Chapter 3 - You Don’t Follow Up ( Total Business Turnaround Book )

Hey, everyone, it's Mike Andes and I'm.

The author of Total Business Turnaround. I'll be reading chapter three of the book today, and this one is a hidden gem. Honestly, this is one of those ones that I think a lot of people will skip this chapter because they you really can sum the entire thing up in two words and that is follow up. But when it comes to follow up, I just believe it's so imperative that you are able to take the leads that come in and actually get as many of them to close and accept the job as possible.

And so one of the things that.

We did actually in person last year at conference was doing follow up calls. And it's one of those things that I can't replicate this and actually hold you accountable to do follow up calls. But so many of the things that we do at conferences in person cement the things that we talk about in the book. So I'd love to invite you to Blue Collar Summit. And it's coming up. I'm really looking forward to being able to share some really in depth speakers.

As well as do a workshop on a lot of these topics to go drill really deep.

And so today on this episode, we're going to talk about follow up.

But I would love to be able.

To have you come in person to Blue Collar Summit and be able to take things like follow up and actually doing follow up phone calls and implement it with other business owners.

So if you'd love to do that, I'd love to see you there.

And so go check out blue collarsummit.com until then, let's check out chapter three of the total business turnaround.

Chapter three, you don't follow up.

Why you don't build a $1,000,000 business. Reason number three, you don't Follow up. Freedom Lawn Care was generating $200,000 in annual revenue. They had $95,000 in debt, 70,000 of which was for a Kubota skid steer that they only use once or twice a month. On the turnaround episode, I was in the office with Luis, the owner. A field employee came in on two separate occasions. Their business credit cards kept bouncing. They couldn't buy the materials needed to complete a job. The credit cards reached their limit. There was no money. Finally, they used Luis's personal credit card and got the materials purchased. We showed up at the job site. The customer didn't know that we were coming to rebuild the deck. They asked us to leave so they could move their plants and furniture. The office hadn't contacted them for a date. Of service. The homeowners weren't prepared for the visit. To make matters worse, the wood planks they'd purchased for the job weren't the right size. Everything they'd bought that morning had to go right back to Home Depot. By the time we left the job site, it was 11:30am they had accomplished nothing. They still needed to go back to the store, return and replace the wood they couldn't use and come back. The job wouldn't even start till 1pm for context, we arrived at the shop at 8am that morning. We wasted more than half a workday on bad communication, poor planning and credit cards that wouldn't work. Another thing, he assembled his team with close friends. The girl in the office was a peer from high school. One of the low performing team members was Luis's closest friend. Of course, this is neither uncommon nor explicitly bad. Working with people you know and trust can be an asset when you're first getting started. But personal relationships can't interfere with what needs to get done. We can't lose accountability, honesty and fairness. Luis also ran another business he did outfitting for hunting expeditions. That business was profitable and doing well. Unfortunately, he'd split his attention with the landscape business. He also started dabbling in real estate by flipping houses or renting them out. Once the businesses achieve operational efficiency, they can become great opportunities. It hadn't been these distractions were splitting his attention. They were keeping him from growing a $1 million business. And all of this was just the icing on the cake. Freedom Lawn Care's real problem was debt. A business doing $200,000 in annual revenue can't sustain $95,000 in debt. They couldn't afford most of that debt to come from equipment they rarely used. Had they been generating 400,000 or more annually in revenue, it wouldn't have been such a big deal. As it was, they had way too much debt for their revenue. Also, a business their size couldn't afford a full time in person office manager like they had. I noticed gaps in their sales process. No one was doing follow up calls on estimates. I asked Luis, the business owner, about this. He and the office manager agreed that they would follow up sometimes for big projects. When it came to small or recurring jobs, they didn't waste their time with it. While looking in his CRM, I noticed that customers had never even opened some estimates. They had only accepted about 15 to 20% and yet they had no follow up procedure. The Kubota purchase and debt were troubling, but if they could increase their revenue the debt wouldn't be a big problem. They could raise revenue without spending much on ads. They just had to follow up on the estimates they had already sent. Get answers from their customers. A common limiting belief caused many of Luis's problems. I just need more leads. I wish I could just find the magic bullet for marketing. I wish I could get more customers. More leads are great when you can convert them. What good are more leads when you fumble the opportunities you do get and never get them across the finish line? In this case, the finish line is when they exchange money from their pocket to yours. I am not immune to this disease. Customers ghosting me cost my lawn care business over $15 million. Last this was the value of estimates and proposals sent to customers that we never heard back from. It happens in