We are entering a retrofit market. Are you prepared to maintain your building automation sales pipelines in this new retrofit market?
I remember when capital work largely dried up in 2009 and the only thing that kept me employed was my retrofit projects.
In this episode, we discuss how to sell retrofit work.
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Resources mentioned in this episode
Show notes
Phil Zito 00:00
This is the smart buildings Academy podcast with Phil Zito Episode 226. Hey folks, Phil Zito here and welcome to Episode 226 of the smart buildings khadem II podcast. In this episode we're going to be talking about for building automation system retrofits sales strategies, everything we discuss from today's episode can be found at podcast smart buildings academy.com for slash two to six, once again, that is podcasts that smart buildings academy.com four slash two to six. If you've been listening to this podcast for any amount of time or following me on LinkedIn or following me on Facebook, you know that I believe our capital market is pretty much going to collapse. And I'm pretty sure willing enough, or sure enough to come on to this podcast and say this, that we are going to be entering a retrofit market and companies that are prepared for retrofit sales are going to survive and thrive and those that are not are going to die. And I know that's a little extreme. But the reality is that when the capital market starts to go away, and the construction market starts to go away, and we enter into a market, where people are just maintaining the assets that they have, then companies that have been preparing for that are going to be okay companies that are trying to scramble and get on operational budgets and start to develop the appropriate relationships to effectively sell retrofit services are going to find themselves in a world of hurt a world of hurt rather, the problem with retrofit sales is not cash flow, at least not in today's economy. I mean, cash is so cheap right now they're practically as a business owner, banks are practically throwing money at you. Because the interest rate is so low. And it's very easy to get your hands on cash right now the problem is not getting cash. The problem is cash flow and return on investment. So people want to know that if they are going to get $100,000 to be able to invest in a retrofit that is going to deliver a return on investment. Now how do you define that? How do you go and say if if you guys or gals go and get X amount of cash that you're going to get why return? Well, that brings us to our first retrofits sales strategy. If you're not already doing this for your existing customers, you should be and it is the site audit. This is going and actually helping your customers gather up all of the information gathering up all their own manuals, gathering up all their documentation, walking the site, identifying systems that have failed identifying systems that may need to be retrofitted, and identifying opportunities for improvement. We'll talk more about that in the later strategies. But this is something you should be offering to every customer and every potential customer. I Deeley, you will find a way to do this at little to no cost. But worst case scenario, you do it at cost. This is not a profit maker. This is a lead into profit. So if you've ever used our services here at smart buildings Academy, we have a skill assessment and our skill assessment is not going to make our revenue numbers. I will tell you though, however, our skill assessment is very good at identifying gaps in people's experience levels and in companies, employees and pinpointing those gaps so that they can then take action on those gaps. And there is a direct causality relationship between the assessment results, the training, and the return on investment, we are able to see anywhere from five to 10% increases in efficiency of staff post training, and that generates anywhere from three to six month return on investments in our training solutions. So what you're looking for here, why do I tell you all that? It's not to sit here and pitch you on our training services. It's to create an example where you can kind of say, Oh, I see what you're doing there. You're doing the same thing with the site audit. You are going to identify issues, real issues, and you're going to identify the cost of those issues.
Phil Zito 04:52
And then based on the cost of those issues, you will provide solutions that will provide a return on investment. If that is your first strategy from a retrofits sales perspective, and it's the key, I would say, linchpin strategy that every other strategy requires. Every time I've seen an estimate go south, on retrofits, it has been from people not going and properly estimating, or sorry, not properly auditing the site, which ultimately resulted in a improper estimate. When people do not properly audit a site, when people do not properly analyze the site, then what happens is they find themselves going and creating estimates. And those estimates are based on inaccurate information. So the site audit is critical to the retrofit sales strategy. But it's also critical for your customers to really understand the depth of the situation they're in, it's one thing to say that your pneumatic system is inefficient. It's another thing to go and do an audit and identify that steams leaking through, you are effectively going and driving fans, which are causing pressure issues, which are causing flow issues, which are causing temperature issues, which in the hospital you're in and the O r you're in could potentially cause liability, they could cause an infectious event, they could cause a readmit at which the hospital will have to bear those costs. There's a variety of ways in which the environmental systems can directly impact the profitability of a business. So it is key for us to audit the site. I can't hammer that enough. From there, though, the next thing that we must do, strategy number two is aligning to core business outcomes. So aligning whatever we're proposing to core business outcomes. I feel like this is where a lot of folks get things wrong. They do a site audit, they find that a chillers ineffective, they find that a sequences ineffective, and they say, you know, you could save some energy, okay, but let's say this person's in Oklahoma, or in Texas and playing a pretty low energy rate as it is. Or you say something like, you know, that chillers inefficient, okay, but what does that mean? Now, if you know you have a hospital, or maybe let's take a data center, for example, you have a data center, and you say, that sequence is very likely based on our experience to cause a failure in the near future. And that failure will impact your uptime? How much does it cost you per minute or per hour that your data center is down? And then you say, What if you could reduce that? What would that be worth to you, and you go and you do that equation, where you say, Hey, this is the cost. And this is the return, and you're aligning your solution to a business outcome. I know it's kind of highly the kind of high up there 30,000 50,000 foot view example there. But the key point, and this is for if you're selling as a controls contractor, this is also if you are a operator, you're trying to sell this internally a service or retrofit or a change, you need to identify the key business outcomes, the core business outcomes, you align with whatever you are selling encre incredibly important. Then from there, I like to hammer kind of the top three kind of benefits. And here's how I do this. So strategy. One was to do a site audit, strategy two was to align to core business outcomes. And strategy three, right, strategy three, is to hit kind of the top three that maybe aren't business outcomes, but they're incredibly important and that is to increase reliability, standardize and streamline and increase asset value.
