As we travel at seminars and meet dealers and sales staff, we are often surprised at where many set their goals. We think goals should be high and definitely high enough to see that your family will be looked after when you retire. Many salespeople and dealers are happy if they have a newer vehicle, and enough money to pay the bills, but in this article we will discuss why you need to sell more today to make sure you are looked after tomorrow and that you won’t need to be doing demos when you’re 90.
Our business is somewhat physical. There will come a day for all of us when digging holes, delivering salt, crawling under sinks and even doing demos will be more than our body can do every day. You may already be experiencing more creaking in your bones and a sore back when you are done for the day. Let’s take a look at what you need to sell now and the common mistakes dealers make in feeling that the future will be looked after.
Saving For Retirement
The first step in planning your retirement is acknowledging that it is going to happen some day. We wish all our readers excellent health but some day selling and installing will become a burden to us all. Let’s assume for this article that you would like to retire when you are 65. Let’s also assume that you are 40 now. You can adjust the numbers to suit your situation.
According to a NY Times article of January 27, 2007 Fidelity says the average American has only $62,000 in their 401K at retirement and negative savings, so if you are behind where you should be in savings, you are not alone.
Let’s take an example. Fred is a dealer and has been for 7 years. He sells a good brand in a mid size market. He makes enough to pay the bills and has a new truck. He lives the good life but hasn’t saved much. He has a nice home and has it about half paid for. His credit cards have a few thousand dollar balance but he is hoping to pay those down. Fred is a successful dealer who sells about 15 systems per month himself and has no sales staff. Fred currently makes about $6,000 per month and has not thought a lot about the future as everything is going well.
To retire with 75% of his current income (which is a financial industry rule of thumb) and assuming a rate of return of 7% (based on stock market at 10% average and CDs at 5% average return) Fred will need savings of $857,000 when he is 65 years old. Factoring in social security could reduce this number to about $550,000. The good news for Fred, is he has time to save as he is only 40. Saving only about $1,000 (before taxes) every month at a rate of 7% will build savings of about $550,000 in 25 years. The bad news is that if you factor in inflation of just 3.1%, his $550,000 will only have a buying power of $256,387 when he retires. This means that Fred should probably be saving $2,000 per month starting right now if he wants a comfortable retirement.
There are a lot of factors that affect this calculation such as taxes, rates of return, inflation etc so you will need to do your own calculation with a financial planner to fit your situation. The overall conclusion is that Fred needs to make a lot more. To save $2,000 per month, his business needs to sell a lot more. Average water equipment dealers net 4% of sales. That means Fred will need to increase his sales by $50,000 per month – each and every month for 25 years to achieve a reasonable retirement. The only way to accomplish sales of this magnitude is to add salespeople and make them successful, since few of us could sell and addition 10 to 15 systems per month ourselves – every month. That extra salesperson selling now is allowing Fred to retire in the future.
Business Equity
Many dealers expect their business to be worth money and expect to sell it when they retire. Realize that your business is only worth money to someone else if it has real estate or re-occurring revenue from rentals or service. If your company only sells or has little re-occurring revenue, when you retire, it will have very little worth.
Building rentals is one way water equipment dealers can save for retirement. If you could put out 4 systems per month on rent at $30.00 per month, in 10 years you would have 480 systems out. We will use 400 to account for cancellations, moving etc. Four hundred rental units at $30.00 per month will bring in $12,000 per month in gross revenue and renting units is a lot easier than saving. That recurring revenue will be worth money if the company is sold. The best way to put out rentals is having a sales staff that sells and rents every month.
Real Estate Equity
Many dealers feel their home will provide retirement cash and it may. However, all markets have their ups and down and there is no way to predict real estate values 10 or 15 years from now. How will global warming, earth quakes, hurricanes and markets affect you? In addition, you have to live somewhere. If you sell your home to raise cash, your costs for rent etc may be far higher than you think when you have retired. Inflation will increase rental costs every year as well. We would not suggest relying on your home to retire.
Dangerous Savings
One area we know you should not cut to save more is health insurance. We are always surprised when dealers tell us they have no health insurance or are relying on benefits through a spouse. Spousal benefits can disappear quickly if the spouse if fired, their company goes under or your spouse dies or leaves. Everyone in our business needs good health insurance. Remember that no matter how much you have saved, a heart bypass came be $150,000 to $250,000 and can wipe out years of savings in a heat beat.
All of the above may be a bit depressing if you are behind in what you should have saved. The good news is that we are in a great industry. You can catch up and plan for a great retirement by realizing the problem and taking steps now to increase your sales and rentals. Take steps now to hire successful sales people, to raise your goals for sales and rentals so we won’t be doing demos when we’re 90.