two ways. One, the customer never responds. You send them a quote, they don't open it, or they never reply. The other way is that businesses ghost customers. Someone expresses a need for a service. The business fails to reply or answer questions about the proposal. It's enticing to focus on the new next lead. We dream of the next big job that will turn things around. That's fine, but not when it keeps you from capitalizing on your current prospects. Think about how much work goes into putting together a quote. You go to their home, talk to the customer to understand the scope of work. Talk to subcontractors or suppliers. You write up the quote and send it to them. You do all of this as fast as possible, knowing the process is competitive and time sensitive. Then crickets. This is the cardinal sin of the home service industry. Your customers owe you a response to your estimate. You also owe them a response to their clarifying questions. Don't let quotes stay in pending or sent status. Get a decision. Either yes or no. You actually create work for customers. When you send them a quote. Keep in mind the estimate is not what they want. It is only a necessary step in the process. What they want is to get their job done and their problem solved. You want to help get them to that solution as quickly as possible. Make it easy for them to accept your quotes. Follow up. Communicate. Solve their problem. Let's look at it in concrete terms. Business A has 100 leads. Business they send out their estimates. They do no follow up. They close 10 new jobs. Business B only has 20 leads. They send their estimates and follow up on every single one of them. They also close 10 new jobs. Business A may have more leads, but both share the same number of new customers. What's more, Business B is making More Money than Business A why they do one fifth of the estimates Compared to business A. They spend less on marketing. They spend less on driving around doing estimates. We often fail to realize that it costs money to get a quote to customers. It includes the cost of acquiring the lead via ads. It also includes the labor from sales and admin teams. It can take a lot of work to produce estimates for leads and that work costs money. Often when I go to a business turnaround, the first thing they tell me is is that they need more leads, they want more customers, they want to grow their business. My question is, do you really need more leads or do you need to talk to the leads you currently have? Do we have a leads problem or a follow up problem? At Augusta Lawn care, across our 150plus locations, we close 34% of the estimates that we send. If we do zero follow up. When we follow up three or more times, our close rate jumps to 65%. You can almost double the speed at which you grow your business. You do this by staying on top of your estimates. You do it by following up until a customer gives you a yes or no. When you convert more leads, your blended customer acquisition cost goes down. Customer acquisition cost, or cac is the money you spend to get one paying customer. The lower your cac, the more profitable each job becomes. Following up is the easiest way to improve your close ratio without spending more money. You have already spent the advertising dollars on getting leads. Getting more leads to become customers will make you look like a marketing genius. People get fancy with terms like customer acquisition cost and return on ad spend. In short, upping your close rate with follow ups gives you more for your marketing budget. Advertising is a great way to grow, but if you can't close leads, you won't be capital efficient. I've seen situations where a business will spend $200 to get a customer only to make $5 in profit per recurring visit. They'd need to do 40 visits only to recoup their acquisition costs. That could take over a year depending on the service and frequency of your industry. When you improve your close ratio and sell more jobs, that number goes down. Instead of spending $200, your CAC is $50. Why you turn more leads into customers. You did this without paying for more leads or improving your ads at all. At a $50 cac, you can recoup the ad spend within 10 visits, assuming the same $5 profit per visit. This is a much more sustainable timeline. If you do follow up calls, you will be ahead of 80% of your competition. The vast majority of service businesses never do it. Some do automated emails or text messages. The vast majority will not pick up the phone and talk to customers. That personal touch will set you apart and grow your business. You won't spend a single extra dollar on marketing. That's not to say that automated communications are bad. We use them a lot at Copilot CRM. We equip users with the tools to set up automated email or text sequences. This can be very useful when you get behind on follow up calls. Automated communications funnel customers toward making a decision. Yet phone calls are still great for converting leads. They also stop leads from ghosting you. It's much harder for customers to blow off a real human being on the phone. Remember, our goal is to prevent ghosting. Unsold prospects ghost a business for two reasons. The first is that they are on the fence. They haven't decided if they want to go forward with the proposal. The second reason? They want to get it done cheaper. The undecided customer tends to follow a consistent script. I'm going to think about it. Let me talk to my spouse. I'll let you know I'm busy right now. This response takes the power out of your hands. Now it's up to the customer to make contact at their convenience. I hate this. You're waiting for them to call back. When they think of it, they won't think about it again. That is unless you follow up again. Keep in mind that what they say isn't exactly what they are thinking. They might mean it when they