Episode Description:
Episode 469 dives into strategies for growing your service business in the building automation space. With the increasing demand for BAS expertise in ongoing operations, this episode guides listeners through the essentials of building a profitable, customer-focused service arm. You’ll gain insights on the value of expanding into owner-direct work, along with methods to foster long-term client relationships that keep your business top-of-mind. This episode is packed with practical advice to help you capture recurring revenue and optimize your approach to service delivery.
Key takeaways you’ll get:
- Market Positioning for BAS Service Success: Discover the best verticals to target and how to identify high-impact opportunities in each.
- Closing Your First Service Contracts: Learn effective ways to approach and win over initial clients for long-term service agreements.
- Building a Service Playbook: Understand the importance of documenting processes to ensure consistent, quality service delivery.
- Recurring Revenue Models: Explore strategies for maintenance contracts, health checks, and other recurring services that build predictable income.
- Effective Team Training and Staffing: Get tips on staffing your service engagements and cultivating a skilled, customer-oriented service team.
Tune in to SBA 469 to unlock the full potential of your service business and transform how you support clients in the BAS industry.
Click here to download or listen to this episode now.
Resources mentioned in this episode
- Free Technical Skill Assessments
- Smart Buildings Academy Workforce Development Program
- Smart Buildings Academy Courses
- Sales Playbook OptIn
Podcast Video
Transcript
Phil Zito 0:00
Phil This is the smart buildings Academy podcast with Phil Zito. Episode 469, Hey folks, Phil Zito, here and welcome to episode 469, of the smart buildings Academy podcast. In this episode, we're going to be taking a break from the guideline 36 we'll be continuing that next week, but in this episode, we're going to talk about how to grow your service business. Was recently at a trade show, and one of the key topics was how to grow your owner direct business. And so that's something that got quite a bit of experience with in a past life. And so I thought I would go and discuss that in today's episode. As always, this episode is sponsored by our smart buildings Academy programs, our workforce development cohort 11, which is going to be starting mid January. There's still time to sign up for that. This is the program that will develop 80% job chargeable technicians within four weeks. And by week 11 of the program, you'll have a technician that can be out on the job site by themselves executing work really takes care of those skilled labor gaps that you're having on the install and startup and configuration side of your business. Additionally, I would be remiss if I didn't mention our skill assessment. Our skill assessment is the only skill assessment in the industry with 24,000 plus people going through this assessment to pinpoint the skill gaps in their technical teams, in their operational teams, in their sellers and their project managers, designers, service techs. We have assessments for all of those. This completely free assessment is available at our website, and by the way, you can find out everything that I mentioned, including Workforce Development and the skill assessment. You can find it at podcast that smart buildings, academy.com forward slash 469, once again, that is podcast that smart buildings, academy.com forward slash 469, you're going to want to pay attention to the end of the episode, because I've got a really cool, brand new playbook that I developed that you're going to be able to get your hands on at the end of the episode, I'll tell you how to do that. All right, let's dive in. What are we going to talk about in this episode? We're going to talk about why you should grow your service business, like why you should be growing your own or direct business. Six step process to building a service business if you don't have a service business right now, I'm going to tell you how you can build it in six steps. I'm going to give you some examples, and then from there, we'll go into three ways to double your service business in six months. So let's dive in. So why should you grow grow your service business? Well, there's increased revenue. Owner, direct work tends to have higher margins. Back when I was uneducated in this industry, I used to think that was because we just generally charged higher margins. But actually there's a lot of margin erosion from the general contractor down to the actual subcontractor in Bas and simply, when that is eliminated, it gives you more profitable business because you're able to go and absorb now or take advantage of all of that margin loss that happens as you trickle down From the GC to the mechanical to the actual subcontractor on a project, additionally owner. Direct work tends to be more specialized and more complex in some situations. I mean, unless we're talking like a data center install or a hospital install, and so obviously, that more complex work is going to cost more customer retention. You know it's critical nowadays for you to stay in contact with your customers. The world is changing rapidly. People's budgets are changing, almost, it seems, on a weekly basis. So in order to retain your customers and not lose them to competitors, you want to go and provide ongoing services. Plus it, just in my general experience, someone who uses the building automation system on a day to day basis is going to end up being a better