To find out how we can help, visit www.carldavidson.com or call us at 800-941-0068.
Tags: management
Many dealers tell us that a strange thing sometimes occurs when they hire a great salesperson. They say that over time, if a salesperson becomes the best producer, they sometimes go wild…refuse to take instructions…cause trouble but sell a huge amount of equipment…making them too valuable to fire. This article will take a look at the causes and cure of this dreaded condition… salesmanus indomitus (out of control sales person).
Symptoms Of Salesmanus Indomitus
Salesmanus Indomitus means a salesperson who is out of control by management. They could refuse to come to meetings or shows, use processes, a demo or techniques not approved by the company or they could try to prevent the company from hiring additional sales staff by poisoning the minds and hearts of new recruits.
This sounds cruel on their part, but we believe it is human nature that happens spontaneously when a sales person meets a manager without control.
Remember that salespeople are high powered tools who should always be aimed at a customer. If they spend to much time aimed at the company, they can go wild. Then, no one wins.
Causes of Salesmanus Indomitus
Poor Recruiting
If you are unable to recruit as many great salespeople as you need, you encourage this condition. If a sales person senses you can’t replace them or can’t get along without them, many will take advantage of the situation. For example, Fred needs 5 salespeople but has 2. He spends little effort on recruiting and has not hired a successful salesperson for 2 years. His star salesperson is Hilda. Hilda sells 70% of the sales and is irreplaceable. Hilda realizes that she can take liberties since Fred cannot replace her or the sales she generates. As a result, she begins to control the company and make the decisions. Fred feels he can’t stop her because he can’t afford to lose the sales she brings in.
Lack Of Confidence
Another cause of the condition is lack of confidence on the part of the dealer. If a dealer does not have the confidence to do a great demo, sell and recruit, the afflicted salesperson becomes completely indispensable. Many realize this and work to further undermine dealer confidence and increase dependency.
Focusing Exclusively On Sales
Sales are important but if a dealer focuses exclusively on sales and not on loyalty, team success, ethics and standards for activities and demonstration, the company will suffer. If a dealer keeps a high producing salesperson who will not attend meetings or shows, is not punctual, refuses to sell some products and services criticizes the company, refuses to follow company policies and performs other subversive activities, that salesperson is calling the shots. They have become the manager and the dealer actually works for them. Sales are very important but anyone who detracts from the culture of success must be adjusted or removed.
Idle Time
This condition is made worse by idle time. If salespeople sit around for long periods of time with little to do, they are more likely to contract this condition. Remember that a salesperson is like a loaded weapon and should always be pointed away from you and toward a customer.
Do Not Try Force
The Salesmanus Indomitus will not respond well to force. You can’t engage in conflict or you will lose them. We suggest selling picking your conflicts and selling them into seeing things your way. You accomplish this like you do in any sales situation….find out what they want and need. With some it may be praise or status…with others it could be perks…still others time off. Find out what they want and try trading for what you want.
Steps To Avoid
Letting Them Help With New Staff
Never leave them alone with new sales staff or ask their opinion of applicants. Remember, they will want new recruits to fail so they can remain indispensable and keep or even increase power. Always train new staff yourself and warn them about sales people who may try to lead them astray.
Making Them A Manager
Never make them a manager. Managers have to be loyal and dedicated to the systems and long term goals of the company. Putting someone who is out of control in charge of your sales force is a recipe for disaster.
Prepare For Landing
If you think you have out of control sales people on your team, here are the steps to follow:
Learn A Great Demo
Over the years, we have noticed that owners who can sell are not bothered by Salesmanus Indomitus . This is because they have the confidence that no matter who works for them or what happens, they can sell enough to stay afloat. That’s why we recommend that you learn a great demo and prove to yourself and anyone else on your team that you can sell. You want them around but you don’t need them on board. We aren’t suggesting you sell all the time, just during emergencies.
Learn To Recruit & Train
The best way to prevent this condition is not to let it happen. If you recruit and train the right number of salespeople, no one on your staff will become indispensable. If you should have 5 salespeople, work until you get five. No one tries to take over a company if they can be easily replaced.
When The Time Comes, Be Surgical & Decisive
We hope that you never have to face this problem but if you do and if you have tried to adjust them into productive staff members, act swiftly and decisively. It won’t get any better if you wait. It will cost you a few sales but if you can replace them, you won’t suffer much. Keep telling yourself it is better to be the boss of a team you have to rebuild than work for an employee who doesn’t have your best interests at heart. Our experience shows that good managers always find a replacement for out of control sales staff.
