I do my best thinking on road trips.
While driving home through the hills of Arkansas yesterday, I had a few thoughts about where this business of roofing has been and where it is likely to go in the near future.
I’m not a master prognosticator by any means and I don’t claim to own a corner on the roofing business. I’ve been around long enough to give me the perspective of history.
These are just my thoughts on the future of roofing that I had while winding my way home.
Change Is Good, Bad, and Always Happening
My father-in-law, Richard Healy, likes to remind our family that, “Change is always good for somebody, always bad for somebody, and change always happens.”
Change is always good for somebody, always bad for somebody, and change always happens.
When I started in the business, back in 1995, residential roofing was primarily a new construction commodity product bought and sold by General Contractor’s as one of many secondary trades.
New construction roofing installers were getting paid $12+ a square here in North Texas with the roofing company charging the G.C. $17 to $20. Residential re-roofing was more profitable, but big storms didn’t roll through town on a yearly basis. It wasn’t unusual for there to be a lull of 2, 3, even 4 or 5 years between big storms.
I remember there were probably less than a couple dozen reputable re-roofing companies operating back then. Out of that number, there were only 4-5 who were serious contenders to do any kind of volume in any given storm.
Back in the early ’90’s, most roofing companies did other work in the off-season while waiting for the next storm to come through their hometown or somewhere nearby. They ordered their expensive Yellow Pages advertising a year in advance with hopes of another storm hitting so they could pay the monthly bill. You didn’t really have a choice. If you weren’t in the Yellow Pages, you would have a hard time convincing people you were in business.
Roofing companies that specialized in chasing hail storms and hurricanes weren’t nearly as plenteous as they are today. I can think of only a handful based out of DFW in the early 90’s.
Those pioneers of storm chasing were kings of logistics, cash flow, and organization. They could sniff out a good hail storm long before the advent of hail maps. Their bankers were mavericks in accounts receivable financing. The early storm chasers were visionaries.
Fast-forward almost 20 years and things have certainly changed.
General Contractors cut out the roofing company middle-man a long time ago to contract directly with the roofing crew. The old language barriers are no longer there as many roofing crews have passed the roofing trade down to their bilingual children; many of whom are excellent business people.
The commodity roofing market is still there. What’s changed is the ability of the local roofing company to profit from the new construction roofing market as the business has gone directly to the end-provider.
More Smart Changes
Thanks to an exponential increase in year-over-year weather-related events, residential re-roofing is almost a full-time business in many parts of the country. Local roofing companies have been able to sustain their business partners, salespeople, credit lines, systems, and processes.
At the same time, the insurance companies who have been paying out all these claims are no longer hindered by limits in technology. They get smarter with every passing year because business intelligence is now a sustainable resource. The business model sustainability created by repeated storms has been both a blessing and a curse to roofers and insurance companies alike.
For insurance companies, these repeated weather events have also allowed them to consolidate their systems and procedures while deploying a more succinct response to what used to be a much more expensive reply to catastrophic storm damage. They too have been able to maintain their most valuable asset, their core workforce, from storm to storm.
While storm chasing insurance adjusters, financed by big-money insurance companies, were more common than storm chasing roofing companies twenty years ago, just about every roofing company I know these days has chased at least a storm or two. If they haven’t, many of their salespeople have.
The increase in storm chasers and weather events has naturally led to an increase in roofing sales recruiting as roofing companies desperately search for ways to quickly scale their revenue models during catastrophic events.
Catastrophic Events Are Still Catastrophic
For all this change, one thing remains crystal clear to me, storm damage is still a catastrophic event that cannot be completely smoothed out in terms of sales talent, sustainability, and revenue potential for all parties involved – including roofing companies, salespeople, supply houses, manufacturers, and insurance companies.
Roofing companies have been beguiled by the potential to mitigate or smooth out some of these wrinkles by storm chasing, but this traveling business model remains a risky business proposition with big winners and horrible losers at both ends of spectrum. It is not a guarantee by any means and is still approached with the great trepidation it deserves.
Manufacturers and supply houses have seen the future of sustainable, impact-resistant roofing products and it doesn’t look good. It is industry suicide to create, market, and sell a product with the potential to eventually put them out of business. Like the manufacturers of ink printers that desperately need retail ink sales to sustain their growth, the roofing business is wholly dependent on replacement sales of their product.
Insurance companies have attempted to smooth out the catastrophic nature of storm damage by partnering with contractors through certified, preferred, or recognized contractor programs with special incentives to the insured for using their program. In the end, these programs usually fall apart sooner rather than later because the rock-solid, financially sound structure of the insurance company contrasted against the teetering finances of the local roofing company invariably leaves the insurance company holding the bag when there’s a warranty dispute or workmanship problem.