customer and competitive different. This is important, because there are, I think you would be shocked how many contractors do not have a service side of their business. They only have a install side of their business. And there's a reason why a lot of the organizations are trying to move towards owner direct work, especially in the environment we're in right now where a lot of the core construction work is getting more and more competitive. So our six step process. You're going to identify your market, you're going to sell your first customer, you're going to staff your service engagement, document your processes, create a playbook, and work your playbook. This may seem like a lot, but it doesn't have to be super complex. We're going to talk about this right now. So the first thing you want to do is define your buyer types and your vertical market segments. You can't exactly market a service offering, if you don't know who you're marketing to and what vertical market they're in, because the vertical market is going to determine the pain points that you're going to be addressing, and the buyer types are typically determined by the vertical market, but they're also going to determine how you go about prospecting and how you go about positioning your offering. So once you've picked a vertical market, for most folks, I recommend higher ed or K through 12, if you've got a mature business, then you can go into healthcare. But realize that's more complex. I recommend these businesses because they are these verticals, because they're established verticals, they're going to have a steady supply of work. They're going to have predictable budgets. Oftentimes, you can actually find their budgets on the open Internet just through searching. And they're going to have very predictable pain points that we in the building automation industry do a pretty good job of addressing. So oftentimes, the common issues we're going to run into at the surface level, you know, energy costs, outdated systems, limited staffing. But that's not enough to really get someone to bite and adopt a service solution from you, whether that's planned, service, retrofit, performance based, service, etc. What you really need to dig into with discovery questions is, do they have system failures? What is their current maintenance process look like? How are they meeting their current needs? Maybe, if it's healthcare, how are they meeting their patient needs? If it's education, how are they meeting their student and instructional needs? So understand these questions, or understand those problems by asking questions. This is super high level in this episode, if you all find this valuable, we'll go into each step at a deeper level. You just need to let me know in the comments all you got to do on LinkedIn or on YouTube or wherever you're listening to this. Go and comment let me know that this is valuable, and you'd like us to expand each step, and we definitely can. You want to try to build out customer personas. One of the things we'll talk through when we get to the playbook section is you're going to want to build out your qualify target and qualifying. You're going to want to build out your discovery. You're going to want to build out your propose and your close phases, and you'll do that with different personas, different verticals, that'll drive your call planning templates, that'll drive your questions, that'll drive everything. And like I said, we have a opt in at the end of this that I think you will find pretty impactful. Let's keep going. Step two, sell your first customer, right? You can't really do anything unless you close some business. So I prefer the solution based approach. Identify a pain point and then show directly how you're going to impact that pain point. The smaller, the better. Usually, when you're getting started something that you can immediately impact if hospitals having issues with or downtime go and create a service contract offering that is going to reduce that downtime and ties you contractually to the uptime of that or or if you're maybe in higher ed, go and look at maybe they have some issues in their dorm, side of their business, I say, side of their business, of their campus. Maybe they have some issues in their teaching areas. Maybe they have some issues with their plant figure out what is the issue. Try to figure out the greatest ROI. We talked about this in a previous episode. I think it was like 466
Phil Zito 8:54
figure out what that ROI is going to be, and then drive that ROI a couple ways. To get in on your first sale. Offer a free site assessment. Just simply go through the site. Look at their mechanical systems. Look at their control systems. Look for degradation of mechanical look for overrides. Look for a variety of issues that you can then go and address. Actually, I realize now we discussed ROI in our previous webinar recording, which should be up on our website for you to go and look at. Just go to our smart buildings academy.com go to our free resources and click on our webinars. You'll see the webinar recording where I talked about how to do energy savings for owners. All right, offer a pilot service or a trial period. Provide testimonials and case studies. Really, what you want to do is let people know that you've done this before. You know what you're doing. You can show a direct financial return and make it something that's not so overwhelming that it eats up all their budget and it gives them the opportunity to try you you. You may have some common objections, things like, we already have maintenance staff. It's not in the budget. We don't really utilize our