Jim's Group CEO, Jim Penman's Inspiring Business Lecture: Part 2

Now, the important thing is this is very different from a Google rating. A Google rating just sits there. Google rating can be manipulated. You know that, don't you? How do you get a good Google rating? You go to all your friends and everybody you know and say, rate me, because there's no controls. All right? So it's pretty. It's garbage as far as I'm concerned. I do not trust Google ratings. But I tell you what, if I want a contractor to do some work for me or somebody else's recommendation, I trust our ratings totally. First of all, because you can't be game. The only way you can actually get a rating is to book a job, and then you send back and say the job is good. So it's really, really hard to manipulate. But the other thing too is we have a system whereby we. Look, we have an appeal system against any complaint or bad survey. And it goes like this. I'm the only person that can change them. It comes to me personally. It's a daily job that we have. You go to your franchisor. Your franchisor can put in a delete request. And there are various reasons. First of all, your franchisor can show that you did everything right. For example, a client complains, say, on a survey, or complains that you didn't ring back. What do you need to show? Evidence of the phone call, evidence of the text within two hours. Now, if you do that, I saw just written evidence. They said, just attach a couple of files. Here's the phone call, here's the phone record, here's the text that was sent. Here's the date stamp. Two hours, bang, gone. Now, it may have been good if you actually rang again or if you tried again, that would be good. But you've done the basics. Does that make sense? And this happens every day. Clients are amazing. You would not believe how you look at people and you say, how on earth you've seen a franchisee, he rings, texts, emails, rings again, texts again, and the client says, I never got a call. How do people get service done? I don't know. But the point is, the franchisee did the right thing, didn't they? So we wiped the complaint. It's only a potential complaint. It doesn't even count for 48 hours, by the way. So when you're Talking about this 4% thing, it doesn't actually count. Every franchisee has 48 hours to challenge the complaint. So that's one thing. Show that you've done the right thing. Also satisfy the client. Now, you may not have sent the quote, or you may not have texted. More likely, you may not have rung, you might have made a mistake, you might have overlooked something. But if in the end you go to that client, you look after them, it may be the client wasn't happy with the job and you offered to go do a whole lot of extra work for free. You give them a free service, you rebate, give them their money back. Anything you do that satisfies a client. Not as good as not satisfying in the first place. But as long as you satisfy the client, you send a text to the client, you're better, you're happy. Now client comes back, send it through. Complaint wiped, survey wiped. Okay, so you can actually get rid of complaints. If your franchisor investigates a complaint, one of the things we'd ask them to do, if it seems difficult, and this is particular case, if you've got a good rating, and this is where the 4.8 plus rating comes in, you got a 4.8 rating, the customer complains that you were rude, okay? Franchisor rings the customer and talks to them. The customer is rude as all hell, which is not uncommonly the case. What happened is you gave a high price and the customer didn't like it. The franchisor confirms that, says, this is obviously what happens. Put the delete request, we white it. It's not a complaint anymore, it's a price. So if your franchisor actually investigates with the client and then confirms your story, or the client says you haven't done this particular job, you send through the quote, which actually did not include that particular job, but the client's trying to get extra work for free. Will wipe the complaint, will wipe the survey. Now, in practice, in actual fact, most complaints, most bad surveys, can be wiped. But you've got to get the job. So if you haven't, you failed the ring. You just got to do everything you can to get that job or do something that may mean, as I said, anything, offer a freebie, anything but satisfy the client. So it's a fair system, we believe, because it actually allows us to investigate. And I would probably knock off about 15 complaints a day, which, for the number of complaints beginners, is a lot. It's probably most of them. If you're on the ball, if your franchisor is on the ball, you can usually get rid of a complaint either by showing it's wrong, having your franchisor do investigation, or by satisfying the client in the end. And by the way, they're satisfying the client. It came in A couple of years ago, we didn't do that in the beginning. That's something we looked at, going through the whole system, as I do, in a very personal level, and trying to work out how we can improve. But what that's a lesson for, of course, is next time, don't get the complaint in the first place. What did you do that caused the problem? Don't forget to do these things. It's a lot easier not to get the complaint in the first place. Does that make sense? It's a very tough system and I think you need to understand that if you really feel you can't. There was one actual training course where a guy came up to me afterwards and he said, after the end of the course, he said, jim, I really love what you do. I can see why you're successful, but I couldn't hack this. This is just too much. This customer service thing is just over the top. I just can't take it. And I said, well, I don't want a franchise. I said, good decision. It is because being part of us means we are the elite of the service industry by far. We are the best. We give the best