In a service-based industry like roofing, profits can vary from year to year. From weather occurrences to excess material orders, a roofing company’s profits often depend heavily on the planning and execution of initiatives by owners and upper management. Identifying new opportunities to grow your roofing company often depend on new ideas, so AccuLynx has 6 easy adjustments to your business model that you might not be trying that can help you increase your roofing business profit margin next season.
6 Tips to Increase Your Roofing Business Profit Margin
1. Sell on the value of your professional expertise
One way of increasing your roofing business profit margin is to ensure that you’re not undervaluing your professional services and charge the appropriate amount for your work. Consider the level of expertise of your project managers, foremen and crews have. Do they have any specific certifications? How long have they been in the industry?
When you sell a roof to client, make sure you’re prepared to sell them not only a new roof, but the value you will provide to their home.According to research from Inc.com
Many consumers are familiar with the nature of value-based pricing…About one-third of consumers are purely hung up on price, while the other two-thirds are open to at least hearing your argument. Charge what you know your work is worth.
2. Redistribute your advertising dollars
One of the easiest ways to increase overall profits is to reduce the cost of your advertising spend. Modernizing your networking is one way you can achieve this. Nowadays, social media advertising is just as effective as traditional methods and costs you a lot less.
Social media is cheaper than any form of advertising available today. It is one of the only forms of media that can expose you to over 1,000 people for less than $3. In addition, you can incorporate traditional elements into your social media campaign. You can advertise video commercials, publish articles, host live podcasts and webinars, and much more. Social media is the only “billboard” that can communicate to your customers, answer their questions, and provide them with feedback. [source]
Social media advertising allows you to cast a much larger net and easily target audiences that have shown interest in your type of products.
Consider what audiences your advertising is targeting and how you might better improve the message you are sending out. Isolate particular audiences who have shown interest in your type of services, so as not to waste your resources on people who are not likely to buy your products.
It’s important to try and not advertise to the same groups over and over again. Expand your advertising to new demographics every once in a while to try and pick up a new pool of customers. Customers want products that benefit them, so make sure your advertising emphasizes all of the great features your service provides.
3. Negotiate with your vendors
Another way to cut down on costs is to take advantage of your vendor’s competition. For services that your company pays for, like insurance, do some investigating to find the provider with the most competitive rate and then ask your provider to match it. While this involves a little bargaining, your provider usually will likely agree to at least a reduced price in the hopes of keeping you as a customer.
4. Improve your efficiency
Another simple way to increase roofing business profit margins is to improve your company’s efficiency. The more efficient your processes are, the less time and resources you need to spend to earn the same amount of profit.
Data entry can be one of the most time-consuming tasks for both your field and office staff, and is the most susceptible to human error. Software products can help roofers streamline this process. Moving your job files from traditional paper folders to a cloud-based CRM system allows everyone access to the most recent documents, ensuring that no one is working off of outdated information.
5. Look for niche markets
Expanding your company’s offerings to fit a particular niche market is another way to increase your potential customer base. If your roofing company is the only one to provide a specific service, customers will be willing to pay more for the jobs you do.
For example, green roofing trends are becoming more popular amongst homeowners, and having employees who are certified in solar panel or skylight installation, or knowledgeable about cool roof systems can help your business attract new customers.
Another way to increasing profits through pricing is to focus on your up-selling. There are many approaches you can take to maximize your up-selling capabilities so take some time to consider not only the roof but windows, siding, gutters, and other exterior services you might be able to offer.
If you can adapt what you already provide to fit a niche market as well as a broader market, you can reap the benefits of both and profit immensely. Do some research to see if there are some specialized products similar to your own and seen what you can do to make your way into that market.
6. Provide continuous customer service
Managing your customers after a job is completed is a critical factor when it comes to recurring revenue. While new customers are important, you can also increase your profits by managing your old clients. A single job can multiply into several if you maintain your connection with the client and do quality work the first time around. Previous clients who know you, trust you, and are willing to leave positive reviews for your business are likely to entrust their new projects to your company, even if the prices are a little higher.
The last step to managing your customers is to find out why some of them did not come back for more projects. If there is a flaw in your process that has kept a customer from consulting your company again, proactive roofers will take steps to identify and fix it as soon as possible so that you can prevent your business from losing any more profits in the future.
Sending surveys along with your warranty documents is an easy way to garner your customer’s opinions and apply your findings as best practices.
Every company wants to double their roofing profit margin, but the majority don’t realize how easy it can be. Simple changes in the prices of your products, advertising, and finding a niche market can help boost the earnings of existing sales, while cutting costs and improving efficiency can lead to a larger net profit. Add in good customer management to ensure that you are maximizing the amount of jobs you are doing and your roofing business profit margin may even more than double. So make sure your company is doing these simple steps and watch as your profits soar!