How to Not Visit a Customer’s Home Until You Have the Down Payment in Hand

By Mike Davis, East Fork Roofing.

This roofing company in Reno, Nevada made the switch to this model three years ago with much success.

Editor’s note: The following is a guest blog from RT3 member and owner of East Fork Roofing, Mike Davis. It’s a deep dive and a how-to article to help contractors shift to price-first quoting, reduce their estimating time and understand what tools are required to make the shift.   

In Reno, Nevada, with a metro area population of 500,000 people, the grocery store shelves are empty. Is it the coronavirus that caused this? Or the fact that the stores’ supply chain is over the Sierra Mountains and it snowed 4 feet? Or both?

When asked by a colleague in the industry about what East Fork Roofing is doing to adjust to these unique times, the owner of East Fork Roofing, Mike Davis said they are doing very little differently. When asked why, he responded that since 2017, the company has been using a highly automated, fully satellite approach to their residential roof replacement business. His business rarely interacts with customers in-person and doesn’t visit a single home until down payment is received from the customer. Interested, the colleague inquired further how this is done.

Before Mike explained, he made sure to clarify his favorite part of this process: his company’s estimating costs have been reduced by more than 50%, which has allowed them to use the money they would have spent on estimating for advertising and recruiting - key components to strong growth.

Price-first quoting

He explained the key to make a satellite-based process work is a process called scenario-based quoting or price-first quoting.

Price-first quoting has its roots in the real estate and insurance industries. In real estate, the buyer agrees to a price after a very cursory visit to the property or with no visit at all. Only once a price and terms are agreed to, does any deep investigation begin. The reason this process is used in real estate is to reduce the cost of the process and increase the speed of the transaction. It makes sense when working with commission-only real estate agents that all the fluff be removed from the process.

Often in roofing, we do things that feel good but may be unnecessary: we spend time, money, and effort getting detail before negotiating price. We do this because it is expected by our customers, but expectations for how a business interacts with their customers is shifting, especially now.  When Mike joined East Fork Roofing and started estimating roofs in 2011, the process was: receive a phone call, schedule an appointment, visit the property to measure and assess risks, build the proposal, sell the job, then move on to the next. The work is front-loaded and inefficient, taking a significant amount of time driving from one location to another.  With price-first quoting, you move much of this time and effort to the back side of the sale. With a close ratio of 25-30%, this makes a huge difference in the cost of estimating. The new process is: receive a phone call, get measurements and risk data from satellite imaging, build the proposal, sell the job, collect down payment, investigate the job, adjust pricing as necessary, execute.

Scenarios

This new process introduces some new risks however: knowing how many layers there are, or if sheathing is needed. What about other risks that cause budget overruns? All these are what East Fork Roofing calls scenarios. The idea is simple. Give the customer a base price and explain that the final price is contingent on inspection and give them any scenarios you believe may apply. For example, a 25 square roof is $8,750 for one layer, $1,000 for each additional layer, $2,500 for sheathing. Done. This is something you can implement easily now. Just build these scenario lines with a price per square into your proposals as options. The goal is to build a list of scenarios for the customer to compare against the roofer who gives a flat price and identifies the scenarios that apply. When the customer selects your quote, bill and collect down payment and then send an inspector.

What other scenarios could be included? East Fork Roofing determines scenarios by doing root cause analysis and creating risk categories. When a job goes over budget, by determining how it went over budget and aligning that with a scenario, they can increase their price for that scenario instead of increasing their price for all projects. This leads to getting more of the work you want and pricing the job correctly for those more difficult jobs. Some examples of scenarios are: shake tear-offs, mobile homes, old homes, geographically based scenarios like elevation requirements, steepness of the roof, and differing prices based on permits/dump fees.  If a cost exists because of an identifiable reason that is not general, it can be considered a scenario.

Advantages and disadvantages

In a marketplace where you are the first one to implement something like this, you will have an advantage because you can afford to offer a reduced price and the other roofer goes out and investigates the roof for you and your customer. It also creates an advantage for the other roofer because there is an increased “perception” of higher customer service and that they have “earned” the work. Humans are emotional, so sometimes they will pick the other roofer because they created a higher value and earned price by visiting the property. With the current market situation surrounding coronavirus, the advantage to the other roofer is questionable. East Fork Roofing’s goal is to be priced in the middle of three quotes, not the lowest.

Another advantage is that instead of sending an estimator, you can send a foreman, who is typically in regular contact with the employees. This eliminates the challenges of an estimator proposing one thing to a customer and the field employees fighting with them about it because it’s not feasible. When the foreman or crew leader goes out, they do a very detailed inspection: outlining the dumpster approach, safety issues, applicable scenarios and identifying change requests. The foreman prepares a report complete with pictures. After review of the report by project management, a plan is made and the customer is informed via phone of all the findings.

