Benchmarking Sales
Brain Trust meetings provide the typical management reality check. How many appointments do we have this week? How many deals did we close yesterday? The baseline is tracking company progress as it hews to annual goals. “We start at the beginning of the year,” Colbert says, “and then every four weeks we reevaluate to see if we’re on goal. What’s changed and what do we need to reshuffle to hit our year-end goal?”
But the meetings are more than that. They provide the company with plans, policies, and direction. For example, the group spent five months this year focusing on sales productivity. Weather Tight uses lots of metrics to assess productivity, but NSLI ? net sales per leads issued ? is the one that matters.
What the group finally agreed to was a new policy that sets sales productivity at three levels, based on longevity, and transfers responsibility for hiring and firing salespeople from the company’s three sales managers back to Schulz. Each level establishes an NSLI benchmark and a time period for hitting that benchmark. Third-level salespeople ? who Schulz calls “proven closers” ? are expected to generate at least $1 million in net good sales per year and to be able to capably present five of the six products the company sells. Should a third-level rep fall into a slump and not meet the NSLI benchmark, he or she has a wider grace period ? 12 weeks ? in which to recover.
The policy was implemented in June, and “there was a groundswell of anxiety from the sales guys’ point of view,” sales manager David Fulbright says. The good thing, he adds, is that “rather than wondering if their performance will continue to cut it, they know. They know what they need to do. And they know there’s support there and the plan of action that we want them to develop.” The goal in changing sales benchmarks was to drive up NSLI across the whole salesforce, reducing marketing as a percentage of revenue.
“You tend to hang onto people because you like them or see promise in them,” Colbert says. Establishing clear benchmarks “weeds out those who are not meeting a minimum standard. It forces management staff to continually feed new talent into the pool so that, over time, the NSLI is going up and up, and that’s where the profitability is.”
Three Complaints, Sub Gone
Compared with other departments’ productivity, sales are relatively easy to benchmark. You know how many leads were distributed, how many demos resulted, how much revenue came in. Then you set goals and create a system to ensure that people meet those goals ? or they leave.
But what about other departments? Marketing, for instance? Based on sales projections, the company works backward to set a goal for the number of demos it needs in each product category for every four-week period. Every marketing employee ? phone room, canvassing, or events ? knows what is expected.
Production? About 85% of Weather Tight’s work is installed by subcontractors, with project managers overseeing the finished job. A sure way to drive down marketing costs, which climbed up to 16% in 2007, is to increase repeat and referral business. That becomes more difficult to do if the crews installing your jobs are independent contractors. The current procedure has the installation crew leader calling Weather Tight’s project manager at the end of the job. The PM then gets on the phone with the homeowner to make sure everything went smoothly, asking questions such as, “Did you have an opportunity to operate the windows?” and “Is the house clean?” A packet containing a report card and self-addressed return envelope is left with the homeowner. “Our benchmark system is fairly ruthless when it comes to installers,” Colbert says. “Cleanup is the biggie.” Three complaints “and that sub is gone.”
Hub and Spoke
When Colbert talks about “shared values,” he puts fiscal conservatism first. The company must always be “on strong financial foundations” and “conservative” in its spending. What it also means is that a lot of the money this business makes goes back into the business. That’s why, for instance, Weather Tight could gamble $3.5 million on its new building.
But the bigger a home improvement company gets, generally the less profitable it becomes. How can Weather Tight, which does so many things so well, avoid the pitfalls that have trapped other well-run companies that expanded to the point of unmanageability?
The answer probably lies in the way that management responsibilities are continuously being shifted onto the company’s front-line staff, and on the way that Weather Tight has become a systems-driven operation, one where not only are the best window salespeople cross-trained to sell every other product, but every employee is cross-trained to do someone else’s job. This way, if an employee leaves, the company is not left stranded.
But the biggest question is how can Weather Tight build on the success of its showroom? The plan there is to develop satellite offices ? as few as seven or as many as 12 ? within the region that can function as a miniature version of the showroom itself. The first opened its doors in June. But can a company where canvassing has always been the biggest lead source drive traffic to those branches? Colbert says that he would like to see Weather Tight do three things in the immediate future: get better performance from its media ads, develop standardized courses for training new and existing employees, and create a customer service department with at least one full-time person. “Right now, if you have a complaint, you might end up in someone’s voice mail. We’re going to correct that,” he says, adding, “We’re going to create a process for that.”
