

It's probably not, it probably wasn't that easy to set that up, man, because everyone's ServiceTitan is set up a little bit different, a little bit different tagging, tracking callbacks is a little, could be a little challenging, tracking reviews.

Yep.

So, I mean, how do you guys work through all of that?

So we had to build a ton of logic. I also think we were able, since, you know, we work with so many other companies, we have all of these benchmarks and we know like, hey, if you're not using time tracking and the Master Pay File, like we can't reliably use that for hours, expected hours, actual hours, right? If you're not using Master Pay File and hours, I might not be able to tell you your billable efficiency, right? Which, Well, which from the master pay file you get, you know, drive time, idle time, billable hours, and then you can say, hey, wow, we're only 50% of billable hours, you know, or callbacks, right? You can tag in ServiceTitan as ST recall, but we've built in logic that's like, hey, if it's the same job type at the same customer address within 5 to 30 days, and it's not like an estimate, because if it's an estimate, you're gonna go back to it, right? Uh, so there's certain job types that are not included. So we've kind of, and then. If that happens, then we'll consider it a callback, even if you're not counting it as a call. So we've kind of built in a lot of these things into this like audit engine that we've built. And then, and then obviously then we compare it like, what are benchmarks? What's everyone else doing? Because we're not going to tell you like, hey, you can get to this if like that's unachievable. We can't say it's a 1% callback rate when like really the benchmark is like 3%. You know what I mean? Like we're going to be—

there are some crazy benchmarks out there that that seem unattainable, right? I don't know where they came from, but yeah, I've heard half a percent of callback rate on installs and I'm like, ooh, half a percent. And so what ends up qualifying as a callback? That's, I mean, that's a whole nother conversation, right? But yeah, you really want to know what is the rest of the industry doing? What's possible for this? And you can only get that from a lot of data from a lot of different contractors, right? So, yeah.

And, and the other thing too is like if there's crews, right? So like how do you splits, are you using the job split report in ServiceTitan, right? And that's able to like, you know, a lot of times if it is, we have job-based plans, you know, and if like, obviously it's not going to be an even split, right? And, you know, so like, let's say the lead will get 70%, you know, the helper will get 30%. But let's say like, you know, you switch, let's say it's a 3-day job or something like that. And you have one guy that's there for 2 days and one guy for 1. We do all that split logic and we'll prorate it based on their number of hours that they worked on the job and their role. So it's like we have all this like logic that's built in that like you're not gonna have to manually calculate it. We're doing all of this kind of calculations, but then like delivering it in like a way that's like easy to actually digest.

Yeah. That's awesome.

Yeah.

So let's switch gears. I have a couple objections to performance pay that I wanted to talk about, things that I've heard over the years.

Let's do it.

And I'd like for you to tell me what you think about them. So one that I hear the most is, you know, now my techs are just gonna upsell and sell things to customers that they don't need. What have you seen with that? I mean, has that happened in shops or, I mean, what typically happens?

Look, I just think, um, if you don't want that to happen, like, you know, put guardrails around it. But I do think like selling techs isn't always a bad thing. Sales isn't, doesn't have to be a 4-letter word, first of all. You know, I do think like if it's too big of a portion of their pay, potentially that could happen. I think like, look, there's, there's training things, but you know, you could counter it with like, if there's a complaint, it gets called back. Like there's just ways to counter it. Right. I also think, you know, it doesn't have to be necessarily like commission if it's just more of like the average ticket, then it's going to be a combination of sort of like all the, all the revenue divided by number of jobs. So like there's just ways to get around it. But at the end of the day, do you really also want them just telling the customer, here's the lowest option, like just go with that option because they don't care. Like if that's what you want, then just have that. That's fine too. Like don't have anything, you know, but they're just going to give them the cheapest option.

Right. And I mean, if your average ticket's increasing a lot after you implement this, it's because they were going with the lowest option.

At first.

Yeah. Yeah. And, and maybe you weren't even offering the other options because you didn't want to, I mean, I've seen technicians not offer options just because they didn't want to do more work. That's right.

Cool.

So let's open it up to questions from the viewers right now. Either I can grab 'em, Ryan can grab. Yeah.

Yeah. Yeah. Put it, we have one question right now from a lady.

Mindful of your time here on Wednesday in July, right?

Yeah. Let's just take a couple more minutes. We'll ask questions, you know, put the questions, any question you have, put it into the chat right now. We'll answer it right away. We have a question from Larry Patterson right now. Can we dial it in with some specifics that y'all have seen drive performance with sales techs versus installers? Like, yes, we're gonna, we're gonna show you all these specific things that we've seen work and not only like work, but that actually improve metrics. Um, cause that is what ultimately success looks like here is like, does, do your metrics improve that you create incentives off of? So absolutely everything is super configurable, customizable, but We ingest your data, we look at what other companies are doing and we say, hey, this is what you should do that we think is, or not that we think is gonna work, that the data says works. So that was Larry. Another question from Amber, do you have templates that have worked with garage door companies? Yes. Again, garage door companies is, are, are huge. Again, Tommy Mello, A1 Garage Door, like he's doing performance pay. A lot of garage door companies are on performance pay. We're working with a bunch of them as well. And Absolutely.

I mean, he's been talking about performance pay for a long time.

Forever. Yeah.

Yeah. For a long time.

But again, unless you're a $300 million revenue company, actually probably $400 million revenue company like him, he does everything in-house, like very high touch. It's like, hey, we've basically democratized the ability to, to do that for everyone. Amber said, can you include SPIS for Google Reviews? How does that integrate? So yes. So a lot of people will, you can integrate directly with your Google My Business and it'll like do best match, right? Like again, if someone Someone does a review from a year ago with like a name like Skater Boy 12, it's going to be like hard to match that, right? But like we try to best match it so you can integrate. A lot of people also will do a Zap and push the reviews to like a Google Sheet, which we can then integrate with the Google Sheet as a dataset. So answer is yes, it best matches it. Sometimes it can't and you have to like kind of manually sort of say, hey, this was for this job or this technician. But that's the long answer. Short answer is yes. Do it. And most people do it. They'll do $10 to $20 for a review, or some people will do like $10 for a regular review, $20 for a review with a photo because the SEO gods claim that, you know, photos are richer in your profile and stuff like that and weight heavier. So, uh, you can totally do stuff like that. All right. I don't think we should wait around, but this was awesome. Free audit. If you want to do an audit, do it there. We'll integrate with your ServiceTitan data and we'll show you opportunities that we think is there or just book a demo., you know, go to our site, book a demo, but I'm going to reach out to everyone after this. I think we had like 50+ people registered. I'm not sure how many showed, but, uh, it was a good, good turnout today. So I'm super grateful. Thank you guys. Um, and yeah, thank you, Bill, for this. You built an awesome—

You got it. Thanks, man. And I'll send out a link to the replay to everyone here and, and everyone who registered. And on that will be that audit link as well.

So awesome.

Thanks for everybody's time, Ryan.

Thank you.

See you, man. Have a good one.

That was awesome. See ya.