Are you a contractor want to know how and grow and scale your business?
This is a great episode to listen to if you want to know more about James Hardie siding marketing, scaling and other valuable tips and advice for helping your small business reach its true growth potential.
Scott Niedow was born and raised just outside of Chicago. He is a proud Purdue Boilermaker! Scott’s been at James Hardie just shy of 15 years. He’s had many different sales and management roles at Hardie over the past 15 years but the bulk of his time and passion lies with helping contractors run successful businesses.
Scott says his mission is to be able to help contractors transform their businesses to meet and exceed their financial and personal goals.
- First we’ll learn a little about Scott’s journey to Hardie and how he got to where he is today.
- Second, I want to learn more about what I call the James Hardie magic. When I talk about Hardie to other people, I tell them that they are the Chick-fil-A of the material supply industry. They go so far above and beyond what most material supply.
- What are some of the the challenges exterior remodeling contractors face and how have they overcome them to grow their businesses and their wealth, and improve their quality of life.
Learn more about Scott Neidow and James Hardie Siding
About Scott Neidow, Regional Sales Manager, James Hardie
Phil Singleton: So one of the things I want to do in our talk to Scott and ask him a couple of questions first is just let people know what we intend to cover here. So they’ll know how long they want to listen. The first thing we want to learn about is just Scott’s journey, just wanting him to explain how he got into the business world out of school and what led him to his position at James Hardie today. And second, the meat of the discussion is really, I want to talk and learn more about what I call the James Hardie magic, because when I go out and talk to other people, and I’ve had some experience with lots of other material vendors over the years. I’ve been doing this for 15 years. The bulk of our clients are contractors or home services so I know a lot about the local construction industry and the people that they work with and partner with.
Phil Singleton: So I’ve seen some really cool things that Hardie’s doing that in real life I think nobody else is doing. And when I explain it to other people, I call them almost the Chick-Fil-A of the material supply industry. They go far above and beyond what most other material suppliers do, and I just want to understand why, how that happens because nobody else does the things that they’re doing. And I see a lot of things that they’re doing that are really helping local contractors, exterior remodeling contractors, all sorts of contractors do better than they were doing before, and it’s just so much further beyond what other folks are doing. I want to talk really a lot about that and why that happens and then how cool that is.
Phil Singleton: And then finally, what are the challenges that Scott sees with the exterior in terms of exterior remodeling contractors? What challenges they’re seeing. Is it lead generation? Is it marketing? Are they having problems scaling? What parts of the business does he see from the smaller, medium, and maybe even larger contractors that they have that holds them back from reaching their potential?
Phil Singleton: So those are the things that we’re going to cover. And with that, I want to introduce Scott. And Scott, let’s lead off with having you give us a little bit of background about your first steps out of school and what led you into this career with James Hardie.
Scott Neidow: Yeah. Right on. So I definitely appreciate it. So I grew up about 25 miles outside of Chicago, went to Purdue. Never in a million years would I have though that I’d end up in construction. So I was always going to go to law school and so you find out how much it costs and how little you make out of law school. And then my whole family was in sales so did a bunch of interviews, found Hardie, been there 15 years. So it’s interesting too because I’ve had, I think, 13 roles in 15 years. So right when you figure it out, Hardie decides it’s time for you to do something else.
Phil Singleton: Awesome. Cool. So pretty much was this your first steps out of school…
Scott Neidow: This is my first and the only real job ever, yeah. So I started in D.C. Hardie moved me out there. I spent a couple of years working more with the retail boxes, so Home Depot, Wells, and then their customer base. And then Hardie actually makes the interior product HardieBacker. Spent a lot of time in tile contractors in Chicago, Wisconsin, across Midwest and then I got into our exterior products. And really my first sales job at Hardie really business to business was with, I think I was the first sales rep who hired the call-on contractors.
Scott Neidow: So our business historically was always new construction. It’s easy, it’s scalable, builders are very low maintenance versus contractors. It’s the opposite. Every home is a custom home because every homeowner’s different every single time we’re at the kitchen table. So we needed to try to figure out how’s that work? How do they sell? How do we add value? We think we have a great product, but I think what we found is that’s maybe one thing. A lot of homeowners buy from people, companies and then the product. And so for us, it was a big deal to really understand the contractors and charter to how we help them.
Phil Singleton: Right. And what’s also really cool about that is I think this is a testament to the organization and that you just don’t … We talked about this before. I’ve had the chance to work with you guys on some, I guess, mutual clients or people that are clients of James Hardie and clients of ours. And what I’ve noticed in speaking to other folks within your organization is there’s a lot of longevity. You’ve been there for 15 years. You’ve got a number of people on your team or in and around you that have been at Hardie for years. Whereas a lot of times these days, you see people jumping around.
