Case Study: Strategies to Increase Sales HVAC Company Example
To build a sales team that can drive your organization’s revenue to new heights, you can either create one from scratch or improve your existing effort. Here’s an example of the latter.
A heating and air conditioning company’s revenue had been “stuck” at about $3,000,000 for the past three years. The owner was nearing retirement and was hoping to position the company for sale. However, he knew that maximizing the sale price would be difficult if revenue was stagnant, so he sought a solution.
After meeting with the owner and his wife, we agreed on a scope of work, a time line and schedule, and some prospective follow up to be determined. The price for creation of their sales method and two days of training was $8,800.
The beginning is always to ensure we have a good understanding of the client’s operation. Analysis revealed that heating generated 80% of their revenue, air conditioning 15% and parts 5%. The company had five salespeople. Two of them were very effective, and the other three mediocre at best. All had worked as salespeople for at least three years, and we discovered there was essentially no sales team management in place, nor any goal setting or accountability process.
A simple but reliable psychological test indicated that four of the sales team were perfectly suited to the role and one much less so. However, the individual with less natural aptitude for a sales role was highly motivated and wanted to succeed.
Sales Method: Training and Strategies to Increase Sales
After learning about the product lines and how the company stacked up against its competitors, a sales method was designed to emphasize the heating product lines, introduce several positive competitive differentiators, and harness the individual talents of the sales personnel.
Training of the sales method was straightforward. Four of the attendees really got into the process and one much less so. Both of the star performers were very engaged and interested in anything that would help them be more successful.
At the conclusion of the second day I met with the owner and recommended a number of steps he could take to keep the inertia going. One suggestion was that he appoint one of the attendees to become a sales manager. I told him that any prospective buyer would feel safer committing to a purchase if they had a manager in place who was fully focused upon revenue generation. I also said that I would train the new manager and help him structure a weekly sales meeting, and that I would then attend for two or three months to get things going. We agreed on a price of $5,300 for these additional services.
I offered the opinion that one of the sales people wouldn’t succeed in a more goal-driven environment, and that he should consider advertising for replacement candidates right away.
The result was that six months later the two best sales people were making an average of $1,300 more each month. Two others were both making an average of over $800 more each month. The lowest performer left before the owner decided to fire him. His replacement was already exceeding his draw after only two months on the job. In terms of revenue, the company was up an average of more than $25,000 for that month, with strong evidence of an accelerating growth curve. Significantly, the average gross margin was also increasing, which reflected the sales team’s ability to close sales with smaller price discounts.
We first met in the first week of September. The engagement was signed on the 15th. On October 17th the sales method had been finalized and the manual typed. Introduction of the sales process was delayed to November 1st due to vacations. We had the first weekly sales meeting on November 9th. At that meeting we discussed current results, set some personal production goals and began the process to establish goals for the upcoming year.
The owner was true to his commitment to put his weight behind the new program. It paid off. The company was sold in September of the following year. The monthly revenue run rate at the time was predicted to generate approximately $4,000,000 revenue for the fiscal year. Adding it all up, Northwest’s revenue from the engagement was $14,100, while the approximate “bump” in sales price related to the increased revenue stream was at least $500,000. That’s a pretty good Return On Investment (ROI).