This step drastically increases the value of the process because it is now affordable to do a detailed planning inspection. An estimator in a typical process can’t be this thorough because it would limit their volume of visits. In the old model, if you add this planning inspection step, you are adding to your unit cost. In this model, you combine the two inspections into one. East Fork Roofing has found that customers love this step because it is a chance for a deeper alignment of their expectations with company expectations and there is limited pressure to proceed if the conversation doesn’t go well. It’s truly win-win. Either party can leave the transaction at this point and a refund can be issued.

If you are going to require down payment before you visit the property, it is East Fork Roofing’s experience that you have to be willing and honorable in returning down payments if a customer does not like any change that you propose after the planning inspection. East Fork Roofing is still old fashion in its contract agreements. Although they have the capability to collect signatures electronically, they require no signatures on projects. If any customer wants to cancel a project, and very little money has been spent, East Fork Roofing will let the customer out of the contract and issue a full refund. Making this very clear on your proposals and having a good reputation is key to creating a safe environment for a customer to send a check in the thousands of dollars to someone they have never met in person. Google "East Fork Roofing Reno" to see their reviews.

Now that you have a basic grasp about how to reduce risks through scenario-based quoting, there are a few more tricks that need to be figured out as you go along. It took East Fork Roofing about six to nine months to work out the details in order to see a full return to previous close ratio. Each pivot will be different for each company but knowing the general idea of scenario-based pricing is the biggest step.

Technology and RT3

From here we will highlight the technology aspect. As a member of RT3, the Roofing Technology Think Tank, East Fork Roofing is driven to streamline the roofing process with forward-thinking technology use.

Due to complexities like steepness difficulty, which can change prices to sheathing, removal of roof, install of roof and additional layers, East Fork Roofing had a hard time streamlining the process of adding scenarios through standard, out-of-the-box software like AccuLynx or JobNimbus, etc.  Manually adjusting line item pricing due to scenario(s) on every proposal leaves room for human error and adds time to the process. Because of this, East Fork Roofing designed their own quoting system on an open-API platform that allows them to change the data with programming and to get data in and out, which most cloud software programs have. 

The platform is a Citrix product called podio.com in combination with globiflow.com. Podio.com is a collaboration software, similar in purpose to Slack, but also has database features. The idea is that through Podio, any company can create items like a proposal in a central location, talk about it with their team via web browser or phone app and use globiflow.com to create highly advanced workflows that work with the data. 

Workflows are key because they allow automation to happen. For example, one of the simplest flows East Fork Roofing has implemented is an automated phone call checking to make sure the customer received their proposal one day after the estimator marks the proposal sent. The system also sends an email at four days, and notifies the salesperson with a task to phone the customer at seven days.  Another feature in globiflow.com is their external link feature. When the email is sent with the proposal and four days later, it has a link that the customer can click to view a webpage with the available dates. East Fork Roofing uses this external link capability to offer a scheduling discount program, which displays three dates: a high priority date with a premium of typically 5-10% of the project price approximately two weeks out, a standard date three to six weeks out for no additional cost, and a discounted date six to12 weeks out with a discount of typically 4-6%. When a date is selected and confirmed, either through this webpage, or by the customer or sales associate if the customer calls in, a down payment invoice is sent via email to the customer automatically with no additional work for a billing administrator. Since Podio has an open-API, the invoice is also pushed to QuickBooks Online with no additional human effort.

This collaboration platform and workflow management allows East Fork Roofing to simplify the process of building and tracking scenarios and creating quotes. It is now as simple as three forms/items in Podio: one about the customer captured by a call taker, one about measurements captured through Roofsnap.com by an estimator, and one about risk data/scenarios created by an estimator. Once this data is entered, the workflows build the proposal. Currently they have a data entry person entering all the data, and a junior estimator double checking the proposal; this means the project manager/estimator is now only used to approve complicated proposals over a set dollar limit.  

East Fork Roofing has built the workflow out for every step of the project: billing, planning inspection, permitting, daily job reporting with photos, scheduling, dumpster management, employee pay entries and timesheets, quality inspections and vendor warranty registration. Throughout the process, the workflows are sending emails with pictures to help customers stay informed without having to call the office for information. The workflows take the customer from initial phone call to cash.

Currently, the only channels of communication available are email and phone with limited SMS. In the works is a Twilio (SMS/Whatsapp/Facebook messenger) integration that will allow a customer to interact with East Fork Roofing throughout the project via any of those channels. Some additional channels East Fork Roofing is looking to add is voice (Alexa, Siri, Google assistant), with plans to implement these into their process over the next few years. Think how innovative it will be when a customer says to their phone or TV, "What is the status of my roofing project?" and it will respond back to you not only with an audio update, but with pictures.

In summary, East Fork Roofing has not changed much with the recent changes due to COVID-19 because they were already a virtual company. However, they are focused on the next technological breakthrough. Now that you have a better idea of one method of implementing roof replacement proposals with reduced risks and of some future ideas, what changes will you implement? What can you do to improve in this regard? East Fork Roofing suggests to request things like this from your existing platforms, subscribing to RT3 Smart Brief, and reading up on technology here at Rooferscoffeeshop.com. 

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