On this episode of the Plumbing Marketing Podcast we interview Dan Dowdy of S&D Plumbing. He shares some amazing insights on how his family grew their business from a one-man plumbing operation in the 1980's to a team of over 25 doing more than $4 Million per year in revenue!

Even more exciting, Dan explains how he was able to increase his revenues in the last 3 years by over $1 Million Per Year (from $3 Million to $4 Million) by ratcheting up his marketing strategy - moving away from the Yellow Pages and into aggressive digital marketing strategies.

In addition, Dan goes on to share how they are able to maintain a 20-25% NET Profit by structuring their business so that it is performance based. He tops it all off by explaining how his company is addressing one of the most common issues haunting successful Plumbing & HVAC Contractors - the issue of hiring & retaining good technicians.

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Read the transcript of the interview below:

Announcer: ...A plumbing marketing profit podcast, interviews with million dollar plus Plumbing and HVAC business owners on how they market and grow their companies in today's economy. Hear directly from the most successful leaders in your business, and discover what they are doing to keep their phone ringing, trucks running and businesses booming with your host Josh Nelson.

Josh Nelson: Hi guys, this is Josh Nelson with the plumbing marketing profit podcast. I want to thank you for joining us. I'm really excited today to be interviewing Dan Dowdy from S&D Plumbing out of the Austin Texas market. We've had a tremendously successful business that's grown significantly over the last, since 1980's. I'm excited to have Dan on the phone. Dan, how are you?

Dan Dowdy: I'm doing well, doing well.

Josh: Thank you so much for agreeing to be on the podcast, and to share some of your experience, and some of your learning's, and how you're really marketing the company, and how you're accomplishing such great success in the business.

Let's start, if you don't mind? Just tell us a little bit about your company, a little bit of background in terms of how long you've been in business, approximate revenues, numbers of trucks? Just some of the background information that everybody likes to know.

Dan: OK. I can definitely do that.

We are a family-owned company. Started up the business in 1980, my parents did. My parents are still involved in the company. As far as myself, and my brother as well, we're all still in the company. Started really in the Galveston area, moved to Austin shortly after they started the company.

Really, our target business is residential and commercial service. We do a lot of leak detection type work, which leads to insurance work as well. We kind of have a niche market in the leak detection business.

Josh: That's a big piece of it for you?

Dan: Yeah, for sure. Right now, we're running six service trucks, they're just full time, doing service. Then we have five other trucks that do a lot of tunneling and drain repair, drain re-routes. Stuff like that. We have five that are doing our larger type dig work.

Let's see, anything else about us? Our approximate revenue is 4.1 million. I would say at this point, 50 percent of our revenue comes from our residential and commercial service, and the other 50 percent comes from our leak detection and large dig type work.

Josh: It's kind of a mix between the general service for residential-commercial, and the heavy, underground digging and leak detection type work?

Dan: That's correct.

Josh: It's about 11 trucks mixed between those two. Approximately how many employees in the company?

Dan: Right now I think we have right around 25 in the company. We have a pretty unique situation here, because we have S&D Plumbing and then my brother runs a completely separate company called S&D Commercial Services. Their specialty is trouble shooting and repairing hot water issues at apartment complexes, any kind of commercial buildings. They really found a niche in that.

We work hand-in-hand together on some of these projects. I'll go in and do all the minor service work for commercial. Then when it turns bigger I usually will pass that on to him. Even though we're not the same company, we do work hand-in-hand in that. It's pretty unique.

Josh: It's kind of a reciprocal, separate division, separate companies, but you guys are able to feed on each other and pass business back and forth.

Dan: Exactly. Once it gets to a certain point where we feel like it's really out of my technician's expertise to be able to handle it, once it turns to a bigger project, we usually pass it on to them. That's their specialty and they're really good at it.

Josh: That's fantastic. About 4.1 million, 25 employees, really solid company there in the Austin market. Tell me a little bit of the background on how your dad started the company and when you got involved. Give me a little of that background.

Dan: As far as how he started the company, I think originally when they first started it, before he started S&D Plumbing, he was doing water softener sales door-to-door. He realized that wasn't cutting it.

When he first started S&D Plumbing, he literally ran one truck for as long as I can remember. He was doing about everything he could do just to keep it afloat. He was doing new construction, he was doing service.

As a little kid, five or six years old, I remember in the summer times going on the service truck with him. We would go out maybe plumbing a big residential house. If I helped carry pipe and do a few things for him, he'd give me five bucks a day just for being there with him. That's as long as I've been working with him. It was always a really cool atmosphere.

All through school, I would spend my summers, me and my buddies would come to work here. We would tunnel under foundations. We'd do all the hard work in the summers. That's kind of how I got into it. I've been full-time in the company I guess 15 years now. Right now, I pretty much oversee the entire operations of S&D Plumbing, both residential and commercial, both service and tunneling.