People & Recruiting Make James Hardie Special
Phil Singleton: So I think that says a lot about maybe why you guys are successful too. You seem to be able to recruit and attract people that want to stay in there. And is that part of … Walk me through that a little bit. Is there an extensive training program? Why are the people that you have so good, I guess is what I’m saying? Is there something-
Scott Neidow: Well…
Phil Singleton: There must be beyond just getting hired and saying jump to the team. There’s some kind of magic in there.
Scott Neidow: No, I appreciate that. And listen, I think was Bill Parcells that said that it’s not the Xs and Os and the Jimmys and the Joes. And so a big part of Hardie’s success may be able to hire and keep really good people, and so it’s probably the hardest part about being a manager. It’s one of the biggest thing contractors struggle with is grooming and attracting talent. And so we have a whole recruiting team as well as some outside consultants that we use to interview and hire people. And then I’ve gone through multiple classes or multiple … I’ve interviewed hundreds of people. And so first, you get that part down. You got to make sure it’s the right fit.
Scott Neidow: And I think one thing that Hardie does real well is we, I don’t want to say we screen people out, but we’re very … There’s no fluff. We’re very candid on here’s what you’re going to get. Here’s what you’re going to expect. Here’s what the family atmosphere is like. It’s very competitive. If it’s not for you, let’s just know now. And it’s probably several interviews on the phone, it’s face to face interview, and there are aptitude tests. And so it’s really important for us to get it right. And I will tell you to be honest, Hardie got it wrong way more than it got it right for my first decade. So it’s something that we’ve probably really stumbled across in the last five or six years just through trial and error, trial and error.
Scott Neidow: But even after we hire someone, we have a very extensive training program. And so we have people in our company, all they do is focus on onboarding sales reps. And so that’s webinars, that face-to-face meeting. I build out my people’s calendars for the first 12 weeks. I know every day where they’re going, what they’re doing, who they’re talking to, and it’s not about micromanaging. It’s about setting them up for success.
Scott Neidow: So Hardie’s a unique business in that there’s nothing transactional. No one gives us money to buy product or no contractors buy product from us, but my entire team spends their life trying to influence and coach contractors. So we have an awesome customer base, everyone from Boise and Forest Distributors to ABC Supply in Lansing who are local vendors that service contractors, but we don’t actually transact with contractors.
Scott Neidow: And so it’s really important for us to get this right, because it’s not like we always know where POs come from or who’s buying our product or … It’s our job to indirectly influence contractors to do something different, and so we spend a lot of time and energy. And probably the best thing too is we never stopped training. So Tiger Woods doesn’t stop golfing. He practices in between golf events and same thing for pitching and football and everything else. So like Patrick Mahomes is ridiculous, but it’s great that he’s got Andy Reid and the whole coaching staff, the whole system built around it. So we try to constantly improve. One of our mantras is 1% better every day. It’s not about drastic step change. It’s not about overnight changing your business. It’s every day being a little bit better than what we were the day before.
Phil Singleton: So is that like you guys have an extensive training resource department? Are you bringing people from the outside and doing things? What’s the training like?
Scott Neidow: Yeah. It’s normally inside. Yeah. So we do have, I think Richardson’s the partner we use. They’re a professional B2B sales organization that does a lot of sales training, but Hardie over time has developed our own sales process and how we go about it. And one of the beauties at Hardie that makes it scalable is everyone does it the same way. So 85% of what we do is always the same, and then each rep or each manager has got the 15% to make it their own. But it’s really easy to scale when everyone else is speaking the same language, doing the same thing at the same time. There’s never any ambiguity on who does what or are we dropping the ball or how come Steven’s having success in Kansas City and Mike’s struggling in Chicago? It doesn’t happen. It does happen, but you know why because everyone’s moving in the same direction.
Phil Singleton: Yeah, and that segues into the second part of this, which is, and you mentioned this already a little bit at the beginning, but there’s not a transactional piece to this. So I look at you guys as highly trained, and I’ve seen you bring a ton of value to the people that you work with, the contractors that you work with. I also see the shine and the glow that comes from the contractors that you work with in terms of how they revere and respect and really value the help that you bring them. It’s a reflection of what you guys are doing, but it’s almost to me, I think we’ve talked about this before too outside of this recording, which is to me, you guys are almost like business coaches. Really, that’s what I see. You mentioned that, but maybe that’s not the right word or something, but you guys have seen a lot. It’s like you put your heads together, you get to know the contractors that you work with and you try and understand what their pain and their growth points are and then try and figure out, hey, and actually bring solutions.
Phil Singleton: So it’s really different than a lot of the materials supplier relationships that I see that’s more relationship based. I know you guys do a lot of that too, but a lot of those guys, more about wining, dining, golfing, doing some things. I’ve seen people arrange some webinars and stuff like that, but not to the extent of really trying to almost provide what I consider free coaching help to some of those folks, and I’ve seen you bring people in to help people grow businesses and solve problems. Where does that come from? Is that active? Was that something that’s been around for a long time?