controls. We already have someone who does it, et cetera, et cetera. Just ask clarifying questions. Dive in, discover where maybe there's a gap between current state and future state, and then grow that gap if it's an actual gap that is really existing, like always be ethical when you're selling, but if it is a real gap, grow that gap and show them the potential impact of that gap. It's basic gap selling. There's a couple books on gap selling that you can find on the internet that are really good. Step three, staff, your service engagement, right? I see a lot of organizations. They're like, Hey, do I staff before? Do I staff after? I highly recommend staffing after. Use your existing employees. If you can use your existing construction technicians to service the engagement, especially if it's like a retrofit engagement, just run it through your construction team. If it's a service engagement work with your construction team to go and allocate resources to do the plan service. Once you've got enough of these going to cover basically an FTE, that's when you want to start looking full time equivalent. You want to start looking at bringing someone onto your service group. You can promote someone from construction but in my experience, the wiring, just the mental temperament of construction folks is not the same as service folks. They tend to have different temperaments, different engagement styles. So I tend to look for people who are more customer service oriented, problem solving oriented. That's not to say people on the construction site aren't that way, but they tend to be more procedural in their thinking, whereas service is very unpredictable and with the wrong person that can drive them crazy. So you're definitely going to want to go and look for people with these technical skills. I recommend training people from scratch. That's my personal experience. Tends to work the best, the stuff we do, the failures that exist on job sites. There's not really anything new under the sun. COMM busses fail the same way they always have. Actuators fail the same way they always have systems tend to fail in very predictable ways. I recommend that you use some form of development to take new hires and make them capable of working on your service projects. Like I said in the beginning of this episode, we have a workforce development cohort. I think it's really good. It's produced some great results. It's a great option if you do not have someone new, and maybe you're hiring someone experienced. My big things for you to look for one, test their problem solving capabilities, test their customer service orientation. Maybe do a behavioral profile like disc or maybe strengths, finders, figure out kind of how they're wired, see if they're going to be oriented towards that, more consultative, problem solving, customer sort service oriented persona. The last thing you want to do is spend a lot of money on someone who's experienced only to find out that there's someone who likes to, you know, avoid people and not really do anything. That's how do I say it non procedural. All right, once you've staffed up your team, then it just it becomes like a almost like a self filling loop, like a flywheel of sorts. You want to document as your team does the work, whether it is service work, whether it is retrofit work, whether it is maybe a performance based agreement you want to document, okay, how did you audit the site? Well, actually, you should start your documentation with sales. How did you target? How did you qualify? What questions did you use? What objections did you get? This should be a leaving, living, breathing document. I prefer putting it on something like OneDrive if you're a Microsoft shop, maybe Google Docs if you're a Google shop. And once you have this built out, like we use OneNote to build out our playbooks and our process documents, essentially, you want to build out from the very beginning to the end. What do people do? How do they do it? Because here's the thing I tell folks this all the time when they say, Hey, how should we drive sales, or how should we drive service? How do we know that it's effective? I mean, you can look at close percentage of your sales people, and you can look at the revenue they bring in on a monthly basis. And that's all well and good, but really, what can you do? You can tell them, Hey, make more calls. But if your targeting process is broken and they're calling people who will never be qualified, then it doesn't matter. You can say, sell more bring in more money. You. But really what you should be doing is you should be analyzing your sales process and see where it's breaking down. Now, sure, there's people who have skill gaps and issues, both on the sales and the technical and the project management side, but all that being equal, assuming people have the skills to do it, then it becomes Do you have the proper process. And one of the things I see when I go to a lot of these trade shows and I talk to organizations is they don't have processes, they don't have systems for documenting. And so they get very unpredictable results, because everything's different versus you start to document your processes, the way you execute a planned service agreement, the way you perform preventative maintenance on systems. Those are all repeatable processes. So you want to create templates for these common tasks. You want to go and adjust these templates. You want to go and make this as process driven as possible. Because if it's process driven and there's something wrong, you can troubleshoot the process. If you have no process, you can't troubleshoot it. I think I made that