Rhonda, my mom here in the office, she's the office manager and she's still extremely involved with the company as well. It's very unique being a family business. We all work really well together, believe it or not and all under the same roof. It's a pretty good thing we have going.

Josh: That's awesome. It's a really cool environment that you guys have with the dad, Sam, Rhonda, Sam Jr., you and then all the success you guys are seeing in the business.

Is there something there that your dad run as a one truck company for a long, long time. Do you know how or when the company was able to make that transition from one truck to starting to be more significant enterprise?

Dan: Yeah, I would say, probably about 20 years ago is when he started to grow more and more...I think a big part of that...It may have been 25 years ago but I think a big part of that was once he found that niche into leak detection is when...once he realized that that's something he really wanted to pursue, that's when his company started to grow.

He started to get a lot of different accounts with big insurance companies, and it slowly started growing from there. Josh, I think some of the biggest success we've had today has been, probably, last three years since we really become engaged with QSC, become engaged with Plumber SEO, doing all of our online marketing and social media.

We really dug into that and gone all the class and learned a lot. We have a business coach now. At a certain point, I guess about five years ago I was thinking to myself, "What if we lost all of our insurance work? What would my company look like?"

At that point, I would venture to say, 75 percent of our work was dependent on insurance companies. With everything going on with the government and all that, "Man, we will just be down to nothing."

That's when I really said, "I've got to figure something else out, I've got to learn how to run a profitable service company and then just, the insurance works kind of the gravy on the side type stuff." Since we started doing that, our business started growing a lot.

Two years ago, compare to last year, we grow almost a million dollars in sales. The crazy thing is since we do dive into the insurance, no leak detection and the tunneling work, It's a very profitable market. Even if were just doing it for home owners, it's pretty profitable.

I think, most service company is probably having that profit around five percent. Year to year we consistently running a net profit somewhere between 20 and 25 percent.

Josh: Holy cow, that's a lot, awesome.

Dan: If somebody's thinking about getting into that market, it's definitely a great niche to get into, is a leak detection because not everybody can do it.

Josh: That's exciting. Did you say over the last three years, you guys really grown by more than a million dollars in total revenues for the company?

Dan: Exactly, for sure. A big part of that is, as far as advertising goes, it's getting out of the Yellow Pages which was something my Dad did forever. He would spend just more money than you could imagine, doing that. We started putting all our money into online SDO type work and social media. Andy's listing Yelp and we've really seen great returns on that.

We have a very minimum marketing budget here compare to most companies, it's probably around four to five percent, we're running at about two percent. I think that has something to say, we've been in this market for 35 years, so we are well-known and we get a lot of referral type work.

We just do our best to keep a great reputation no matter what it takes and it really pays off. We're definitely proud of that.

Josh: Let's dive in, because I'm sure you've excited a lot of our listeners by talking about this significant growth over the last three years. Let's start to talk about some of the specific marketing strategies and techniques. I always, at this point in the interview, talk about the fundamentals of your marketing plan for a plumbing business.

There are three core fundamentals. There's market, message, and media. The market is who are you selling to? As the owner of a plumbing business, you can say, "We serve all residential and commercial clients," and really cast such a wide net that you're not attractive to anybody. Really be clear about who that market is and who you're really targeting within your geographic area.

Then there's the message, which is what are you saying that differentiates you from the competition? How do you position yourself so that when you go after that target market it resonates with them and they want to choose you as the vendor of choice or provider of choice versus the competition?

Then the fun stuff of the media. I always lay that foundation because when people listen to this podcast, they're just looking for the tactical piece which is SEO, paperclip, email marketing, Yellow Page ads, radio.

Unless you've spent some time really being clear on who you're serving and what your message is, all of those different channels and all those different efforts will fall flat. Let's just talk a little bit about who you consider to be your target market in the geographic area that you serve.

Dan: I guess it really depends on what kind of service we're talking about. As far as commercial goes, our target market is generally going to be multi-family residences. We do a lot of hydro jetting type work. We run three jetters full time, which is a very profitable job. It leads to other work, obviously, whenever you're doing a jetting, following it with a camera.

That seems to be our big target area with commercial clients. We do restaurants as well. I would say our main target right now is residential. I'm trying to think of a good example. I would say, as far as our marketing goes, anything... Josh, you might have to repeat some of the questions. You asked me a lot there.

Josh: I dumped a lot on you. Your main target then on the commercial side is very clearly multi-family residences, restaurants that have higher-level needs. On the residential side, it sounds like it's home owners that have a certain income threshold within, would you say, a 25 or 30 mile radius of your office in Taylor, Texas?

Dan: We cover a bigger radius. We go more west toward the Austin area where we're located. We'll go about a 75 mile radius from where we're at. We're roughly 20 to 30 miles from the Austin area. We definitely service more west of Taylor. We do cover a big area as far as that's concerned.

Josh: That's the market piece. As far as the message, how do you guys position yourself in the market there... What's your unique selling proposition? How do you position yourself?