service, we have the best reputation and we charge the best prices. And they all go together. To be part of an elite system, you have to be elites yourselves. Is that where you fit? Because in actual fact, the biggest single thing that determines customer service is not actually our system, it's you yourselves. That's what we try to look for in terms of potential franchisees. Do you have that kind of mindset that says I'm going to succeed? You know, it all started before I was. Before I had. I had a franchise at all. Where I got this idea when I. When I had subcontractors, I used to build up and sell lawn mowing rounds. That was my previous, prior to 1989, when I was. Well, I didn't know I was aiming towards the franchise, but I hadn't got there. And one of my. What I used to do, we didn't have any formal training in those days, but one of the. One of my trainers actually asked me, he said, what happened to so and so and so and so? There was two particular guys he'd taken out. And I said, well, they both failed within six months because I used to keep in touch with them. And he said, I thought so. And I said, why? He said, because they didn't have good attitude towards customer service. Now, we weren't doing any selection in those days. I was selling a business. I wasn't selling A franchise. So we didn't screen them at all. So when I actually started franchising, I made that part of my system right from the beginning. I interviewed people and I actually put them out on the road. And I got my trainers to give me assessments. They used to mark them A, B, C, D according to how good they thought they were. And if I got poor ratings, I would not accept them. That's. That's something I did as a result. And then over time, we put these extra things in places and the results are there. It works for the individual, it works for the group. Great customer service. Now, I've been talking for an hour and 10 minutes about customer service. Are you starting to get the feeling that it matters to us? Is that sort of coming through? You don't need me to talk an extra hour? An hour and a half. You sure? It is clear I made my point. All right. Now, having said that, would it surprise you if I said that when we as franchisors get together and talk and discuss, customer service is far from our number one priority? There is one thing, and one thing only that gets far more attention from us. What is that? Profits. What one thing more than customer service that we would talk about as franchisors? Franchisees. It's you, your success. Far, far more time talking about what makes franchisees successful. Now, there's no. There's no opposition. Some people say if you cared about franchisees, you wouldn't care about customer service. No, I care about customer service because it helps franchisees to succeed. That is the justification, that is the reason for it, because we know if we give great customer service, you as individuals, will do better, and we as a group will do far better. But in reality, you are actually our number one customers. Do you realize that we had 220,000 unserviced leads last year? Do you think we're not growing faster? We actually grew pretty well. We did 7% during the year. But do you think we're not growing faster because of lack of leads? No. Lack of franchisees. Look at these empty seats here. We've got people at the back. Actually, you really shouldn't be able to sit in here, so we don't block the entrances. We need more franchisees. We need you to be more successful. We need you to stay for longer. We need you to tell all your friends what a great deal it is. A lot of you, how many here actually come because they know somebody who's got a franchise. Wow, look around you, people. This is the reason it's so Successful. If we make you successful, you're making fantastic money, you're getting great support and it's the best thing you ever did. You know, when I talk to people, I bring people on my anniversaries, like 10, 15 years, you know, the most common thing they say to me, I wish I'd done this 10 years earlier. I hear all the time, our aim is to make you successful and that is our number one goal. And customer service is part of that. It's not worth for its own sake. It's because you are our number one client. The number of franchises we select and we keep from a purely profit driven basis, and we're far from that. The number of franchisees that we can attract, how successful we make you, how happy you are, will determine how successful we are, how fast we grow. It's the number one thing more than anything else. So what are we going to do for you? This is the important point. What are we going to do for you to help you to be successful? What is the first thing we're going to do? The first, when you first approach us, what is the first thing we're going to do? You answered that question before when I asked you about customer service. It's the same answer. What are we going to do when you first approach us? Yeah, we're going to assess you, we're going to look at you and to see whether you're the kind of people that are going to be successful. Because if there's obvious signs that you're not, we are not going to want to have you in the system. Because until we, we don't owe you anything until you sign, after you sign, we owe you everything. So we don't want to bring you in unless we really believe. And I always say to the franchisors, when we do franchisor, when in doubt, say no. If you've got any doubts about a person, is there something about them that sets off your hackles or it just makes you think that they're not quite honest or they're just a bit slapdash or there's something about their history that's bad, say no to them. You've got to say no. In fact, when I talk to franchisors in franchisor training, I spend the first, best part of an hour talking about why we select, how we select. It's very important. So that's the first thing we're