Scott Neidow: No, yeah. It’s probably been a culmination of about nine or 10 years of every year getting 1% better. So we actually started off being a … We actually opened a Hardie siding solution center in Denver 10, maybe 12 years ago because we had no idea what we were doing. We were a new construction company. The market crashed. Remodeling was a big part of it and we had no idea how to actually … We understood how builders went to market. We didn’t understand anything about our contractor base. So we sent out 10,000 mailers to 10,000 people and nobody will call. And you’re like, “This is crazy. Boulder, there’s so much feeder in it. There’s so many wealthy people. Hardie the perfect product.” But you can’t send out mailers once.
Phil Singleton: Wait, wait. Hold on. Let’s step back on this. You guys actually set up a remodeling center in Denver, you said it was?
Scott Neidow: We did, yeah. And-
Phil Singleton: Was that a place where people actually contracted you to do this stuff so you learned about it or was it just a place that people come see the product? What was-
Scott Neidow: No, yeah. So Hardie set up as an exterior placement contractor that only did siding. And so we still bought from our customers. We used Oracle sub-base. We went to all of our current contractors and basically guaranteed them that we charged a fair premium. Our whole goal was we need to figure this out, and we find a demographic fit.
Phil Singleton: So like a James Hardie lab basically. So you guys were like it’s actually happening.
Scott Neidow: It’d be similar to Anderson Renewal, but instead of having franchises, the manufacturer did everything.
Phil Singleton: Got it.
Scott Neidow: And so our goal was to try to figure it out.
Phil Singleton: Okay.
Scott Neidow: And we basically failed at everything. We…
Phil Singleton: And when was this?
Scott Neidow: It was 10 years ago.
Phil Singleton: 10 years ago. Okay.
Scott Neidow: Yeah. We basically only learned through failure. There were very little things we did well there. We had huge 50,000 foot showrooms that no one ever came to, and she was marking budget time, direct mail that … Direct mail can actually work if you do a smaller group several times. We did a huge group once, and….
Phil Singleton: And there’s so much wisdom in that. There’s so much wisdom in that because that’s marketing in general. You do one thing, it’s never going to work. If you do stuff over a time and build a relationship, that’s when the payback comes off.
Scott Neidow: Yeah. And then we had to learn to actually sit in the home. We actually sat in the home. Most contractors to do a two-call close so we purposely did a one call just to see if it can be done. And again, one of my favorite things in working at Hardie is great people, but Hardie’s base allowed us to fail. Hardie’s allowed me to try things over and over and over again and not work out and be … We talk about embracing the red. It’s really about what’s not going well? Let’s keep trying new things. Let’s not be afraid of failure and let’s figure it out for our customers and for our contractors.
Scott Neidow: And so from there, we basically got hooked up with a lot of really great contractors. So I’ve learned so much from the Twin City Sidings and Craftsman’s Choice in Minneapolis, All-star in Wichita. I live in Kansas City now, so Salter in Wichita. Lakeside Renovations in St. Louis. These are 10, $15 million companies that figured it out through trial and error themselves. There’s really dedicated, awesome contractors that just got it right. And so we spent a lot of time with them understanding their secret sauce, trying to add to it, trying to hook them up with other like-minded contractors. We’ve been able to crowd surf thousands of contractors across the country, and that’s really what’s our success is. I don’t just talk to one contract in one market. I talk to hundreds of contractors that try thousands of different things, and it’s much easier to figure out what works by basically being able to try several different things all the time.
Scott Neidow: And it’s funny. So it’s always the little things that add up to matter. Very rarely is it one thing that changes the contractor’s business. It’s like the little things are so important, and those are the hardest things for contractors to dedicate infinite resources towards. But having the right phone script is extremely valuable. And it’s much easier to ask Ben what he uses in Minneapolis and then share it in other markets, not in Minneapolis, but bring it to St. Louis or Milwaukee, than for us to always try to figure it out. And so we have some phenomenal partners as well as by the way. So you do a great job. We love the partnership. CCN out of Washington, D.C., Certified Contractor Network. We learned a ton from them. BTA Breakthrough Academy up in Canada. These are other like-minded entrepreneurs that run businesses and basically coach contractors for a living.
Phil Singleton: That’s awesome.
Scott Neidow: And so it’s really the combination of all our partnerships and all of our customers that’s allowed us to get to where we are.
Phil Singleton: Right. And you mentioned something, you brushed over, but you and I have talked about this a couple of times, about how important the phone is. Wow. I’ve learned this on my own listening to call real calls is a major pain point. Some people don’t answer, some people don’t … I think a lot of times I hear people that we spend all this time with, for instance, James Hardie.