Dan: Besides the obvious, besides our quality workmanship and reputation around here, a family owned business is always big. As far as how we position ourselves, the main thing we look for and feed off of is specialty-type work. We always tell our clients we do the things that nobody else likes to do or knows how to do.

Our specialty leak detection equipment. We can go through and locate water leaks in slabs, trace water lines, stuff like that. We dive into that type of work. It goes both residential and commercial.

Our multi-family management companies, they want the cheapest work at the cheapest price. We always tell them, "If you want that type of work, we're not your plumber for that. We're your plumber for, maybe you have boilers and for some reason half your buildings aren't getting the proper hot water. Or you have leaks that we need to locate. Or we need to do hydro jetting. We're more of your specialty plumber. We're not always your day-to-day when it comes to those commercial-type properties."

But as far as the residential clients go, the main thing we concentrate on is the full customer experience. We train our techs to, once you get in the door you not only address the issues at hand, you also follow up and see if they have anything else we need to address. We do home safety inspections. We have a really cool membership plan that allows for a lot of different perks like priority scheduling, discount pricing, stuff like that. That kind of sets us apart from a lot of our competitors.

Josh: Some really awesome stuff you shared there and how you're positioning yourself. One of the reasons I think you're so attractive, obviously, like you said, the years in business, family-owned. I think in all of your marketing you really play up on that with pictures of the actual team, pictures of you guys on fishing trips. The fact that it's that family atmosphere.

Then separating yourself in being the specialist in some of those harder to do, more complicated services I think is key to getting people to want to choose you because you guys are so likable. Also, the key to that higher level profitability you have is you're not just doing the basic vanilla services. You're able to do the more complicated things that require more specialized knowledge and better equipment.

Dan: Exactly.

Josh: Let's talk about media and some of the things you guys are doing in order to get the phone ringing, in order to get new customers. You mentioned that you'd done some Yellow Pages and you kind of pulled away from that and shifted Internet. Which is kind of go through some of the high level things in order. Do you guys do any direct mail or ValPak or any of that type of stuff right now?

Dan: Yes we do. We do a couple different things. We do a monthly newsletter. That's a monthly email we send out. It's a member's only type of newsletter. It comes equipped with a blog about different plumbing issues that may help a homeowner. As well as whatever our special is for the month.

That seems to be a pretty cool product that we're doing now. We've always done thank you cards and follow-ups, stuff like that. We just really started doing a direct mail marketing program to where we are sending out our thank you cards, sending out follow-up newsletters throughout the year with coupons and information to the customer. We try to get back in front of that customer at least two more times throughout the year to remind them. That's actually mailed products sent to their house.

Then, really cool thing that we just started up that's just not cranking up is a referral program that will help us actually track our referrals, reward our customers that are giving referrals in the form of cash, and coupons to use. I'm really excited about that.

That's one thing I've always thought, "Man, we get so many referrals." Unless you take the time to get the name of who referred us and their number, it's harder to even call them up and say thank you sometimes. You do get so busy. You forget to do that. This is going to be a great way to track who's doing that and who's getting rewarded for that. I'm really excited about that program.

Josh: That sounds like it's going to be powerful on the road. It will help you cement those relationships, get more repeat in referral business which is awesome. You mentioned Yellow Pages, shifting a little bit away from the Yellow Pages, are you guys still in the yellow book at all? Do you have a large ad? Do you have a small ad? Have you removed yourself from that altogether at this point?

Dan: I've pretty much done everything in my power to get us away from that. I don't know how long. It's probably been five years when I took over the marketing aspect of the company. I didn't know what I was doing. I was pretty much just a plumber trying to run a business.

You always had those influx of phone calls and people wanting to come in and sell you stuff. It took me probably six months to finally get everything canceled, because you always have those re-upping yellow page ads. When I realized the bigger spending in there, I was like, "That's crazy."

That's when I found Plumber SEO. Now, it's my knowledge, I know for sure that we don't spend any money on yellow page advertising. At that point, we stumbled upon Plumber SEO. That's when I decided, "Hey, look, I'm going to dump at least 80 percent of my marketing budget into Plumber SEO."

That way, we can target the online keywords that people are searching on Google. We can do our paper click and social media, because I'm sure there are other guys like me out there...I'm not big on social media. I'm trying to keep up with running a business. Doing that can be very stressful.

Since I did that, it's turned us around. I talked to customers that I go out and meet sometimes. I ask them, "How did you hear about us?" They may be an hour away from Taylor. They're like, "The ads kept typing in water house re-pipe and you'll keep popping up first in the list. I went to Angie's List and you all had good reviews."

It's cool to hear that type of stuff. It proves that having the right search words for Google and different websites like that is capturing our most profitable business. It's paid off for sure.

Josh: Thank you very much for that endorsement. I really appreciate it. I'm not asking for an endorsement on these interviews for those of you that are listening, but I really appreciated it. That means a lot to us and to me.

