Tracey Donels - Untapped Roofing Revenue - PODCAST TRANSCRIPT

Editor's note: The following is the transcript of a live interview with Tracey Donels of Service First Solutions. You can read the interview below or listen to the podcast.

Intro: Welcome to Roofing Road Trips, the podcast that takes you on a thrilling journey across the world of roofing. From fascinating interviews with roofing experts to on-the-Road adventures, we'll uncover the stories, innovations and challenges that shape the rooftops over our heads. So fasten your seatbelts and join us as we embark on this exciting roofing road trip.

Karen Edwards: Hello and welcome to another episode of Roofing Road Trips from RoofersCoffeeShop. My name's Karen Edwards, and today on this episode, we are going to be diving into the world of service. And I am excited to welcome Tracey Donels of Service First Solutions. Tracey, welcome.

Tracey Donels: Thank you very much for having me, Karen. I'm excited to be here.

Karen Edwards: Yeah, this is going to be a great conversation. It's one of those topics that everybody is, it's kind of an enigma like, oh, I could make money through service. I don't know how. And we're going to answer all these questions today during this episode. But before we get that deep, let's learn a little bit about you, Tracey. Give us the intro and your background and how you got where you are today.

Tracey Donels: Oh, okay. So Tracey Donels, I live in the suburbs of Dallas. I've been in commercial roofing for 18, 19 years or so. Spent most of my time introductory with a contractor out of Dallas, KPost Company for about 15 years where I tell people I'm one of the dummies. I started in the service department day one and nearly after 20 years I haven't left, so I must be hurting for something. But I worked in their service department and worked my way up through a track. And we were able to grow that department under my leadership from 800,000 to about eight and a half million dollars in revenue per year. The last three and a half years, we started Service First Solutions. And now what we do is we go around the country and help people recognize those same benefits from having well operated service departments and be able to reap all those benefits. And we help people through coaching, training and consulting to start and grow their service departments.

Karen Edwards: Wow. First of all, that's impressive. I'm going to restate those numbers, $800,000 to eight and a half million dollars. That just shows you the potential that's out there through service and maintenance. And the fact that you now are taking that knowledge that you have and giving that back to the industry, I think that's really fantastic. Tracey, thank you.

Tracey Donels: Oh, thank you very much. As you know, it's something that I really enjoy. I have a passion for it. And when I see so many roofers struggle with it, it's something that I really wanted to get involved in. And when I left my last contracting firm, I really wanted to stay in service. And I was worried that if I started my own shop or if I opened up another location for somebody, that I would quickly be promoted for good reason probably out of the service department because the risk lies elsewhere in a contracting business. So the leadership often that is strained in a roofing company often has to follow the risk. And in service there's not a whole lot of risk. There is a lot of profit, there's a lot of margins, there's a lot of opportunity but there's not a whole lot of risk. And so that's really why I wanted to start a company that focused on helping people grow their service departments.

Karen Edwards: Wow, that's fantastic. And we've been saying there's margins and there's opportunity and not a lot of risk. It's almost like why wouldn't you start a service department? Let's talk a little bit about those numbers. What do the margins look like for roofing service and maintenance compared to the re-roofing side of a new construction?

Tracey Donels: So most commercial contractors, even roofing contractors with what I would call a dedicated service department, are seeing margin in the 50% gross margins on the work. And that's far and above the standard, what might be even a 30% return on re-roofs or maybe even a 10 or 15% return on your new construction. So there's tons of margin in service, but there's so many more benefits to it. But you're right, the margins are there. But well easily over 50%, but I definitely know of contractors that are making 70% routinely on their service work.

Karen Edwards: Why is that?

Tracey Donels: It's because they have dedicated processes. It kind of goes to why a lot of contractors don't want to do service. Service is complicated. They don't have the processes set up. They don't have the people that are dedicated to do the work. I often talk about service, and I use the analogy of a food truck versus a Chick-fil-A drive-through. Everybody has to have a service department. Most people are running their service departments like their food trucks. They have a couple of guys in back, they know how to do lots of different stuff. They can bid work, they can get the work done, they can invoice it, they can talk to customers. But they can't handle a rush, they can't handle more. To do more of that work, I got to find more guys that know everything and want to work in the service department, that's a key here. And that want to work in the service department because unfortunately, service is often labeled as a red-headed stepchild.