So take courage and start working now top prevent it from developing. The you’ll be ready…when good sales people go bad! If you need help recruiting or training sales staff so they don’t go bad, visit www.carldavidson.com or call us at 800-941-0068.
Tags: management
We often hear from dealers that they are having trouble competing with big box stores. We feel there is nothing to fear if we do a good job presenting value. If you worry about big box stores, read along and see if you can take steps to restore some of your confidence.
“I Can Help In Any Department”
You offer services the big box stores do not and cannot. Try this test. Go to a big box store near you and go to the softener aisle. Many stores display a sign that says “This softener designed for ferrous iron and this one for ferric iron.” Ask the helpful staff what is the difference. We have been told by one employee that ferrous is just the Spanish version. This test should give you confidence that the box stores will never replace the services you provide your customers – even when they have the exact product you carry!
Are You Chasing The Wrong Market?
Remember that only a small portion of the market would ever consider going to a box store and installing equipment themselves. Think about the problems. First, you have to diagnose your problem – the old ferric/ferrous problem. Then, you need a truck to pick it up. Then you need to have the time, tools and expertise to install it. Who has all this? Do attorneys and dentists in your town enjoy crawling under cupboards on the weekend sweating pipe? Do they look forward to dropping hot flux on their skin so they can show their wounds on Monday at the office?
If you sell to call-ins from ads or if you sell to do-it-yourselfers, you are asking for competition from everyone including the box stores. If a customers calls from your yellow page ad, they probably called 4 or 5 dealers and visited a box store. There is no money to be made there. However, if you prospect – particularly in a municipal up-scale area you will find very few who change their oil, cut their own hair or install their own water equipment.
Are You Missing The Secret Ingredient?
People who buy from the box stores are missing a great demonstration. If you do a great demonstration, your total package will have far more than what they can get at the box store. Also, be sure to talk in dollars per month as this make a difference to do-it-yourselfers.
Sell The Entire Package
Most do it yourselfers will only buy one piece of equipment at the box store. But they need far more. Make up a custom package for them that solves all their water challenges. A mixed media conditioner, an R.O., ultraviolet light or ozone, whole house carbon. If you can show them a complete package that suits their needs, very few will attempt to install it all. If you miss the softener sale, maybe you can sell the rest of the package. Just talking about these advanced solutions will help them realize how little they know about solving their entire problem.
The Cost Of Self Installs
Sometimes we forget all the skills and assets we have to do installs that “civilians” just don’t have. Take a simple example. Does Mr. Homeowner have a tool to cut copper pipe? If he does how old is the blade. If he hasn’t used the blade for 3 years, will it make a nice clean cut? Oh he needs a blade – that’s another trip to the store and more time. While he is there, he buys the pipe. Does he get the exact amount or 12 feet too much in case he is short? When he is done installing the R.O., can he test the TDS? No, he has no meter. Would he buy one for just one installation?
The fact is that the home owner probably needs more than $600.00 in tools, 4 trips to the store, and much more in assets even if he has the skills to do it right the first time. How much is his time worth?
If you do the math, you will see that your professional install is a bargain…even if you don’t count the emergency room visits he will probably be making.
What Other Value Do You Provide?
You provide far more and you need to point it out to the home owner. No only do you provide a diagnosis of the water problem and a custom solution, you provide factory trained installers. If his equipment fails to function, does he bring it back to the box store? No, he ships it to the manufacturer. What does that cost? How long does it take for a solution? If it is improperly installed, does that invalidate the warranty? If the manufacturer sends him a faulty part replacement under warranty, can he install and test it?
If the home owner fails to diagnose the water problem properly and needs to get different equipment, will the big box store take back what he already purchased? If there is a problem at 2:00 AM what is the value of making one call and getting help on the way? What is the value of not hearing your spouse say “I told you so” when something goes wrong? We think it’s priceless.
Today’s buyer wants recourse and that is what you provide. Quick response times, all parts and tools, manufacturer warranty, financial backing, no hassle. These are all valuable to the right customer.
Interestingly, we find that dealers who rely on call ins for sales and who sell based on price have a problem with the box stores. Dealers who have great service, who generate leads and who do full demonstrations have no problem at all.
So, sell yourself on your value and then go forth without fear to battle the box stores. If you need asistance in getting all the sales you need, visit www.carldavidson.com or call us at 800-941-0068.