You said something that a lot of people are scared about, and that's, "Will my business die if I come out of the Yellow Pages? Will my phone calls dry up? Will I be in a desolate wasteland?" At least in your case, in the market that you're in, you were able to chip those dollars online. Rather than seeing [inaudible 23:39] in leads in calls, you have been able to see a noticeable increase in leads in profitability in the business. That's very cool.

Dan: Once I got rid of that, I was pretty much saving money at that point. All the customers I had before that, by that point, they already had our information. When I did get rid of the Yellow Pages, I did notice the difference in our sales.

Josh: How about radio, TV, billboards? Do you do any of that type of stuff? I know that you did some radio.

Dan: Yes. We did some radio last year. Probably about the last six months of last year, we did do radio. As far as our market, I would say it was beneficial to do the radio, but it probably wasn't as beneficial what I was paying to do it.

I found that I needed to invest more money in my paper click campaign and then also invest more money in my direct mail marketing. That's one thing that I was missing out on. That's why this year, we're cranking the program up. I'm backing off the radio for now.

Josh: I think it will have a more quantifiable return. The radio, especially in a massive market like Austin, can get lost in the noise. It does help with branding. It does help with that recognition to be able to say, "Oh, that's S & D Plumbing." The paper click advertising and direct mail should generate a more significant return. It's an interesting path that you've taken there.

In terms of networking...I know you guys are active in the market down there. Are you guys involved in a proactive way in any of the networking groups like B&I or the Chamber of Commerce? Is that something that generates business for you? Is that something that you guys leave out of the equation?

Dan: It definitely does generate business. We don't do any B&I groups currently. We are very active in Chamber of Commerce, different groups like that. My dad, he does a lot of that type of work, PHCC, obviously QSC. We take a really active role in our community here in the Taylor area mainly. It does generate a lot of our business.

It's definitely beneficial. I would say at the very least, trade organizations like PHCC and QSC are extremely beneficial just in the knowledge aspect, just in the classes you can take. Once you dive into that and start to meet people and take classes, you realize, "Man, how much information can I get off of meeting people that you can always email and ask questions?" We're all competitors but we're all friendly. We all help together out. It's a pretty cool aspect.

Josh: We've talked a little bit about Internet marketing. You mentioned SEO, PPC, and social media. You would say that's a big element of your marketing strategy, the whole online marketing play?

Dan: Yes. Definitely yes.

Josh: As far as online directory advertising, some of the ones we hear often to be pretty productive are Angie's List, [inaudible 27:25] search, Yelp. Which of those are you actively engaged with possibly with paid ads?

Dan: Right now, just Angie's List and Yelp, the two.

Josh: Do you feel like that drives a noticeable flow of inbound leads being on Angie's List, being on Yelp?

Dan: It definitely does. With Yelp, they even came here and did a little online video for us for YouTube. That was a pretty cool deal. Our customers can get on there and hear from me about our company and all that good stuff. That's really paid off for us.

Josh: One of the things we hear often is Angie's List is a tremendous source of high quality customers. Yelp in certain markets can be really effective. The key to success on Yelp is your reputation. On Angie's List, it's your reputation and the number of reviews that you have and, of course, those reviews being positive. Approximately, how many reviews would you say you have on Angie's List if you know? If you don't, it's not a big deal.

Dan: Probably not enough. That's one of my goals for this year, is concentrate on getting more reviews. That's one thing that starts from our technicians asking for those reviews a lot of times. You always have customers that you have a really good experience with and they will go on there and do a good review. Then, you have the crazy customers that everybody deals with that it's all about doing the bad reviews just because they're absolutely nuts.

You got to respond to both of them. That's one thing I know that we can do better. I couldn't give you an exact amount but I'd probably say we have somewhere between 20 and 30 reviews on each, Angie's List and Yelp. It used to be a lot more than that. That's something that we're working on this year. We're also doing the Nearby Now which is a really cool way to generate reviews. I don't know if you want to talk about that a little bit.

Josh: Yeah, absolutely. Tell us a little bit about how you're using Nearby Now within your business process and how that helps you get reviews.

Dan: Nearby Now is a cool program because every time our technician finishes a service call, what we do is give a picture of the name of the technician, a brief description of what he did. We send that out in email form to the customer asking for a review. If they go on there and respond to that and give a review, it populates not only our web page but also Google Plus as well.

The really cool thing is if you go to our web page, you could scroll down and you could see our current Nearby Now reviews. It populates a map that shows our true coverage area. When customers say, "Do you truly service..." maybe they're an hour from where we're located.

They can go online and see that we were just there two days ago or whatever doing this service for this customer and we had a great review. When that is actively going on and current, it's a cool way for customers to be able to see that we are active in their community.

Josh: Build that social proof where they're like, "OK, not only this is why they're cool company, but they're literally in our area and this is what our neighbors have had to say about them." You guys have been active with Nearby Now for about two years or so, maybe a little bit less between when we set it up and when you started using it.