Phil Singleton: James Hardie does a great job with marketing and getting the brand awareness. And then these contractors will come out and they’ll hire hired guns like maybe me there get out there and to make sure they’ve got a great web presence and a pretty website and social media and great reviews. And all of a sudden, they come to the phone and it’s a fumble or it’s low energy, or it’s not answered at all, or it goes to some automated and it all pins down to the funnel, that one thing. And people don’t realize how much money is lost or maybe how somebody might bounce off to somebody else to where they hear somebody … Little things like that can make a huge difference to your client.
Scott Neidow: For sure, yeah. I don’t know if it’s the best analogy, but I think about if you work out, if you stretch before you work out and you stretch after, you’re much more likely to be successful with whatever you’re trying to get out of your workouts. That’s the blocking and tackling around answering the phone and scheduling meetings. No one likes to think about it. They all think about going to lift weights and run and all this marketing and huge marketing budgets and my cost per lead. But the reality is, to me, people just never realize those actual leads.
Scott Neidow: I remember if I’m ever having a really bad day and I want to feel better, I’ll go listen to some of the recordings we get from when contractors answer our leads. It’s somewhere between depressing and horrifying, and these are successful business owners, by the way. These are people that run two, three, four, $5 million businesses that answer their own phone though, and they’re just humans. They’re probably driving. They got caught off guard. They’re almost trying to get off the phone versus trying to actually make the customer’s day…
Phil Singleton: Totally a solvable problem. But to you and me, those are the unicorns man. It’s all like the customer, the lead that comes in is what it’s all about and just to have one.
Scott Neidow: Oh, for sure.
Phil Singleton: But, again, all these business owners, they’re working their butt off. They got other things on their mind. They’re not trained to be the, “Hey,” that kind of stuff all the time. But it can be solved, and there’s little things like that if you put them all together, that I’m getting into the last question here, which is what are some of the challenges that you see with contractors and how they’ve overcome stuff? How do you see the million dollar a year guy getting to two or three million or the $5 million approaching 10 plus? What are the things that you’ve seen?
Scott Neidow: I think probably the biggest problem across all contractors are, and this really separates probably the great ones from the good ones, is if you want to scale and you want to have some business that either runs itself you could sell someday, you can’t be an employee in your business. You got to start working on your business, not in your business. You actually need to be an investor or an owner of your business, and that scares a lot of contractors because they either don’t want to hire people or they had a bad experience, or they think they’re going to get too far away from the business. There’s a million different … Some of them also just don’t know better. They just have a hard time letting go of control and I get it. Their blood, sweat, and tears have basically built the entire livelihood that takes care of their family just on their own.
Scott Neidow: But the reality is they’re normally, the owners become a bottleneck for growth because they want to control everything. They want to make every decision. They’re not necessarily hiring the right people. And I think the second that they can take a step back and actually think about, “Okay. I could keep sell them the home forever, but I’m probably tapped out.” And so, to be honest, marketing’s probably the easiest thing because if someone has a marketing problem, I could recommend someone like Phil and say, “Listen. If you have $75,000, it’s just math. Phil could do it for you.” And most people have $75,000 and they can call you. The problem is it’s, “Okay. Do I have the labor production capacity?”
Phil Singleton: Can I scale?
Scott Neidow: They’re too many guys nowadays … Exactly. So if you have the marketing budget, the next thing you need to do is you need systems and processes from the phone rings, I answer the phone, we have the same phone script every single time. The lead goes to my sales rep. He runs the exact same sales process every single time. He doesn’t do his own thing. Then we have someone from our corporate office set the next meeting or follow up, and then we go on a second call if we need to. And then if I don’t close it, do we have a set rehashing structure? Because I just paid Phil all this money to get the lead. I can’t just stop calling if they didn’t buy.
And then when you sell the job, to hand off to pre-construction and when your subcontractor or your in-house crew gets out there, do they know what to do? I can’t say how many people sold a $50,000 job and it’s like chicken scratch on a piece of paper. And then the installer is furious because he can’t read it. He’s not sure what’s going on. Like, “Why do you want to work for a contractor?” They might pay him well, but they have no process and no structure. So just a really bad experience for the sub.
Scott Neidow: And so the biggest thing overall is it’s whether the contractors want to scale or whether they want to maximize their profitability. There’s not written systems and processes, and they’re not thinking about how do I develop my own employees. And if you’re an owner and investor, that’s all you’re thinking about, is where is my growth going to come from? How do I get good people? How do I train them up? But if you’re an employee in your business, you’re not worried about that. You’re just worried about where’s my next sale. How do I finish this job? I’ve got all these receivables coming out, but got to order material. But if you’re an owner, that’s probably a really bad use of your time, well except maybe the first year or two.