But they're running these departments like their food trucks when they really should be running them like their Chick-fil-A drive-throughs, where everybody has the responsibility. I'm dedicated to service. I'm not doing more than one thing. I'm not working in two different departments. So because they don't have these processes, they don't have these standard operating procedures, they don't have the people to carry out these procedures in a timely manner, service is often thought of as everything's a fire drill because we don't have that kind of institution in place. But the companies that do, service is the easiest work they do. Let's go back to that Chick-fil-A and food truck analogy. If six people walk up to a food truck at the same time, that sixth person's going to be waiting for a while. If six full cars pull up to Chick-fil-A, that's just another Tuesday at three o'clock. That's what they're built to handle.

They're built to handle the customer's emergencies, the customer's hungry, quickly with good customer service and a good product. And with that the customer doesn't care about price. If we handle our customer's emergencies, their roof leaks, quickly with good customer service and a good quality product, good repair, they're going to keep coming back and they're not going to care about the price. And that is the enigma that often people don't think they can get into service because they don't see all the processes they have.

Karen Edwards: So how do you implement, how do you get those processes? How do you put them in place? Because that in itself can be kind of daunting.

Tracey Donels: It can because there can be so many steps to stuff. And that's why I think so many roofers rely on to, well, I'm going to hire somebody who's already a roofer because I don't want to retrain them. And training becomes such a daunting task. But if we look at the services that any particular service department, whether it's a brand new service department or existing service department offer, we don't do that many things in a service department. We make lots of different repairs, but we're not producing that many real services out of the service department. So we need to figure out what the processes are. So for instance, if we have a leak call that comes in, we have to figure out who takes the call, how do they document it into our CRM system or our recorder system? Who schedules it? Who reviews the information that comes back from the field?

Who sends out the invoice? What kind of follow-up is there? So on and so forth, just like a Chick-fil-A might. When you go to Chick-fil-A, you can go through the drive-through, you can order on the app and pull into a parking spot or you can do catering or you can go in. There's not that many options. And if we figure out our steps and figure out, okay, what is each step in the process and who's responsible for each step, then it's a lot easier to complete those steps. It's a lot easier to train those steps, and it is most importantly easier to hold accountable those steps. If you never officially train someone, it's really hard to hold them accountable on said training.

Karen Edwards: Yeah, training's so important. But before I ask the next question, I just have to ask you is Chick-fil-A your favorite fast food restaurant?

Tracey Donels: They're definitely not my favorite, but they do have service down because if you think about it, they have the highest prices, they have the longest lines. They close one day a week and the customers say, "Okay, no problem. We'll catch you tomorrow." And if you went into a Chick-fil-A here, it comes back to the service departments and the processes and the capacity of the people you have running your service department. If you walked into a Chick-fil-A and then walked into a Wendy's, there'd be twice as many people working at the Chick-fil-A. And they're making probably three times as much money as the Wendy's, because they have the people to carry out the processes to enact their services or sell their services. And nobody gets rid of a service provider that they like and does good work.

Karen Edwards: Right. So let's talk about how that strong service and maintenance department helps contribute to top line revenue and profitability. What does that look like?

Tracey Donels: So we already spoke a little bit about the margins that service can bring in. Now, obviously the units are smaller because we're doing smaller leaks and stuff like that. But if a quote unquote, 'service truck', a two man truck can bring in, let's say half a million dollars in revenue a year at 50 or 60 or maybe even 70% gross margins, that's nothing to bat an eye at. So it's some really important numbers just on the service work itself, but there's so much more that comes from just the raw service work. And what I mean is the long-standing relationships. So as I spoke before, I was with my last contracting firm for about 15 years. The last two years I was there, about half of our project revenue came from service clients.

So those are big dollar jobs. And now all of a sudden, 50% of our big work comes from clients that know us and have had a relationship with us for several years. So that work is now easier to bid because we have all the information, we have a history, we've been on the roof for a long time. Easier to sell because we have a relationship. They've already trusted us for several years. Easier to manage because they like us because the superintendent show up. And they like us just because of the name on our shirt and they pay us on time. Now isn't that a kicker in today's work?

Karen Edwards: Yeah, getting paid, that's important.

Tracey Donels: So at the time, we were doing I think around 60 or 70 million in project work a year. So that's a huge portion of that that is now not only better work for us to be doing and more profitable work, but it's easier work for us to do within our shops. So not only can we bring in revenue and margins and repeat customers with a good service department, I think a good service department can lower the stress level of an entire roofing company just by changing who our client base is.

Karen Edwards: Yeah, good points. So you talked a little bit high level on some numbers, two guys in a truck or two technicians in a truck and how much they could do. What does that look like? If I'm a contractor and maybe I do have that small service department, maybe I am using that food truck model, what should I be looking at in terms of cost versus invoicing and profitability? How do I look at that to say, you know what, this really isn't working for me and I need to make a change?