I know that there's been a tremendous increase in reviews across the Web, not just on Yelp and Angie's List but also on Google Maps and all those other places. I'm sure that that's been a powerful tool in your arsenal for building your reputation and also enhancing your online presence.

Dan: Yes, for sure. I would say as far as reviews go -- I'm speaking for everybody -- it's a scary part of the business because not everything goes perfect. We all want to have great reviews. What I find is something that obviously we all have to deal with. The most important thing to do with your reviews, no matter what business you're in, is make sure you are responding to every single review.

You may have four or five stars on Angie's List, but not all of those are going to be good. I think when customers see, "Hey, S&D Plumbing has the majority of their reviews are great. They have one or two of the customers that just sound like they're nuts." If you're responding saying how much you appreciate their business that you're thanking them for the review, and you're trying to solve the issue, what I find is those people never respond back.

You'll go on there and make a comment, and you'll try to resolve the issue and be real professional about it. That also makes you look like you're a real company. Most sane people look at that and say, "That customer kind of sounds a little crazy." Or, "S&D may have screwed up but here's the owner of the company responding to it trying to fix the issue. That's really cool."

That just leads into the one thing we drill into our technicians and our office staff and passed on to our customer is we understand we're going to screw up from time to time. The nice thing about doing business with us is we're always going to come back and make it right. Whatever the cost is, whatever happens, we're always going to stand behind our work and make it right. That all flows back to having that good reputation no matter what.

Josh: That was a powerful insight. Yes, there's a little bit of fear and apprehension when you request a review that somebody's going to jump on and write a nasty-gram because problems do arise and things go wrong from time to time.

It's much better to push through it, be consistent with requesting the reviews and just know that a negative review might happen. You can address it publicly and the world's not going to judge you or discount you because you have one or two lunatics that went on a wrote some nasty things about you online.

Dan: For sure.

Josh: As long as you address it professionally.

Dan: Yes. Sometimes I have to take a step back and, "OK I'm going to come back to this tomorrow after I have a chance to cool down a little bit." That happens. Sometimes you want to get on there and say, "You're absolutely nuts." That's definitely the professional aspect. Not trying to make it worse is the best way to approach those back reviews.

Josh: Getting to the nitty gritty and what it all comes down to. What would you say, out of all these things you're doing, you've got a really nice marketing mix. What marketing efforts tend to drive the most leads for you?

Dan: At this point, probably our SEO type of work. Hitting those key words. Picking up those customers. That's probably the biggest return on investment I have going on right now. Pay per click has been good but it's still fairly young. We just started that less than a year ago. I know it sounds pretty basic, but making sure you have a good coverage area.

Making sure you're working with a good company you can trust. Then really figuring out what are the key words the customer's really going to be searching out? What's my most profitable market? We're in a really competitive market in Austin. We have a really small budget and we do a lot with it to really compete in Austin.

There's a lot more surrounding areas than just Austin. We can capture [inaudible 36:07] . There's a lot of big communities all around us. They're all hiring down type communities. We can really capture those customers, and have good sales doing that.

Josh: I didn't pay him to say that. He wasn't solicited to say that. That's exciting to hear that the SEO online marketing is really driving some of the best new leads and new referrals for you. That's exciting.

In terms of business in general, you talked about a lot of the different services you offer. There's a lot of guys listening to this that maybe they're just doing general plumbing service, unclogging the drain, fixing a leaky pipe. What services have you found to be most profitable for S&D Plumbing?

Dan: I would probably go back to jetting. Hydro jetting has been a very profitable service for us. Another very profitable business is the leak detection. Once you detect a leak, you can charge for the specialty service once you find it. Then we have to go make the repair. It leads to more work. It goes the same way with the jetting. Here, every one of our service trucks is equipped with a camera.

That's one thing we don't charge for. We include it in our price whether we're doing a sewage stoppage or a jetting work. It just makes sense to follow up with the camera, spend five minutes with the customer. What you find is that tends to lead to bigger work that's necessary. If you just auger a drain, pull the roots out, and say "you're good to go," there's a reason why there's roots in the drain. That's been a profitable area for us.

With our service technicians, one thing we did change over the past two years is we went to where they're strictly working on commission. It's a great incentive-based program. These technicians, instead of having hourly technicians that are dragging around, milking the clock, wanted to get fifty, sixty hours a week and not really producing. We've gone to a commission system to where these guys are getting rewarded for their sales.

We have plumbers making $40 plus an hour when you calculate it out for the week. In my market, that's unheard of to pay them that high. When they're that good, they're that good. The main thing I look out for personally and the company does is making sure we're not cheating our customers out. That's the big part. Some people hear that commission, and they think, "The guys are just selling unnecessary stuff."

