Leadership That Drives Brand Trust
Customers don’t sit in on staff meetings, and they won’t study your mission statement, but they feel the effects of how your business runs every time they interact with your team.
In this week’s episode, contracting business expert Gary Elekes shares how internal leadership changes can create real results in the field. He breaks down the steps he took to rebuild trust with his team, strengthen customer relationships, and reverse declining sales trends. Learn to lead with intention and see the payoff in both culture and revenue.
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Audio Transcription (in beta, please be wary of typos)
00:00:00:00 – 00:00:11:17
You know, leadership equals trust in your brand. You’re going to learn all about that today from Mr. Gabrielle.
00:00:11:20 – 00:00:25:11
Well, as I mentioned today, we’re going to have some awesome leadership content from the G-Man himself today. Gary is going to talk to us about trust in our brand, raising others up work style and creating a plan. Take it away, Gary.
00:00:25:14 – 00:00:48:19
The one thing that leaders need that is the process that you have to work through over time. You get what’s called positional authority. I remember in 1989 when they they handed me the keys to the first Linux branch. And I distinctly remember my boss saying, they’re not going to know whether or not you know anything or not.
00:00:48:21 – 00:01:15:23
I mean, like the team that you’re inheriting up there, it’s an underperforming team. And that was Detroit, Michigan. And the comment was, you know, they they’re they’re reporting to you. So you have what we call positional authority. And so positional authority if you describe that is you’ve got the title, you know, so somebody has bestowed upon you the idea that, okay, you’re a branch manager, whether you’re a good branch manager or a bad branch manager is irrelevant at this point because nobody really knows you.
00:01:15:26 – 00:01:35:27
And so his comment was, you’re going to have the ability to get things done because of your positional authority. But the sustainability of keeping things done is about raising others up and developing people so that they trust what it is you’re doing, which goes back to creating trust inside of a leadership brand. So I was 29 years old.
00:01:35:28 – 00:01:55:29
They had absolutely no reason whatsoever to trust me. The average branch manager in Linux was 52, and it had been seasoned for quite some time. And, you know, they’re sending somebody up there who’s more of a young technology, you know, modern day version of, hey, you’re not that far out of school. So you’re bringing some new ideas and some innovations to the to the concept of the job.
00:01:56:02 – 00:02:12:21
And that’s part of the reason why Linux did that. The flip side of that, though, is the challenges. All those individuals that were in that branch had been there quite some time and were significantly older than I am and had more experience. And, you know, they’re going to look at that and say, well, why should we trust you?
00:02:12:23 – 00:02:31:02
And so my answer was, you know, you you shouldn’t you should see what happens. And then let’s talk about the business plan. Let’s talk about the gaps. Let’s talk about what’s going on. So I’m not I wasn’t an entrepreneur. But number four I have to create a plan. And so I would just I would really like you to sort of understand what happened there.
00:02:31:05 – 00:02:51:16
So my first meeting with that group, you know, positional authority obviously I’m, I’m running the meeting. And the concept that I laid out was there’s a lot that I really am not going to know. So I’m going to spend the first 90 days and I’m going to analyze what’s going on inside of the world, inside of our customer base, inside of the branch, inside of logistics, inside of customer service credit.
00:02:51:22 – 00:03:12:26
In those days, operations and sales were all underneath the one roof of the branch manager. That is not true today. They have distinctly separated that these days. But in those days, you had the whole operation. So the state of Michigan and most of the northern part of Ohio and Indiana were mine. And so my job was to run that whole operation with very little experience and very little knowledge.
00:03:12:26 – 00:03:27:06
So what I did is I did exactly what you should do. I did a situational analysis. I wrote a letter to every customer in my community. So, Bobby Barrow, you would have gotten that letter and it would have said, hey, Bobby, I’m coming to visit you. And here’s a survey, and I really want you to fill out this survey for me.
00:03:27:06 – 00:03:43:05
And when I get there, we’re going to go over this survey. And that survey was about 15 questions long. And it was, you know, how are we doing with product availability? How are we doing with pricing? How are we doing customer service? You know, how are we doing with parts availability when you call one 806 five four Dave, does anybody actually answer the phone?
00:03:43:12 – 00:04:09:01
Just a whole list of questions. And I pretty much knew the answers were going to be negative, but the goal of that process was to collect the data. So again, when you do the business process evaluation, I like the idea of having your team together to actually do that. So it slows the process down a little bit. But on the flip side, they get the opportunity to create some inputs, meaning that the whole team gets to comment on the situational analysis.