pretty clear. Now, you want to create a playbook in here. I'm talking about the technical side of the playbook, but you also want to have a sales playbook. I recommend two playbooks. I recommend a sales playbook and I recommend a technical playbook. Actually, I recommend kind of three. One. You'd have your sales, you'd have your construction, and you'd have your service playbook. So your service playbook would start off kind of establishing, what is our service process, what do we expect our customers to experience? How do we issue? How do we resolve issues? What is our escalation process? What are the common issues we run into? You really should have a way of documenting your service visits, and once you identify an issue, that issue should then get transcribed into some sort of living, breathing document that people can refer back to. You know, if you're constantly running into air handlers that are failing on pressure and you find out that it's due to like plugged or dirty coils or filter issues, then you should in your troubleshooting guide under pressure issues. You should have checks that are put in place. So you gradually build this out over time. You train your team on the playbook, you show them where to get it, and then you once again, have a process for utilizing the playbook and iterating on the playbook. I'm going to share a sales playbook with you at the end of this episode that's going to have vertical market guides, questions for qualification, call planning, templates, etc, that you can sign up for and download for free. That's an example of a sales playbook. I'll be developing a service playbook in the near future that you can download as well, as well as a construction playbook. Use these as kind of your templates and guides and customize them to your business. Once you have your playbook, you actually have to use it right so you want to execute it. I remember, I've worked for organizations that had amazing process tools and process driven businesses, but there was no enforcement of the use of the process or the tools, and so everything still kind of was different based on what pm or technician you had working the project or service call. So we really want to get
Phil Zito 18:24
into the process. Keep saying process. I'm trying to think of a different word. We want to get into the habit of using processes and using playbooks. So a playbook is going to contain a process, and a process is going to have procedures. So your playbook, it has processes like this is what we do. Procedures are how we do it. And you gradually adjust your procedures and your processes based on feedback, document any challenges or deviations, collect your client feedback, use it to adjust your processes. For example, if you are consistently running into scheduling issues where two tech or a technician is booked on two different PMS at the same time, preventative maintenance at the same time. Then you want to go and look at your scheduling process. How is this happening? And you kind of work backwards, okay, this person got scheduled for two PMS. How did that happen? Maybe you have two dispatchers, and both of them are scheduling, but maybe they're not checking the technician's calendar and they're both scheduling at the same time, and maybe the system's not updating. It could be a variety of things, but figure out what's going on and then update your playbook accordingly. And one big thing, you want to highlight people who use the playbook. You want to celebrate the use of that, and you really want to empower them to provide feedback, and you want to show that you actually use their feedback, because people want to be part of creating something. How often is it that a technician really gets to create the process that they're expected to be? I believe people want individual agency to. Be able to be a part of something, to kind of be captain of their own journey, and by engaging people in creating these processes and procedures. One, you make their life a lot less stressful because they know what to expect. And two, you give them autonomy to kind of chart their own path within reason. All right, let's look at how we can double your service business in six months. These are three easy, doable ways to double your service business in six months. So what are they? Increase? Attach rate. Attach rate is, if you have a construction project and you are attaching a planned service agreement or some sort of service offering to that project. This is one of the lowest hanging fruits to do you do have to be careful with it, because it can get muddy with warranty and like, what is service, what is warranty? What's billable, what's not billable, but I highly recommend that when you get with your clients, you put on services. If I owned my own controls contracting business, and it was mainly construction. Here's the services. I would attach one I would attach an ongoing training service. I'm a training organization, so I think I know a thing or two, and I've seen how much owner operators struggle with operating their businesses. We've had companies asked to resell our owner training courses. That's definitely something reach out to us. We could talk about. But that would be an area I would focus on. An additional area I would focus on would be summer, winter switchover checks I would have twice a year where I would come in during the shoulder months and check that everything's working. I would have a calibration service that I would offer. After about 18 months, I would go and I would offer calibration of outputs and inputs, because that's where things really start to fail. I would also go and do