The main thing is you've got to find the right technicians. I had to let one go just recently for that reason. He's really the only one I've had to let go in the past two years for that reason. You know when it starts happening. We always preach is we're always going to give the customers what they need or what they want. It's amazing. You go into a house, and my guys are even skeptical sometimes, you go into a house and you think, "This guy's got no money." I'm just going to try to fix it as cheap as possible and get out of there."

Before you realize it, you start building that rapport, that relationship with the customer. You may walk out of there with a $3,000 ticket by the time the day is up because he wanted everything done to his house and he loved it. It's wild, because some people think that's not possible. Until you really get in there and offer those opportunities, you won't realize how that is possible.

Josh: That has had a noticeable impact in profitability, converting the guys from being paid a wage per hour to actually being strictly commissioned based.

Dan: Exactly. The nice thing is it goes both ways. My philosophy here has been I want every truck to operate like it's its own business inside of S&D Plumbing. All we are is the people that capture the work and hand it out to the technicians. I try to make them grow up a little bit. I make them do the full aspect. Call the customer, set up the inspection, do all that type of stuff. They're getting paid to do that.

What that allows for is less management. You don't have to hire a manager for every two trucks or four trucks or whatever it is. You really cover the whole aspect if they're taking care of their own business. It really has worked out well for us. You may see a couple technicians that are killing.

You may see some that are really struggling. They're getting $14, $15 an hour. Those are the guys you've really got to coach up and figure out why is this happening. It's on both ends of the spectrum. Sometimes you just have a technician that's not cutting it. They're just wasting too much time. It definitely makes them take ownership of their business. It's really cool.

Another thing we're doing this year for our large job crews is we're really trying to incentivize everybody. We job cost all their jobs and we have a different scale of bonuses based between 45 and 65 percent gross profit on the job. Then we hand out bonuses at the end of the month to each guy for different jobs they did well on for that month. That's a really cool way to do it.

We even spiff and bonus our CSR. We bonus them based on the gross sales of the company for the month, our target sales for the month. What we do is we just pool together a sum of money and we split it up evenly throughout the ladies in the office. We run spiffs on memberships sold, total [inaudible 43:08] bio products sold.

We do different stuff like that. We let everybody get involved, even the ladies here in the office. A lot of times you find whenever they're booking the calls, they're already pre-selling the products.

Josh: Planting the seed.

Dan: When the technician gets out there, the customers are inquiring about it. It's a really cool benefit for everybody.

Josh: I'm sure that has a major impact on that ability to hit that 20 to 25 percent net. You don't have people you're paying just for the sake of paying them. You've got everybody engaged in the growth and profitability of the company. It's a true performance based environment. Where would you say you learned how to implement that in your company? That is a specialized business process that I'm sure a lot of our listeners would love to learn more about.

Dan: I definitely didn't invent the wheel. Really, it's through QSC, Quality Service Contractors. Three years ago, we went to our first meeting with them. We really started to dive in with the service manager training and stuff like that. We really started to talk to the other companies in the room and figure out that there's a great way to run a service company that we really need to learn how to do. We started going to their conferences and taking the classes.

The biggest thing I did personally is I have a business coach through that organization that comes to my business once a quarter. He helps me with all that information. He has that information with him that he can pass on to me. All we pretty much do is customize it to our company. We figure out what percentage of commission we are going to pay our technicians. We put our logo on it. They have a template, we just make it our own.

I 100 percent could not have done it without that. I just did not know enough people in the industry that were doing that. Once you go to these conference meetings and you talk to all the different plumbers throughout the nation, that's what the most profitable successful service companies are doing. They're on an incentive based program for their technicians. Flat-rate pricing was also something we went to, which has been really nice. It's definitely paid off for us.

Josh: That's powerful information here on the plumbing marketing podcast. We are talking about marketing strategies. We're talking about getting the phone ringing and growing the business. The other side of it is how do you maximize efficiency? How do you maximize profitability? Following the model of what Dan's talking about, look into QSC. Find out what it's all about.

Meet with some of the other contractors. Get a business coach. You can see more hours hit the bottom line that you can put in your pocket for all of the revenue you generate. Thank you very much for sharing that. I'm sure a lot of guys are going to be excited about learning more about commission based incentive plans and flat rate pricings. Great stuff there.

Dan: I would say probably the biggest aspect of joining something like QSC and PHCC is if you're going to do it, you've really got to plug in. We did it six or seven years ago and we didn't plug in. At that point we just thought, "Well, this is just dollars wasted every year." We got out of it. It wasn't until we decided that, "Hey we're going to do this. We're going to jump in with both feet, and we're going to learn." That's when it really started paying off.

If y'all are thinking about joining something like that, make sure you're ready to go to those conferences. You're ready to learn. You're ready to get a business coach in there. I always joke with my business coach. I say, "It's nice to have you here because you make me do everything I hate to do." Which generally is...

[crosstalk]

Dan: It's anything financial. It's all that stuff. I get so tied up in the day to day. I don't want to have to go back and do all that stuff.

