Hello, and welcome to the Service Contractor’s Business Tape of the Month. This monthly cassette CD series represents yet another step in accomplishing Grandy and Associates’ vision of helping the service contractor come to a place of maturity and profitability. Each month, a different national speaker from throughout the service and trades industry shares dozens of cost-reducing, profit-increasing ideas to help you become a more profitable company.
There are two kinds of people. There are those that have hopes and dreams, and that’s it. The other group also has hopes and dreams, but they make plans and they accomplish their objectives.
This month’s presentation is a real treat. Roger Pujo is a mover and a shaker, while being one of the nicest fellows you’ll ever run into. Many years ago, Roger made a decision.
After years of frustration, like most contractors experience, he made a decision to be profitable. He made a decision to completely reorganize his company in order to create an environment that would be a blessing for his employees, supplier, his customers, and himself. Unlike many of us, Roger didn’t just dream.
He accomplished his dream and has become unquestionably the top plumbing company in Overland Park, a suburb of Kansas City, and perhaps the nation. Roger has been successful in business and life. In 2001, Roger Pujo, whose company is called Roger the Plumber, was named the Delta Faucet PHCC Plumbing Contractor of the Year out of 88,000 eligible competitors.
How did Roger accomplish this? Well, he offers same-day service 24 hours a day, 7 days a week, while maintaining 100% customer satisfaction since 1995. He carries over 10,000 parts, tools, and supplies on 15 of his Big Red Roger the Plumber trucks. There are a lot more reasons also, which will be shared as part of this presentation.
Roger also cherishes receiving the coveted Colonel George D. Scott Award for the National Plumbing, Heating, and Cooling Contractors Association, where he serves on the board and is a founding member of the Quality Service Contractor, a specialty group within the National Association. He has served on advisory boards to Insinkerator, Delta Faucet, Kohler, and A.O. Smith. He currently serves on the Board of Directors and the Executive Committee of Federated Insurance, the only blue-collar worker to do so.
Yes, Roger is very successful, but it all started with a dream, followed by a lot of hard work. The only really unique thing about Roger, versus the rest of us, is that he committed to his dream and walked it out. You can too.
I think you’ll really enjoy listening to Roger this month. Whatever you do today, don’t do what I did. By that I mean, don’t waste another four years of your life between the moment you see a new possibility for yourself and the day you finally implement it.
Don’t just window shop your life, otherwise by the time you finally try on that NARU jacket in the window, life will have passed you by. I’m going to tell you my story, in hopes that you add some velocity to your life, because I’ve noticed that some parts of my life work differently. For instance, last year I saw a beautiful black lambskin leather jacket in the window of a fine store on the world-famous country club plaza here in Kansas City where I live.
I admired that jacket. I walked into that store and I tried it on, and I walked out wearing it. Man, why didn’t I do that with my business? And why don’t you? So there I was, ever since 1971, when I started my own plumbing business and split off from my dad’s plumbing business, when people asked me what I did for a living, I answered, I’m a plumber.
But ask me today, and I’ll say, I’m a business owner. Next, when people ask what I own, I say, I operate a plumbing service firm. It’s a complete shift, and it’s the truth, because I can no longer afford to work with a plumbing wrench all day long.
I’ve got to manage the business so other guys can be the plumbers. And it’s only in managing this business that the customer really gets what they want, service, same-day service, from knowledgeable technicians at a price they can count on, from people you can trust alone in your house that I can develop and retain a workforce that can afford their families to have a decent life as well. If I hadn’t decided to be profitable and redesign my business, my family wouldn’t have the house we have, my kids wouldn’t have been able to go to college, and I’d be miserable because I would have gone broke.
I did two things. I transformed my identity, and I gave up thinking thoughts that no longer served me. Now, every morning I wake up, just as early as ever, into the identity of a business owner.
And I organize my actions to fulfill that possibility. Oh, sure, every once in a while I will drop in on a job, like I used to for Mr. K., Ewing Kaufman, the founder of Marion Laboratories and the man who brought the amazing Kansas City Royals to life. But Mr. K. didn’t take batting practice.
He managed his businesses and created great lives for the people he refused to call his workers, because in his organization, they were his associates. The second thing I did was to change the thoughts I allowed myself to dwell on. And the thoughts I had to change? Well, you’ve heard them a million times.
You’re just a plumber. You don’t deserve to make that much money. Why, it only took your guy an hour to do that job.
And how about this kicker? You’re taking advantage of an old lady. I still get those reactions, but it’s how I answer them that has changed my life and transformed my business. Another thought I changed was, flat rate pricing will solve all my problems.