backups, and I would do a service where I come alongside the owner, kind of as the owner's rep. When they do tenant finish outs or changes bonus points. If they use my business, I won't charge them for this. But if they don't use my business, I will charge them for this, but I make sure that from day one, that tenant finish out goes and actually maintains their standard. By the way, if the owner doesn't have a BAS standard, I offer to create one, it starts seeing you can upsell almost anything, as long as you're doing it ethically and you're providing a good value service. I have yet to run into owners that aren't willing to entertain at least a proposal. So that's one way revisit your existing customer base. If you do not have a CRM, I don't know how you're running your business. If you're running it on spreadsheets, if you're running it on what's in your head, you're really not doing yourself and your customer or you're really doing yourself and your customers a disservice. I don't mean to talk down to you, and I hope that doesn't come across that way, but there are so many opportunities with your current clients. I know this because we train a lot of universities, we train a lot of higher ed, and we train a lot of health care. So I know that there are opportunities with these provide or with these owner clients for service. We've been specifically asked to develop RFPs for preventative maintenance services by some of the higher ed clients that we have. So I know they're looking for it, but you can't call on them if you don't know they exist. And you can't know that you're properly pursuing opportunities, if you don't have a way of documenting what the results of your last call were, I highly recommend using a variety of different assessments. So we use skill assessments to showcase up skilling as a value added service. That's what we do when we go after a lot of our owner and contractor clients. Now I will say it's not really value adding for us. It's our core business. But what you can use is you can actually use site assessments. Doing a site assessment is not terribly difficult. I talked about it in previous webinar, like I mentioned, and we'll do a podcast episode on it. If you all would like me to once again, you just got a comment, use the comments. You all literally drive the content. If you say you want us to do more of something, then let us know. If you want us to do less of something, let us know, and we will do that. And then develop reoccurring revenue streams, maintenance contracts, monthly health checks, regular upgrades. These are things that can be predictably forecasted for your customers. They like it because they can budget for it. I know a lot of people say that customers don't want reoccurring costs, but I know many customers that want a reoccurring cost if. If it was within a perceived value structure, meaning that if they can see the value, if you can tie it to performance, or you could tie it to ROI, those kind of reoccurring costs, I have seen customers on the owner side willing to entertain all right. So how do we do all this? So increasing attach rate. First off, we want to identify our complimentary services, right? Monitoring services. Create bundled packages like add ons, such as diagnostics, remote monitoring, system upgrades, etc. Make sure your sales team actually knows these, understand how to sell them. This goes back to the playbook. Provide cross selling scripts, really highlighting in on the pain points. You want to incentivize this. You want to offer bonuses for salespeople who increase attach rates, and then for your owners, you want to just do a life cycle cost forecast for them. Show them what things look like if they don't maintain their sensor accuracy, if they don't maintain their actuators, and all of a sudden an operating room goes down during surgery, or a whole wing of, you know, a teaching building on a university goes down and they can't occupy it that day. What is the cost of that? And then don't be afraid to use discounts and loyalty incentives. The great thing about owner direct work is you have a lot more flexibility in your cost structure. You could do things like deferred payments. You can do things like, Hey, if you are willing to sign a multi year, we can reduce our cost because we can forecast our costs. You could do things like, if they are a reoccurring customer, they can have loyalty incentives. Maybe something like, Hey, you purchase 10 months of pm service. We give you two months for free. There's a variety of things you can do in order to move the needle. Revisit your existing customer base, please, please, please, get a CRM. We use HubSpot. It's super easy to use. It's like $8,000 a month for five salespeople, or, sorry, $8,000 a year for five salespeople, I think is our cost. I don't know what it's gonna cost you. It's not terribly difficult to set up, and works really well for what we need, but it gives us the ability to look at our past customers. It helps us understand what is going on with those customers, and then we can effectively market to them
Phil Zito 27:31