going to do, do a selection process. You remember I called you about this case of this young bloke, the one whose Mother was buying the franchise. I was really angry at the franchisor. But you know why? It wasn't because of customer service. It was because that would be a totally unconscionable thing to do to that boy and to his mother. To accept him into a business simply so the franchisor could make money when he had no reasonable prospects of success. That's what got me angry. Not about customers, it was about him. And the idea that we could have accepted him was appalling. And since then, the franchise has reached. I won't say who it is, actually. I don't want to even blacken anybody in retrospect, but it was an appallingly immoral thing to do, to take somebody on, to get them to invest money in the business where they had no reasonable prospect of success. So that's the first thing we do next. We do training. Now, this training course that you're doing here didn't used to exist in the early days of humans. We just used to send people out on the road a bit. We counsel them, we discussed them. And what we were measuring was attrition rate. Remember I talked about attrition rate before. I talked about the independence, how on the average their attrition rate's between 90 and 95% first year. You can look this up, it's on Google. There's a system called the Cleaning Janitorial Service association of America. Look it up. It's on their website now. As you would expect, and you'll understand more when I finish this particular section. Our attrition rate was a lot better. We were losing in the first year about one in six. We were losing about one in six. We were losing 17% of our franchisees in the first year. That's attrition rate. It's a very easy way to measure how well you're doing in terms of inducting someone in your system. So we measure attrition rate. Now, 70% was consistent, consistent from year to year, consistent across different states. And in New Zealand as well, we ran this course, we put this together and we said, how can we prepare our franchisees better? The first year we did it, we watched very carefully. That figure, you can bet we were on it like a tristrate. Dropped to 10 and a half percent first year. It's since then gone back up slightly. I don't know why. Got to about 12%. But it's never, ever, ever since then been as bad as it was pre training course, this training course alone, and it's not so much the Divisional section though that is important, it's helpful. It's this business section that's going to make the difference. People very rarely fail at a mining business because they can't prune a rose bush. Because we can teach you that in five minutes. They fail because they don't get back to clients property, they don't organize themselves correctly, don't have the right emotional background, they don't talk to their franchisors enough, they don't do pay for work, guarantees a whole lot of things why they've failed. It's never the technical side in my experience, it's always the business side. So what we're going to teach you in this course there's three days, pretty intense aiming hard at all the things that are going to help you to succeed. Make it less likely that you will leave, less likely that you will fail. It's targeted every session. The only session that doesn't do that is first aid. And first aid is obviously to do with your physical safety which is of course even more important. In the whole history of Jim's crew they had one franchisee die on the job which was absolutely horrifying. But when you consider how many people are using dangerous machinery. It was a chainsaw accident by the way. He held a chainsaw one handed. Shocking. Point of it is every section of this course has the one aim only to say how can we help you to succeed? So when we back in 2000 when we had those people who were not watching the course, you can immediately see the problem with customer service. I don't know about what else was happening going wrong but you could tell it from the figures that their customer service was terrible. So we knew they hadn't watched it. Training course Very, very important. Leads are also important. Obviously one of the main reasons why you're more likely to succeed with us and why you very probably will succeed is that we're going to give you work. Now that's important issue to understand when you're talking about somebody going as independent. It's very difficult to get business off the ground. Once they're established. If they've got good customer service and everything else, they'll usually be okay. But getting off the ground is really difficult. I have a friend called David. We used to play games like diplomacy together from my church and he's an electrician now if anybody, when you came from the airport, you know there's a tunnel that you came through on the way. Okay. He was in charge of the lighting, electrical work on that tunnel. So this is the senior, very capable guy, great attitude towards customer service. Wanted to get his own business going as an electrician and failed because he couldn't find enough work. Nothing wrong with him. In fact, if I meet anybody who started as an independent and succeeded in business, my immediate reaction is fantastic. That is a really big credit to you to actually do that because you have beaten the odds by a massive amount. It's great because it's so hard. No matter how good you are to start isn't good. Now, you're not going to have that issue. Most of you will get quite a lot of leads. Most of you will probably actually have all the work you can handle. Even in the first month, there's a fair chunk of you that won't. You'll get leads, but not quite enough. Now to cope with that, we have a system called pay for work guarantee, which means that if you don't get enough lead to get a certain amount of income, that's anything between $1,000 and $2,000 per week. If