Phil Singleton: Do you think there’s a point? To me, it seems like I don’t know what the number is for different contractors, but there’s a point of, and I think it’s probably in the million somewhere where you maybe … Definitely 10 million. It’s hard to get to 10 million on one owner doing everything. At that point, they’ve got a system in place and they’ve got a team, they’ve got a repeatable thing where they’re just feeding it because there’s no way usually one person unless you’re like a home builder and you’ve got 20 projects and you’re getting 10 million right?
Scott Neidow: Yeah, yeah.
Phil Singleton: What’s that number where it’s like-
Scott Neidow: So I know two huge unicorns. One guy, Steve Jones from Tulsa Renew. If you ever look up a great small business, Google Tulsa Renew and he’s as good as it gets. So one guy, actually two people, him and a production manager, four and a half, $5 million, amazing customer experience. Another contractor in Milwaukee. Scott could sell 130 hard jobs by himself. That’s a very rare thing. Most other contractors probably tap out around a million and a half, maybe two. And at that point, they need a structure and they need people. And the reality is you need to start planning before. You should have a written sales process before you hire your sales guy because how you’re going to train them?
Phil Singleton: Right.
Scott Neidow: And that’s what Hardie tries to do though. So we try and spend our time looking for bottlenecks in companies’ businesses. Saying, “Hey.” Shield’s Exterior in St. Louis, phenomenal business. “You sold 40 jobs. You have two crews. We need to be talking to Isaac. We really need to help you find a third crew. Is it money? Is it time? We could train them. What do you need? How do we help you recruit them?” Because if you wait till 40, it’s just too late and then you have a huge bottleneck. And so the thing we try to do is help contractors just realize what their problems are. And I’ll tell you half the time we identify a problem, the contractor doesn’t want to fix it and that’s okay because it’s their business.
Phil Singleton: That’s because some people, there’s just going to be some…
Scott Neidow: Yeah. It’s okay.
Phil Singleton: That are always going to be a million, 2 million. That’s just it because their personality or where they don’t want to … That’s just…
Scott Neidow: And it’s probably a fantastic life, yeah.
Phil Singleton: To get to 10 million plus, that’s pretty special. To get to five million in most markets is probably pretty special. Even to get the one to two million’s probably take some, but you can do that by one person, like you’re saying. There’s not a lot of people though that can get to….
Scott Neidow: No, it’s not. It’s not. So if I put things in perspective, there’s probably maybe four companies in my region over 10 states that will do a 100 plus hard jobs a year, resides. And then there’s another 20 that will do 50 to a 100. And then there’s, I don’t know, another 75 that do 20. Then a big guy or two or some a guy that do 20 to 30 homes a year. My methods, if it’s the contractor in 20, 30 homes a year is do you want to be more efficient? Do you want to be more profitable? Do you want more freedom? Because if you can let us help you build systems in your business to make your life easier and embrace technology, either way, we can help you save money. And either way, we can help you be more profitable or at least just work less.
Phil Singleton: Awesome. You can go on and on about this, is so fascinating, but I wanted to ask if you … You’ve named a lot of different companies you admire, good examples but I do want to ask you just some other ones that you admire, whether they’re in the business or out of the business, things that they do.
Phil Singleton: But before that, I came up with another question I wanted to ask because I’ve got some projects I’m working on this. I’ve got other plenty of all sorts of contractors, who they are looking at different softwares on the project management software. We’ve talked about, again, some of these before this recording, before we wrap up, what are some that you’ve seen that people using or are starting to use more in terms of … I’ve started recently to hear people talk more about JobProgress. CoConstruct is another one and it’s out there. I think it’s more like home builders and bigger remodelers. There’s AccuLynx and there’s a bunch of, there’s so many of them out there, but you’re in a great space to know what things, what people are working for.
Phil Singleton: None of them do everything that you want, but are there some up and coming ones that people are like, “Wow, this is really solving some problems and would be a good recommendation? And if there are, you do have some … Are there some that you’d say, “Oh, this is good for the million dollar or under guy or one or two million. Here’s one for a guy that’s doing a couple million or a few million a year.” Any of on those?
Scott Neidow: Yeah, right on. So I would tell you from a purely customer relationship management, managing your leads, follow up with customers, rehashing, from the marketing and customer homeowner standpoint, MarketSharp‘s probably the best. They’re also-
Phil Singleton: What tool was that again? Which one?
Scott Neidow: MarketSharp.
Phil Singleton: MarketSharp. Yeah. Okay.
Scott Neidow: Yeah. Now listen, they might be the worst when it comes to the production side or at least I don’t want a contract to only use them on the marketing side. So there is a handful that a lot of contractors-
Phil Singleton: That is more for sales automations, CRM stuff like that on the front end?
