Building a $220M Empire: The Power of Training and Branding

0:08Hello and welcome to another episode of the Duct Tapeaket marketing podcast. This is John Jantz. My guest today is Tommy Mello. He's a driven entrepreneur who's built a 220 million home services business with over 700 employees across 20 states. He's also the founder of Home Service Expert, where he's dedicated to helping fellow entrepreneurs achieve the same level of success. He's also the host of a popular Home Service Expert podcast and the author of Elevate, Build a Business Where Everybody Wins. So Tommy, welcome to the show. Thank you. Really excited to be here. I got looking back, I think this is at least your second appearance on the show.

0:49And I got looking back and the last time you were on the show, it was 2020. We were in the throes of, or maybe just starting to come out of the pandemic. And the home services business was really kind of crazy at that point. A lot of folks were in turmoil. A lot of folks were really having trouble finding skilled labor. fast forward to 2024. What's the state of the industry today? Never been better. You know, we were deemed essential during COVID. And the fact is, is there's always this teeter totter. You need more leads or you need more great people. I learned in 2017 how to build my own technicians.

1:25So right now we graduate from my training school right next door, about 50 technicians a month. But it's kind of, I view recruiting like marketing. You got to really define who your avatar is and make sure it's the right person. Because if you're not converting leads, getting the right reviews, getting the right opportunity job averages, people are always like, I need more leads. And I'm like, well, you must be booking every phone call. You must be converting every booked call to a paid customer. And they're like, well, what do you mean? And I'm like, well, your marketing dollars are going to waste because your call center is not working out very well.

1:59Your technicians are not converting very well. You don't have a rehash program. So the most important thing is you got the right people showing up to the right leads. And you should be ranking your leads and ranking the people showing up to the leads. Yeah. So it's interesting because I think a lot of business owners, doesn't matter what industry, kind of think of hiring as an event. Oh, I need people. I'll go out and hire some people. I'll run some ads. I'll hire some people. And the way you're talking about it is more like we would think of traditional marketing. You got to know who that ideal customer is.

2:31You've got to have the right message. You've got to constantly build pipeline, you know, to get those folks. And I think a lot of, I think of a lot of businesses treated recruitment that way. They'd find a lot more success rather than just always firefighting. I can tell you this. What if I told you, like, I want you to, the old Pareto 80-20 rule. Right, right. What I'd love people to do is look at their top 20%. I said, what if they were able to multiply that by five? life so that what that means is they take the top 20 percent of their working staff and either you got to train them up or out to get into that 20 percentile and unfortunately when you're a small business like i was for a decade longer than that actually i didn't know what good was and you know what i used to tell people john i used to tell people if you got a garage you're my client and And I've quickly, over the last, I'd say, seven years, realized that not everybody with a garage door is my client.

3:31The people that are price shopping, you could only have three things. My dad taught me this. You could have the cheapest, the best quality, or on your timeline. You can never give all three. It's impossible to give all three. So I decided a decade ago, I'm not going to be the cheapest. I'm going to get out there today when they need me the most. and I'm going to do a quality job with a drug tested background, trustworthy person that can be alone with your wife and kids. And that's what we've done. And I think to be the cheapest is a race to the bottom. Yeah. You got to throw all that other stuff out, right?

4:07So you talk about in your writing and when we talked before, you know, about kind of struggling a little bit before you kind of turned the corner and figured out how to really scale. So were there any kind of pivotal moments or pivotal things that really made you, you know, you feel like, you know, kind of made the light bulb come on and, you know, really lead to success? Yeah, this right here, I know not everybody's watching, but the way my trucks were branded, this was my original truck. It was just a white truck with stenciling on it. Then I got a better wrap that was pretty good. And then I got this one that's absolutely phenomenal.

4:44and this other the brand new rap i got and this had to be about five years ago it was done by dan ansonelli from kick charge and it doesn't have a lot of logos like the bbb and and yelp and angie's list on it it doesn't have anything it doesn't even have a phone number on it it's a billboard people can only read five words as they're driving by right so anybody that puts these 18 words on there and says you know you know call now to get your appointment and this qr code they're driving by. So once you get your brand dialed in, and now my signature on my email looks like my catalog, looks like my website, looks like my yard signs, looks like my billboards.