Tracey Donels: Okay. So if you don't feel you're getting the margins you should, I would look at two things. A, how are we pricing it and B, how are we actually completing it? And that's often what falls down in the service side. We're pricing it good, we're putting good numbers on it and stuff like that. But because we don't have those back end resources, those back end processes, the job kind of falls apart and it gets done a different way and not for the right margins. But if we're not getting those margins that we expect based on our bid work or based on just what we think we should be getting, again, because 50% that's expected across the service departments all across the country. Now, there are obviously service departments making less than that and might even be okay with less than that based on cost of labor and stuff like that. But for the majority, 50% is a really good number to start with or at least to aim for.

But if we're not making those numbers, we have to go back just like we would on a big job. If a big job goes south, we need to do some investigation and figure out what went wrong. Often people refer to them as post-cons or post-mortem, stuff like that. That's no different in the service department. We have to keep track of everything in the service department because even more so than big jobs, the numbers hold true in service. So what I mean by that is it's much more analytical. You're going to have so many more units that we can tell a lot more from the averages and the statistical means and stuff like, to be able to project where we should be. But like I said, 50% is a pretty good baseline to start with. And if you're looking at how much can I get per truck, let's say in my market, we got to go back to those services that we provide.

Remember, we're doing leak calls, we're doing inspection work, preventive maintenance work and let's say pending improvement work. For the most part, that leak repair work should be the least profitable work you do in service. So if all you're doing is leak repair work, you're probably on the lower end of that per truck average.

But if you're doing more bid work, more preventive maintenance work, maybe you have more recurring preventive maintenance programs for your customers and stuff like that, you're getting a higher gross margin on that work and you're going to drive that revenue per truck number well.

Karen Edwards: To have that maintenance program in place with your customers that you go out on a regular basis and it's just you're doing normal inspections, maybe a little bit of cleaning, maybe checking the gutters, that kind of stuff. That's one of the more profitable areas to focus on.

Tracey Donels: It for sure is. And especially right now in the industry, it is an extremely hot topic. Not only with roofers but with all service providers, HVAC guys, lightning people, elevator people. Obviously those have to be inspected but also with property managers, because property managers are getting smarter. They're realizing that if they do preventive maintenance work, it's going to save them money in the long run. But yes, I believe every roofer should have a standard preventive maintenance program that they offer and hopefully it's recurring. There are a lot of people out there trying to sell two or three year or even five-year plans. I like just making them auto-renewing and you can cancel them any time. I think it makes it easier for the customer, and you'll hear that spoken a lot from me, make it easier for the customer. If you make it easier for the customer to buy, they're going to likely spend more money with you.

So I like a good preventive maintenance program like you said, that means we come out every so often. That could be different things depending on what that building is. Most buildings are fine with once a year. A lot of people like twice a year. There are some buildings that even may require four times a year visits out there, depending on the age, the size, the makeup and maybe what the building is used for. But I definitely think you should have a standard program that you not only offer for existing buildings, but I think you should include them on your new installs. And I say include them and this is one that gets me in trouble a lot with roofing contractors. So I mean include them at no additional charge. Now, that doesn't mean we're not going to have those monies buried in the price of a project somewhere to cover the program. But we're only going to offer the program for two years because two years is exactly how usually long our warranty is, and it coincides with everything and it works out really well.

So I like providing a preventive maintenance program with the new roofs for two years to get them on the train and then switch them to a paid program once the warranty changes.

Karen Edwards: Yeah, that's a really good idea. When you say warranty, you mean like a workmanship warranty?

Tracey Donels: Correct. Most of your workmanship warranties for your roofing contractor is going to be two years. So it's very easy to include enough time in that job to go back and provide this preventive maintenance program for two years, because remember the roof's brand new. We should be able to go out once a year, clean it up, make a few minor minor repairs if that and get off the roof. And we send them a nice report, we say, "Hey, your roof's doing great. It's still under warranty. Everything's going great." After the second time we deliver it in person because that workmanship warranty, that two-year warrant is expiring. And this is a great time to communicate with your customer anyway, just on the changes of the warranties. "Hey Mr. customer, you're going from our contractor warranty now to the manufacturer's warranty. And now here's what's different because there's going to be less stuff that's going to be included in that warranty."

Communication is key, education is key in service, but at the same time you get to offer them the extension of the preventive maintenance program. We've been taking care of your roof for the last two years because it's had our super fantastic preventive maintenance program, and we can continue that program for the low, low cost of $1,500 or $3,000 or $4,000. And here's the thing, is that can be valued at several different price points because that preventive maintenance, that safety, that assurity, that peace of mind can be worth a lot depending on what's inside that building.

Karen Edwards: Sure. And overall, what the cost of the installation was. That's just a fraction of it. In some cases, don't manufacturers once that warranty is issued, they want regular inspections or you could potentially void that warranty?