say they'll talk to their spouse. But they often think about the other costs of taking the job. How long will it take? Will they treat me bad like the last contractor I hired? Does this company use harmful chemicals? Will this job be noisy? Do I need to be home? Will they lock the gate when they finish at the property? These are some of the obstacles customers think about when making a buying decision. You must answer these questions once you send the quote. A follow up phone call might be the fastest way to to defuse all these questions. One way to get customers to commit is to leverage scarcity. Hey Mr. Jones. We are booked out for several weeks, but I have a crew with a spot that came available for next Thursday. I wanted to call you first before it gets booked up since I know you wanted the project taken care of. This gives the customer a clear timeline. They can't drag their feet forever. They have to commit. This is the same logic behind allowing your estimates to expire after 10 to 15 days. It forces the customer to make a choice. You can even offer a discount to further entice the customer. We are available next Thursday. I want to fill that hole in the schedule. If you can commit now, I will take 10% off the price. This consideration determines whether you should discount the price. Are you fat and happy or skinny and sad? If you are making a profit fat and happy, you probably won't offer discounts. You'll stick to the scarcity method and if they don't bite, that's fine because you are booked out solid anyways. The only reason you're following up is because you hate seeing leads get wasted. The second scenario is that you are sad and skinny. You need more jobs to fill up the schedule. You are struggling to keep the crew busy. You're in growth mode and focused on maximizing your close ratio. In that case, you could offer a discount. Keep in mind that if you are going to offer a discount, do it up front during your follow up call. When you do it after they say they don't want service next Thursday, it looks desperate, a little slimy. If you will discount the estimate to close the deal, give a reason for the discount and a deadline for the decision. For example, Mr. Jones, we are booked out for several weeks, but I got a spot that just opened up on the schedule for next Thursday. I wanted to call you first since I know you didn't want to wait several weeks. I also was able to get a 10% discount approved if I am able to get you on the schedule and collect payment today. When it comes to follow up calls, the key is conviction. You believe in your core that you are the best option for the customer. If you don't believe you are the best option, they won't believe it either. Conviction is a superpower. It changes the way you come across. Your pitch won't feel salesy. You'll feel like you are offering true value. You care for the customer. You know that you are the best value compared to the competition. So you will ensure that you clear any objection or obstacle. Get the estimate accepted and the job completed by you. If you care for them, that is your obligation to the customer. Let that confidence bleed into your follow up phone calls. Ask them, has anyone else called to follow up with you? I will personally guarantee you'll be satisfied. Usually your competition haven't even had a chance to send a bid yet. I've used similar lines hundreds of times. Not once has a customer come back and said why yes, three other of your competitors have phoned me back. This approach is especially helpful when the customer is waiting on other quotes. Your conviction will make other service providers seem less appealing. You're the best by definition. All other options are inferior. If you don't believe this, work on your product or service and refine it until you can say this with confidence. Also, keep in mind that you see all the business's dirty laundry firsthand. You can see the weak areas of customer service or quality. You hear every complaint and see every negative review. Remember, you only need to be better than the customer's alternatives to know you are the best option for them. The third thing to do when dealing with leads who are on the fence? Agree with them. Keep the ball moving. They want their problem solved. You want to keep the conversation moving in that direction. Don't get bogged down in negotiations or false flags. Wordtrack. Let's roll. Totally for sure. Absolutely. Does that sound fair? The fourth way to move an on the fence customer forward is to tell them I will reserve your spot. This is particularly great for voicemail. It can also work on a phone call. When a customer says let me get back to you later. Absolutely you're agreeing with them. You should talk to your spouse. Let me go ahead and reserve your spot. We fill up very fast. I know we have one spot available next Thursday. I can see it's important to you that we get this done as fast as possible. I'm going to save your spot and you can confirm with me after talking with your spouse. If they let you put them on the schedule, they'll wind up going through with the service. If they cut you off. No, no. Hold off on putting me on the schedule. It's their way of saying no. But now you have called their bluff and can get a straight answer from them. Either way, you've done your job. The purpose of follow up calls is to get customers to make a decision. You want them to say yes or no. Your goal is to make sure estimates don't remain pending. Stop allowing customers to ghost you. The other thing that keeps customers from committing they want a cheaper price. They might say the following I can't afford it. I'm on a fixed income. I need to check my budget or the price is a little too high. When the conversation takes this turn, keep in mind there are three ways a job can get done. It can be done well. It can be done fast. It