Milking defect quotes is one of the last frontiers of untapped revenue for most fire protection contractors. This little goldmine is treated so passively (pun intended) that piles of potential ca-ching is left unearned. By focusing on just one small metric and implementing three small changes to enhance the metrics performance, revenue, cashflow and ca-ching will follow.
Contractors don’t want to be salespeople. I understand that. Yet by understanding and working on this one critical sales concept, and, using the three (3) strategies identified below, fire protection contractors will gain a huge lift in cash-flow and bottom line profit!
Here are three (3 HUGE) reasons why focusing on Defect Quote Conversion Rate (DQCR) will bring the big ca-ching:
- Defect quotes are typically quoted and priced at a higher profit margin than re-active or routine tasks. You, therefore, generate more liquidity from these types of jobs when completed.
- Defect quotes, due to their transaction type, result in faster cash flow into the business. The customer has pre approved and is expecting your invoice.
- A small increase in your defect quote conversion rate brings a revenue multiplier and can mean big bucks. Four percent increase is great, twelve percent is huge!
In Janurary, FireCorpAU sent out 200 defect quotes.
Over January and February, 68 of the 200 quotes were approved.
THE DQCR FOR JANUARY = 34%. (68/200)*100
Let’s assume in our example above that the average quote value was $250.
January Total Value of Quotes = 200 x $250 = $50,000 in quotes generated.
Based on 34% DQCR = $17,000 in approvals.
By focusing on DQCR:
An increase of 4% = $2000 additional work per month.
An increase by 12% = $23,000 additional work per month.
STRATEGY 1: “24 hours” All defect quotes finalised, and sent to the customer, within 24 hours.
Obviously, the customer needs a quote before they can approve the work and thus impact DQCR. Alert your customers to any defects at their property within twenty-four (24) hours of your attendance. This has to be your company’s first priority!
Implementing this strategy will positively impact DQCR as a result of:
- The customer perceives greater urgency in having the issues resolved. Therefore more likely to escalate the importance of the defect quote and have it approved asap. From a rollout perspective separate “critical defects” and “recommendations” to gain maximum urgency impact.
- The positive perception of your business as a highly efficient and professional fire protection and compliance partner is enhanced. Thus reducing the likelihood of your clients seeking alternatives or cheaper providers in the market to provide the service thus reducing the delay in approval.
- If you do not express and act with urgency why would your customer? Any customer queries or concerns with your quote can be quickly identified, addressed and acted upon again increasingly the likelihood of rapid approval.
STRATEGY 2: “Follow Up” Be Exceptional-Follow Up.
So the customer is aware of the issue(s) and has received the defect quotation. Here is where 90% of contracting businesses leave it. Magically the customer is going to look at the defect quote and jump at the opportunity to proceed. It just doesn’t happen.
The purpose of “following up” is to get the customer to commit to rectifying the issue. Just calling or emailing “Hi I just wanted to followup the quote I sent through” may get some small response and increase in DQCR but it will not result in a big increase.
To be exceptional and rake in the big ca-ching use some of these tips in your follow-up process:
- Emphasise that your recommendations are based on compliance to Australian Standards. “Please be advised that these recommendations are made as per the Australian Standards – be specific AS1851-x”. “Should you choose to ignore the Australian Standard you place your business financially liable should the worst happen”.
- Speak and write as a consultant or advisor. Your business is engaged for professional consultation and inspection, think of it like this: you are a building’s life cycle doctor. The prescription you issue to repair the health of the asset is the defect quote. In most cases, you’re the doctor (diagnosis and prescription) and the specialist (who carries out the healing) for the building – be professional and communicate your advisory process – inspection, defect recorded, defect quoted, appointment to rectify.
- Be specific, communicate the potential risk if the issue is not rectified, what is the severity on a one to ten (1 – 10) scale. Focus on high severity defects to get pre-approval and close low severity defects once confirmation is given. For example: “XXX is a serious 8/10 issue and could result in yyy. Ask for their commitment – when do you want us to rectify the issue?” Once confirmation is received then confirm the low scale items. “Fantastic, I have scheduled the rectification for XXX, while we are there do you want us to complete a,b,c as well?”
- Keep defects relevant and urgent. Make the initial follow-up at 3-4 days via email from when the defect quote was initially sent. The 2nd follow-up should be made ten (10) days later by phone.
STRATEGY 3: “Make it easy” Make it easy for your customer to approve
Anything you can do to make it easier for your customer to approve a defect quote needs to be considered, and, if possible implemented. At no point should your customer have to wait to give you the go ahead. Make it easy so they can approve fast and increase your DQCR.
These are general tips and processes for keeping it easy for your customer to approve.
- Don’t talk about the money, focus on the issue.
- Ask for the approval in a professional manner. Don’t ask for the quote to be approved. Ask if they want the issues rectified? “Following on from your inspection last Monday, we identified xxxx, Do you want to rectify this/these issue(s)?”, if yes then “fantastic, I just need you to approve the paperwork”.
- Get any changes that need to be made scribbled on the original Defect Quote or written in the email reply. Don’t delay the conversion process. Make it easy for your customer to say yes and send written approval with their changes included.
- Write a script for phone follow-ups so you keep focused and refer to it as required.
- Make it easy to authorise electronically. Increasingly no one prints documents. Electronic acceptance is now legal tender for most contracts including defect quote approvals.
Fire Protection Contractors that measure and focus their efforts towards improving their defect quote conversion rates understand that the resulting revenue is lucrative and also relatively easy compared to going out and getting new customers and work. Professionalism and implied urgency goes a long way to increasing the number and the speed of defect approvals received.
Uptick automates literally every step in the service and maintenance of a building and makes the process of measuring and improving DQCR a breeze.
For Uptick Users.
Use the Intelligence Reporting tool to get your DQCR metric immediately.
Goto: Intelligence Reports | Defect Quoting.
In the example below: Authorised indicates all quotes approved by the customer. The percentage “Authorised = DQCR”.
How to setup and send Defect Quote Follow up Emails.