When he comes in once a quarter, we change things. We do stuff like that. We look at the overall aspect of the company. We do a lot of really cool stuff. We always have a really cool agenda. He usually comes for three days in a row. He makes me sit down. I can't go in the field. I can't do everything I want to do. We really grind it out those three days. It's really definitely paid off for us.

Josh: Powerful. Powerful stuff.

Dan: Something else I talked about earlier was going from hourly type pricing to a flat rate type pricing. I was like everybody else in the industry that's been doing the hourly rate forever. We did it for 30 years, then we switched to flat rate. That's a pretty scary thing. You think customers are going to hate that, whenever we've got to give this big price up front. It's completely the opposite. It's turned out to be a blessing for us.

The customers greatly appreciate it. It gives them the opportunity to make decisions, their own buying decisions, instead of...I always remember when I was doing service, the customer would be watching his watch and I'd be running out to the truck to get parts. We're trying to get it done within an hour. That type of stuff. That's just not a proper way to do business. At the end of the day, there's so much more you can get when you're doing flat rate pricing.

Josh: You can control your profit margins and have a better experience for the client. It might feel a bit counter intuitive when you're not doing it yet.

Dan: It's definitely a scary step. It's definitely a step any true service company needs to be doing that type of work. Even our commercial customers appreciate it. It's definitely a nice way to go.

Josh: Another thing I know you guys are doing that's unique, it's a challenge that every one of the successful plumbing and HVAC contractors I talk to is dealing with. That's, "We've got the successful business. We've got the leads flowing in. We've got a challenge finding good quality technicians that know how to do the work but also have the ability to be selling technicians."

Obviously that's something you and your father have been trying to innovate to bring in those higher quality guys at a younger age that you can train up and really [inaudible 50:07] into the types of techs you need. If you don't mind, tell us a little about what you're doing. I think it's very exciting.

Dan: We're doing a couple different programs. I would say as far as service technicians, licensed service technicians, the most success we've had out of that is going through the veterans' avenue. Hiring veterans to come in here. In particular, one of our newest service techs, he was in the Navy. He worked on ships. He did the plumbing in the ships and stuff like that.

Once we brought him on, he was able to capture enough hours to be able to go get his journeyman's through what he did through the Navy. He may not have been 100 percent qualified to go out in the service field. It took a lot of training to get him to that point.

You have a kid with great discipline, a great look, great demeanor, and what we've done is we have a full time service trainer here that used to be one of our service techs. He has a bad back. We put him in a different role. Whenever we're able to bring in kids like that to our program, we allow our trainer to train them for literally at least a month, maybe two months, to really get them into what are the systems in place for S&D Plumbing.

Not only that, but also the technical side of it. You're not going to get a guy out of the Navy or the Army or whatever that's ready to roll out in the residential real world. They're definitely trainable and that's been a great, great avenue for us.

Another really cool avenue that my dad's been really involved with is working through the local technical colleges. We have some plumbing programs set up. What we're doing is we're going to little trade shows at the local high schools, and we're picking up young kids that are usually junior, senior, and they're not the college type kids. They're the kids that like to work with their hands that want to start a career. We bring them in.

They'll usually work until two or three o'clock in the afternoon, and they'll come in and they'll put up parts in our warehouse. They'll learn things. They'll go out on service trucks. They'll work the summers with us. The program we have set up is they also go to school. What happens is once they go through a four year apprenticeship program, leading up...I'm sorry. It's not four years, it's two years. Once they go through that and graduate high school all that time in the school applies towards their 2,000,or 4,000, or 6,000 hours to go ahead and get into their license and start working full time.

It's really been a cool avenue for us. We've had a few kids come and go. We've had two recently that's really locked in with the company and one that's been with us almost two years now that's getting ready to graduate. He's going to be off to getting his license. Then we have another one that's been with us about a year.

The reason why my dad really wanted to start the program like this in the state of Texas was he realized that we saw kids, we knew kids, cousins, that were going to college for four years and graduating and working at Whataburger because they couldn't find a job in their general studies that they went to school for.

He started thinking, "Back in my days, there was actually a trade school. There was actually people that graduated high school and went to certain trades, went into the Union, did certain stuff like this that, you know, nowadays everybody's pushing if you don't go to college, you can't be successful.

He's really trying to change that mindset, and take it back to the old school, to where we're able to get kids directly out of high school, into these trade schools learning not only the school aspect of it, but also hands-on experience. I think it's going to prove to be extremely successful and beneficial for all the plumbing companies around here.

Because once people start engaging in that program, they're going to get not only really good, qualified, young professionals, but we're also going to get people that are dedicated to your company.

Josh: After you've improved the training, you've apprenticed them all the way into a real career.

Dan: Yeah! The way we work is if you get A's and B's in your classes, in that training program, we pay for it.

Josh: Awesome!

Dan: That's the way we do it. It's pretty exciting. I'm sure he could really dig into it a little more. He's really revolutionizing the plumbing industry in Texas.

