#211 What Growing Home Service Companies Get Right About Sales

In this episode of Owned and Operated, HVAC business experts Jack Carr and John Wilson break down the sales strategies that drive revenue growth at every stage of a home service company’s journey. Whether you're running a $1M shop or scaling past $50M, understanding how to structure your HVAC sales team is critical—and it starts with knowing the difference between marketed leads and technician-generated leads.

Jack and John explore why top HVAC companies like Four Seasons, Logan Services, and Peterman Brothers separate their sales teams based on lead source, and how that impacts close rates, efficiency, and scalability. From peer groups and sales training to seasonal lead flow and process refinement, this episode delivers real-world strategies for owners looking to increase HVAC revenue, optimize sales performance, and build scalable systems that actually work.

🔹 In This Episode, We Cover:

• The difference between marketed leads vs. tech-generated leads
  
  
• Why large HVAC companies often split sales teams
  
  
• Seasonal weather’s impact on lead flow and performance
  
  
• Peer groups as a catalyst for refining sales strategy
  
  
• Challenges in scaling marketing-led sales for smaller operators
  
  
• Sales process breakdowns from Four Seasons, Logan, and Peterman
  
  
• The role of efficiency and closing rates in mature orgs
  
  
• Strategies for training techs to sell in the field
  
  
  

🌐 More resources: ownedandoperated.com


👤 Hosted by:

 Jack Carr 

 John Wilson 

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John Wilson, CEO of Wilson Companies
Jack Carr, CEO of Rapid HVAC

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Transcript

211 Transcript

John Wilson: [00:00:00] Think HVAC is kind of funny because it goes through these like different stages of growth. You can't get good at marketed leads if all you're served is tech flip leads. It is a different game and the the biggest companies in the industry know it, so they run just different sales teams. 

Jack Carr: We have different minimums for marketed leads and tech generated leads.

John Wilson: All the companies that we see that are running HVAC at like very real scale. That's how they all work.

Jack Carr: Welcome back to Owned and Operated. Today we have Jack and John in the house. Wow. Hopefully that didn't hurt you too much. We love 

John Wilson: you. We love you. We subscribed. 

Jack Carr: If you can't tell, I'm excited. We haven't done one of these episodes in a few weeks now. 

John Wilson: No. Yeah. Well, I'm pumped to have you up. You're gonna be up in mm-hmm.

Two weeks. 

Jack Carr: Like a week and a half. Yeah. 

John Wilson: Week and a half. 

Jack Carr: Whatever. Either way. Either way, either way. Uh, yeah, man, there's lots going on. 

John Wilson: [00:01:00] Yeah. How's your, well, how was your May? It's, it's June 10th, 11th today. How was your May? 

Jack Carr: So HVAC C, so HVAC doubled over, doubled over a hundred percent. Oh, wow. Over our best month of last year.

Okay, thank you. So we had our best month ever in the history of the company in May. Um, nice. Which was about almost a hundred percent over last August. That's crazy. Yeah. So we're trying to continue that momentum. Keep it rolling. What, what 

John Wilson: were, what are like temperatures? Like how's weather, 

Jack Carr: what's, what's super weird is that May was moderate for us.

Yeah. I think people had just started turning on units though, so that's why we got some of it. But we should be pushing into the nineties this week and next week. 

John Wilson: Okay. 

Jack Carr: Which add a lot of humidity, so it's gonna be, it's gonna be a wild week, is what our expectations are. One of 

John Wilson: the things that's helped our business grow the most has been peer [00:02:00] groups, and that's been for both myself and our leaders, being able to talk to other companies about exactly how they've solved.

The problems that I'm dealing with today has just been instrumental, whether it's how to acquire companies or how to add new locations. How to hire directors or service managers, or what should compensation look like? All of those things are things that can be solved by just asking people a little bit ahead of you.

Inside that group, we have Fireside Chats, weekly peer Conversations by business size resources to help you grow your business and a lot more. Make sure you check out owned and operated.com and click on Join Pro. This has been a really weird summer for us, so may like we still grew, uh, most of the departments grew 20 ish percent.

Um, but HVAC was down, which like, we actually haven't had the down month at HVAC for a while, um, like year over, year down. Mm-hmm. But last May was 90 degrees in May and this May was 45 degrees in May. Yeah. Um, [00:03:00] so just like zero urgency. So really like May was our April this year, which was kind of funky.

Mm-hmm. Now June is like ripping, uh, we're pretty much selling to budget every day, so that's been great. Obviously, obviously loving that, but um, yeah, may was kind of a funky month for us. 

Jack Carr: Funky. Yeah. That, that's definitely interesting. Um, I remember seeing that, 'cause you, we, we talked once in May and you were wearing a sweater and I was like, why are you wearing a sweater?

It's 85 down here. Yeah. And you were still in sweaters, so that makes sense. I 

John Wilson: mean, 

Jack Carr: that mean it was 

John Wilson: literally like 45 degrees most mornings until the, until June. Mm-hmm. It was, uh, to put this in perspective, so people don't think I'm exaggerating, the pools didn't open on Memorial Day. Ooh. Yeah. It was that cold.

The pools literally just didn't open, so they actually didn't open Memorial Day, and they also didn't open the next weekend either. That's rough. So in June, outside pools [00:04:00] opened, and I've, that's, I've never had that in my whole life. 

Jack Carr: Yeah. The interesting part though, is it really, you know, I know we, we talk about this a lot, but yeah, it.

To some extent, it doesn't matter, right? 'cause you're gonna have that opening rush at some point, right? When you get your first high week. It's just the hope that you, as long as you get a few high weeks in the beginning of the year Yeah. Or in the beginning of summer, um, I think is what it comes down to.

Yeah. 

John Wilson: Yeah. I mean, we've been, we've been still cooking, um, h HVAC for us. We've done a ton of work over the past, like year in order to basically hit it to scale. Um, so I think HVAC is kind of funny because it goes through these like different stages of growth where like the first stage is like you have a technician or the owner is selling, and then the second stage is you bring on comfort advisors and the techs no longer sell.

And then the third stage is you go back to selling texts with comfort advisors and you [00:05:00] separate the sales teams. And all the companies that we see that are running HVAC at like very real scale, that's how they all work, is the technicians run some leads. Like they, they basically, they're running their own tech flips.

They're, you know, techs no longer flip to cas. They flip either inside sales or the technician sells it on site. And then Cas actually just run marketed leads. So that's what, um, yeah. I mean, four Seasons in Chicago, Logan and Cincinnati Peterman Eco, uh, that's like the model. So it's, it's, so we're just, it took us like maybe six, seven months to finish that transition into stage three from like every tech flip and every marketed lead went to a ca.

Um, to now you separate 'em. And the reason is, uh, quantity. 

Jack Carr: Yeah. So if the reason. The reason it makes sense too, from the logical standpoint. 

John Wilson: Um, well, you [00:06:00] can't get good at marketed leads if all you're served is tech flip leads. It's a different sales process. Like in a tech flip, you were given a lead that the, the homeowner already is bought into the business.

They already bought into the tech. They already believes the recommendation. Like it is a different sales experience than, Hey, I have to walk in and create value. In the first 30 minutes, I have to explain the company up. When I'm against 

Jack Carr: competition, 

John Wilson: when I'm up against competition, it is a different game and the, the biggest companies in the industry know it.

So they run just different sales teams. Uh, in some companies take it as far like four Seasons In Chicago, they actually have, um, like different sales price books, which we have not done that. But like, that's pretty common because on the ca side, it's a more competitive process. Whereas the tech flip side, it's not like you have a bought in, you know, 80% likelihood to close.

Jack Carr: Yeah. We have different minimums for marketed leads and tech [00:07:00] generated leads. 

John Wilson: Oh, like what? What do you mean? Like cl Like closing rates? 

Jack Carr: No, like we, I, our comfort advisor runs both and she has a different, technically she has the bottom that we, we can't go under for anything, but then she has her minimum goal for.

Tech generate leads and her minimum goal for marketing leads, so like marketing leads, she can go down, her goal is like at minimum 45% gross margin. Um, and then at, uh, on tech generate leads, we wanna see that to be 55% in the summer months, and then it goes down again in the off season. But point being is that it is a dynamic, um, oh yeah.

Uh, pricing. And that's because we understand like if we come in and hit somebody with a 65% gross margin on a marketing lead that they've had three other people out, we're not even gonna get a shot at the second opportunity to. Price match or whatever, because we're just out of the range. So like we understand [00:08:00] that going in, so they're handled completely differently.

I think though a big part of that, um, which is, which is really interesting that you put it that way, that the third iteration is that because the, well, 

John Wilson: everyone's going through it and like you get stuck like these HVAC companies, just like they break when you hit a certain size and you're still flipping everything over to cas because the, the way, the way anybody gets better is repetition.

Right. Yeah. Like if I wanted to be the best baseball pitcher in the world, I, I'm gonna go pitch a million fucking times, like the 10 hour, 10,000 hour things. So you need reps. And when you're served up two totally different types of leads, it's really hard to get good at one or the other, especially when one of them is so easy and one of them takes actual work.

You will just never try to get good at the one that takes actual work. 

Jack Carr: Well, the problem though, right, for everyone listening and for myself versus you, not everyone listening 'cause there's some big listeners out there, but is, uh, there's a few things that have to happen [00:09:00] as a prerequisite prior. A you have to have, you know, enough leads for marketing alone to be able to hold a person full time.

Right? And that comes with scale. Yeah. That's, that's, I don't know. Uh, so you're, you're living in, uh, John World here, and I'm gonna call you out on it because I, I guarantee 99% of people you can just go get 

John Wilson: the leads 

Jack Carr: though, not direct marketing leads. That's very, very difficult to, and like, so you example here, my living experience, lemme give you example, is like a hundred million dollar company, like Peterman or all Yeah.

All these people that you're talking about in my market, Hoffman Hiller Lee, they can pay that thousand dollars for a PPC. HVAC installation lead. Yeah. Right. 

John Wilson: I can't, well, well anybody can. 

Jack Carr: No, I can't. You just have to close it. Yeah, you're right. Anybody can in, in a magic world where you have to close it, but.

Inevitably, you are going up against [00:10:00] other people. Your sales process has to be amazingly tight, but just based on numbers, like you are going to close at a lesser rate than you would tech generated. That's why tech generated are easy. I guess like, 

John Wilson: it, it, I'm not being sarcastic. Yeah. Walk me through it.

'cause like, from my perspective, 

Jack Carr: okay. 

John Wilson: I'm using your words. Size is irrelevant 

Jack Carr: because using. Your words. Well, it's not irrelevant because I think it's irrelevant. It doesn't, it 

John Wilson: doesn't have anything to do with 

Jack Carr: it. Well, you have a branding that allows, your brand is so large in your location that it allows you to generate more.

No, we're full buying these leads. 

John Wilson: Full buy. Well, 

Jack Carr: yes, but at a cheaper PPC because you have branding. People hear you on the radio. See, these are typically Angie's 

John Wilson: List leads or modernize, or like they're paid for leads. 

Jack Carr: Yeah. No, I'm, I'm with you on that. I'm following. 

John Wilson: Okay. Okay. 

Jack Carr: I'm just still saying if you're on Angie's List, okay.

Or you're on Thumbtack, or you're on an aggregator, or you're on [00:11:00] Modernize, or you're on PPC or LSA, Wilson Coe in your area has branding, and that branding drives PPC. All those costs lower or it, it drives people there easier for you. You have a higher click through rate on that because they've seen your branding before versus Joe's.