I changed that to, how can I calculate and design this so what I’m charging is the right price? And another is, if I was the highest priced guy in town, either by the hour or flat rate, surely I’d lose all my customers or irritate them greatly. I changed that to making the most extraordinary promise to myself. On November 1st, 1994, of 100% customer satisfaction.
I have not hung up the phone on anyone or let them complete our call until they promise to use me again. I can honestly say I do not have even one dissatisfied customer. Just how I do that is probably a whole other tape.
So let’s get back to my story. So there I was around 1990, with not much to show for 19 years of working virtually two shifts a day, seven days a week. My wife Diane was a huge part of our success and survival, but she got ripped off.
She worked for no money for years, dispatching out of our kitchen and keeping the books on our dining room table. We’d never taken a vacation. That wasn’t just pathetic and counterproductive.
It illustrated the flaw in the design of our business plan, because the truth was, we didn’t have a plan. I was exhausted and broke trying to be a plumber, a team leader, and a customer service manager. I also happened to be a secret stacker.
I surrounded myself with stacks of trade association magazines, good ideas buried under a mountain of other good ideas. I kept thinking, I’ll get organized when the business grows. But the stack of good ideas kept growing faster than my business.
No matter how much time I spent in the library, that’s what I call the bathroom at our office, those ideas weren’t being translated into profits. One day, my best technician quit me to go install windshields at General Motors. I was devastated.
How could he? I trained him. We talked every day. Our work was meaningful.
We solved problems of needy people with water up to their ankles. Yeah, Roger, he said. I know it’ll be meaningless, boring work at GM, but here with you, I can’t support my family.
For the next few months, it began to dawn on me that he wouldn’t be the last guy to leave me. And he wasn’t. Meanwhile, Diane and I continued to enjoy dinners with a friend who owned two McDonald’s restaurants.
He made a quarter of a million dollars a year off of each of them, including one he had never set foot in. I was in awe of that. He was fixing to buy a third restaurant.
I asked him how long until it would turn a profit, and he laughed out loud. Well, that would be from day one, of course. It’s a business, not a charity.
Doesn’t everybody do it that way? As Arsenio Hall used to say, hmm, I sure didn’t want to let this guy know that my big red Roger the Plumber trucks might as well have a Red Cross logo painted on the side because we were not making a profit. I knew that in order to attract and maintain a high caliber of technician, I had to change the way I was charging and what I was charging. I’d taken all the seminars at my professional association.
They had taught me how to break even. I would need to charge well over a hundred dollars an hour. I was at seventy-eight dollars an hour and still in the red, but I still wasn’t ready to take the plunge.
I looked around other industries and the survivors were all doing flat rate pricing, except lawyers. Now, you can tell every joke you’ve ever heard about plumbers, but at least I had some pride. I knew I didn’t want to be a lawyer.
My carpet cleaner, my appliance repair company, the dentist, the muffler guy, the oil change guy, the people who fixed our copier, nobody was charging by the hour. Then in 1990, I went on what I call the big trip. For some people, reading that stack of magazines in the library will turn you around.
For others, it might be listening to this tape. Gosh, wouldn’t that be great? But for me, I had to take a field trip. I had to see it done.
So here I was living in Kansas, the land of the Wizard of Oz, but I couldn’t work up the courage I needed until I drove all over Wisconsin and Ohio. Go figure. Thanks to the wonderful generosity of our profession, other guys in my trade association let me ride with them.
I saw them charging three and four times more than what I was charging. And here was the big aha, I realized. Roger, if you’re going to do this, you need to add things the customer wants and charge for it.
Like rugs, rolling out the red carpet, uniforms, real people answering the phones and not machines, and new trucks with 10,000 parts on them, including two water heaters and three toilets. So when the customer quit procrastinating, as they always do, and finally called us and pulled out their list, we could complete all their plumbing jobs in one trip without having to go get parts. Here’s the biggest lie in the world, the lie that keeps you from doing what I did.
Are you ready? It’s the belief that people just want the lowest price. No, they don’t. They want the best service at a fair price.
If people wanted the lowest price, they’d never call in the middle of the night, and they’d never hire it to be done. They’d go to Home Depot and get no help from some $6 an hour, know nothing kid, and they’d buy marginal parts or low ball systems and read the instructions and do it themselves. Believe me, what we do is not rocket science.
People could change a washer, they just don’t want to. Quit believing that lie. Wipe it out of your vocabulary, and then you’ll be able to redesign your business model.
I saw what I needed to do was design the service to what the customer really wanted, and to deliver that, I needed to design the business so my technicians were top-notch and loyal. What the techs wanted was retirement benefits, hospitalization, and ongoing training. And they helped me figure out that what they also wanted and needed was incentive pay to keep them more motivated on Friday afternoons because if I upped their pay at the end of the week, they would take every call and quit making excuses so they could go home early.