Tags: management · sales
Well, it’s official, the red hot economy of the last few years is slowing. It had to happen, jobless rates are rising, interest is up, housing sales are down. The era with demand so great that living were made waiting for the phone to ring may be slowing but we believe that oddly the same dealers will do well and the same will do poorly no matter how much the economy changes. In fact, we have noted over time that the well organized dealers and dealers who still to the basics seem to rise higher and fall lower with changes in the economy than dealers who fly by the seat of their pants. Let’s take a look at why this seeming contradiction could be true.
If You Complained In The Last 5 Years
Despite the fact that housing sales have soared, people have never been wealthier, unemployment has been the lowest in history and people have never been more focused on health, home and family during the last five years, some dealers have complained that times are tough. Be honest with yourself and if you have not profited immensely from these historic highs, you probably will not be affected much by any lows. Many will continue to work away at call-ins and that will fall slightly but be pretty steady in troubled water areas.
Recruiting
Dealers who have been unable to attract great employees will continue to do about the same unless they change. Sure there will be more candidates looking for jobs if the economy slows but dealers with 20 year old pay programs and no support or supervision will continue to attract the bottom of the candidate pool with the same results. Dealers with full time professional sales managers, great pay programs and a complete sales system will attract the best and get the most out of them. This superior sales pool will more than make up for any downturn in buyers and we predict these dealers will expand and prosper despite any slowing of the economy.
Prospecting
Dealers who rely on call ins will be adversely affected as the economy slows and there are less new built homes and resales to generate call-ins. Dealers with good prospecting and lead generation plans will be unaffected or even prosper as they draw from the largest market of all…the people who don’t know they need our help until we call them.
Municipal Water Markets
Almost every area of the country has a very large and almost untapped market with people who use municipally treated water. This the largest market with the most disposable income. In addition, this market allows dealers who seek it to hire and train new sales staff, since it takes very little time to learn enough to sell on municipal water. Finally, over the next few years, the municipal market will continue to grow and well or rural water will continue to shrink making to tough for dealers who only sell on wells to expand and prosper.
Demonstrations
As the market moves to municipal markets, doing a demonstration that addresses taste will be an important issue. Taste is what motivates the municipal market and dealers still focused on technology and savings will be hard pressed to sell to today’s municipal market.
Closing
In the next five years, dealers will find that the old closing techniques of discount, pressure or scare tactics will continue to work on a smaller and smaller segment of the market. As the economy slows, the people who will be affected least will be the better educated and upwardly mobile professionals who can be lead but not pushed to the sale.
Consolidation
The industry has experienced wide spread consolidation and this trend will continue over the next five years with dealers and manufacturers. The public has become more and more attracted to national brands and less to local merchants. Brand identity will become more and more important and independents will begin to fade or link with national brands. In addition, the manufacturers appear to be offering the best markets in the nation as second locations to dealers who have shown sales skills and business acumen in their original market. This means that reality of “get big or get out” has arrived in our industry. The dealers that will pull ahead as the economy slows will be dealers with sales managers and sales forces with professional systems in place. This exactly parallels the automobile industry during the slowdown of the 1929-1939 era when manufacturers became fewer and the corner garage became extinct as an auto dealer in favor or larger and more professional organizations.
Government Intrusion
Finally, the effects of government intrusion will be come even more critical over the next few years. Some dealers who pay staff as 1099’s are already reporting huge fines from the authorities. One of our clients was recently fined $27,800.00 for failure to have workman’s compensation insurance in place. Another client unknowingly violated OSHA regulations by not having regular safety meetings and by having the fuse panel blocked by boxes in a storage room. These infractions which many dealers would consider small have resulted in very large fines…fines so large the dealership may have to close. The government will continue to enforce laws that many dealers don’t know about and don’t follow. Only the dealers with systems to follow the laws, professional advisors and the capital to comply may prosper.
Price
As dealers realize they need more money to expand, to comply with government regulations and to have the kind of facilities, training and inventories the public demands, dealers who want to stay will have to charge a fair price for their goods and services. We believe the next few years will see the deep discounters begin to fall away as manufacturers, government and staff all demand more out of every dollar of sales. The man with a truck who works alone may be going the way of the cowboy or the traveling salesperson.
All this may sound gloomy to some but it is better to face facts that put our head in the sand until the world has changed without us. The fact is that any dealer who does things right and sticks to the basics in business, complies with the law and continues to change with the market will prosper as the economy slows or recovers.
It is good to realize that “get big or get out” is on our doorstep as we face the next few years. We recommend that every dealer plan when they want to be in five years and what steps they need to take now in order to get there.
If you want assistance in being a success in the water equuipment industry, visit www.carldavidson.com or call us at 800-941-0068.