and we can prospect them. You definitely need to talk to your customers on a regular basis. Be predictable, but don't be someone who's calling to just check on the money. Be predictable in following up, but follow up in context to their facility. If you know they're trying to hit an energy and sustainability goal, which, by the way, you should know the goals of your companies that you're servicing. But if you know they're trying to hit an energy and sustainability goal in two years, you should be touching base with them and see how they're going towards that, see what they're doing to achieve that, see where they're slipping, and then, based on that, provide your expert guidances. Maybe you're going to position some chiller optimization, maybe some energy analysis, offer site assessments. These are so easy to do, they give you so much information. It takes half a day, and it really can give a lot of valuable information that you can then go to really customize your solutions and offerings based on data. And then, as always, offer some special promotions for renewals, get some people back, like offer a first year discount if they sign a multi year agreement. There's a variety of ways to get people back and then reoccurring revenue streams really big on monthly or annual service plans really define these. I like to bundle things into tiers, basic standard premium or, you know, Silver or Bronze, Silver, Gold. Really give them levels. Most people settle in on the middle level. That tends to be the level that balances value and price the most. That's just statistically where people tend to end. Create compelling value props for these long term contracts. Help people really understand what the cost of running their facility is. Offer incentives. Train your sales folks to focus on reoccurring revenue. If that is a business you want to develop, reoccurring revenue is beautiful, I'll tell you, as a business owner, it makes things predictable. It really takes the stress off when you have a slow month or, you know, it's summer and no one's buying training during the summer. On the contractor side, all the owners are buying training, but the contractors are like, Oh, it's July. I can't train our people. Well, if you have predictable revenue, it kind of takes the edge off of those months. It's really nice to have, and you can plan and forecast your business better. So in conclusion, why should you grow your service business? It's great, predictable, high. Margin work that really in like, embeds you and your customer, really helps you understand your customers. I personally think if you do good quality service work, you're going to do better construction work, because when you approach something on the construction side, you know how it's going to be operated. You're going to make those minor little tweaks that make things a little bit easier for you, like, for example, on a graphic, just simply putting a link to the sequence of operations, because you know that the operators can't find the O and M's, and they're trying to figure out why things are going on, and just simply clicking on that link and opening the sequence of operations, they know what's going on. Six step process. We talked about how to build a service business if you don't have one, and we talked about some ways to double your service business in six months. Now I'm going to show you something that you can get at. Podcast that smart buildings, academy.com forward slash 469 once again, that's podcast smart buildings, academy.com forward slash 469 so what you're looking at here is version one of our sales playbook. So this playbook is going to give you a lot of quality, valuable data that your sales team can use right now, we're going to be doing this by vertical, and what you're going to see is that in each vertical, and this is a huge document, by the way, in each vertical, we're going to go through an overview of what the vertical is, what do they care about? What are their pain points and what are their key drivers? We're going to talk about common titles that are in the verticals and what they do and how you'd want to market to them. We're going to talk about their common pain points, and we're going to talk about how you could potentially address these common pain points. We're going to talk about the common solutions you can offer to them and how you would position them. We're going to provide you some spin based questions and some positioning statements that you can use in your sales process. We're going to give you a couple example opportunities. We're going to talk about how do you qualify this market, and we're going to talk about current trends that are impacting the market. We're going to give you some sample call plans and call structures, and then we're going to give you example call scripts, and we're going to give you a sample qualification checklist and objection handling for that vertical market. We've done this for multiple different vertical markets, and you can download this by going to podcast that Smart Business academy.com, forward, slash 469, and filling out the form, and you'll be able to download this document. We're going to continue to deliver these kind of documents to you. Things we have on the radar, as I mentioned, is a service playbook, a construction playbook. We also have a technician training series for those monthly trainings that you have to put on. You'll be able to find these opt ins as we develop them. We'll be announcing them in the podcast. More reason for you to tune into the podcast each week, so that you can be aware of the opt ins and these playbooks and guides and procedures that we're going to be bringing available for download to the market. And if you would like a playbook customized for you that is definitely something that we can do from a consulting perspective, feel free to reach out to us at support@smartbuildingsacademy.com Once again, that support at smart buildings. Academy.com to learn more. Thank you all for being here. I really hope that this was valuable for you. I hope you took a lot from this, and I look forward to seeing you in the next episode. Hope you all have an awesome week. Take care. You.