Crab Shack, HVAC that nobody knows about. It's a single guy in a truck that has two reviews because they don't have that many people. Whereas Wilson has the ethos of 30 reviews, or 130 or 500 reviews on their Angie's profile because they're running so many calls. So you're so far ahead. There's a moat there for specifically marketing leads.

It's so we try really hard to run marketing leads, obviously, because we're buying a great lead. Like I would love to pay the a hundred, 200 bucks for the great lead. Don't get me wrong. What I'm just saying is that when they have additional optionality, your branding plays a large portion which [00:12:00] drives more click through I, I think is probably the best way to describe it to you.

Yeah. But like. We see that with Hiller. So for example, Hiller in our area, we're paying like $400 

John Wilson: a lead. So we're, we're not like, sometimes we might get a discount, but that's, I, so my perspective, 

Jack Carr: you're paying 400, have 38% have, so is Joe's check, right? Your buzz are both paying that $400. What I'm saying is the volume of clicks that you are getting is more than Joe's.

So for example, the volume of your LSA No, I'm talking about like go, 

John Wilson: go buy a lead. So like I bought a lead. From modernize it was $400. Mm-hmm. So I'm gonna go out and I'm gonna sell 38% of the marketing leads that I get. Yeah. And my average ticket's gonna be $10,000. So I paid $900 to get that job. Which like, that's math.

That is irrelevant to the size. Like to me, all [00:13:00] I agree. All that we're talking about is like, what's your cta? LTV. Which like that has nothing to do with how big our budget is. That's just like we now it does have to do with, we have a sales process, so maybe that's a part of it, but like, I think that's a huge part of it.

But I, I do think CAC to LTV is, is IR irrelevant to how large the total company is? 

Jack Carr: I'm just saying, so on Angie's and Thumbtack Yeah. As the, as the consumer you go through, you are buying a central air. HVAC installation lead for a 250 bucks. Mm-hmm. Yes, you are buying that lead. But the way that that process works is the customer goes onto there, they fill out what they're looking for, and then they click three companies.

They click Wilson, they click company B, and company C Company Wilson has 500 reviews, five stars. They've been killing the game. Yeah. Company B also pays that same price, but they have two stars, two reviews. And they suck. [00:14:00] Company C is a middle, middle size, maybe 160 reviews. Now the 160 review company doesn't have a speed to lead person in place that is focused solely on answering these as quick as possible.

So the minute that they enter it, you hit them. I 

John Wilson: think my point is like, yes, we're more mature. Mm-hmm. But that stuff can be put in place at any size. Well, not any size, but like. If you're a $5 million business, like you have the similar type of resources to put towards that process because you gotta be able to buy leads.

Gotta be. So, yeah, if we're talking about like a one man shop, sure, but if you close 38% of marketing leads, then like mm-hmm. That's just a, that's just a math problem. 

Jack Carr: I think we'll have to agree. I, I will agree, but I think that there's more to that on the backend and. I will accept. Well, what that we are going to will somewhat disagree on this.

John Wilson: What will probably happen [00:15:00] is they won't close at 38%, so maybe they'll close at 30. The leads are there. But if you go get the reps you'll, you will close at maybe a lesser percent. So that I would, that I would concede that you would close less leads potentially. Uh, yeah, but like you could still make up for that on average ticket.

Or you could just have less overhead. So you can take a slightly reduced margin to what we could withstand. 

Jack Carr: Mm-hmm. So that, that's the first one is either whatever way you cook it, you need to have enough marketing leads somehow. And if that process is in place, you need to put those processes in place, overcome the lift, spend the money to have those processes to be able to handle the market.

Well, some of 

John Wilson: this process, but some of it, I'm just gonna encourage people to do their math. So like, yeah, I agree. I don't, I don't disagree with that. What does it cost for a lead? How many of those leads do you close and what's your average sale? And if, if you have your numbers, this is just a [00:16:00] math problem.

Like it has nothing to do with us being big or not. Like maybe we close a higher percentage 'cause we're bigger and we're more branded or whatever. But like leads to lt, like CAC to LTV is literally I get more leads literal the math that every single business has to work off of. So how much does it cost me to get a customer?

What's my average order value? 

Jack Carr: So Hiller, for example, okay, in our market is a hundred million dollar company. Yeah. They don't actually, I was looking through, um, one of the, the, I forget the home service pro whatever, um, the, how do you look at your competitors? Yeah. And I was looking at them. They don't own any map pack.

They're almost on zero map packs across. They have a lot of, Hey, hi. First page. Yeah. Stuff. But they bring in all their leads, the through paying, but they're able to drive those paid leads through the Google platform because they have the branding that everybody knows Hiller. 

John Wilson: He is there. 

Jack Carr: So I think that what we're [00:17:00] you're discounting here is the amount of leads that you're able to bring in through subconscious people clicking on your PPC link versus they wouldn't click on other people's PPC.

My PPC, when I, when I run it, I pay, I'll pay the same thing as Hiller, but I will drive, I. Two calls on PPCA month. If I were to bid the, I think that's a 

John Wilson: marketing funnel problem then. 'cause like top line proves my point. Right. Have you followed their story? Uh, no. I don't know what top line is. So, so top line came outta nowhere like four years ago and they went from zero to 40 million in four years.

Mm-hmm. And all like, I think it's a hundred percent hvac. So like, obviously fast growth and they don't have a brand, like they're not branded. Uh, and it's all ser, it's all service replacement. Um, it's actually, I think, all replacement. They, they're doing this thing where they don't service equipment that they don't install, so it's basically fully replacement.

So the, they're, they're on, like they're far, they're deeper in it than I am, where they're even more optimized as a [00:18:00] $0 brand now, $40 million. But they started four years ago. Mm-hmm. Where it started with just the math, like, this is what it cost me to get a customer. This is my close rate, this is my average job.

You can ramp that to infinity. And they, they literally just did, like, they're in their fourth year, so they started from nothing. They're not Hiller and Hiller's been around forever. Yeah.

Jack Carr: I, no, dude, this, this is awkward silence. I like, no, I, I, I mean, I like, so part of me doesn't disagree with that. I, I just think that there's a discount and maybe it's me justifying why I don't do PPC, but um. You know, it is what it is. We have enough that we, we do run quite a few marketing leads through aggregators.

I think it's a great source. Um, it's just making sure that you are able to put systems in place, have enough, and then receive enough leads maybe through math, maybe through a little bit of branding. I don't know, we'll find out. Um, and then secondly, uh, the other side to this is having enough good systems in place [00:19:00] that your technicians are can close.

Because that's why you moved him to CAS in the first place at at number two was because, yeah. You know, it's recruitment's a huge issue. And then. Uh, training and making sure you can build a training program. I mean, I, I like the model. I think the model works because your, your technician's already building that rapport with the customer.

Yeah. Like that's gonna be the easiest sale. But the reason in phase two, you moved it to a comfort advisor and flipped everything, was because the technicians that you had were not good at sales. Yeah. And so like, how do you get them up to par so that they can still have that same close rate and that same 

John Wilson: average ticket?

So companies are doing it a few different ways. Uh, one, you can just train the tech directly. Uh, which that's like the old school way of doing it, but it does work. Like you can, you can have selling techs, like you can have selling techs do. Our, our selling techs average ticket is considerably higher than our comfort advisors.

Like, uh, thousands of dollars higher. Um, [00:20:00] so it's not a, it's not a guarantee. Uh, I, I think it's, I think what people get confused by is they say, which I thought the same thing, but. Hey, our CA's average ticket is higher than our selling tech average ticket. Like maybe, I think most of it's like, is there a process there?

A yes no, because the reality is a tech flip average ticket is higher than a marketed lead average ticket. And I think that's the real distinction as long as both follow a process. Um, but yeah, so we, so one, are you training them or two, A lot of companies use some version of a call by call, like Joe C's.

Like, Hey, I'm gonna call into my coach and we're gonna talk through this option and we're gonna try to sell it together. Or like, we have an inside sales process that we run, uh, and that's how we do our, our tech sales. So there's a lot of different ways to do it. I think the benefit, um, you know, when, when the team gets large enough, what the, the friction you start seeing is like a speed to sale.

And like if a [00:21:00] tech just spent an hour or two hours building rapport, why are we willing to lose that rapport? Yep. Uh, and why are we, why are we also willing to like, inconvenience the homeowner waste more of their time for a second appointment? Mm-hmm. Just for someone to have to come in and restart the rapport building process.

It just doesn't make sense. So, and, and like a homeowner, I would be really inconvenienced and annoyed, but I'd be like, okay, well if it's another appointment, like you'll be meeting my assistant next time you come out here. Like, I'm here right now. I don't have a lot of time. We just are finishing the best April we've ever had.

55% year over year. Organic growth. Really just a huge thanks to Service Scalers for being our marketing partner in that a ton of that growth came from both paid and organic SEO efforts. We did a ton of work on our SEO with service scalers, really strategizing and working on that about a year and a half ago, and the results have been creeping up over the past about year.

Really started to go crazy over the last few months as we're starting to see [00:22:00] multiple six figures of revenue attributed to our website. I. And that's from their work on our SEO. On top of that, the management of paid has just been absolutely huge. Year to date, we're up 30 something percent. April alone was 55.

And uh, we're just super grateful for service scalers in that partnership. So if you wanna learn more about how they helped us, make sure you check out service scalers.com. 

Jack Carr: I mean that, so that's actually one of the issues that we're having right now is we've had a slew recently of cancellations or reschedules, and I said, you know, we're trying to lock down the process on how.

To do the flip in the easiest way possible to customers because here's what happens if in, in that flip process Yeah. Is you open yourself up and your team up to friction. Yep. Which then opens you up to losing the sale. Yep. So it gives the customer time. To hire or call or Yep. Look around. It gives the customer time to do this.

Time to cancel. Told that, cancel. Yep. They could talk to their cousin who says, Hey, no, you could buy a unit for $1,500 and I'll come install it. [00:23:00] Yeah. You know, there's about 17,000 ways that they, you could lose a customer at that transactional point or the, the junction point right there. So, I mean, I like it.

My thing is just like, how do you get, how do you get the text to that level? Um. Because our, it's a lot of training. Well, I think the thing is 

John Wilson: it one, it's a lot of training, but two, yeah. There are a lot of techs out there. Like over the years we've had plenty of techs cross a million dollars of equipment sold.

Mm-hmm. Now they do need a lot of help with like, here's how to offer options. Here's how you, like, you do have to work through that a lot, but like you can have seven figure selling techs, like we just hired two. Yeah. And like one of 'em does a couple million bucks a year. 

Jack Carr: Um. I mean, uh, as a company that started out in that direction.

Mm-hmm. One of the guys that left that first week that when I started my business, he wasn't a a million dollar, but he was $750,000 in a. Small company and a two person, two three truck company. So like I know it's definitely possible and we've tried to buy other companies that are [00:24:00] two guys and those two guys are techs owners, everything.

Yeah. Their wife on phones, half, 2 

John Wilson: million each. Yeah. 

Jack Carr: Yeah. And they're, they're doing about a million each. 'cause it was a 2 million top line company and then sub out the install. Yeah. So like, it's definitely possible to find those guys. The hard part is just, in my opinion, it's finding those guys and having a recruiting process and then a systems process to be able to make it.