you fall below that, what you must, must, must do is go out and offer free services and we will pay you to do those services. Now, if you do that, you will not fail for lack of work, because first of all, we're going to put a floor underneath your income. But secondly, even more important, by doing these things, you'll be out there getting extra work. You'll pick up new regulars, you'll get referrals, you'll meet people on the street, you will get more work. I've never known a franchisee to fail for lack of work if they did this consistently. If you don't do it and you're short of work, you could fail. And people have failed in the past, but never if they do this. So the combination, we are pretty good at finding leads. Most divisions, there are some divisions. Anybody here from IT or bookkeeping? Okay, yeah. All right. You're going to need to do marketing, no question about it. But most divisions, generally speaking, you won't have to do a lot except do the work, do the upsell and do the other stuff we're going to be describing. Give great customer service, use the system, use the paperwork if you need to. Most divisions, that's the situation. Mowing, dog wash, fencing, cleaning, very, very similar in those areas. So we're going to give you leads, we're going to give you paid for work guarantee to get you through them. By the way, it sounds like a lot, but in fact, anybody who does it never does it past the first two or three months. Because they always pick up work. It's just universal pattern. We're also going to give you the kinds of jobs that you want, where you want them. This isn't just a random process. You're going to describe to us, define to us. In the beginning, your franchisor will go through this. You're going to actually work out what suburbs you want to cover, what services you're happy to handle, what times of day you want to take leave, what days of the week you want to take leaves. You're going to define this very exactly. So when you're busy, we're not going to flood work on you, we're going to give to the next person who maybe is quiet. But when you are short of work, we will be able to direct work clean to you. We may have 20 franchisees that in an area and we'll know if there's one person who's short of work, we know who that is. Now, this system in the beginning was hugely expensive. In fact, in the beginning it cost me so much to do it. The administrative, it's in this book. By the way, those of you who would read it, you'll talk about this. In the beginning of how that worked, it actually cost more money to run than I was getting in fees. It was so expensive and then we automated it and that made it possible. But this system enables you to get the work that you want, when you want it. That's also one of the reasons that drives customer service too. Because the problem with independence, why they often have a bad reputation, is because they can't control their work. Jobs come in when the clients want it, not when they need the work. So they might be, you know, had nothing on one week, next week they're overloaded and customers get let down. But you don't have that problem because we're never going to give you a job that you don't actually say that you want. And it's your interest in a priority. Because if you don't want the job, we're not going to try to press you to take it. The customer has to go find somebody else, sorry, we can't help them. You're our priority, the work that you want. They even have a system that if you haven't taken any jobs for the first last three days, you get a higher priority over non territory jobs. So we're not only going to give you leads, but we're going to allow you to decide the leads that you want and what that means with time too, you can be more and more Fussy. You can initially start taking leads that are a long way away. As you get busier, you get more and more fussy, until eventually you just take your territory. At least ideally, that's what you should do. So you always try to improve it and then you focus on the jobs that you want. Like we got one guy in the mowing division who doesn't nothing but gutter clearing. Others just do landscaping. For example, you might even see Jim's Landscaping. That's a mowing franchisee who just says, I only want to do landscaping. So we give you as much work as we reasonably can. You have paperwork, guarantee, and we direct you the kind of jobs that you want to do because you can earn a lot more money on some jobs than others and you enjoy some jobs more than others. What else do we do? We run meetings. Now, this probably doesn't excite you a great deal. If I say we run meetings, eight meetings a year, typically you probably think, well, that's just. That's okay, that's nice. That's a bit of a social event. May go, may not. In actual fact, we've discovered from hard experience that this is actually one of the keys to a successful business. If you attend meetings, you are far, far more likely to be successful, to continue long term, to report a very good income, to be satisfied. And we discovered this the hard way in the beginning, because originally I ran my business. I was starting off, I lived in Blackburn, which is in eastern suburbs of Melbourne, and my first franchise were mainly around that area. And they were. And we used to meet in my lounge room. Initially we had a circle of chairs and then we had two rings of chairs. Then we moved to a school hall because it got started growing very fast. But one thing I discovered is that when we moved further away, like even to the western suburbs of Melbourne or Interstate, we had a much higher failure rate. And he recognized in the end, these meetings that were happening in my lounge room, which really weren't, I didn't think very much of, were actually really important and that people who didn't have meetings to go to actually were failing a lot more often. Why do you think that was the