So they would win, and we would keep our promise to the customer of same-day service. Heck, now our $1,500 a day consultant says my guys want to come back to a nicer workspace at the end of the day, so now we’re shopping real estate, and we’ll just figure that into the overhead. But I’m jumping ahead of myself.
After the big trip, I was ready to be trained. I’d been to every seminar on how to charge more, but we were already charging $78 an hour, but I was not profitable. I could not justify in my mind how to tell the customer I needed to charge over $100 an hour.
I was already battling the customer conversation, you’re the most expensive guy in town, but you’re worth it. It took me four years to finally figure this out. You don’t tell them what you charge an hour, and neither does anyone else.
Look around you, it’s true. The Jiffy Lube guy doesn’t reveal his hourly labor charge. I secretly learned that the internal hourly rate for the guy who fixes my copy machine is $390 an hour, but he doesn’t admit that or reveal that.
They just charge a flat rate. It comes down to this. Do you want your copier fixed or not? Do you want me to install this reliable battery backup sump pump in the middle of the night during this 8-inch rainstorm, or do you want to send my tech home and let the $65,000 you just spent on your glass block designer wood and stainless steel billiard and party room just sit there in 3 inches of water and rust? People want service, and that’s what I provide.
Home Depot is not my competitor. On the contrary, they’re my business generator. The more crummy parts they sell and don’t diagnose and don’t install, the better for me and my guys.
Now, I just factor into my price the time it takes to lovingly and humorously explain this to the customer. In the last 10 years, I have bought out a garage, the next thing I do is I buy a bingo truck. Now, when his wife was still dispatching from the kitchen after 22 years in business, the only decent asset he had to sell was a 1985 Bean Cherry metallic low-rider pickup truck.
Now, I drive it in parades. But this This poor guy just couldn’t change his mind. He went broke giving away his service, and now his customers can’t use him anymore because his charity business closed its doors.
So back to my story. I took the big trip in 1990. I had my eyes opened.
And then I couldn’t pull the trigger. I stewed about it for two and a half years. At one point, I contemplated getting out of the business.
I couldn’t support my family. I barely made payroll. I realized the value of what I do, but I wasn’t about to go to work for someone else.
There’s always a payoff for everything we do. For me, the payoff for procrastination was I got to be right. I just knew this flat rate pricing wouldn’t work in my town.
What’s your excuse? And don’t you love getting on your high horse, talking about it over and over until your wife and your staff are sick of hearing it? Two and a half years after the big trip, finally, my older brother Jack, the organized one out of the five of us, came to work for me. He needed a job. So even though I wasn’t making it, I hired him.
I thought I was doing him a big favor. Little did I know, he had shown up in my life to save my bacon. Jack’s greatest act as my big brother has been to get me over the wall of uncertainty that was stopping me.
Now, the truth is, Jack didn’t know Jack about flat rate. So we started talking. And that’s how I finally got my head into the future.
Ever since the great philosophers of Greece, it’s been known that if you ever have to teach someone something, then you really must know and understand it to teach it. So it’s a real gift to get to explain your life to someone who has no clue what you are doing. I invite you to be open to such a miracle appearing in your life.
Be open to explaining your life to someone who is a blank slate about it. Because if you’re open to redesigning your life, a blank slate is the perfect place to start. As I was explaining and teaching Jack about flat rate, he asked me basic questions, like what did I really want? I remember telling him the only way that I could get what I want is to change the way I do business.
So I could get the right price. I guess of all the days in my life, fully two and a half years after the big trip, I’d have to say that day talking to Jack was the day that I decided to be profitable. Jack set about organizing the warehouse into barcoded bin order.
Then he put the same system on the trucks. So every night, every tech restocked his truck back to perfection. A full complement of 10,000 parts in barcoded bins that mirrored the warehouse.
It was an obsessive compulsive dream, a triumph of the Virgo mind. And most importantly, it was our first step in putting systems theory into practice. First steps, baby steps, are the most important steps I will ever take in my life.
If I was Mark Victor Hansen or some big motivational guru, I’d make you repeat that out loud with me. First steps, baby steps, are the most important steps I will ever take in my life. Organizing the trucks was my first baby step.
While Jack was organizing the trucks, I told the techs, we’re going to go flat rate. And boy, did that drive up a lot of anxiety. A lot of talk, a lot of jaw jacking occurred out back in the parking lot behind those newly organized trucks.
It’s just to be expected, fear of the unknown. I asked the guys to bring their discussions into our new weekly staff meetings. Finally, we set a date, six months ahead, November 1st, 1994.
Most of the people listening to this tape will never do anything really important until you set a date. Think about it. How did we all end up getting married? Well it’s simple.