Tags: management · sales
The trick to having a successful career in the water industry, whether you are an owner or salesperson, is not to retire until you actually retire. Unfortunately many of us become the walking wounded, wandering through endless days of mediocrity, no longer working to improve our careers and our company. We call that being semi retired. Here are a few ways to tell if you have “bought the farm”, “hung up your spurs”, “turned in your teeth” and are semi-retired. Take an honest look and ask yourself an important question. If you are actually ready to retire, good luck. You’ve earned it. Stop coming to work and hit the links. However, if you accidentally joined the semi-retired too early, make the changes that will change your life and get you back in the game.
A Time To Reap, A Time To Sow
The bible says there is a time to reap and a time to sow. I guess the question is, “Are we sowing or reaping?” People on their way up are sowing, making contacts every day, expanding their circle of associates, getting referrals, trying new things and doing everything they can to expand and improve. When you are semi-retired, you slow down. No need to increase your knowledge or contacts because you won’t be around much more. If you are “living off the fat of the land” instead of consciously building an empire every day, you may be semi-retired.
How’s Your Head?
People on the way up are constantly learning and improving. No scrap of information is too small to absorb. They live and breathe their job and industry. It isn’t what they do, it’s who they are. How is your head? Have you done anything to learn new techniques or information in the last 30 days? Have you taken a training class, read a book on sales or business, attended a seminar, invested in a DVD, attended a local group of salespeople or business people who share techniques? If not, you have been retired for 30 days. The world is changing faster than ever before. It takes a lot of study just to keep up. Once the mind closes it’s tough to re-open it. If you didn’t do something this month to expand your mind and learn techniques or information that will make you more next month, you may be semi-retired. Semi-retired people don’t learn new things as they won’t be around long enough to use them.
The Numbers Don’t Lie
There are always numbers that keep us on track. 98.6 is normal. 120 over 80 is good blood pressure. In our industry there are numbers too. At our seminars, almost everyone in attendance agrees that doing 2 demos per day is a reasonable sales performance and that closing 33% or 3 per week is a reasonable average. As a salesperson, if you did not close 3 systems last week, you are semi-retired as a salesperson. As the manager, if you have no salespeople or if you need salespeople and did not interview 10 applicants, you are semi-retired. If you do not keep track of exactly how many demos you did and your closing rate, you are really semi-retired.
How Is Your Demo & Kit?
If you are doing the same demo you did 10 years ago despite the changes in the market place, you are semi retired. The world changes and the up-and-coming change with it. If you did not need to recharge your mini today, you are probably semi-retired. If you can’t remember where you put your kit, you are definitely retired. Today’s customers are skeptical of salespeople and who can blame them? You have to show them and involve their senses to convince them. Selling without a full demo in every home is old school selling. Also old school is the “scary magic show approach” with tricky phrases and amazing moves. If you are not developing a great demo that changes with the market and sells the way the customer buys, you are semi-retired.
Are You Excited? Do You Tell Anyone?
Young, up and coming and young at heart people in our industry cannot wait to talk to folks about water. They have a passion to share exciting information. Are you excited? Do you have new and powerful information you can’t wait to share? Do you wake up and thank goodness you are in our industry? Would you pay to be in it if it wasn’t your job? Up and comers feel that way and if you don’t, you need to sell yourself every day or you may become semi-retired.
One reason so many of us fall into the semi-retired state is it is so easy to do and keeping enthusiasm and current knowledge takes work. Look at couples who can’t bear to be apart but 5 years later they can’t bear to be together. Things change. We are constantly moving ahead or falling behind. No one stays still but the dead.
My grandfather used to say, “You learn something every day”. What did you learn yesterday and the day before that? If it was something about Oprah that’s OK but if it was something about sales, your business and your career, that’s moving ahead.
If you find you are drifting toward retirement earlier than you had planned, it isn’t too late. Take steps now. Get excited about the improvements we make in people’s lives. Dust off your kit and learn a great demo. Buy a DVD, attend a seminar, read a book on business and one on sales. Set time aside to read. An up-and-comer probably reads two books a month to improve and get ahead of the rapidly advancing world. Oddly, the semi-retired have more time but read a book a year or less. Get out there and make new connections. Tell everyone you meet about water and offer then a professional test of the water in their home. Don’t wait for customers to call you, go out and find them.
Being excited and keeping ahead of the world and your competition is the kind of work that good people find exhilarating. It will keep you productive and young for many years no matter what your chronological age. Best of all, it will not only increase your enjoyment of your life and career; it will provide the kind of sales, profit and income that will allow you to enjoy your life now when it is finally your choice to retire.
For more information visit
www.carldavidson.com or call us at 800-941-0068
Tags: management · sales