00:04:09:03 – 00:04:27:27
So I visited 130 contracting businesses in 90 days. So in some cases, 2 or 3 in a day, you know, 2 or 3 hours I’d visit. And and that was an intensive schedule from my point of view. But I needed to do it. I, sidebar story. I bought a Jeep Grand Cherokee with scarlet and gray. I was living in Michigan.
00:04:27:27 – 00:04:43:11
So if you don’t know anything about the Ohio State, Michigan rivalry, I chose those colors for a reason. But I bought a local Jeep because Chrysler is based where? Red Cross Street from where our offices were in Auburn Hills. So I drove around, first week at that there, and I’m in a blizzard and a snowstorm and I get stuck, real happy about that.
00:04:43:12 – 00:05:01:23
I distinctly remember that story, and my wife is basically 39 weeks pregnant, so I’m stuck in Saginaw, Michigan. I can’t get out. The roads are closed, and she’s basically ready to give birth. So, it all worked out in the end. I basically got on the road and forced my way down. And, so obviously we we had our first job there in Michigan.
00:05:01:25 – 00:05:22:00
So what that 90 days and that 130 contractor visit did was it gave me this pile of data that I was able to create in terms of a presentation for my staff. So leadership equals trust. So this isn’t Gary walking in the door saying, well, here’s what I think. And this is what we’re going to do in the autocratic style.
00:05:22:00 – 00:05:44:17
And we’re going to we’re going to charge up the hill and we’re going to we’re going to make customer service better. Actually, what I did is I laid out, you know, on a histogram, if you know anything about, you know, back in that day, it was Lotus one, two, three, today it’s Excel or Google worksheets. But now I just basically laid it out and said, you know, 130 customers, you know, 90 of them said, we can’t answer the phones, you know, in three ways or less.
00:05:44:17 – 00:06:05:10
So obviously that’s a problem we got we had to figure out how to fix that. So I laid out all of that data in front of my sales, distribution operations, credit and customer service organization and said, we got to figure out a game plan on how to fix these problems. These are all the customer viewpoints for problems. So they’re not Gary’s viewpoints, they’re the customer viewpoints.
00:06:05:12 – 00:06:21:10
And the other thing about the number one on trust is everybody knew that I made those visits. I sent out the surveys, I had the surveys. So I had data. So I’m going to ask you to consider this principle. It’s our business philosophy. I’m not saying it’s yours, but it’s one that has worked for us in the past.
00:06:21:10 – 00:06:43:11
And that is, we refer to in God We Trust. Everybody else brings data. So if you walk into a meeting and you’ve got an idea, that’s fantastic, but nobody is going to approve or disapprove of that idea. We’re always going to be neutral on that idea until there’s data that surrounds that. So, you know, Bobby implemented the lifetime repair guarantee.
00:06:43:11 – 00:06:59:24
And I just remember in the class that he was in and people were asking, well, how can you do that? And the answer is, well, we do it relatively smoothly because we’ve cost it in the price of the repair should it happen. And somebody said, well, how can you do a refrigerant leak? And what happens, at least again, do you cover it?
00:06:59:24 – 00:07:32:05
What happens if a compressor fails? Do you cover it? And the answer is, yeah, of course we do. And the next sentence was the reason I’m okay with that is I know the data and the analytics for what those secondary repairs are. And you know, Bobby will remember this, but I said we know from his stoical data that 4% of the time we incur the exact same repair in a period of time they would cover the warranty, meaning by the time the life cycle of the equipment sort of hits 15 years old, we know that condenser fan motors that I replaced seven years ago.
00:07:32:12 – 00:07:51:10
If they work for 30 days or a year, they’re probably going to work as long as we’re doing the maintenance. So it’s a 4% risk factor. We know that piece of data, so that’s not a huge risk. If I told you that 4% of the time you might have a failure on the equipment on a secondary repair, and you were going to raise your price from $250 to $450 an hour.
00:07:51:12 – 00:08:05:25
So you got $200 extra on every single service call, no matter what. And you multiply that by the number of service calls. And then you looked at the cost associated of the repair for the 4%. You’d be like, well, yeah, we’re making a lot of money on that. And there you go. And there’s the answer to that problem.