Scott Neidow: Yeah, yeah. So Contractor Cloud is one I see a lot of people use. JobNimbus is one a lot of roofers use, I see a lot of siding contractors like to use. JobProgress is another one. Buildertrend is pretty popular at the base at Omaha. I think for a builder, a remodeler or builder, it’s phenomenal. There’s just so many features you could use that you would never use as if you’re a windows siding roofing contractor, but it is a really cool platform. That’s arguably one of the more popular ones. AccuLynx, if you’re a storm contractor, I feel like you should be using AccuLynx. But if you’re someone who’s really more high-end retail focused and it’s about lead generation, AccuLynx doesn’t do a ton for me.
Scott Neidow: Two other quick shout outs though is there is a company called SumoQuote and it’s basically for those of you that don’t have a good sales presentation, but you’d like one, it’s a GAF and Hardie contractor based in Canada that built an online digital platform that it comes out to be a 10 page proposal and it’s awesome. It’s really cool. You can use it for a couple hundred bucks a month. If you don’t love your sales process, I’m a big fan. It’s not the best. Don’t get me wrong. There’s contractors out there that have a way better proposal, but if you don’t like your proposal and you want an A- proposal overnight … And they have free tech support, it’s awesome. Everything’s cloud-based so you always know where stuff is. So I’m a really big fan of that company, for sure. And then just the last thing I always try to … Well, I’m sorry?
Phil Singleton: I thought you said there was two. So is there another one?
Scott Neidow: Oh yeah. The other thing I would say, it’s more a concept that is please use financing. So if contractors only take away one thing I’m saying, so two things. One, always have someone always answer the phone and please, please, please, please, please always promote market leverage and offer financing on every single call, not just when people ask for it. Build in your pricing, figure that out. I realize it costs money, but you will get more leads, sell more jobs, and you’ll upsell jobs because you’re allowing homeowners to actually get what they want for what their budgets are. I can’t stress enough, especially during a pandemic.
Phil Singleton: Amen. Amen.
Scott Neidow: So it’s the number one thing I’d tell you is please use financing.
Phil Singleton: Totally. Especially when you talk about James Hardie being the top end premium product, you talk about exterior siding being the most transformational piece that you can do outside of your home, I actually heard some statistic that it’s return on investments is 60% or something like that. I don’t know where I pulled that out of. I heard somebody else talking about that, but it’s a pretty high return on…
Scott Neidow: Yeah. I think it’s low 70’s. A lot of it does depend on the region you’re in, but it’s 10, the last 11 years Remodel Magazine said residing with fiber cement will be the top upgrade over 500 bucks for your house. And so homes look big billboard for the product….
Phil Singleton: So if you’re there and you’re just like, “I don’t want to do this. I want to save a little bit.” Well, financing is the answer and it’s such a no-brainer. If you’re going to finance anything on your house…
You’re almost guaranteed to get it back if it was slightly outside of your budget or something like that. So I agree with you. So I need just put it out there. It’s a no brainer, should put so many more people in reach. But if you….
Scott Neidow: It makes your collections must easier too, by the way. No one thinks about you don’t have to collect any money. That’s all taken care of. You’re getting paid by the financing company so.
Phil Singleton: I have heard the argument though that, and you can tell me what you think about this. If you come in and you want to be the premium priced leader, which is what I would be and what I try and do for anything. If I’m going to go in, I don’t want to be the guy that’s trying to chase the bottom. If you come in high and then you offer financing on top of that, is there still a way to … Are you following what I’m saying? You know what I’m talking about?
Scott Neidow: Yeah, that’s fair. Well, I guess what I’d tell you is the 20 most expensive guys I know are the 20 really expensive because they offer financing.
Phil Singleton: Financing, I guess. Yeah.
Scott Neidow: And so I would come in, and listen, there are some legal things around cash discounts and credit cards so I’m going to try to avoid that. But if I was a contractor, I’d come in and say, “Hi. Your price, Phil and Mrs. Phil, is $37,200. How do you think about paying today?” And they’d say, “What do you mean?” I’d say, “I have 18 months, same as cash. I also have an option where you could pay 3.99 a month. Does that work for you within your budget?” Or, “Obviously, I accept cash, check or credit.” If it was me as a contractor, I would do the math on how many people are going to pay credit card? How many people are going to pay cash? How many people going to pay financing? What’s my most popular financing fee? And I would just blend them. So I would just build the cost in to every single proposal so you don’t have to worry about it. Your price is your price.
Phil Singleton: Yes. And is there a go-to resource that most people use for … Is it a local thing if you’re going to be a “contractor financer”, is there a national finance company you receommend?
Scott Neidow: There is a handful. It’s Synchrony Financial and Interbank and GE. There’s a lot of different companies that do it. There’s a newer company. The name is escaping me now….