So you gotta be able to train it. Hmm. Yeah. 

John Wilson: Yeah. It gets, I, and I, I think it just comes later. I think it, it comes at the point where, uh, hey, the team is big. Now it's at scale and we need to be able to this. It's no longer one or two comfort advisors. Mm-hmm. Like, how do you run 17 comfort advisors? Yeah.

Like, that's the question. How do you run 17? Or how do you run eight? You know, not like onesie, twosie. Uh, but the companies that we're drawing inspiration from for this process are literally running 20 comfort advisors. Like that's it. And all they're doing is marketed leads all day long. Um, and, and in order to get [00:25:00] really good at it, you, you just need to be doing marketed leads.

Jack Carr: Generalist is specialists. The specialist is a hundred percent specialize in at comfort. Yep. Our, uh, marketing leads. 

John Wilson: Yeah. 

Jack Carr: Hmm. I, I don't like this conversation, John. It feels like a lot of lift that I just don't want to think about for a long time. Well, I don't think you have to 

John Wilson: worry about it. I don't think you have to worry about it, and it's kind of messy.

Yeah. Like it was really messy. Like we, you know, we had some, we had obviously some turnover in the process, but, um, like long term it's right decision. Like, it, it's, it's the businesses that are, um, like the businesses that are twice our size, this is the process. So, and we wanna be twice our size, so, okay.

That's what we're gonna do. 

Jack Carr: That's sweet. That's sweet. And it's cool that they're in the industry, allows you to see that like they're, they're really open to the conversations. Yeah. Even though Right. Peter Man's potentially moving into your market like we compete. Yeah. Yeah. So like, it, it, it's so interesting how this, this industry is so friendly and so nice [00:26:00] across strategy and model.

Um, too cool. And, um. Where, how do we even get started on that? Just like new thing you were doing? 

John Wilson: Uh, no, I, well, uh, well we just, we're in the process of dividing our HVAC team and we just brought on a sales manager on, so we're really excited about that. We've, we've never had a sales manager before. Uh, so we have a few teams right now actually that it, it's, it's, it's cool.

It's like different. It's a new thing. So each of these teams are getting big enough. That we have to actually split them in half. Yeah. And we have three teams all doing this right now. Uh, like okay, what do you do once you have 12 sales? Plumbers? Well, probably four sales plumbers ago we should have hired a second manager and then had two teams of eight and get gotten up to 16.

Uh, same thing with hvac. Like we were having our service and sales managed by the same guy. It's a lot of people, [00:27:00] 17 people. Right? Like, whatcha are you gonna do with that? Mm-hmm. So we're dividing those off. Um. And then I think we will divide HVAC service again pretty soon into like some version of six and six.

The problem is like, obviously HVAC service, like doesn't produce revenue really, so it's hard to like sup, you know, it's hard to give overhead 'cause like HVAC service doesn't really support itself, you know, and un unfortunately, that's just, we've tried over the years to like, get more out of it. But, um, it, it just 

Jack Carr: doesn't, HVAC causing problems like usual.

It's sexy, but then causes a bunch of issues. 

John Wilson: Yeah. I mean, I, I think it feeds install, like it just, it feeds install. Like that's what it does. We talked about the business, wish it didn't, but that's what it does is install the business. Is install, like the business is, you know, like, uh, most companies try to run an 80 20 of, like 80% of your eight revenue in HVAC should be installed in 20% service.

Mm-hmm. We're typically like an 85, 85, 15. Frankly we're [00:28:00] comfortable with that and I actually, I wouldn't even mind getting up into the nineties because now that we know how to get leads and we understand our math, we can just go buy more leads. Like I don't need to go through this whole, like, let's get a tech out there, let's diagnose it.

No, I'm like, let's get up to 10 cas and run some freaking leads. Like let's scale a sales team. Yeah, that's that. That gives me a lot of energy. 

Jack Carr: Yeah. I mean, you see it in other industries, right? Like, um, water filter only companies. Yep. They're just only running, they're just only running, uh, comfort advisors roof or roofing 

John Wilson: bathrooms.

Jack Carr: Yep. 

John Wilson: Exteriors like, yeah. HVAC is the only one that has like a feeder system. Mm-hmm. And I think the smaller you are, the more you're like, oh, I have to do that. But like, Logan has a three location, $70 million HVAC business. They have 17 comfort advisors and they're just running comfort advisors, and I think that's freaking 

Jack Carr: great.

Yeah. It leads to the, the, the company at once you start getting to a scale becomes less of a [00:29:00] HVAC company, it becomes more of a marketing company that drives to hvac. We're, we're a marketing and sales company a hundred percent. Yeah. Which is super interesting because, uh, it always feels like when you, we talk about like the 90 10, 'cause we, I think we're somewhere like 70, low seventies, like 71, 72.

Oh yeah, 

John Wilson: yeah. Rich is there too. 

Jack Carr: Yeah. And it's, he's like 60 or something. It's difficult because my, the worry on the back end right is like at 90% the amount of marketing leads you have to drive and close is crazy just because you can't sustain like a 90 after if you know your math off customer base.

And that was my 

John Wilson: argument earlier. If you know your math and you're a marketing and sales driven business and like you understand the funnel, then it's not intimidating. Like that's just like what it is. And, and I think what gives me a lot of like relief around this is roofing is a hundred percent, exteriors is a hundred percent.

Like it's, that is just how those businesses work. And our industry is just like, we have this crutch of having service. No other industry with a $10,000 average ticket [00:30:00] has this type of thing. Like none of 'em, and they all do just totally fine. Yeah. Uh, so I, I think, yeah, I, I think the industry is wrong, which is fine with me.

'cause that means like, I think I'm right and 'cause every other business in the world is just like C to LTV, like boom. Uh, and, and they're big. 

Jack Carr: You just want to own a roofing company. John, just say it already. Yeah. I do just buy a roofing company. I honestly do Well, Chad owns one. Chris owns one. Yeah. I'm like, is 

John Wilson: it my time?

Jack Carr: You know? You just wanna own a roofing company, get real. I, I think it would be fun 

John Wilson: to just be marketing and sales driven, which like, that's what plumbing and electric are for us, is plumbing and electric are, they're a hundred percent sales. Uh, sales inta like marketing sales at this point, like HVAC is 85, 15.

Like plumbing is like 99 sale, 1% service. Like it's. Yeah. Same with electric. Uh, well, I mean, 

Jack Carr: I think it comes down to it, there's no [00:31:00] mechanical function to plumbing or HVAC for the most part. I mean, yeah, there's pumps and stuff that you have to maintain, but not really. They're like, the pumps in, in plumbing are built as 10 year no maintenance plums type things.

Yeah. And so I, you know, I view HVAC more as like the auto mechanic industry to some extent in the sense that, yeah, like it is a piece of functioning machine that needs to be maintained regularly. Yeah. Or it breaks down. You gotta do your oil changes. So, 

John Wilson: yeah. Really interesting though. Well, we, we have the same thing with generators.

Yeah. So like we are thinking about joining like a, the generator Generac program and if we did, we could, we could access all of the service leads, but like mm-hmm. It's like, why do I want them? 

Jack Carr: Yeah. 

John Wilson: Like why do I want them? It's like, okay, I can go out and get 500 bucks. Uh, and I could do that a lot and then have to optimize routes and like all this annoying stuff that would never amount to that much money or.

I could just go get leads. Yeah. And sell generators. So, yeah, I [00:32:00] feel like, um, so if I'm 

Jack Carr: taking away anything from this episode, it's, you know, everything that we worry about in the HVAC industry, just don't worry about it anymore. Stop worrying about service and just go install units. Market install. Market install.

Yeah. Just figure that out in you're golden. Don't even worry about the rest. 

John Wilson: Marketing and sales. We are, we're a marketing and sales, yeah. Consumer brand. 

Jack Carr: I mean, I wouldn't disagree with that idea though, in general. 'cause I think Lyle, um, I forget what company they have. They ended up, that's top line. Is that top line systemized leads?

Yeah. Yes. Yeah, that's top line. Line. So yeah. I'm sorry. I mean, 

John Wilson: they're literally doing it. They're literally doing it. 

Jack Carr: I mean, I will say though, like he. It cracked the marketing formula at just the right place in the right time to get on like TikTok when nobody else was on TikTok. And it was super juicy to be able to do that.

Um, but it's still working. It's not like they stopped, definitely stopped growing. So it's still working. No, it's, it definitely works. I'm not, I'm not discounting that at [00:33:00] all. We used it for a year and a half and, uh, we, we potentially would go back to it, but it's, you know, as a service, um, it's very expensive compared to what you can do yourself.

Um. 

John Wilson: Yeah, I haven't even looked at using them as a service, uh, to be honest. But I do think, um, like they understand the number, 

Jack Carr: they definitely understand the number. Um, and they understand like the, the speed delete process and all we're ing this just like C 

John Wilson: to LTV, basic math to grow your business. John and Jack 

Jack Carr: arguing episode, everyone's like, oh gosh, there's trouble in paradise.

No wonder why we haven't seen them together in the last three. It's three weeks. It's 

John Wilson: tough. We're arguing about cac. 

Jack Carr: Yeah. Don't put that in there. No, no, no. That's the 

John Wilson: title. Oh, fun 

Jack Carr: stuff. We'll wrap it up. 

John Wilson: Yeah. Uh, let's do it. Thanks for tuning in. If you like what you heard, make sure you check out owned and operated.com.

Sign up for the newsletter. We're officially in the 40 thousands, uh, so we're super pumped about that. [00:34:00] And, uh, we're aiming for a hundred, so that'd be fun. Sign up, make sure you like and subscribe.

Think HVAC is kind of funny because it goes through these like different stages of growth. You can't get good at marketed leads if all you're served is tech flip leads. It is a different game and the the biggest companies in the industry know it, so they run just different sales teams. We have different minimums for marketed leads and tech generated leads.

All the companies that we see that are running HVAC at like very real scale. That's how they all work.

Jack Carr: Welcome back to Owned and Operated. Today we have Jack and John in the house. Wow. Hopefully that didn't hurt you too much. We love you. We love you. We [00:35:00] subscribed. If you can't tell, I'm excited. We haven't done one of these episodes in a few weeks now. No. Yeah. Well, I'm pumped to have you up. You're gonna be up in mm-hmm.

John Wilson: Two weeks. Like a week and a half. Yeah. Week and a half. Whatever. Either way. Either way, either way. Uh, yeah, man, there's lots going on. Yeah. How's your, well, how was your May? It's, it's June 10th, 11th today. How was your May? So HVAC C, so HVAC doubled over, doubled over a hundred percent. Oh, wow. Over our best month of last year.

Jack Carr: Okay, thank you. So we had our best month ever in the history of the company in May. Um, nice. Which was about almost a hundred percent over last August. That's crazy. Yeah. So we're trying to continue that momentum. Keep it rolling. What, what were, what are like temperatures? Like how's weather, what's, what's super weird is that May was moderate [00:36:00] for us.

Yeah. I think people had just started turning on units though, so that's why we got some of it. But we should be pushing into the nineties this week and next week. Okay. Which add a lot of humidity, so it's gonna be, it's gonna be a wild week, is what our expectations are. One of the things that's helped our business grow the most has been peer groups, and that's been for both myself and our leaders, being able to talk to other companies about exactly how they've solved.