Tracey Donels: They do. The warranty state, depending on who the manufacturer is is that yearly inspections are either required or recommended. And you have to keep some record of that. Now, any building owner can do that themselves. But again, you can pull out the warranty in this meeting and you can say, "Hey, this is something that needs to be done. This is a service that we offer."

We don't tell them that they can do it themselves. We just say, this is a service that we offer along with your preventive maintenance program. So your warranty stays in good working order. And you spend a lot of money on that warranty. Think about two years ago, warranties got a lot more expensive in this industry. That's probably been more than two years ago, but they got out and warranties used to be super cheap. Now they're a lot more expensive. So we want to keep that roof in good working order.

And just like all preventive maintenance, if it's worthwhile, it's saving them money. It's preventing future leaks, and it's extending the life of the roof. And that pays for itself over and over again. And that's actual true numbers that we can show the building owners to show that preventive maintenance works.

Karen Edwards: Nice. Okay. So Tracey, this has been really, really interesting. And I want to make sure that we touch on how Service First Solutions helps roofing companies maximize their profitability through an existing department or even start a service department. What does that look like for the contractor if they reach out to you?

Tracey Donels: So what we do is when a contractor reaches out to us, we set up a few meetings to really start to learn their business and what they have currently as a service department, whether like you said, that'd be an existing department or it be something brand new that they want to get into. And what we start to do is we start to either define and review, like I spoke before, is what are those services? What are the changes we need to make? And often there is a lot to do right at the beginning. There is so much to do. And that's where I think we can really, really help and we can be of benefit. A lot of times we refer to ourselves as a roadmap to grow your service department. It's not rocket science. There's very little in all of this roofing industry that is rocket science.

Most of it's pretty easy to understand, hard to do, hard to carry out, hard to be great at customer service, but it's easy to understand how we can be great at customer service. So a lot of this is coaching more than training the consultant, it's being that roadmap. You know you want to grow your service department, you know where you are and where you want to get to. And what you need is kind of someone to show you the way, maybe help you avoid some dead ends, maybe show you a few shortcuts along the way. Shortcuts are always good. And one of the most important things I think we offer our customers is when you get stalled out, when you get busy, you get behind and you need someone to come in and say, "Hey, remember why you want to do this? Remember all the great benefits of what we're doing."

And that's where the coaching really, really comes in. And I think that's one of the reasons that I know that I'm in the right industry because I feel it. I have the passion for it. So I like to come in and be, "Hey, don't forget about this. We need to do this." And so we'll do it through weekly calls. We have some customers that we meet with several times throughout the week, depending on who we're talking to in their department, what kind of to-dos maybe on our list, what we need to check off our to-do list, what kind of goals we have, so on and so forth. Because there's going to be a lot of them and we can only do one thing at a time. But if we do them in the right order, it's going to be way more beneficial. And again, that's where I think our experience can help out because we have all of that time committed to growing service departments.

Karen Edwards: Yeah, it's fantastic that you've been there, you've done it, you've experienced it, you know what the shortcuts are and potential pitfalls. So having that partner and a person to reach out and call, I'm sure is invaluable for contractors. So Tracey, how does one contact you?

Tracey Donels: So the easiest way to contact me is really easy, my email is tracey@growroofservice.com. Very easy to remember our website because it's exactly what we do, we grow roof service. Also, you can look at our website which is at growroofservice.com. And of course all over social media, I tend to do a little bit more than I should. And our CAT being this week, I'm sure there'll be some more videos coming out with the team and stuff like that. But definitely go to the website, you can reach out to us. The phone number is on the website. I don't know what it is offhand because it is on the website. I always give out my cell phone number, but tracey@growroofservice.com or info@growroofservice.com. We want to help the industry grow their service department because again, we'd much rather be competing against contractors on the up and up than competing with Joe Schmo in a truck.

Karen Edwards: Yeah. And that's Tracey with an E-Y on the end.

Tracey Donels: Correct. I always forget about that, yes.

Karen Edwards: Yeah. And if you didn't catch all of that, you can just come on over to rooferscoffeeshop.com because Service First Solutions has a full directory with their website, with phone number and a little bit of information about what they do. Tracey, thank you so much for being here and for sharing with us today and our listeners. It was a pleasure to have you.

Tracey Donels: Thank you so much, Karen. And I look forward to seeing you next time on the trail.

Karen Edwards: Oh, yeah. And thank you everybody out there for listening. It has been fabulous to have you here. Please follow us on social media, turn on those notifications so that you don't miss a future episode of Roofing Road Trips. And we'll see you next time.

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