5:23And then I've got a jingle that's the same everywhere. So that was a big piece of it. I think people don't understand a part of marketing is your brand. And brand is, you know, some people take them and they differentiate them a little bit, but I think it starts with your brand. And what is your core values and what do you stand for? What can you prove you're known for? Like, you can't say I'm the best. You can say out of the last thousand jobs, 998 started on time and two of them got rectified within 48 hours. And those are facts. And your KPI should be driven towards the consumer. Obviously, your financial department's going to have KPIs, like what's your conversion rate, average ticket, and what's your balance sheet income statement and all.

6:04A lot of great data about what's good for us, but we need to start thinking about what's good for our clients. that the biggest thing I've learned is most companies I've invested in, most companies that I've coached, I find most of their opportunity in their call center where their leads are coming into. My mom used to answer phones for me, John, and she, sometimes I felt like she was having phone sex. She's never, I don't think had phone sex, but she'd be like, oh my God, honey, I am so sorry. It was like crazy. She'd be like apologizing and empathy and just, honey, I am so we're going to get this fixed.

6:40I'm going to send out my best technician. This is like 15 years ago. And I show up to these houses, John, and the people would give me a hug. And they'd be like, this is the best company I've ever talked to. Like, whoever that lady was, she would never say she's my mother, but she brag about me. She said, I'm going to send out our best technician. This guy, he's a handsome devil. But she never say she's my mom. I show up with it was putty in my hands. Like the client would say, whatever you guys say to do, we're going to do it. We've never heard of anybody take a call like that. And so I think the contact center, there's a lot of opportunities.

7:14And that's operational, right? But marketing needs to go through all the way through to where I collect the cash. And even after I get the review and when we do business again in the future. And I think people miss that. You know, I listen to you talk about, I mean, obviously, your mom was very invested in the success of the business, in your success personally. How do you get employees to feel like I'm an essential part? I mean, a lot of times people answer on the phone, they're like, I'm just putting in my time. You know, I don't get to see that profit necessarily. I mean, you know, all the things people can delude themselves with.

7:46So how do you get people, you know, everybody bought in it? Because I know that's been a big part of what you've really preached in terms of really building a company culture. There's this simple phrase called what's in it for them. And I'm not into tenure. I'm not into hourly pay. I'm into performance pay. And if you set the guidelines and it's fair and it's distinguishable, meaning that it's not based on somebody's opinion, performance pay, what will happen, and I want to be very careful here for your listeners, if you switch to performance pay, you'll probably lose 80 % of your staff because they like to get paid hourly.

8:22They love to get paid, you know, come in, do my job, and be done. But when you come up with ways to say what's in it for them, How could I have them win more? And look, everybody's like, how do you even start that? Well, you just take your historical data. Like this person's booking 62%. At first, you got to know KPIs and have data accuracy. It's got to be some type of data compliance to make sure that it's accurate. And say, if I got them up, like right now, we'll do 300 million right next year. For every percent we increase the booking rate, that's$3 million of revenue to the company. At 20%, that's an extra$600 ,000 to the EBITDA.

8:59And so I'm a mathematical guy, right? So I'm always doing math and coming up with formulas and saying, does this get the right behavior I'm shooting for? And if I share some of it with them, the company, you know, I win really big, but I allow them to feel like they're winning really big too in comparison. Because if you're making$17 an hour, I can pay people$45 an hour and still be winning. And how easy is it, do you think, for me to recruit A-plus players when I can pay that much? right it's not even it's like taking candy from a baby it's like why would he pay that much well he's setting he's getting people to set him up for success and that's so important it's just smiling on the phone and empathy and really caring and you know if the i heard this from a buddy of mine he said if you ever go to the four seasons you'll notice that they hire people that genuinely genuinely do care like they don't just say hey how are you today sir nice to see you see you later They say, listen, is there anything I can do to make your stay better?

10:01I'll tell you this. I got to stay at Four Seasons in the past. They might tell you a story and say, it was so magical for me and my family. After that day, I knew I wanted to work here. And my goal is to make sure that this is the best experience you ever have. They'll look you in the eyes. They'll walk you to the bathroom if you ask for a question. They'll open up a restaurant that's closed and make you something themselves that they have the opportunity to do that. And that's what I think is we talk so much about marketing, about making the phone ring. And I talk about stacking the deck on the other side by recruiting A-plus people on your team.