John Wilson: The problems that I'm dealing with today has just been instrumental, whether it's how to acquire companies or how to add new locations. How to hire directors or service managers, or what should compensation look like? All of those things are things that can be solved by just asking people a little bit ahead of you.

Inside that group, we have Fireside Chats, weekly peer Conversations by business size resources to help you grow your business and a lot more. Make sure you check out owned and operated.com and click on Join Pro. This has been a really weird summer for us, so may like we still grew, uh, most of the departments grew 20 ish [00:37:00] percent.

Um, but HVAC was down, which like, we actually haven't had the down month at HVAC for a while, um, like year over, year down. Mm-hmm. But last May was 90 degrees in May and this May was 45 degrees in May. Yeah. Um, so just like zero urgency. So really like May was our April this year, which was kind of funky.

Mm-hmm. Now June is like ripping, uh, we're pretty much selling to budget every day, so that's been great. Obviously, obviously loving that, but um, yeah, may was kind of a funky month for us. Funky. Yeah. That, that's definitely interesting. Um, I remember seeing that, 'cause you, we, we talked once in May and you were wearing a sweater and I was like, why are you wearing a sweater?

Jack Carr: It's 85 down here. Yeah. And you were still in sweaters, so that makes sense. I mean, that mean it was literally like 45 degrees most mornings until the, until June. Mm-hmm. It was, uh, to put this in perspective, so people don't think I'm exaggerating, [00:38:00] the pools didn't open on Memorial Day. Ooh. Yeah. It was that cold.

John Wilson: The pools literally just didn't open, so they actually didn't open Memorial Day, and they also didn't open the next weekend either. That's rough. So in June, outside pools opened, and I've, that's, I've never had that in my whole life. Yeah. The interesting part though, is it really, you know, I know we, we talk about this a lot, but yeah, it.

Jack Carr: To some extent, it doesn't matter, right? 'cause you're gonna have that opening rush at some point, right? When you get your first high week. It's just the hope that you, as long as you get a few high weeks in the beginning of the year Yeah. Or in the beginning of summer, um, I think is what it comes down to.

Yeah. Yeah. I mean, we've been, we've been still cooking, um, h HVAC for us. We've done a ton of work over the past, like year in order to basically hit it to scale. Um, so I think HVAC is kind of funny because it goes through these like different stages of growth where like the first [00:39:00] stage is like you have a technician or the owner is selling, and then the second stage is you bring on comfort advisors and the techs no longer sell.

John Wilson: And then the third stage is you go back to selling texts with comfort advisors and you separate the sales teams. And all the companies that we see that are running HVAC at like very real scale, that's how they all work, is the technicians run some leads. Like they, they basically, they're running their own tech flips.

They're, you know, techs no longer flip to cas. They flip either inside sales or the technician sells it on site. And then Cas actually just run marketed leads. So that's what, um, yeah. I mean, four Seasons in Chicago, Logan and Cincinnati Peterman Eco, uh, that's like the model. So it's, it's, so we're just, it took us like maybe six, seven months to finish that transition into stage three [00:40:00] from like every tech flip and every marketed lead went to a ca.

Um, to now you separate 'em. And the reason is, uh, quantity. Yeah. So if the reason. The reason it makes sense too, from the logical standpoint. Um, well, you can't get good at marketed leads if all you're served is tech flip leads. It's a different sales process. Like in a tech flip, you were given a lead that the, the homeowner already is bought into the business.

They already bought into the tech. They already believes the recommendation. Like it is a different sales experience than, Hey, I have to walk in and create value. In the first 30 minutes, I have to explain the company up. When I'm against competition, when I'm up against competition, it is a different game and the, the biggest companies in the industry know it.

So they run just different sales teams. Uh, in some companies take it as far like four Seasons In Chicago, they actually have, um, [00:41:00] like different sales price books, which we have not done that. But like, that's pretty common because on the ca side, it's a more competitive process. Whereas the tech flip side, it's not like you have a bought in, you know, 80% likelihood to close.

Jack Carr: Yeah. We have different minimums for marketed leads and tech generated leads. Oh, like what? What do you mean? Like cl Like closing rates? No, like we, I, our comfort advisor runs both and she has a different, technically she has the bottom that we, we can't go under for anything, but then she has her minimum goal for.

Tech generate leads and her minimum goal for marketing leads, so like marketing leads, she can go down, her goal is like at minimum 45% gross margin. Um, and then at, uh, on tech generate leads, we wanna see that to be 55% in the summer months, and then it goes down again in the off season. But point being is that it is a dynamic, um, oh yeah.

Uh, [00:42:00] pricing. And that's because we understand like if we come in and hit somebody with a 65% gross margin on a marketing lead that they've had three other people out, we're not even gonna get a shot at the second opportunity to. Price match or whatever, because we're just out of the range. So like we understand that going in, so they're handled completely differently.

I think though a big part of that, um, which is, which is really interesting that you put it that way, that the third iteration is that because the, well, everyone's going through it and like you get stuck like these HVAC companies, just like they break when you hit a certain size and you're still flipping everything over to cas because the, the way, the way anybody gets better is repetition.

John Wilson: Right. Yeah. Like if I wanted to be the best baseball pitcher in the world, I, I'm gonna go pitch a million fucking times, like the 10 hour, 10,000 hour things. So you need reps. And when you're served up two totally different types of leads, it's really hard to get good at one or the other, especially when one [00:43:00] of them is so easy and one of them takes actual work.

You will just never try to get good at the one that takes actual work. Well, the problem though, right, for everyone listening and for myself versus you, not everyone listening 'cause there's some big listeners out there, but is, uh, there's a few things that have to happen as a prerequisite prior. A you have to have, you know, enough leads for marketing alone to be able to hold a person full time.

Jack Carr: Right? And that comes with scale. Yeah. That's, that's, I don't know. Uh, so you're, you're living in, uh, John World here, and I'm gonna call you out on it because I, I guarantee 99% of people you can just go get the leads though, not direct marketing leads. That's very, very difficult to, and like, so you example here, my living experience, lemme give you example, is like a hundred million dollar company, like Peterman or all Yeah.

All these people that you're talking about in my market, Hoffman Hiller Lee, they can pay that thousand dollars for a [00:44:00] PPC. HVAC installation lead. Yeah. Right. I can't, well, well anybody can. No, I can't. You just have to close it. Yeah, you're right. Anybody can in, in a magic world where you have to close it, but.

Inevitably, you are going up against other people. Your sales process has to be amazingly tight, but just based on numbers, like you are going to close at a lesser rate than you would tech generated. That's why tech generated are easy. I guess like, it, it, I'm not being sarcastic. Yeah. Walk me through it.

John Wilson: 'cause like, from my perspective, okay. I'm using your words. Size is irrelevant because using. Your words. Well, it's not irrelevant because I think it's irrelevant. It doesn't, it doesn't have anything to do with it. Well, you have a branding that allows, your brand is so large in your location that it allows you to generate more.

Jack Carr: No, we're full buying these leads. Full buy. Well, yes, but at a cheaper PPC because you have branding. People [00:45:00] hear you on the radio. See, these are typically Angie's List leads or modernize, or like they're paid for leads. Yeah. No, I'm, I'm with you on that. I'm following. Okay. Okay. I'm just still saying if you're on Angie's List, okay.

Or you're on Thumbtack, or you're on an aggregator, or you're on Modernize, or you're on PPC or LSA, Wilson Coe in your area has branding, and that branding drives PPC. All those costs lower or it, it drives people there easier for you. You have a higher click through rate on that because they've seen your branding before versus Joe's.

Crab Shack, HVAC that nobody knows about. It's a single guy in a truck that has two reviews because they don't have that many people. Whereas Wilson has the ethos of 30 reviews, or 130 or 500 reviews on their Angie's profile because they're running so many calls. So you're so far ahead. There's a moat there for [00:46:00] specifically marketing leads.

It's so we try really hard to run marketing leads, obviously, because we're buying a great lead. Like I would love to pay the a hundred, 200 bucks for the great lead. Don't get me wrong. What I'm just saying is that when they have additional optionality, your branding plays a large portion which drives more click through I, I think is probably the best way to describe it to you.

Yeah. But like. We see that with Hiller. So for example, Hiller in our area, we're paying like $400 a lead. So we're, we're not like, sometimes we might get a discount, but that's, I, so my perspective, you're paying 400, have 38% have, so is Joe's check, right? Your buzz are both paying that $400. What I'm saying is the volume of clicks that you are getting is more than Joe's.

So for example, the volume of your LSA No, I'm talking about like go, go buy a lead. So like I bought a lead. From modernize it was $400. Mm-hmm. So I'm gonna go out and I'm gonna sell 38% of the [00:47:00] marketing leads that I get. Yeah. And my average ticket's gonna be $10,000. So I paid $900 to get that job. Which like, that's math.

John Wilson: That is irrelevant to the size. Like to me, all I agree. All that we're talking about is like, what's your cta? LTV. Which like that has nothing to do with how big our budget is. That's just like we now it does have to do with, we have a sales process, so maybe that's a part of it, but like, I think that's a huge part of it.

But I, I do think CAC to LTV is, is IR irrelevant to how large the total company is? I'm just saying, so on Angie's and Thumbtack Yeah. As the, as the consumer you go through, you are buying a central air. HVAC installation lead for a 250 bucks. Mm-hmm. Yes, you are buying that lead. But the way that that process works is the customer goes onto there, they fill out what [00:48:00] they're looking for, and then they click three companies.

Jack Carr: They click Wilson, they click company B, and company C Company Wilson has 500 reviews, five stars. They've been killing the game. Yeah. Company B also pays that same price, but they have two stars, two reviews. And they suck. Company C is a middle, middle size, maybe 160 reviews. Now the 160 review company doesn't have a speed to lead person in place that is focused solely on answering these as quick as possible.

So the minute that they enter it, you hit them. I think my point is like, yes, we're more mature. Mm-hmm. But that stuff can be put in place at any size. Well, not any size, but like. If you're a $5 million business, like you have the similar type of resources to put towards that process because you gotta be able to buy leads.

John Wilson: Gotta be. So, yeah, if we're talking about like a one man shop, sure, but if you close 38% of [00:49:00] marketing leads, then like mm-hmm. That's just a, that's just a math problem. I think we'll have to agree. I, I will agree, but I think that there's more to that on the backend and. I will accept. Well, what that we are going to will somewhat disagree on this.

What will probably happen is they won't close at 38%, so maybe they'll close at 30. The leads are there. But if you go get the reps you'll, you will close at maybe a lesser percent. So that I would, that I would concede that you would close less leads potentially. Uh, yeah, but like you could still make up for that on average ticket.

Or you could just have less overhead. So you can take a slightly reduced margin to what we could withstand. Mm-hmm. So that, that's the first one is either whatever way you cook it, you need to have enough marketing leads somehow. And if that process is in place, you need to put those processes in place, overcome the lift, spend the money to have those processes to be able to handle the market.

Jack Carr: Well, some of this [00:50:00] process, but some of it, I'm just gonna encourage people to do their math. So like, yeah, I agree. I don't, I don't disagree with that. What does it cost for a lead? How many of those leads do you close and what's your average sale? And if, if you have your numbers, this is just a math problem.

John Wilson: Like it has nothing to do with us being big or not. Like maybe we close a higher percentage 'cause we're bigger and we're more branded or whatever. But like leads to lt, like CAC to LTV is literally I get more leads literal the math that every single business has to work off of. So how much does it cost me to get a customer?