can be done cheap. At best, you can get two out of three. Ask the customer which is most important to them. Usually they will chuckle. Rarely will they ever say that getting the job done cheap is the most important thing to them. When they do, there are still directions you can take the conversation. If they have budgets they can't break or price limits, you can say for your price we would have to reduce the scope of work. In other words, the job will not be done as well. If they don't have budget constraints, they will usually reverse course and accept a full job. If they do have legitimate constraints, they will reduce the scope of work to make it work for their budget. Alternatively, if a customer cares about price, you can tell them that you can schedule their job in a few months in your off season. In other words, the job won't be done as fast if someone will pay today for services done a few months from now. When I don't have as much work, I will give a discount how do bad follow up practices keep you from building a $1 million business? Take Luis from Freedom Lawn Care. He could have tripled his $200,000 in annual revenue business by increasing his close ratio. It wouldn't have cost more money. He didn't need to get more leads. Getting customers on the phone could have increased his close ratio from 15% to 50 plus percent. That simple choice would help him triple his business. Tripling the size of his business would make his current overhead structure manageable. Think about follow up strategies. This way they reduce the money you spend on leads. This reduced your marketing costs. You see profit sooner. You reinvest that profit into the business and the business grows faster. If you want to grow your business faster, pick up the phone and follow up on estimates. Businesses that have low customer acquisition costs grow faster without debts or loans. Instead of focusing on cost per lead, I like home service business owners to focus on calls per lead. It is an input action you can measure and control. You can call every pending estimate until you get an answer. This action is bound to affect your close ratio. This goes back to my opinion that most businesses have a follow up issue, not a lead issue. Let's do the math. Say you follow a process for follow up phone calls. One out of three customers pick up the phone. The other two calls go to voicemail. Of the leads that answer the call, one out of five converts to a customer. That means to get one job you have to make 15 follow up phone calls. If each call averages two minutes, this means you can get a new job for every 30 minutes of work. As a business, let's say you send 60 estimates per month. You would follow up on every single one. If you do two calls for each, that would mean 160 calls per month. If we close a new job for every 15 follow up phone calls, that would lead to 8 new jobs every month. If your customer acquisition cost is $100, that would mean that you are now saving $800 per month on marketing. If your customers average $2,000 in annual value, this increases monthly revenue by $16,000. You'll add $192,000 in annual revenue. It all comes from following up calling every estimate, getting those eight new jobs each month. Let's now assume your close ratio is 33% before doing follow up calls. That would mean you had 20 accepted estimates out of the 60 sent estimates. If that number goes from 20 to 28 accepted estimates, your close ratio increases to 47%. We will also assume $100 is your customer acquisition cost on the 60 estimates last month. Then you started doing estimate follow up phone calls. You added eight new jobs. After adding eight new accepted estimates, your customer acquisition costs went from $100 to $71.42. It's amazing. People try many marketing techniques and schemes, but half an hour of follow up phone calls will bring in new customers every single time. We've covered a lot of ground here. Let's end this chapter with a few actionable takeaways. When it comes to follow up phone calls, the number one rule is to slow down your words. Many of your customers will be older. They might comprehend things slower than you. If you speak fast, they may not understand you. They might mistake you for a fast talking salesperson. You are not a salesperson. You are a trusted advisor. You are trying to guide the customer to the best solution for their problem. You care about them and because of that, you know you should be doing the work. And remember, the best way to improve your close ratio through phone calls is to do more of them. At first, you may not get a new job every 15 calls, but as you get comfortable, your ratio will increase. Reps matter. You'll get better. You'll know what questions to ask. You'll become practiced at leveraging scarcity. If you're thinking about using discounts to increase sales, go back to early in this chapter. Reread the section where we discuss discounts. Decide what situations will be appropriate for you to lower the price. The key is to know what final price you can offer before the call begins. Third thing to keep in mind, it's good to have the estimate information in front of you. The customer may ask questions about the scope of the work. You should be able to answer them and modify the estimate if needed. This is particularly handy when they are nervous about the price. If you're going to walk back your quote by reducing the scope, you need those notes. Here's a quick way to determine if unresponsive customers are costing you. Run a filter on all the quotes you sent out in the last 90 days. My bet? You'll see that 20, 30, 40% of your estimates never received a response. Customers are ghosting you. Call 15 of your pending quotes. Tag me on a social media post and let me know what happened. Follow up diligently to build a $1 million business. No money required, just a phone.