00:08:05:28 – 00:08:24:22
So we’re not just going to force feed any idea inside of the organization. We’re going to create a level of data around that. And we’re going to create trust based on the idea that we’re going to create collaboration, and we’re going to raise others up, and we’re going to develop them, and we’re going to ask questions, and we’re going to create the opportunity to create number five, which is involvement.
00:08:24:25 – 00:08:51:16
So my plan of attack was I’m 29. The average person up, there’s 45 to 52. I have positional authority, but I have no experience. I have no respect. So I mean obviously they have to pay the position respect. So my ability to go to the contractors and grab data and ask questions provided the data and the analysis for me to set a plan up in number four and simply say, this is what the customers voices.
00:08:51:16 – 00:09:05:12
And in fact, that’s what we call it. It was called voice of the customer. And I just remember my boss is like, dude, you’re going to visit 130 accounts in 90 days. How are you going to do that? Because, you know, obviously Saturdays and Sundays are part of that. And you got a baby coming and I’m like, I have no choice.
00:09:05:12 – 00:09:19:14
You set me up to a branch that’s losing $1.2 million. There’s 36 branches. This is the only one that loses money. Do you have to do this? This is what you set me up here to do. So I’m going to do it. And I remember talking to my wife saying, you okay with that? And she’s like, well, yeah.
00:09:19:14 – 00:09:35:21
She’s like, you know, I mean, my parents are coming up, your parents are coming up, etc.. And so, you know, we had some support network around that. But I did do that. And what that allowed was the involvement in the buy in from the territory managers to be able to see what the plan of attack was. So there’s a second layer of that.
00:09:35:23 – 00:10:00:28
Okay. What I also identified was that the organization, most of the people in that organization had not been groomed, meaning number two, they had not been raised up. They were asked to basically be root sales professionals. And so in my perspective, that’s not really a value added. We were competing against dealer young and carrier factory. And you know, there was a, there was a distributor that was managing train there.
00:10:01:06 – 00:10:27:28
And, and they had better market positions than we did. Obviously, our market share was 3.4%, and the national average for Linux in those days was about 8.5. So, you know, you’re basically five percentage points below the average. And some of the operations were upwards of 15 or 16%. So the target really is 15. So I laid out the vision that we’re going to target 15% because that’s what the top operation was inside of the Linux organization at the time.
00:10:28:00 – 00:10:50:12
And and that became a milestone that we looked at. And so the question becomes, if we’re at 3.4, the average is, you know, 8.5 and 15 is the target. Let’s let’s transpose that or move that over to your world. I’m at 3 million, you know, I want to be maybe closer to 10 million. And so, you know, I have to reverse engineer how that’s going to work.
00:10:50:12 – 00:11:11:21
So the planning process, number four sort of has the definitions that we have to deal with. The team was not raised up. They did not know how to do this. So I asked the question, you know, what do you guys need in order to, you know, make that at 3.4% operation, move to a 15% operation. I’ll never forget, his name is spike McMurtry.
00:11:11:21 – 00:11:29:10
Ray McMurtry is his real name. But he went by spike. And spike was the territory manager in Jackson, Michigan. He has since passed away recently, but, he lived to be in his 80s, so, he had a pretty good life. But spike was a character, and, spike was about, I don’t know, 56, 57 years old at the time.
00:11:29:12 – 00:11:47:16
Had plenty of money. He had a garage, the chop shop. He was go out to Arizona, buy cars, bring them in, clean them up and then resell them in Michigan, because Michigan is a huge, historic car. You know, collecting type market. And so spike said, Mr. Gary, he said, you know, you seem like a young, smart guy.
00:11:47:16 – 00:12:00:06
He said, but I’m gonna tell you right now, this is in a meeting in front of all of his peers. And he said, I’m gonna tell you right now, a lot of is going to have to change around here to go from there to there. And I said, spike, you have no idea how fast that’s coming at you.
00:12:00:09 – 00:12:16:24
So, I’ll never forget that. And just everybody in the room was like, oh, boy, here we go. Like, you know, the old war veteran who’s like the peer group alpha influencer. That’s your alpha tech sitting there, right? He’s the guy that everybody’s looking to, you know, he’s thrown down the gantlet. Yeah. That a lot of stuff’s going to have to change.