Unless the insurance company can sustain a steady stream of revenue to the local contractor, which is inversely proportional to their own profit motives, the “preferred contractor” program is almost always destined to fail.
The law of unintended consequences has also given rise to the roofing sales solopreneur who no longer wants to travel from storm-to-storm or has been badly burned by a storm chasing company who promised rainbows and skittles, but left them empty, hungry, and angry.
This new breed of salespeople either starts their own roofing company by joining forces with their counterpart new breed of roofing installers or they get lucky and settle in with a good, local roofing company who has solved the puzzle of working year-round.
Almost every week I see a few new roofing yard signs or truck magnets that I’ve never seen before. They were working for somebody else a few weeks ago, but now they’ve got their own roofing company.
At the same time, I still get phone calls on a regular basis from good, solid, reputable salespeople who are struggling to get their company off the ground or they’re seriously kicking around the idea of going out on their own and need good advice on making the transition.
I tell them all the same thing, “nothing happens until somebody sells something.” The greatest cause of business failure is a lack of sales. Like the wisest man who ever lived once said, “Money solves everything.”
Men prepare a meal for enjoyment, and wine makes life merry, and money is the answer to everything. – King Solomon
Getting New Business
Long gone are the days of Yellow Pages advertising being a prerequisite for a local roofing company to be considered reputable and worthy of a phone call.
Actually, a good amount of lead generation and referral processing isn’t even done over the phone these days. People still call, but an increasing number of requests are processed over the internet.
Prospects see your yard sign down the street and are more likely to do a little research online before they even think about calling the phone number listed on your sign.
On that point, internet advertising costs have gone through the roof. When Google first started selling AdWords, you could buy the keyword “roofing” for a nickel per click. Today, you’re lucky to pay less than $15 a click in some competitive markets.
That’s $15 per click – not per lead, per call, or per customer – $15 per click!
If you don’t like those numbers, you can buy your leads from one of many online lead generators… who then simultaneously sell the same lead to several of your closest competitors.
I won’t even mention affiliate fraud which is rampant in the lead generation business, but basically, you could be paying big money for leads that have no interest whatsoever in a roofing work. They were just trying to win a new iPad. The crafty affiliate sells a name, address, and phone number to the lead generation company for $15 or $20 and then the lead generation company turns around and sells that same “lead” to several people for $50+ each.
Bottom line, unless you personally really, really, really know what you’re doing with online advertising, you’re more likely to go broke than you are to make money if you try to scale online advertising and lead generation.
Door knocking is still the fastest way to get new business.
People have never liked strangers knocking on their door, but the shortest distance between two points is still a straight line. That will never change.
Roofing companies that wait around for their next customer to call them do not make the same money as salespeople who are out, about, and active in the neighborhoods where they are working.
Door knocking may be the one thing that hasn’t changed much in the last twenty years. Roofing companies know it works. Old and new salespeople still resist knocking and 99.9% of customers would probably tell you they would never buy anything from a door knocker, but it still remains the best way to get new business. Funny how that works, isn’t it?
Good Sales Training
If you were trained the same way I was trained, you probably rode around with somebody for a few days before picking up your business cards and contracts. If you were really lucky, you maybe had a few days in-house training where you were taught the difference between 3-Tab and 30 year along with a few prospecting strategies. After that, you may have had a weekly
beating sales meeting.
Because of the catastrophic nature of the residential roofing sales business model, the majority of the profit is front-loaded in the early stages of the storm when time is most valuable and good sales training is an opportunity cost that most roofing companies cannot afford.
Basically, you have to come into the storm already trained and ready to capitalize on the opportunity. Even if you survive your first storm, you’ll almost certainly sing the same sad, blues song almost every veteran roofing salesperson has sung before their second storm, “If I only knew then what I know now…”
Needless to say, good sales training always has been, and continues to be a huge, gaping hole in the roofing business.
But Wait, There’s More
Like the early storm chasers who looked out into the future and put together a plan to capitalize on the change they saw coming to the market, somebody is going to see the future of residential roofing sales and make the most of it.
If I were to bet on the future, my money is on a business configuration where there’s a consolidation of talent, resources, systems, and procedures in mid-size companies than can mold themselves to the revenue opportunity by quickly expanding and then easily contracting back to smaller, sustainable entities.
Obviously, the greatest difficulties in a flexible roofing business model come down to control and cash flow. When you put together all that talent, there are bound to be a few divas anxious to blow the whole thing up because they are unable to submit to working in a team under the autonomous authority of whoever controls the cash flow. Cash is still King! That hasn’t changed either.
Those are just a few of my thoughts about the future of roofing. I would love to hear your thoughts too in the comments section below or hit me up on the Roofing Salesman Facebook page. I would love to hear from you.
P.S. I really would love to hear from you. Please hit me up in the comments below or on Facebook.