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11:14That means if you spend$5 ,000 on TV ads, you'll get an additional$5 ,000 to spend. Head on over to adcritter.com. That's adcritter.com and get started. Let me ask you a few things. You feel like you know what differentiates your business from every other business out there? Can you confidently charge a premium for what you offer? Are you working from a plan, a marketing roadmap that allows you to know precisely what to do next? Look, don't worry if you can't answer yes to any or all of these questions. You're not alone. See, marketers today get so focused on the tactic of the week, staring them right in the face that they forget to look at the big picture.

11:55The overarching strategy needed to consistently grow their business. Over the years, I've worked with thousands of businesses, helping them do just that. Create the perfect marketing strategy and plan that gives total clarity about what to do next. Confidence to charge ahead and charge more. and complete control of the marketing tactics they choose. I would love to help you and your team do the same. Look, to find out if our strategy first program is right for you, visit dtm.world slash grow and request a free consultation. That's dtm.world slash grow. Talk a little bit about that concept of recruiting versus creating, you know, A plus team.

12:42Obviously, if somebody is already a proven superstar salesperson, you're going to pay for it, right? To recruit them, perhaps. Whereas I know you spend a lot of time and energy actually training and teaching and creating A players. Talk a little bit about that, the difference between those two ideas. Well, I do think there's certain things I look for. I hire for personality. So eye contact, tonality. Can you tell a great story? Do you smile a lot? when I take you and your wife or husband out to dinner, do I find that you guys get along well? Because if there's problems at home, there's more likely gonna be problems when you come to work because you're trying to kind of put yourself out of a fire that you just got into at home.

13:25But what we do is we train, train, train, train, train, and we role play. And we just focus on these attributes of like believe in yourself. The first thing you need to do is believe in yourself. And that's what eye contact tonality smiling is, is believing in yourself. And I'm not Starbucks. I can't hire people to save them, to start looking through their lens differently. It's so hard to do that. It takes years. It takes years. Sometimes people go into the military very unorganized, come out very, very organized, but that takes sometimes four to eight years. So I try to find the right canvas.

13:58And then I try to teach these things, like the words we use. We never say, this is how much it costs. We say the investment would be this. It is an investment. It's the number one ROI on your home. The number one investment more than your kitchens or bathrooms is your garage. Remodel magazine six years in a row, an unbiased third party. So we teach them the words to say. We monitor this. We've got systems that record the whole conversation in the garage with the client. That's for the client's best interest, but it's also to coach. We say kneel down when you're presenting. You don't want to be above the customer because you make them feel inferior.

14:33There's a lot of things that we try to do. and when I played football, we did two a days. We practiced 10 times a week, play one game. So in business, why shouldn't we do the same thing? Or should we go after you train, you're just gonna go practice on the customer's house forever. And I don't know about you, but I like nice things that last. I've gone with the cheapest to fix my house. And when I did a remodel in 2012, I'll never go with the best price again because I had to redo the roof after five years. I've done, I'm on my third AC unit. I just want the best. I don't want to have to worry about it.

15:08And I think homeowners are smart. They're like, you know what? What's the, and what if you had a magic moment where you said, you know what I care about the most? I care that my kids could go to school and I care that my wife makes it to work on time because that's what we missed today. So you called the best option. This is to keep the kids coming to school on time and make sure your wife gets to work. And there's these magic moments and you title the estimates exactly what the client cares about. And you title it, this is the one that'll give you the best investment for moving in five years and making sure your garage will last.

15:45Because they say, I'm going to move in five years. So you say, listen, we don't need to do the Taj Mahal. Out of the five options, let's do number four. Talk a little bit about skilled labor. I mean, people aren't coming out of high school today thinking, I want to go be a carpenter or whatever electrician. nearly enough, I think, to meet the demand. So what have you done to really kind of shore up that? You hire for, like you say, personality or fit, but they still have to be able to install something. They still have to be able to fix something. What are you doing to kind of shore up that end of it?