00:12:16:24 – 00:12:35:04
He said the word. You know what? And I said, yeah, absolutely. You have no idea. Are you looking at this list like everything on this list we’re going to change. So what they were used to was the leadership style, where the previous guy was in his mid 50s and he was semi-retired. And that guy’s name was also Ray.
00:12:35:06 – 00:12:55:29
Now they fired him for a reason, okay. Because it wasn’t happening. And so I basically said to spike privately, I said, you know, there’s a reason why they put a 29 year old in your world, okay? Because at 29, I’m not afraid to change. And I said at 55, 56, 57 the other day, he he was in a comfort zone.
00:12:56:02 – 00:13:18:12
And I said, you know, I haven’t made any money. And I said, so, you know, looking at the opportunity, it’s an opportunity for me. So I’m not changing anything that isn’t on this list. But that’s what your that’s what your process list is about. So you get your people together, you organize them. You go through the process list together, you make them evaluate the process list and you make them prioritize with you.
00:13:18:15 – 00:13:37:00
So when they get there, one through 20 and you got your one through 20, let me show you what that looks like, okay? This is a real life business plan. It happened. Now this company just sold for a large multiple. So we’ve been working on this process for a long time. But I just want you to look, it’s the same structure Rockefeller habits.
00:13:37:00 – 00:14:00:06
There’s your management team. Right there we are. That’s who we are. Do we have alignment? Do we understand each other? Do we have weekly meetings, blah blah blah? Yes. No. You can see the green and red so we know what’s going on. Here’s all the stuff that we’re doing okay. Here’s our strengths. Here’s all the weaknesses. All that blue is the stuff that we thought were kind of high priority stuff.
00:14:00:09 – 00:14:23:23
You can see it looks just like the same one we did just yesterday. For I market, it’s the same blueprint. It’s the same process, process driven leadership next master priorities list. This is a new piece of information for you. How do you take the situational analysis and how do you take all five of these people right here. So you got five different personalities.
00:14:23:25 – 00:14:47:29
You got five different positions and interests, meaning, you know, Kevin, runs operations. Brandon ran commercial. Charmaine was our GM. Chris was our service management service sales. And I was, you know, strategy partner, owner. And so you go, okay, great. What are you doing? How do you do that? And the answer is everybody looks at this list and goes, boom, we need this stuff.
00:14:48:01 – 00:15:07:29
Right? So this is our problems. These are all the things that we see are issues. And so you go through and you got let’s everybody go over here and put their list, their top five, their top ten, their top 15. Right. So everybody goes into this is a Google doc shared file. So what that means is it’s collaborative.
00:15:07:29 – 00:15:29:13
So it’s not. Well Bobby barrels over here doing his and Gary’s over here doing his. It’s not Brian Burke is doing his. And Bobby barrels over doing his. We’re all in the same document. And so we can literally lay out the one system. And so we came up with 79 items, 17 items that we needed to deal with.
00:15:29:15 – 00:15:49:09
So everybody had some continuity. If you take it five different people, 17 items. There were some consistencies there. And I think you’re going to find that there will be some differences and there will be some consistencies. This is my favorite one right here. Number nine, we need 5000 new service calls in 2021. That was part of the marketing class the other day.
00:15:49:09 – 00:16:14:05
That’s a real thing that happened. And we went and got them. Well, that was a big deal. And so we said, well, okay, great. We put everything in to soup and now we have to agree on what those initiatives are. So this is what you do. This is exactly what you do okay. Just want to get there. You so everybody goes through and ranks whether that’s a high a medium or low.
00:16:14:07 – 00:16:36:22
So think of must do need to do nice to do. In this case we’re just using a different adjective high medium priority low priority A, B and C all the same strategy. Just a different verb. Just a different adjective. So high high very high. I love that we don’t even have a very high that Chris just has to go in and go very high.
00:16:36:23 – 00:17:02:23
Why? Because he’s Chris. That’s why I got some charisma, got some personality. And so all the highs get organized. And so when everybody agrees on that, what you have is you have a collaboration going on where the Venn diagrams are meeting. So I want you to think about this discussion right here. All right. So, if we if we said each person is a Venn diagram and that’s Chris.
00:17:02:23 – 00:17:27:11
Okay. And then maybe this is Charmaine. Okay. And then maybe this is Brandon, and then maybe this is Gary. There’s this center universe where the mass is meeting on that particular spreadsheet. That’s that’s what we just did. That’s what I just showed you. So everybody does the process chart together. Everybody creates their idea of their one through 20, but they think one through five is six through 15.