Josh: I think that's awesome! If there were other plumbing business owners in other states, and they wanted to follow that path, could they reach out to the local technical college, and try and make some relationships? Is there any path that they can try and replicate this in another state?

Dan: I would probably say the P.A.C.C. is going to be-- they are nationwide, in every state. That's going to be probably you're Best Avenue to start. Just because they can talk to Texas and realize what we're doing down here in Austin, and really gather all that information from our local branch.

I would say that would probably be the best place to start, and then from there, I would take it on to like a local technical or junior college that may have programs like that that you can really get into. To really get detailed into that I think you'd need to get my dad on the phone to really break down what all he's doing there. That's his baby.

Josh: That's Sam Dowdy if you need to talk with him or just reach out to your local PHCC. Let them know that this would be a great opportunity to explore in your state. They can connect you with PHCC Texas. You can put your heads together and see how you can start to develop the plumbing trade or even the HVAC trade in your local state. Powerful stuff.

Dan: That's one thing I can always give out his contact information if you're wanting to learn more about that. Maybe his email, if you want to send him an email, he can really let you know what direction to go into on that.

Josh: If you're willing to share it on the call, that's great. Otherwise, they can just reach out to their local PHCC. Whichever you prefer.

Dan: I would say I can go ahead and share it now. That's his passion. He would love other business owners to be able to spread that throughout. His email is sam@sanddplumbing.com. Sam at S and D plumbing, all spelled out. Go ahead and shoot him an email if you're interested.

Josh: Sam and Dan are both wonderful guys. I'm sure if your reach out to Sam, he'll graciously respond and be willing to talk you through it and point you in the right direction at least. Awesome stuff, Dan. This has been a tremendous interview. I'm sure the listeners are... Their minds are spinning. There's so much great information that you've shared.

Congratulations on the tremendous success on the company as a whole and your success in taking over, over the last several years. Really accelerating the growth and putting these initiatives in place. Any last words you would want to share with the listener that may already be million dollar plus or may just be getting started in trying to figure out how to grow the business? Any additional nuggets of wisdom you'd be interested in sharing?

Dan: The main thing I was always taught was you've got to find that niche, and what you're good at in the plumbing market. If you just want to be a general plumber, there's thousands and thousands of those guys around you. I think once you find out, "What is my niche? What can I really dig into?" It can be anything. That's when you're truly going to start to revolutionize the company.

Also just figuring out a way to really make your company an incentive-based company. To share the wealth with your employees that are doing well. Obviously you're not going to share it with the ones that aren't. You'll find that that really changes the mood.

One thing we're doing today, which is really cool, I told my service technicians, "If you'll can all sell $10,000 a piece for the week I'll do a steak dinner for everybody." Today I got the grill here, we're firing it up. We're going to do steaks. We're going to do sauces. We're going to do a good old fashioned barbecue. That's one thing we talked about this year, we want to really start celebrating our wins, having a really good time doing it

Another really cool thing we do, you mentioned it earlier in the interview, is we go on a fishing trip twice a year with our guys. We go out for the weekend, and we rent cabins, and we get guide services. We do the full work. Stuff like that's a great way to really bond with your employees. Everybody gets a little silly. Get the guys away from their wives, it just gets a little crazy.

Stuff like that is what your employees look back on and think, "Man, S&D Plumbing is a great company to work for." It even goes along with Christmas parties and stuff like that. We just really try to have a good time working. We'll be fine if it really ends up paying off in the long run for the company.

Josh: Building that culture, as you build your team, that bonds everyone together and not only makes a funner place to work but makes it so the guys that work with you are loyal. They're wanting to serve the customers as well as possible. As they serve the customers better, your reputation improves and the business continues to grow.

Dan: For sure. Another really cool thing that I've done is right here behind my desk I have a huge dry erase board with an organizational chart on it. I've got it all done up professionally to where the guys can see, if these are the different aspects of the company, this is the service department, this is the large crew department, this is the commercial sales department, CSRs.

Really allowing a cool avenue to where the guys can see, "What is it going to take for me to move to this level?" Then you have that information right there in front of them. They really see the full breadth of the company. They really realize that they're not forever going to be stuck in this position that I'm in. There's managers positions open. There's all these different types of positions open and there's a lot of room for growth.

Eventually we do want to be a $10 million company a year. The main thing is allowing for your employees to see that there is potential for growth in your company.

Josh: They see the potential and they grow with you.

Dan: Exactly.

Josh: Dan, thank you so much for your time. I think this has been a tremendous interview. Lots of great information spanning from marketing to operations and team development.

Those of you listening, thank you for your time. If you'd like to listen to other interviews like this, or more from the leaders, the guys that are excelling in their plumbing or HVAC business, you can subscribe to the podcast at plumbingmarketing.net. Thanks so much for your time. We'll see you guys or talk to you guys again soon.