First, we set a date. So we set the date to go flat rate. But here’s a little secret.
We did a trial run. We practiced on water heaters. And the guys got it.
They embraced the concept. They bought into the new system. In fact, they even urged me not to wait a full six months because they started making so much more money on those water heater installations.
Instead of counting sheep at night, they dreamed of replacing water heaters one after another as quickly as possible. When we used to charge $78 an hour to install a water heater, the technicians often dragged it out. Sometimes they made the job last three hours.
Suddenly they were motivated to add velocity to their work so they could take another call. Make more profit before they went home. Look around you.
The people making money today are not trading their lives and measuring their worth in hours. It’s how efficient can you be. There’s no longer any reason to drag it out when you know how much profit you’ll be making before you ever start a job.
Part of our transformation included managing the phone. We quit having the dispatcher try to sell water heaters over the phone because then the customer tries to price shop in advance of even knowing whether or not they need a new water heater. And they’re comparing our service to a Home Depot price without service.
They won’t come look at their problem that day or any day, period. They sell the uninformed customer what they imagine they need. And then they take their sweet time doing it.
That’s not our business model. They’re selling lemons. We’re in the Apple business.
Our dispatcher’s new job became having the customer invite us to come out. The service call is waived if they need the work. When we come out, only if they need it do we sell them a water heater.
To tell you the truth, that first year when Jack said, let’s put two on every truck, I only did it to humor him. I didn’t think we’d sell any at our new higher price. I was wrong.
Sales doubled. As we built our system, I designed my future. We covered every possibility, including holiday pay and givebacks to upset customers, refunds to maintain 100% customer satisfaction.
We budgeted $30,000 that first year, but only gave away $17,000. So the manager got a bonus that year. By the way, the manager was me.
November 1st, 1994 finally came. We made the switch. We have raised our prices many times since then, based on more statistics on what each job really cost.
And I’m continually tweaking our service, looking to offer the customer what they really want. And we’re continually looking at what else we can do to serve our customers. I’ve really seen the value in training my techs in not just their trade, but in relating to the customer.
Human dynamics. I try to send the same guy back to the same house so they develop a rapport and trust. We’re one of the biggest participants in the Dale Carnegie program, as well as Landmark Education Corporation.
They put on the forum. The cost? They’re factored into our prices. As my McDonald’s buddy says, doesn’t everybody do it that way? I’m always shocked at what it really costs to run a profitable business, especially overhead and benefits.
Insurance? Got to have it. Not negotiable. Roll it into the overhead.
I like to think I bring a realistic perspective to the board and the executive committee at Federated Insurance, where I now sit as the only former blue-collar guy on the board. Oh, there were rocky days. Some of my guys quit out of fear or personal issues with charging so much.
Some came back. The ones who left because they couldn’t stand to charge more, they mostly went broke. I saw one at Home Depot recently.
And there’s probably not a day when I don’t have to explain our overhead to an inquiring customer who says, Roger, you’re the highest-priced guy in town, but you’re worth it. Besides, my old plumber went out of business. But mostly, there’s been wonderful times, including finally taking Diane on her first vacation, the first of many.
And at the end of the first year being so profitable that instead of just paying it all out to Uncle Sam, I was able to put $80,000 into a 401k plan for our techs. What a proud moment that was. And buying all new 16-foot trucks for 15 techs at $88,000 each.
Last year, my techs averaged a W-2 of $90,000 a year, plus the best benefits in the country. In closing, I wish you all had an older brother named Jack who could walk through your door today and put his arm around your shoulder and tell it like it is. For just one moment, allow me to be your big brother when I say in the kindest possible way, don’t wallow in misery.
If you’re not ready to make a transformation in your business, please get out of the way. Go to work for someone else. Don’t mess it up for the rest of us.
Design something for yourself, a plan to live into. President Kennedy’s favorite story was about the five Irish lads on a walk in the countryside. They came across a very tall rock wall and jabbered on at great length about how would they ever get over the wall.
Finally, one lad, the real leader, tossed his cap over the wall. Now we’ll find a way, he said, because I have to go get my cap. I invite you to toss your cap over the wall or else go home empty-handed.
Do it for yourself and the lads who depend on you. That’s the opportunity you have today. I’m Roger Pujo, and I’m a business owner.
How about you? As always, we welcome your feedback on each month’s tape. Feel free to give us a call with your comments, or if you prefer, you may fax or email our office. Better yet, check out Grandy & Associates on the World Wide Web.
Our totally redesigned website now has a complete listing of all the products and services Grandy & Associates has to offer. Our address is www.grandyassociates.com, and it is also printed on the tape insert. Again, our website address is www.grandyassociates.com. As a reminder, our three-day basic business boot camp continues to take the industry by storm.