Phil Singleton: We’ll put that in the show notes. When you find it later, I’ll put it in the show notes.
Scott Neidow: Yeah, yeah, yeah. It’s basically like you basically sign up and you pay monthly. And then it’s just a service that they go through 30 or 40 different vendors. That’s new and a lot of contractors like it because it pays monthly. I have heard though, it probably doesn’t work as well for clients that really need credit. And so if you have people that might be credit crunched, you might be better off going with an Interbank or a Synergy or GE or someone like that.
Scott Neidow: The one thing I would tell you though is I wouldn’t leave it in a homeowner’s hand to go get home equity or you pay us money to get in the house, you spend all this time to build a proposal, having the option … If they want to go that route, God bless them, but I’d have a solution for them that day. And I would definitely be telling your marketing person to market financing. I’ve heard from a lot of contractors in the last year that well, actually, people used to get deals like a free green egg or free gutters or a thousand bucks off, and they changed the messaging to more financing based, that they’re offering 12 months or 18 months same as cash. And the same marketing spend and the same proposals have been seen to be eight to 10% better this year, maybe because the pandemic and people are more worried. But I’ve heard from several bigger contractors that that’s really working for them.
Scott Neidow: Leveraging financing is the give in the marketing versus a $500 coupon, which most people assume you’re going to raise your price anyway. Most people don’t actually think they’re going to get $500.
Phil Singleton: So you’d say most of your more successful, larger contractors are offering financing, it sounds like? That’s just-
Scott Neidow: I would say so, yeah. There’s a couple of old school contractors that they’re just they’re really good because they’ve been doing this 20 years, they have a great business and amazing quality and tons of referrals. And very few that guys break through those companies have had to make the jump, but those companies also aren’t trying to grow. Any of the companies I’ve seen really trying to grow and all the companies I see that are normally the most expensive, they all really leverage financing. That’s a huge part of what they do is … A quick story. Two of my sales reps to used to work for big contractors, and those contractors used to only sell vinyl 10 years ago. And they were selling vinyl for more 10 years ago than our best contractors at Hardie today because it was 100% financing. So these people are selling vinyl for … Hardie probably goes on average around a thousand bucks a square plus or minus 25%. These people were selling vinyl for 1800 to 2000 bucks a square 10 years ago because it was heavily financed.
Phil Singleton: Right. All right. I’m going to wind this up with, I got one last question. I really appreciate you because I’ve gotten two more than I said I was going to ask you-
Scott Neidow: No worries.
Phil Singleton: But one of the things that I’ve noticed, I’ve, again, been in a lot of different businesses myself and I don’t know about your perspective on this, but I’ve seen in working with some James Hardie contractors now around the country now, thanks to you guys, there’s some guys that have done phenomenally well with not a whole lot of marketing, what I would call … I think a lot of the companies now that are dominating that I see basically adopt an agency mentality. They become marketers. Those are the ones that are really winning. They don’t fear marketing. They’re not intimidated about it. They’re basically fearless marketers.
Phil Singleton: But I do know there’s other ones that don’t do much marketing at all and still kill it. You know what I mean? They still got their other channels. They’ve still got other things. Now does that mean that they’re still reaching their full potential? I would say no. I would say somebody that’s killing it at whatever they’re killing it at, if they adopted an agency mentality, they could do 50 or 100% better maybe more than they’re doing now. But what’s your feel of when you see that? Do you see contractors resistance to investing in marketing? Surely everybody out there has been burned by some way, shape or form where they feel like they’d been let down by an agency or a digital marketing or an SEO or what have you, or even trying, like you said. Just because you tried a mailer one time doesn’t mean it didn’t work because you didn’t do it right or had the right messaging. You did it one time. You just tried it one time. You can’t throw it out the door and say that doesn’t work.
Phil Singleton: Everything works. If you get the right message in front of the right person at the right time, they’re going to buy it from you. So I guess my question to you is what do you guys see and do you see resistance to it? Do you see people becoming more marketing oriented? What’s the feeling over a course of dozens of-
Scott Neidow: So there’s obviously been a lot of contractors that have been burned because a lot of there’s a lot of … Marketing companies or used car sales. They’re everywhere. They’re constantly contacting you to replace some contractor. They’re constantly cooking on your PPC saying I could do it better when you’re paying for it. So I would say anyone interested in growth is all in on marketing, several different avenues, spending five to 10% of their revenue back on marketing that they built in to their pricing. There are a lot of other companies that are starting to dabble and my message to them is, “Hey. If you have a minute and a half to start marketing company mostly based on referrals and ValPak. Awesome. But if you want to be a $3 million company, you probably need to spend $120,000 or $150,000.