case? What's good about meetings that makes people be more likely to succeed? Best practice sharing. Sorry, Best practice sharing. Best practice, yes. You get to talk with other franchisees who are more successful than yourself. You now, there's usually a talk of some kind, a presentation. It's often the informal stuff because you're there and you're struggling and you're making 50 bucks an hour, and you're talking to a person who's making 150 bucks an hour. What are you doing? How are you doing that? And then you learn from that and you learn what's possible. And down the track, you'll be the same situation. You'll be the one making 150, and you'll be getting a new person. You'll be talking to them. It's actually the ability to keep on learning and learning from really successful people who are on your side. We are not no franchisee, and I say this is quite common, would ever think of another franchisee as a competitor. The competitors are out there. That's them. We're in the same team. But coming to meetings and learning new systems and new ways of doing things is really, really effective. Remember one particular case where a franchisor described to me where he was running a meeting on Upsell. Does anyone know what upsell is? Yeah. Upsell is where you go into a job and you upsell to something else. And it's a very key part of being successful because you less travel and you make a much higher hourly rate. Top operators upsell. You listen to Dan tomorrow morning, you're telling about Upsell. He's really good on that area. Now, this franchisor knew that certain of the franchisees in the region were not good at upselling. And it was costing them, it was hurting them. So we thought, I'm going to run a meeting on upselling now because people don't want to hear the franchisor speaking all the time. He had three franchisees in his region he knew were really good at upselling. Now I forget their names, but let's call them Tom, Dick and Harry. Okay. Three guys. And honestly, he had no reason to decide that any of us. When he better than the others, he just picked Tom. This is a purely. You can do it. Tom got up the evening of the meeting and he gave what the franchisor described. I wasn't there. Franchiser described as a really powerful presentation on upselling. It was very practical. It was what exactly he said to the clients, how he got them. We'll give you some clues on how to do that later. What he said to the client, how he said it, the kind of jobs he did, the kind of hourly rate he charged, and just how much difference it made. Very good. Brilliant, inspiring talk. As he was talking, the franchisor was looking around the room for these guys who were struggling to upsell. And you know what? Not there. They weren't there. But this is what really struck him, Dick and Harry, whatever their names, real names, were the guys who could have just as easily given the talk as Tom, were sitting down there listening to every word but Tom was saying. Now, why is it that the franchisees who needed to hear this, who was struggling with their income, they weren't there. But Dick and Harry, the guys who could have given the talk, who were fantastic upsellers, why were they there? Because you can always improve. And that's exactly what was happening. The reason that Tom, Dick and Harry were such great operators is because they were always looking to get better. And there are different ways to run a business. You can run a business where you simply learn the ropes and you, like in a factory, like you're working on a factory bench, and you just get to a certain stage and you learn the job and you're there forever. That's it. That's my income from now until the end of time. That's right. That's all right. But there are others who look at every job they do and they say, how can I do this better? How can I do this job quicker? How can I do it better? How can I travel less? How can administration better? And they all want to learn. And it's not a matter of being a genius or having an MBA or any of that sort of rubbish. It's just a matter of having that attitude that says, I want to do better. Now, if you look at my job history, and I would try not to kill the loot too much, but I am absolutely pathetic at doing most things. I really am. I am a complete monumental stuff up in so many areas of business, and I knew nothing about business when I started. In fact, there are so many reasons I should have failed, like the fact that I got appalling personal skills. My wife reckons I've got borderline Asperger's. That's how she tries to live with me. Honestly, there are so many reasons why I should have failed, but one thing I do have is an attitude. An obsessive, incessant attitude. How can I do this better every day of my life? And I include Christmas Day, Easter Sundays and evening, anytime I always line up. How can I improve when I talk to you franchisees down the track, what I do with complaints, when I talk to my staff and I wander around all the time, I don't do very much in this place. I just wanna listen to people. I'm always asking myself the question, how can I improve? Now, this system is very good for the kind of person who has that kind of attitude. I'm not saying that you wanna become multimillionaires. If you do, you're in the right place. You really seriously are. There is no place in the world better for starting off a business with nothing and making an absolute fortune. Most of you probably don't want that. What you do want, though, is a great lifestyle. You want a decent income and you want time with your family. Is that right? That's the single most common thing I get when I ask what the comparison. When I ring my 10 year veterans, I asked them what they were doing. Some of them have made a lot more income, but more often I make the same similar income, allowing for inflation that I used to. But I've seen my kids growing up and there's nothing to come.