What's my average order value? So Hiller, for example, okay, in our market is a hundred million dollar company. Yeah. They don't actually, I was looking through, um, one of the, the, I forget the home service pro whatever, um, the, how do you look at your competitors? Yeah. And I was looking at them. They don't own any map pack.

Jack Carr: They're almost on zero map packs across. They have a lot of, [00:51:00] Hey, hi. First page. Yeah. Stuff. But they bring in all their leads, the through paying, but they're able to drive those paid leads through the Google platform because they have the branding that everybody knows Hiller. He is there. So I think that what we're you're discounting here is the amount of leads that you're able to bring in through subconscious people clicking on your PPC link versus they wouldn't click on other people's PPC.

My PPC, when I, when I run it, I pay, I'll pay the same thing as Hiller, but I will drive, I. Two calls on PPCA month. If I were to bid the, I think that's a marketing funnel problem then. 'cause like top line proves my point. Right. Have you followed their story? Uh, no. I don't know what top line is. So, so top line came outta nowhere like four years ago and they went from zero to 40 million in four years.

John Wilson: Mm-hmm. And all like, I think it's a hundred percent hvac. So like, obviously fast growth and they don't have a brand, like they're not branded. Uh, and it's all [00:52:00] ser, it's all service replacement. Um, it's actually, I think, all replacement. They, they're doing this thing where they don't service equipment that they don't install, so it's basically fully replacement.

So the, they're, they're on, like they're far, they're deeper in it than I am, where they're even more optimized as a $0 brand now, $40 million. But they started four years ago. Mm-hmm. Where it started with just the math, like, this is what it cost me to get a customer. This is my close rate, this is my average job.

You can ramp that to infinity. And they, they literally just did, like, they're in their fourth year, so they started from nothing. They're not Hiller and Hiller's been around forever. Yeah.

Jack Carr: I, no, dude, this, this is awkward silence. I like, no, I, I, I mean, I like, so part of me doesn't disagree with that. I, I just think that there's a discount and maybe it's me justifying why I don't do PPC, but um. You know, it is what it is. We have enough that we, we do run quite a few [00:53:00] marketing leads through aggregators.

I think it's a great source. Um, it's just making sure that you are able to put systems in place, have enough, and then receive enough leads maybe through math, maybe through a little bit of branding. I don't know, we'll find out. Um, and then secondly, uh, the other side to this is having enough good systems in place that your technicians are can close.

Because that's why you moved him to CAS in the first place at at number two was because, yeah. You know, it's recruitment's a huge issue. And then. Uh, training and making sure you can build a training program. I mean, I, I like the model. I think the model works because your, your technician's already building that rapport with the customer.

Yeah. Like that's gonna be the easiest sale. But the reason in phase two, you moved it to a comfort advisor and flipped everything, was because the technicians that you had were not good at sales. Yeah. And so like, how do you get them up to par so that they can still have that same close rate and that same average ticket?

John Wilson: So companies are doing it a few different ways. Uh, one, you can just train the tech directly. Uh, which that's [00:54:00] like the old school way of doing it, but it does work. Like you can, you can have selling techs, like you can have selling techs do. Our, our selling techs average ticket is considerably higher than our comfort advisors.

Like, uh, thousands of dollars higher. Um, so it's not a, it's not a guarantee. Uh, I, I think it's, I think what people get confused by is they say, which I thought the same thing, but. Hey, our CA's average ticket is higher than our selling tech average ticket. Like maybe, I think most of it's like, is there a process there?

A yes no, because the reality is a tech flip average ticket is higher than a marketed lead average ticket. And I think that's the real distinction as long as both follow a process. Um, but yeah, so we, so one, are you training them or two, A lot of companies use some version of a call by call, like Joe C's.

Like, Hey, I'm gonna call into my coach and we're gonna talk through this option and we're gonna try to sell it together. Or like, [00:55:00] we have an inside sales process that we run, uh, and that's how we do our, our tech sales. So there's a lot of different ways to do it. I think the benefit, um, you know, when, when the team gets large enough, what the, the friction you start seeing is like a speed to sale.

And like if a tech just spent an hour or two hours building rapport, why are we willing to lose that rapport? Yep. Uh, and why are we, why are we also willing to like, inconvenience the homeowner waste more of their time for a second appointment? Mm-hmm. Just for someone to have to come in and restart the rapport building process.

It just doesn't make sense. So, and, and like a homeowner, I would be really inconvenienced and annoyed, but I'd be like, okay, well if it's another appointment, like you'll be meeting my assistant next time you come out here. Like, I'm here right now. I don't have a lot of time. We just are finishing the best April we've ever had.

55% year over year. Organic growth. Really just a huge thanks to Service Scalers for being our marketing partner in that a ton of that growth came from [00:56:00] both paid and organic SEO efforts. We did a ton of work on our SEO with service scalers, really strategizing and working on that about a year and a half ago, and the results have been creeping up over the past about year.

Really started to go crazy over the last few months as we're starting to see multiple six figures of revenue attributed to our website. I. And that's from their work on our SEO. On top of that, the management of paid has just been absolutely huge. Year to date, we're up 30 something percent. April alone was 55.

And uh, we're just super grateful for service scalers in that partnership. So if you wanna learn more about how they helped us, make sure you check out service scalers.com. I mean that, so that's actually one of the issues that we're having right now is we've had a slew recently of cancellations or reschedules, and I said, you know, we're trying to lock down the process on how.

Jack Carr: To do the flip in the easiest way possible to customers because here's what happens if in, in that flip process Yeah. Is you open yourself up and your team up to friction. [00:57:00] Yep. Which then opens you up to losing the sale. Yep. So it gives the customer time. To hire or call or Yep. Look around. It gives the customer time to do this.

Time to cancel. Told that, cancel. Yep. They could talk to their cousin who says, Hey, no, you could buy a unit for $1,500 and I'll come install it. Yeah. You know, there's about 17,000 ways that they, you could lose a customer at that transactional point or the, the junction point right there. So, I mean, I like it.

My thing is just like, how do you get, how do you get the text to that level? Um. Because our, it's a lot of training. Well, I think the thing is it one, it's a lot of training, but two, yeah. There are a lot of techs out there. Like over the years we've had plenty of techs cross a million dollars of equipment sold.

John Wilson: Mm-hmm. Now they do need a lot of help with like, here's how to offer options. Here's how you, like, you do have to work through that a lot, but like you can have seven figure selling techs, like we just hired two. Yeah. And like one of 'em does a couple million bucks a year. Um. I mean, uh, [00:58:00] as a company that started out in that direction.

Jack Carr: Mm-hmm. One of the guys that left that first week that when I started my business, he wasn't a a million dollar, but he was $750,000 in a. Small company and a two person, two three truck company. So like I know it's definitely possible and we've tried to buy other companies that are two guys and those two guys are techs owners, everything.

Yeah. Their wife on phones, half, 2 million each. Yeah. Yeah. And they're, they're doing about a million each. 'cause it was a 2 million top line company and then sub out the install. Yeah. So like, it's definitely possible to find those guys. The hard part is just, in my opinion, it's finding those guys and having a recruiting process and then a systems process to be able to make it.

So you gotta be able to train it. Hmm. Yeah. Yeah. It gets, I, and I, I think it just comes later. I think it, it comes at the point where, uh, hey, the team is big. Now it's at scale and we need to be able to this. It's no longer one or two comfort advisors. Mm-hmm. Like, how do you run 17 comfort advisors? Yeah.

John Wilson: Like, that's the question. [00:59:00] How do you run 17? Or how do you run eight? You know, not like onesie, twosie. Uh, but the companies that we're drawing inspiration from for this process are literally running 20 comfort advisors. Like that's it. And all they're doing is marketed leads all day long. Um, and, and in order to get really good at it, you, you just need to be doing marketed leads.

Jack Carr: Generalist is specialists. The specialist is a hundred percent specialize in at comfort. Yep. Our, uh, marketing leads. Yeah. Hmm. I, I don't like this conversation, John. It feels like a lot of lift that I just don't want to think about for a long time. Well, I don't think you have to worry about it. I don't think you have to worry about it, and it's kind of messy.

John Wilson: Yeah. Like it was really messy. Like we, you know, we had some, we had obviously some turnover in the process, but, um, like long term it's right decision. Like, it, it's, it's the businesses that are, um, like the businesses that are twice our size, this is the process. So, and we wanna be twice our size, so, okay.

That's what we're gonna do. That's sweet. [01:00:00] That's sweet. And it's cool that they're in the industry, allows you to see that like they're, they're really open to the conversations. Yeah. Even though Right. Peter Man's potentially moving into your market like we compete. Yeah. Yeah. So like, it, it, it's so interesting how this, this industry is so friendly and so nice across strategy and model.

Jack Carr: Um, too cool. And, um. Where, how do we even get started on that? Just like new thing you were doing? Uh, no, I, well, uh, well we just, we're in the process of dividing our HVAC team and we just brought on a sales manager on, so we're really excited about that. We've, we've never had a sales manager before. Uh, so we have a few teams right now actually that it, it's, it's, it's cool.

John Wilson: It's like different. It's a new thing. So each of these teams are getting big enough. That we have to actually split them in half. Yeah. And we have three teams all doing this right now. [01:01:00] Uh, like okay, what do you do once you have 12 sales? Plumbers? Well, probably four sales plumbers ago we should have hired a second manager and then had two teams of eight and get gotten up to 16.

Uh, same thing with hvac. Like we were having our service and sales managed by the same guy. It's a lot of people, 17 people. Right? Like, whatcha are you gonna do with that? Mm-hmm. So we're dividing those off. Um. And then I think we will divide HVAC service again pretty soon into like some version of six and six.

The problem is like, obviously HVAC service, like doesn't produce revenue really, so it's hard to like sup, you know, it's hard to give overhead 'cause like HVAC service doesn't really support itself, you know, and un unfortunately, that's just, we've tried over the years to like, get more out of it. But, um, it, it just doesn't, HVAC causing problems like usual.

Jack Carr: It's sexy, but then causes a bunch of issues. Yeah. I mean, I, I think it feeds install, like it just, it feeds install. Like that's what it does. We talked about the business, wish it didn't, but that's what [01:02:00] it does is install the business. Is install, like the business is, you know, like, uh, most companies try to run an 80 20 of, like 80% of your eight revenue in HVAC should be installed in 20% service.

John Wilson: Mm-hmm. We're typically like an 85, 85, 15. Frankly we're comfortable with that and I actually, I wouldn't even mind getting up into the nineties because now that we know how to get leads and we understand our math, we can just go buy more leads. Like I don't need to go through this whole, like, let's get a tech out there, let's diagnose it.

No, I'm like, let's get up to 10 cas and run some freaking leads. Like let's scale a sales team. Yeah, that's that. That gives me a lot of energy. Yeah. I mean, you see it in other industries, right? Like, um, water filter only companies. Yep. They're just only running, they're just only running, uh, comfort advisors roof or roofing bathrooms.

Jack Carr: Yep. Exteriors like, yeah. HVAC is the only one that has like a feeder system. Mm-hmm. And I think the smaller you are, the more you're like, oh, I have to do that. But like, [01:03:00] Logan has a three location, $70 million HVAC business. They have 17 comfort advisors and they're just running comfort advisors, and I think that's freaking great.