Scott Neidow: And now listen, your base business is your base business because for 20 years, you’ve always done it. If you want to grow, you’re not going to get the extra one, two, three, $4 million based on doing what you’ve always done. And so I think once contractors understand that, it’s a little easier. Whatever you have, you don’t need to spend more to keep it. But you definitely, if you want to grow, you need to spend more. And I will tell you…
Phil Singleton: That’s a great message.
Scott Neidow: Anyone, $1 to $3 million, almost every penny should go into digital marketing, like SEO, PPC, Facebook. I know some people don’t love Google, but the reality is you’re better off, if you’re going to spend…
Phil Singleton: Can’t avoid it.
Scott Neidow: Any money at all, yeah, yeah. You should spend the bulk your money not ignoring Home Advisor. It’s the speed of leads. Make sure you’re the first one to call homeowner back. There’s nothing wrong with … So we both have a mutual client in Minneapolis who I think he ends up selling seven to 10 jobs a year from our Hardie radius kits. So when you sell a Hardie job, we give you the option through our system to basically send 50 door hangers or 50 direct mail pieces around that house, and we give them 20 Starbucks gift cards, five to the right, five to left, 10 across streets. Knock on a door and tell them who you are. It costs next to nothing. Probably did a million dollars of business and it was just time. He made sure someone had to the time to do that.
Phil Singleton: It’s so awesome.
Scott Neidow: Yeah.
Phil Singleton: It’s so awesome because when those things happen, especially when they’re in a neighborhood where they’re like, I don’t know what you guys call them, they’re transitional or whatever, and they’re vinyl or something else. Somebody comes in and just tricks out their house with James Hardie. It looks like somebody dropped in a million dollar house in some cases, you know what I mean?
Scott Neidow: It’s a huge billboard. Yeah. It’s a huge billboard for that contractor. If a homeowner get house looks brand new and for hopefully for that contractor, if they do a good job, they should be able to get three, four, five, six, seven houses over the next three or four years. So our strategy is basically help contractors win neighborhood by neighborhood. And it’s not the easiest thing, but it’s the best longterm annuity. Every year you’re going to get two or three home from this neighbor if you provide an awesome customer experience. And if you do, if the home looks great, but then you also got nurture it. You got to send direct mail every year. You got to follow up the Jones’s and ask them for referrals. You actually need to have the yard signs out. You need to do a great job at everything around that job and need to absolutely ask for referrals and ask for the business. A lot of contractors don’t struggle with asking for the business or asking for referrals.
Phil Singleton: Right, right. I just thought of two more questions that I’m not going to ask. I’m going to invite you back. I know this is going to be one of my most popular episodes ever because we’ve got a lot of small businesses and a lot of home services people that listen. But I do want to ask you very finally just any other types of businesses that you admire personally, whether in Kansas City or whatever, that they do something cool that you look up to or admire, and then we’ll just call it a wrap.
Scott Neidow: Yeah. Yeah, yeah. I probably wouldn’t be in this position today. There’s a handful of people in my career that have really helped me. So at Hardie, shot out to Dave Denafrio 00:38:16]. Outside of Hardie, there’s a couple of companies, Siding & Window Group, Greg Bednarski the owner is-
Phil Singleton: Wait, wait, who are those guys you just mentioned?
Scott Neidow: So the one guy David Donofrio is a Hardie guy, but Siding & Window Group is a company in Chicago. The owner’s Greg, Greg Bednarski. I’ve learned so much from him. There’s two other big contractors in Minneapolis. They’re both seven to $12 million companies. Terry and Kristen Stamman from Twin City Sign Professionals, Ben Juncker from Craftsman’s Choice. I can’t tell you how much those companies have meant to me, to my learning, to my development just even mentorship or just dealing with Hardie and some of our growing pains. So it’s companies like that that have really allowed me to grow professionally, but also really allowed Hardie to trial and error some things. So thank you for putting up with us, I guess I’d say. Yeah.
Phil Singleton: Awesome. Hey, well, thanks so much for taking this much time, man. Every time I talk to you, it’s on the phone and especially here, I’m glad I had the chance to record it and share it because you’re a wealth of knowledge. And like I said, you guys just blow my mind every time I see or talk to people, how much you help these contractors, your contractors out, your partners, or whatever you guys call them. It’s just really amazing. I hope you guys keep doing what you’re doing. I think a lot of us, a lot of home services contractors did … A lot of bad things happened this year, but home services did pretty well. I’m still really bullish on next year, maybe the next several years. So let’s hope for all the guys that we work with will continue their good fortune in 2021.
Scott Neidow: I feel the exact same way, yeah. I think 2021 is going to be a banner year, yeah.
Phil Singleton: Awesome. All right. On that note, let’s thanks very much, Scott and we will talk soon.
Scott Neidow: Appreciate it Phil. Take care.