Phil Zito 09:46
So if we look at increasing reliability, standardizing and streamlining operations and increasing asset value, no matter if you're in commercial real estate K through 12, higher ed, local Gov meant health care, hospitality, one of those three is going to hit home. Now let's say you're in K through 12, you're in the school districts, right? asset value, probably not that important. They're not looking to flip a school and find someone that buys school. Right. But the reliability is probably pretty important. standardizing and streamlining operations, especially as we have an aging workforce that is exiting the workforce is incredibly important. So as we start to position, our sales offerings, as we start to position our solutions to the marketplace, we're going to focus on these three, I found that in about 85 90% of my previous sales engagements, increasing reliability, standardizing and streamlining operations or increasing asset value delivered results that aligned with what people were looking for. And it opened the door to a conversation. So that is kind of your big strategy right there. Strategy three, and strategy four, is facilitate cash flow, facilitate cash flow, this is going to be a little weird, because as a salesperson, how much control do you really have about your business facilitating cash flow? Not too much, or at least it would seem like that on the feet on the surface. But what if you had a customer that you did a site audit, you align their solution with their core business outcomes. And you will identify one of those three things right, crease reliability, standardizing a streamlining operations or increasing asset value? He got to the table and they said, Yeah, but we just don't have money. And you said, You know what? I hear you. And that's why I've connected with XYZ bank, or I found this grant money, or I found this funding source. And here's how we can do this. How would that position you against your competitors? Where would that put you, as far as being able to deliver value to your customer, I will tell you that I've done this in the past, I was working with a school district, they saw that they had a lot of issues with their pneumatic system, they saw that this was impacting their ability for comfort in the learning in the classrooms, and was causing issues with students actually getting sick. They saw that this would increase reliability. And this would basically really help them out. But they just didn't have the money. And so researched energy grants, because at the time, energy was really big. This was back when gas was $4 a gallon, and research energy grants and efficiency grants and was able to help them submit for that money, and ultimately get approval for the project. That project ended up being I think it was like $350,000 in retrofits. So having the ability to facilitate funding for your projects is going to be something that I guarantee you, your competitors are most likely not doing unless they're at one of the big organizations that has its own internal funding. I'm telling you, there are so many ways to get cash right now that are beneficial to your customers. Alright, so those are four VA s retrofit sales strategies. I know this was a shorter episode than normal. But I mean, hey, that's how long it took to talk about this. So recap. If you do a site audit, and you analyze and identify problems, and you align those to the core outcomes, and you help people see how they can hit one of the top three benefits, increasing reliability, standardizing the streamlining operations, and or increasing asset value. And then you assist in finding funding or cash flow for a project, you will
Phil Zito 14:24
find yourself in a really solid position for at least initiating a retrofit sale. In next week's episode, we are going to take a look at actually going and quoting a retrofit sale. We're going to talk about kind of how do you do it? What are the things you need to pay attention to? How do you pay attention to those? So for those of you who are in sales, that will be pretty awesome for you. For those of you who are not in sales, I think you're still going to find a lot of value because what I'm going to teach in next week's up sewed is more going to be focused on the auditing and retrofit engineering of systems. And it'll just so happen that those steps are required in order to effectively scope and estimate retrofit work. We're not really going to be focused on the sales sales side of things, we're going to be focused more on the, how do I analyze this system? What do I need to look for? Like, do I need to check out that I can reuse these inputs and outputs? Yes, the answer would be yes, you need to find out Can I reuse sensors or not? Can I use existing cabinets or not? Can I use existing wires pull wire? Can I take existing drawings and hand those off to my electrical subcontractor so I get a more accurate quote? What can I do to ensure that I have a proper design? For my retrofit, that's what we're going to talk about in next week's episode. The last thing I'm going to leave you with is that we have a free project management webinar coming up next Wednesday, November 11, I believe it's at 12pm Central Standard Time, you'll be able to sign up for that there'll be a link at podcast that smart buildings academy.com for slash two to six. So if you haven't already registered for that, I encourage you to register for it. We're going to be going through the project management process, how to forecast work, we're going to talk about project management triangle and how that affects you. And we're also going to have our famous question and answer session where every question you possibly have around project management gets answered. There'll be a lot of fun. As you know, our webinars are never sales pitches. They are always pure learning experiences. And I really encourage you if you have any curiosity about project management whatsoever to sign up at podcasts at smart buildings academy.com for slash two to six, scroll down to the project management webinar link. And I will look forward to seeing you at the project management webinar. Hey, thanks a ton and take care