16:20Well, we spend 12 % of our revenue on marketing, okay? If we do 25 million, we're spending a few million dollars a month in marketing. Yeah. So we're in ValPak. We're all over website optimization. Clipper Magazine, the newspaper, PFP deals, Angie, every lead aggregator out there. We're on TV, radio, billboards. The idea is why not put the recruiting ad into some of these? I say at A1 Garage, you've always known us for great service, blah, blah, blah, blah, blah. Now we're looking for more. You want to do two in one. You want to do the marketing and the recruiting in the same message. And then you want to have this massive funnel that chops, chops, chops, chop.

17:03Every time it chops down to the smaller amount, it's refining, refining, refining, refining. Here's what I do know. Artificial intelligence and robotics are not going to replace Braggers, HVAC, plumbing, electrical, roofing anytime soon. No one's going to come out with a robot and install Windows. But I'll tell you what, this camera stuff we're working on, the drones and the different things, they're all going to be AI. AI is going to fix everything. think left brain ai is like handling here soon development coding everybody said hey go into code and go into coding well ai is going to fit you're not going to have a job so these blue collar things that were shit on for a long time like man it was embarrassing if you were hey uh i do i'm a plumber now it's like you're beating your you're like i'm a plumber baby it's like our day this is our time and i think the word's getting out there like the average plumber is 49 years old.

17:58And now you got this amazing amount of people going, look, I don't think I was cut out to go to college and go into debt for$200 ,000 because I don't really know if I want to go into economics or accounting. And I don't know if my future, what the future holds there. So I do know that no one's going to be fixing anything on the home in at least for a decade. I don't think there's robots going to be coming out and doing it for a while. So I think people are starting to understand that and they're starting to say, I don't want to go into debt. We pay to train you. You come to work for A1, you're going to get paid a very healthy living to get trained.

18:37And then if you can't make two grand a week, shame on you your first year. If you can't make three grand a week on year two, shame on you. We're going to give you the tools. We pay for the tools. We're going to give you a brand new van. We're going to give you training. We're going to give you role play. We're going to give you a flexible schedule. It's a really rewarding job. And I think the more we could share the stories, we've got a full-time dream manager. Their job is to help people dream. What do you want out of life? Do you want to go on a big vacation? Do you want to buy a home or a second home or a third home?

19:08What does that mean needs to happen? Well, it means these need to be your KPIs. And when I talk to you, I just say, listen, you ever, you told me you want to take your kids to Disney World first class, let's skip all the lines. Do you realize if we just, if you had a little bit higher conversion rate and I'll show you exactly what you need to do to do that, that you would make that happen this year. So you talk about what's in it for them again. They don't care that, hey, Tommy sits down with them and he wants to make more money to the bottom line and you're going to be on a performance improvement plan.

19:39No one cares about that. They care about like, what about me? What about my family? What about the people I care about? Like, I took a chance working for you. Why don't you teach me more? But you got to remind them. You got to remind them about their why and what does it means to their life in the future. And hopefully you'll hire the right people that have plans that some people go through life and just say, I'm okay being mediocre. Well, Tommy, we've run out of time, but I appreciate again, you stopping by. Very inspirational as always. I appreciate you taking a moment to stop by the Duct Tape Marketing Podcast.

20:10Is there some place you want to invite people to find out more about? I know you've got a variety of different interests and things you're involved in, but what's the best way for people to find out more about what you're doing. Yeah. If you just go to Tommy Mello, there's no W at the end of my name. So Tommy M E L L O.com. You can see all my social media, my books, everything's there. And if you go to Tommy Mello.com for a slash shop, you can do a shop tour. I don't charge anything. If you ever get, find yourself in Phoenix or want to come out here, it's a great experience. It's a way to pay it forward.

20:44Like everybody did for me when, when I was coming up in the home service, home improvement space. It's a way for me to brag on the team and it's a way for me to help you because I do believe that if you help people, it comes back tenfold. I think Zig Zayler said, you can have anything you want in life if you help enough people get what they want. And I'm a true believer of that. I really am. So if anybody needs anything, reach out to me. I got 80 ways from Sunday to reach me. I've got a full-time team, a massive team these days that make sure that it gets that I'm aware of the comments and questions.

21:15So I appreciate this podcast and I'm looking forward to having you on. Yeah. Likewise, we're going to record back to back today. So again, thank you for taking a few moments to share with our audience and hopefully we'll run into you one of these days out there on the road. Sounds great. Appreciate you.