00:17:27:17 – 00:17:49:09
That’s 20 items you go into the master initiatives list and you pile it in there. That’s a public document. That’s a legitimate document that’s that’s out there in the world today right now. And that’s a live business plan. Now this is 2021. So this is last year’s stuff, but it’s still relevant. And so all right, you go fine.
00:17:49:16 – 00:18:09:00
If that’s what we’re supposed to be working on and everybody agrees on it, then the five items that you can see are the ones that turned into the bright blue. That’s the ones that we did. So we launched a call center. We hired a plumbing GM. We created a better meeting rhythm with accountability around KPIs. People were coming to meetings and they weren’t being prepared.
00:18:09:00 – 00:18:27:08
And so we said, no, you can’t do that. You know, we’re wasting other people’s time. So, you know, we created the process that said, you have to prepare ahead of time. And so that that improved our meeting rhythms. And we had to hire two more commercial account managers. So, in addition to the 5000 service goals, that’s what we landed on is the initiatives.
00:18:27:10 – 00:18:53:07
So I can’t emphasize to you enough, this conversation where we said raising up the others. So back to Detroit, Michigan. So I had a group of people and they were acting as independent, you know, silos. And they were out doing their own thing, and they were basically really good at calling on their existing customers, and they stunk at calling on any new business so they couldn’t walk in the door and talk to a carrier or train dealer.
00:18:53:14 – 00:19:14:10
They didn’t know what to do. They didn’t know how to do it. They had no process. So you have to listen carefully. This is a $19 million branch that’s losing money. Okay. So we finished that year at 27 million. So it took me a little while to fix it. But we finished the year $27 million that we were we were awarded branch of the year.
00:19:14:12 – 00:19:37:00
And we won that award five years in a row. And we were number one in every single metric in Lenox across the board. And they had 14 metrics for branches. We owned the number one position in every metric for the next four years. What changed? The answer is number two. And number four. We always had a plan, and we started training and developing the people to execute the skill sets they needed to be successful.
00:19:37:03 – 00:20:01:13
So that’s a standard operating procedure for how we call on a new customer. That’s a standard operating procedure for how you onboard a new customer. One of the things we did in our data analysis, my personal data analysis with the customers is I ask them, do you participate in Lennox’s programs like Lennox has Got Plan Service, Lennox has got financing, Lennox has got a promotional program, Lennox has sales training, Lennox has, you know, product training.
00:20:01:15 – 00:20:30:08
Which ones are you using? And I created a chart and I had every single account, mapped out, and I had every, aspect of where they participated and the most successful contractors that we had in our universe were the ones that were participating in the programs that Lennox had available to them. That is not lost on you if you’re a supplier, if you’re deacon or you’re train or you’re any of these other, worlds, you have to look at your contractors and you have to say, well, why are they not participating?
00:20:30:10 – 00:20:58:01
And the answer is they don’t understand why. So I would ask the territory managers, the sales team. And number two, why can’t you convince this contractor to come to a sales training class when they’re only selling in those days? Eight seer okay. Ten Seer would have been the standard in the day. And so the marketplace was really, sweet around the 19, which is an 11 to 12 Seer unit, which is what we positioned as a strategy to go after the marketplace.
00:20:58:04 – 00:21:20:05
And everybody said, well, you can’t sell 1112. I mean, I’m today we’re talking about VRS and VA converters. It cracks me up. But, you know, the standard was Ted. So the lowest common denominator would be like the 14 today. So we had most of our contractors selling Fourteens and you know, 80% furnaces and some 90%. And the more successful contractors obviously sold better efficiency equipment.
00:21:20:05 – 00:21:48:21
And they understood the gross profit issue. So what we did is we trained the sales organization, we sat down and we did a gap analysis. So I want you to write this down, okay. The gap analysis isn’t just on your business. The gap analysis has to be on all your skill sets for all your people. That’s the difference between what typically most contractors that are super successful at scaling and half process do, and those that are just working on trying to figure out how to get better in their company.
00:21:48:23 – 00:22:03:21
Awesome stuff there from the G-Man, as always. Now listen, if you like this episode, be sure and share it on your Facebook. And if you want to unlock more premium training content to take your business to the next level, click the link in the Facebook post for a free 30 day trial. Well, that’s it for this week, folks.