Yeah. It leads to the, the, the company at once you start getting to a scale becomes less of a HVAC company, it becomes more of a marketing company that drives to hvac. We're, we're a marketing and sales company a hundred percent. Yeah. Which is super interesting because, uh, it always feels like when you, we talk about like the 90 10, 'cause we, I think we're somewhere like 70, low seventies, like 71, 72.

Oh yeah, yeah. Rich is there too. Yeah. And it's, he's like 60 or something. It's difficult because my, the worry on the back end right is like at 90% the amount of marketing leads you have to drive and close is crazy just because you can't sustain like a 90 after if you know your math off customer base.

And that was my argument earlier. If you know your math and you're a marketing and sales driven business and like you understand the funnel, then it's not intimidating. Like that's just like what it is. [01:04:00] And, and I think what gives me a lot of like relief around this is roofing is a hundred percent, exteriors is a hundred percent.

John Wilson: Like it's, that is just how those businesses work. And our industry is just like, we have this crutch of having service. No other industry with a $10,000 average ticket has this type of thing. Like none of 'em, and they all do just totally fine. Yeah. Uh, so I, I think, yeah, I, I think the industry is wrong, which is fine with me.

'cause that means like, I think I'm right and 'cause every other business in the world is just like C to LTV, like boom. Uh, and, and they're big. You just want to own a roofing company. John, just say it already. Yeah. I do just buy a roofing company. I honestly do Well, Chad owns one. Chris owns one. Yeah. I'm like, is it my time?

Jack Carr: You know? You just wanna own a roofing company, get real. I, I think it would be fun to just be marketing and sales driven, which like, that's what plumbing and electric are for us, is plumbing and electric are, they're a hundred percent [01:05:00] sales. Uh, sales inta like marketing sales at this point, like HVAC is 85, 15.

John Wilson: Like plumbing is like 99 sale, 1% service. Like it's. Yeah. Same with electric. Uh, well, I mean, I think it comes down to it, there's no mechanical function to plumbing or HVAC for the most part. I mean, yeah, there's pumps and stuff that you have to maintain, but not really. They're like, the pumps in, in plumbing are built as 10 year no maintenance plums type things.

Jack Carr: Yeah. And so I, you know, I view HVAC more as like the auto mechanic industry to some extent in the sense that, yeah, like it is a piece of functioning machine that needs to be maintained regularly. Yeah. Or it breaks down. You gotta do your oil changes. So, yeah. Really interesting though. Well, we, we have the same thing with generators.

John Wilson: Yeah. So like we are thinking about joining like a, the generator Generac program and if we did, we could, we could access all of the service leads, but like mm-hmm. It's like, why do I want them? Yeah. Like why do I want [01:06:00] them? It's like, okay, I can go out and get 500 bucks. Uh, and I could do that a lot and then have to optimize routes and like all this annoying stuff that would never amount to that much money or.

I could just go get leads. Yeah. And sell generators. So, yeah, I feel like, um, so if I'm taking away anything from this episode, it's, you know, everything that we worry about in the HVAC industry, just don't worry about it anymore. Stop worrying about service and just go install units. Market install. Market install.

Jack Carr: Yeah. Just figure that out in you're golden. Don't even worry about the rest. Marketing and sales. We are, we're a marketing and sales, yeah. Consumer brand. I mean, I wouldn't disagree with that idea though, in general. 'cause I think Lyle, um, I forget what company they have. They ended up, that's top line. Is that top line systemized leads?

Yeah. Yes. Yeah, that's top line. Line. So yeah. I'm sorry. I mean, they're literally doing it. They're literally doing it. I mean, I will say though, like he. It [01:07:00] cracked the marketing formula at just the right place in the right time to get on like TikTok when nobody else was on TikTok. And it was super juicy to be able to do that.

Um, but it's still working. It's not like they stopped, definitely stopped growing. So it's still working. No, it's, it definitely works. I'm not, I'm not discounting that at all. We used it for a year and a half and, uh, we, we potentially would go back to it, but it's, you know, as a service, um, it's very expensive compared to what you can do yourself.

Um. Yeah, I haven't even looked at using them as a service, uh, to be honest. But I do think, um, like they understand the number, they definitely understand the number. Um, and they understand like the, the speed delete process and all we're ing this just like C to LTV, basic math to grow your business. John and Jack arguing episode, everyone's like, oh gosh, there's trouble in paradise.

No wonder why we haven't seen them together in the last three. It's three weeks. It's tough. We're arguing about cac. Yeah. Don't put that in there. No, [01:08:00] no, no. That's the title. Oh, fun stuff. We'll wrap it up. Yeah. Uh, let's do it. Thanks for tuning in. If you like what you heard, make sure you check out owned and operated.com.

John Wilson: Sign up for the newsletter. We're officially in the 40 thousands, uh, so we're super pumped about that. And, uh, we're aiming for a hundred, so that'd be fun. Sign up, make sure you like and subscribe.

Think HVAC is kind of funny because it goes through these like different stages of growth. You can't get good at marketed leads if all you're served is tech flip leads. It is a different game and the the biggest companies in the industry know it, so they run just different sales teams. We have different minimums for marketed leads and tech generated leads.

All the companies that we see that are running HVAC at like very real [01:09:00] scale. That's how they all work.

Jack Carr: Welcome back to Owned and Operated. Today we have Jack and John in the house. Wow. Hopefully that didn't hurt you too much. We love you. We love you. We subscribed. If you can't tell, I'm excited. We haven't done one of these episodes in a few weeks now. No. Yeah. Well, I'm pumped to have you up. You're gonna be up in mm-hmm.

John Wilson: Two weeks. Like a week and a half. Yeah. Week and a half. Whatever. Either way. Either way, either way. Uh, yeah, man, there's lots going on. Yeah. How's your, well, how was your May? It's, it's June 10th, 11th today. How was your May? So HVAC C, so HVAC doubled over, doubled over a hundred percent. Oh, wow. Over our best month of last year.

Jack Carr: Okay, thank you. So we had our best month ever in the history of the company in May. Um, [01:10:00] nice. Which was about almost a hundred percent over last August. That's crazy. Yeah. So we're trying to continue that momentum. Keep it rolling. What, what were, what are like temperatures? Like how's weather, what's, what's super weird is that May was moderate for us.

Yeah. I think people had just started turning on units though, so that's why we got some of it. But we should be pushing into the nineties this week and next week. Okay. Which add a lot of humidity, so it's gonna be, it's gonna be a wild week, is what our expectations are. One of the things that's helped our business grow the most has been peer groups, and that's been for both myself and our leaders, being able to talk to other companies about exactly how they've solved.

John Wilson: The problems that I'm dealing with today has just been instrumental, whether it's how to acquire companies or how to add new locations. How to hire directors or service managers, or what should compensation look like? All of those things are things that can be solved by just asking people a little bit ahead of you.

Inside that group, we have Fireside Chats, weekly peer [01:11:00] Conversations by business size resources to help you grow your business and a lot more. Make sure you check out owned and operated.com and click on Join Pro. This has been a really weird summer for us, so may like we still grew, uh, most of the departments grew 20 ish percent.

Um, but HVAC was down, which like, we actually haven't had the down month at HVAC for a while, um, like year over, year down. Mm-hmm. But last May was 90 degrees in May and this May was 45 degrees in May. Yeah. Um, so just like zero urgency. So really like May was our April this year, which was kind of funky.

Mm-hmm. Now June is like ripping, uh, we're pretty much selling to budget every day, so that's been great. Obviously, obviously loving that, but um, yeah, may was kind of a funky month for us. Funky. Yeah. That, that's definitely interesting. Um, I remember seeing that, 'cause you, we, we talked once [01:12:00] in May and you were wearing a sweater and I was like, why are you wearing a sweater?

Jack Carr: It's 85 down here. Yeah. And you were still in sweaters, so that makes sense. I mean, that mean it was literally like 45 degrees most mornings until the, until June. Mm-hmm. It was, uh, to put this in perspective, so people don't think I'm exaggerating, the pools didn't open on Memorial Day. Ooh. Yeah. It was that cold.

John Wilson: The pools literally just didn't open, so they actually didn't open Memorial Day, and they also didn't open the next weekend either. That's rough. So in June, outside pools opened, and I've, that's, I've never had that in my whole life. Yeah. The interesting part though, is it really, you know, I know we, we talk about this a lot, but yeah, it.

Jack Carr: To some extent, it doesn't matter, right? 'cause you're gonna have that opening rush at some point, right? When you get your first high week. It's just the hope that you, as long as you get a few high weeks in the beginning of the year Yeah. Or in the beginning of summer, um, I think is what it comes down to.

Yeah. Yeah. I mean, we've been, we've been still [01:13:00] cooking, um, h HVAC for us. We've done a ton of work over the past, like year in order to basically hit it to scale. Um, so I think HVAC is kind of funny because it goes through these like different stages of growth where like the first stage is like you have a technician or the owner is selling, and then the second stage is you bring on comfort advisors and the techs no longer sell.

John Wilson: And then the third stage is you go back to selling texts with comfort advisors and you separate the sales teams. And all the companies that we see that are running HVAC at like very real scale, that's how they all work, is the technicians run some leads. Like they, they basically, they're running their own tech flips.

They're, you know, techs no longer flip to cas. They flip either inside sales or the technician sells it on site. And then Cas actually just run marketed [01:14:00] leads. So that's what, um, yeah. I mean, four Seasons in Chicago, Logan and Cincinnati Peterman Eco, uh, that's like the model. So it's, it's, so we're just, it took us like maybe six, seven months to finish that transition into stage three from like every tech flip and every marketed lead went to a ca.

Um, to now you separate 'em. And the reason is, uh, quantity. Yeah. So if the reason. The reason it makes sense too, from the logical standpoint. Um, well, you can't get good at marketed leads if all you're served is tech flip leads. It's a different sales process. Like in a tech flip, you were given a lead that the, the homeowner already is bought into the business.

They already bought into the tech. They already believes the recommendation. Like it is a different sales experience than, Hey, I have to walk in and create value. In the first 30 minutes, I have [01:15:00] to explain the company up. When I'm against competition, when I'm up against competition, it is a different game and the, the biggest companies in the industry know it.

So they run just different sales teams. Uh, in some companies take it as far like four Seasons In Chicago, they actually have, um, like different sales price books, which we have not done that. But like, that's pretty common because on the ca side, it's a more competitive process. Whereas the tech flip side, it's not like you have a bought in, you know, 80% likelihood to close.

Jack Carr: Yeah. We have different minimums for marketed leads and tech generated leads. Oh, like what? What do you mean? Like cl Like closing rates? No, like we, I, our comfort advisor runs both and she has a different, technically she has the bottom that we, we can't go under for anything, but then she has her minimum goal for.

Tech generate leads and her minimum goal for marketing leads, so like marketing leads, she can go down, her goal is like at minimum [01:16:00] 45% gross margin. Um, and then at, uh, on tech generate leads, we wanna see that to be 55% in the summer months, and then it goes down again in the off season. But point being is that it is a dynamic, um, oh yeah.

Uh, pricing. And that's because we understand like if we come in and hit somebody with a 65% gross margin on a marketing lead that they've had three other people out, we're not even gonna get a shot at the second opportunity to. Price match or whatever, because we're just out of the range. So like we understand that going in, so they're handled completely differently.

I think though a big part of that, um, which is, which is really interesting that you put it that way, that the third iteration is that because the, well, everyone's going through it and like you get stuck like these HVAC companies, just like they break when you hit a certain size and you're still flipping everything over to cas because the, the way, the way anybody gets better is repetition.

John Wilson: Right. Yeah. Like if I wanted to be the [01:17:00] best baseball pitcher in the world, I, I'm gonna go pitch a million fucking times, like the 10 hour, 10,000 hour things. So you need reps. And when you're served up two totally different types of leads, it's really hard to get good at one or the other, especially when one of them is so easy and one of them takes actual work.

You will just never try to get good at the one that takes actual work. Well, the problem though, right, for everyone listening and for myself versus you, not everyone listening 'cause there's some big listeners out there, but is, uh, there's a few things that have to happen as a prerequisite prior. A you have to have, you know, enough leads for marketing alone to be able to hold a person full time.

Jack Carr: Right? And that comes with scale. Yeah. That's, that's, I don't know. Uh, so you're, you're living in, uh, John World here, and I'm gonna call you out on it because I, I guarantee 99% of people you can just go get the leads though, not direct marketing leads. [01:18:00] That's very, very difficult to, and like, so you example here, my living experience, lemme give you example, is like a hundred million dollar company, like Peterman or all Yeah.

All these people that you're talking about in my market, Hoffman Hiller Lee, they can pay that thousand dollars for a PPC. HVAC installation lead. Yeah. Right. I can't, well, well anybody can. No, I can't. You just have to close it. Yeah, you're right. Anybody can in, in a magic world where you have to close it, but.

Inevitably, you are going up against other people. Your sales process has to be amazingly tight, but just based on numbers, like you are going to close at a lesser rate than you would tech generated. That's why tech generated are easy. I guess like, it, it, I'm not being sarcastic. Yeah. Walk me through it.

John Wilson: 'cause like, from my perspective, okay. I'm using your words. Size is irrelevant because using. Your words. Well, it's not irrelevant [01:19:00] because I think it's irrelevant. It doesn't, it doesn't have anything to do with it. Well, you have a branding that allows, your brand is so large in your location that it allows you to generate more.

Jack Carr: No, we're full buying these leads. Full buy. Well, yes, but at a cheaper PPC because you have branding. People hear you on the radio. See, these are typically Angie's List leads or modernize, or like they're paid for leads. Yeah. No, I'm, I'm with you on that. I'm following. Okay. Okay. I'm just still saying if you're on Angie's List, okay.

Or you're on Thumbtack, or you're on an aggregator, or you're on Modernize, or you're on PPC or LSA, Wilson Coe in your area has branding, and that branding drives PPC. All those costs lower or it, it drives people there easier for you. You have a higher click through rate on that because they've seen your branding before versus Joe's.

Crab Shack, HVAC that nobody knows about. It's a [01:20:00] single guy in a truck that has two reviews because they don't have that many people. Whereas Wilson has the ethos of 30 reviews, or 130 or 500 reviews on their Angie's profile because they're running so many calls. So you're so far ahead. There's a moat there for specifically marketing leads.

It's so we try really hard to run marketing leads, obviously, because we're buying a great lead. Like I would love to pay the a hundred, 200 bucks for the great lead. Don't get me wrong. What I'm just saying is that when they have additional optionality, your branding plays a large portion which drives more click through I, I think is probably the best way to describe it to you.

Yeah. But like. We see that with Hiller. So for example, Hiller in our area, we're paying like $400 a lead. So we're, we're not like, sometimes we might get a discount, but that's, I, so my perspective, you're paying 400, have 38% have, so is Joe's check, right? Your buzz are both paying that [01:21:00] $400. What I'm saying is the volume of clicks that you are getting is more than Joe's.

So for example, the volume of your LSA No, I'm talking about like go, go buy a lead. So like I bought a lead. From modernize it was $400. Mm-hmm. So I'm gonna go out and I'm gonna sell 38% of the marketing leads that I get. Yeah. And my average ticket's gonna be $10,000. So I paid $900 to get that job. Which like, that's math.

John Wilson: That is irrelevant to the size. Like to me, all I agree. All that we're talking about is like, what's your cta? LTV. Which like that has nothing to do with how big our budget is. That's just like we now it does have to do with, we have a sales process, so maybe that's a part of it, but like, I think that's a huge part of it.

But I, I do think CAC to LTV is, is IR irrelevant to how large the total company is? I'm just saying, so on Angie's and Thumbtack [01:22:00] Yeah. As the, as the consumer you go through, you are buying a central air. HVAC installation lead for a 250 bucks. Mm-hmm. Yes, you are buying that lead. But the way that that process works is the customer goes onto there, they fill out what they're looking for, and then they click three companies.

Jack Carr: They click Wilson, they click company B, and company C Company Wilson has 500 reviews, five stars. They've been killing the game. Yeah. Company B also pays that same price, but they have two stars, two reviews. And they suck. Company C is a middle, middle size, maybe 160 reviews. Now the 160 review company doesn't have a speed to lead person in place that is focused solely on answering these as quick as possible.

So the minute that they enter it, you hit them. I think my point is like, yes, we're more mature. Mm-hmm. But that stuff can be put in place at any size. Well, not any size, but like. If you're a [01:23:00] $5 million business, like you have the similar type of resources to put towards that process because you gotta be able to buy leads.

John Wilson: Gotta be. So, yeah, if we're talking about like a one man shop, sure, but if you close 38% of marketing leads, then like mm-hmm. That's just a, that's just a math problem. I think we'll have to agree. I, I will agree, but I think that there's more to that on the backend and. I will accept. Well, what that we are going to will somewhat disagree on this.

What will probably happen is they won't close at 38%, so maybe they'll close at 30. The leads are there. But if you go get the reps you'll, you will close at maybe a lesser percent. So that I would, that I would concede that you would close less leads potentially. Uh, yeah, but like you could still make up for that on average ticket.

Or you could just have less overhead. So you can take a slightly reduced margin to [01:24:00] what we could withstand. Mm-hmm. So that, that's the first one is either whatever way you cook it, you need to have enough marketing leads somehow. And if that process is in place, you need to put those processes in place, overcome the lift, spend the money to have those processes to be able to handle the market.

Jack Carr: Well, some of this process, but some of it, I'm just gonna encourage people to do their math. So like, yeah, I agree. I don't, I don't disagree with that. What does it cost for a lead? How many of those leads do you close and what's your average sale? And if, if you have your numbers, this is just a math problem.

John Wilson: Like it has nothing to do with us being big or not. Like maybe we close a higher percentage 'cause we're bigger and we're more branded or whatever. But like leads to lt, like CAC to LTV is literally I get more leads literal the math that every single business has to work off of. So how much does it cost me to get a customer?

What's my average order value? So Hiller, for example, okay, in our market is a hundred million dollar company. Yeah. They don't [01:25:00] actually, I was looking through, um, one of the, the, I forget the home service pro whatever, um, the, how do you look at your competitors? Yeah. And I was looking at them. They don't own any map pack.

Jack Carr: They're almost on zero map packs across. They have a lot of, Hey, hi. First page. Yeah. Stuff. But they bring in all their leads, the through paying, but they're able to drive those paid leads through the Google platform because they have the branding that everybody knows Hiller. He is there. So I think that what we're you're discounting here is the amount of leads that you're able to bring in through subconscious people clicking on your PPC link versus they wouldn't click on other people's PPC.

My PPC, when I, when I run it, I pay, I'll pay the same thing as Hiller, but I will drive, I. Two calls on PPCA month. If I were to bid the, I think that's a marketing funnel problem then. 'cause like top line proves my point. Right. Have you followed their story? [01:26:00] Uh, no. I don't know what top line is. So, so top line came outta nowhere like four years ago and they went from zero to 40 million in four years.

John Wilson: Mm-hmm. And all like, I think it's a hundred percent hvac. So like, obviously fast growth and they don't have a brand, like they're not branded. Uh, and it's all ser, it's all service replacement. Um, it's actually, I think, all replacement. They, they're doing this thing where they don't service equipment that they don't install, so it's basically fully replacement.

So the, they're, they're on, like they're far, they're deeper in it than I am, where they're even more optimized as a $0 brand now, $40 million. But they started four years ago. Mm-hmm. Where it started with just the math, like, this is what it cost me to get a customer. This is my close rate, this is my average job.

You can ramp that to infinity. And they, they literally just did, like, they're in their fourth year, so they started from nothing. They're not Hiller and Hiller's been around forever. Yeah.[01:27:00] 

Jack Carr: I, no, dude, this, this is awkward silence. I like, no, I, I, I mean, I like, so part of me doesn't disagree with that. I, I just think that there's a discount and maybe it's me justifying why I don't do PPC, but um. You know, it is what it is. We have enough that we, we do run quite a few marketing leads through aggregators.

I think it's a great source. Um, it's just making sure that you are able to put systems in place, have enough, and then receive enough leads maybe through math, maybe through a little bit of branding. I don't know, we'll find out. Um, and then secondly, uh, the other side to this is having enough good systems in place that your technicians are can close.

Because that's why you moved him to CAS in the first place at at number two was because, yeah. You know, it's recruitment's a huge issue. And then. Uh, training and making sure you can build a training program. I mean, I, I like the model. I think the model works because your, your technician's already building that rapport with the customer.

Yeah. Like that's gonna be the easiest sale. But the reason in phase two, you [01:28:00] moved it to a comfort advisor and flipped everything, was because the technicians that you had were not good at sales. Yeah. And so like, how do you get them up to par so that they can still have that same close rate and that same average ticket?

John Wilson: So companies are doing it a few different ways. Uh, one, you can just train the tech directly. Uh, which that's like the old school way of doing it, but it does work. Like you can, you can have selling techs, like you can have selling techs do. Our, our selling techs average ticket is considerably higher than our comfort advisors.

Like, uh, thousands of dollars higher. Um, so it's not a, it's not a guarantee. Uh, I, I think it's, I think what people get confused by is they say, which I thought the same thing, but. Hey, our CA's average ticket is higher than our selling tech average ticket. Like maybe, I think most of it's like, is there a process there?

A yes no, because the reality is a tech flip average ticket is higher than a marketed lead average ticket. And I think that's the real distinction [01:29:00] as long as both follow a process. Um, but yeah, so we, so one, are you training them or two, A lot of companies use some version of a call by call, like Joe C's.

Like, Hey, I'm gonna call into my coach and we're gonna talk through this option and we're gonna try to sell it together. Or like, we have an inside sales process that we run, uh, and that's how we do our, our tech sales. So there's a lot of different ways to do it. I think the benefit, um, you know, when, when the team gets large enough, what the, the friction you start seeing is like a speed to sale.

And like if a tech just spent an hour or two hours building rapport, why are we willing to lose that rapport? Yep. Uh, and why are we, why are we also willing to like, inconvenience the homeowner waste more of their time for a second appointment? Mm-hmm. Just for someone to have to come in and restart the rapport building process.

It just doesn't make sense. So, and, and like a homeowner, I would be really inconvenienced and annoyed, but I'd be like, okay, well if it's another appointment, like you'll be meeting [01:30:00] my assistant next time you come out here. Like, I'm here right now. I don't have a lot of time. We just are finishing the best April we've ever had.

55% year over year. Organic growth. Really just a huge thanks to Service Scalers for being our marketing partner in that a ton of that growth came from both paid and organic SEO efforts. We did a ton of work on our SEO with service scalers, really strategizing and working on that about a year and a half ago, and the results have been creeping up over the past about year.

Really started to go crazy over the last few months as we're starting to see multiple six figures of revenue attributed to our website. I. And that's from their work on our SEO. On top of that, the management of paid has just been absolutely huge. Year to date, we're up 30 something percent. April alone was 55.

And uh, we're just super grateful for service scalers in that partnership. So if you wanna learn more about how they helped us, make sure you check out service scalers.com. I mean that, so that's actually one of the issues that we're having right now is we've had a [01:31:00] slew recently of cancellations or reschedules, and I said, you know, we're trying to lock down the process on how.

Jack Carr: To do the flip in the easiest way possible to customers because here's what happens if in, in that flip process Yeah. Is you open yourself up and your team up to friction. Yep. Which then opens you up to losing the sale. Yep. So it gives the customer time. To hire or call or Yep. Look around. It gives the customer time to do this.

Time to cancel. Told that, cancel. Yep. They could talk to their cousin who says, Hey, no, you could buy a unit for $1,500 and I'll come install it. Yeah. You know, there's about 17,000 ways that they, you could lose a customer at that transactional point or the, the junction point right there. So, I mean, I like it.

My thing is just like, how do you get, how do you get the text to that level? Um. Because our, it's a lot of training. Well, I think the thing is it one, it's a lot of training, but two, yeah. There are a lot of techs out there. Like over the years we've had plenty of techs cross a [01:32:00] million dollars of equipment sold.

John Wilson: Mm-hmm. Now they do need a lot of help with like, here's how to offer options. Here's how you, like, you do have to work through that a lot, but like you can have seven figure selling techs, like we just hired two. Yeah. And like one of 'em does a couple million bucks a year. Um. I mean, uh, as a company that started out in that direction.

Jack Carr: Mm-hmm. One of the guys that left that first week that when I started my business, he wasn't a a million dollar, but he was $750,000 in a. Small company and a two person, two three truck company. So like I know it's definitely possible and we've tried to buy other companies that are two guys and those two guys are techs owners, everything.

Yeah. Their wife on phones, half, 2 million each. Yeah. Yeah. And they're, they're doing about a million each. 'cause it was a 2 million top line company and then sub out the install. Yeah. So like, it's definitely possible to find those guys. The hard part is just, in my opinion, it's finding those guys and having a recruiting process and then a systems process to be able to make it.

So you gotta be able to train it. Hmm. Yeah. Yeah. It gets, I, [01:33:00] and I, I think it just comes later. I think it, it comes at the point where, uh, hey, the team is big. Now it's at scale and we need to be able to this. It's no longer one or two comfort advisors. Mm-hmm. Like, how do you run 17 comfort advisors? Yeah.

John Wilson: Like, that's the question. How do you run 17? Or how do you run eight? You know, not like onesie, twosie. Uh, but the companies that we're drawing inspiration from for this process are literally running 20 comfort advisors. Like that's it. And all they're doing is marketed leads all day long. Um, and, and in order to get really good at it, you, you just need to be doing marketed leads.

Jack Carr: Generalist is specialists. The specialist is a hundred percent specialize in at comfort. Yep. Our, uh, marketing leads. Yeah. Hmm. I, I don't like this conversation, John. It feels like a lot of lift that I just don't want to think about for a long time. Well, I don't think you have to worry about it. I don't think you have to worry about it, and it's kind of messy.

John Wilson: Yeah. Like it was really messy. Like we, you know, we had some, we had [01:34:00] obviously some turnover in the process, but, um, like long term it's right decision. Like, it, it's, it's the businesses that are, um, like the businesses that are twice our size, this is the process. So, and we wanna be twice our size, so, okay.

That's what we're gonna do. That's sweet. That's sweet. And it's cool that they're in the industry, allows you to see that like they're, they're really open to the conversations. Yeah. Even though Right. Peter Man's potentially moving into your market like we compete. Yeah. Yeah. So like, it, it, it's so interesting how this, this industry is so friendly and so nice across strategy and model.

Jack Carr: Um, too cool. And, um. Where, how do we even get started on that? Just like new thing you were doing? Uh, no, I, well, uh, well we just, we're in the process of dividing our HVAC team and we just brought on a sales manager on, so we're really excited about that. We've, we've never had a sales manager before. [01:35:00] Uh, so we have a few teams right now actually that it, it's, it's, it's cool.

John Wilson: It's like different. It's a new thing. So each of these teams are getting big enough. That we have to actually split them in half. Yeah. And we have three teams all doing this right now. Uh, like okay, what do you do once you have 12 sales? Plumbers? Well, probably four sales plumbers ago we should have hired a second manager and then had two teams of eight and get gotten up to 16.

Uh, same thing with hvac. Like we were having our service and sales managed by the same guy. It's a lot of people, 17 people. Right? Like, whatcha are you gonna do with that? Mm-hmm. So we're dividing those off. Um. And then I think we will divide HVAC service again pretty soon into like some version of six and six.

The problem is like, obviously HVAC service, like doesn't produce revenue really, so it's hard to like sup, you know, it's hard to give overhead 'cause like HVAC service doesn't really support itself, you know, and un unfortunately, that's just, we've tried [01:36:00] over the years to like, get more out of it. But, um, it, it just doesn't, HVAC causing problems like usual.

Jack Carr: It's sexy, but then causes a bunch of issues. Yeah. I mean, I, I think it feeds install, like it just, it feeds install. Like that's what it does. We talked about the business, wish it didn't, but that's what it does is install the business. Is install, like the business is, you know, like, uh, most companies try to run an 80 20 of, like 80% of your eight revenue in HVAC should be installed in 20% service.

John Wilson: Mm-hmm. We're typically like an 85, 85, 15. Frankly we're comfortable with that and I actually, I wouldn't even mind getting up into the nineties because now that we know how to get leads and we understand our math, we can just go buy more leads. Like I don't need to go through this whole, like, let's get a tech out there, let's diagnose it.

No, I'm like, let's get up to 10 cas and run some freaking leads. Like let's scale a sales team. Yeah, that's that. That gives me a lot of energy. Yeah. I mean, you see it in other industries, right? [01:37:00] Like, um, water filter only companies. Yep. They're just only running, they're just only running, uh, comfort advisors roof or roofing bathrooms.

Jack Carr: Yep. Exteriors like, yeah. HVAC is the only one that has like a feeder system. Mm-hmm. And I think the smaller you are, the more you're like, oh, I have to do that. But like, Logan has a three location, $70 million HVAC business. They have 17 comfort advisors and they're just running comfort advisors, and I think that's freaking great.

Yeah. It leads to the, the, the company at once you start getting to a scale becomes less of a HVAC company, it becomes more of a marketing company that drives to hvac. We're, we're a marketing and sales company a hundred percent. Yeah. Which is super interesting because, uh, it always feels like when you, we talk about like the 90 10, 'cause we, I think we're somewhere like 70, low seventies, like 71, 72.

Oh yeah, yeah. Rich is there too. Yeah. And it's, he's like 60 or something. It's difficult because my, the worry on the back end right is like at 90% the amount of [01:38:00] marketing leads you have to drive and close is crazy just because you can't sustain like a 90 after if you know your math off customer base.

And that was my argument earlier. If you know your math and you're a marketing and sales driven business and like you understand the funnel, then it's not intimidating. Like that's just like what it is. And, and I think what gives me a lot of like relief around this is roofing is a hundred percent, exteriors is a hundred percent.

John Wilson: Like it's, that is just how those businesses work. And our industry is just like, we have this crutch of having service. No other industry with a $10,000 average ticket has this type of thing. Like none of 'em, and they all do just totally fine. Yeah. Uh, so I, I think, yeah, I, I think the industry is wrong, which is fine with me.

'cause that means like, I think I'm right and 'cause every other business in the world is just like C to LTV, like boom. Uh, and, and they're big. You just want to own a roofing company. John, just say it already. Yeah. I do [01:39:00] just buy a roofing company. I honestly do Well, Chad owns one. Chris owns one. Yeah. I'm like, is it my time?

Jack Carr: You know? You just wanna own a roofing company, get real. I, I think it would be fun to just be marketing and sales driven, which like, that's what plumbing and electric are for us, is plumbing and electric are, they're a hundred percent sales. Uh, sales inta like marketing sales at this point, like HVAC is 85, 15.

John Wilson: Like plumbing is like 99 sale, 1% service. Like it's. Yeah. Same with electric. Uh, well, I mean, I think it comes down to it, there's no mechanical function to plumbing or HVAC for the most part. I mean, yeah, there's pumps and stuff that you have to maintain, but not really. They're like, the pumps in, in plumbing are built as 10 year no maintenance plums type things.

Jack Carr: Yeah. And so I, you know, I view HVAC more as like the auto mechanic industry to some extent in the sense that, yeah, like it is a piece of functioning machine that needs to be maintained regularly. Yeah. Or it breaks down. You gotta do your oil changes. So, [01:40:00] yeah. Really interesting though. Well, we, we have the same thing with generators.

John Wilson: Yeah. So like we are thinking about joining like a, the generator Generac program and if we did, we could, we could access all of the service leads, but like mm-hmm. It's like, why do I want them? Yeah. Like why do I want them? It's like, okay, I can go out and get 500 bucks. Uh, and I could do that a lot and then have to optimize routes and like all this annoying stuff that would never amount to that much money or.

I could just go get leads. Yeah. And sell generators. So, yeah, I feel like, um, so if I'm taking away anything from this episode, it's, you know, everything that we worry about in the HVAC industry, just don't worry about it anymore. Stop worrying about service and just go install units. Market install. Market install.

Jack Carr: Yeah. Just figure that out in you're golden. Don't even worry about the rest. Marketing and sales. We are, we're a marketing and sales, yeah. Consumer brand. [01:41:00] I mean, I wouldn't disagree with that idea though, in general. 'cause I think Lyle, um, I forget what company they have. They ended up, that's top line. Is that top line systemized leads?

Yeah. Yes. Yeah, that's top line. Line. So yeah. I'm sorry. I mean, they're literally doing it. They're literally doing it. I mean, I will say though, like he. It cracked the marketing formula at just the right place in the right time to get on like TikTok when nobody else was on TikTok. And it was super juicy to be able to do that.

Um, but it's still working. It's not like they stopped, definitely stopped growing. So it's still working. No, it's, it definitely works. I'm not, I'm not discounting that at all. We used it for a year and a half and, uh, we, we potentially would go back to it, but it's, you know, as a service, um, it's very expensive compared to what you can do yourself.

Um. Yeah, I haven't even looked at using them as a service, uh, to be honest. But I do think, um, like they understand the number, they definitely understand the number. Um, and they understand like the, the speed delete process and all we're ing this just like C to [01:42:00] LTV, basic math to grow your business. John and Jack arguing episode, everyone's like, oh gosh, there's trouble in paradise.

No wonder why we haven't seen them together in the last three. It's three weeks. It's tough. We're arguing about cac. Yeah. Don't put that in there. No, no, no. That's the title. Oh, fun stuff. We'll wrap it up. Yeah. Uh, let's do it. Thanks for tuning in. If you like what you heard, make sure you check out owned and operated.com.

John Wilson: Sign up for the newsletter. We're officially in the 40 thousands, uh, so we're super pumped about that. And, uh, we're aiming for a hundred, so that'd be fun. Sign up, make sure you like and subscribe.