As Installers begin to see tougher trading conditions, it’s easy to have concerns for the future. Especially when the mainstream media like to hype up any negative signs in their desperation to keep us tuned in. With the benefit of Business Pilot’s Barometer, we can cut through the noise and get straight to the data. So what is really happening in the glazing sector and has the tap been turned off?
In order to shed some real light on the subject, Business Pilot’s Managing Director, Elton Boocock took some time out to analyse the past four years. Two of which we were in the Covid Bubble, and two are after, giving predictions for the rest of the year of 2023. There are some surprising results, so stay tuned to the end.
To get a real handle on things, Elton looked at Lead volumes, Conversion Rates and Order Values.
The key when reading the charts below is to look at the trend. You may have more or less leads for example, than the average. However, you will probably relate to the pattern. Where you don’t that’s where you are bucking the trend!
Let’s start with Lead Volumes.
Lead Volumes
Starting with pure lead volumes, which is really what we mean by the ‘tap’, notice how consistent the quarter trends are, as in QTR to QTR changes. The seasonality through the year is pretty reliable. Q1 is consistently on top, Q4 at the bottom. This even happened through Covid / Lockdown. Now remember, this is pure demand. It is the average number of leads coming in the top. At this stage it has no baring on how good the leads are, the value of the leads or anything else. Just simply the number of enquiries.
We began this analysis as we entered lockdown, although remember Q1 2020 only included 7 days or lockdown. It was already a strong start to the year. What is very compelling, is where the drop happened. Look at Q1 for 2020 and 2021, compared to 2022 and 2023. Now look at Q4 2020 compared to Q4 2021. The drop in leads happened in Q4 2021. Some 18 months ago. From that point, look at Q1, Q2, Q3 of 2022 compared to the same quarter of the previous year. Then, look at the subsequent year, where we have the data. So for that, we have Q4 in 2022 and Q1 in 2023. The change is marginal confirming exactly where the real drop took place.
So, why has it taken so long for us to ‘feel’ the drop? For this, we need to look at the conversion rates.
Conversion Rates
The average conversion rate for installers is consistently around the 37% mark. And then, Covid, or should we say, lockdown happened. More people working from home, with more disposable cash than they’d had before and less ways to spend it, yet more time to look at their homes in a new, more critical way. Demand was crazy, as were conversions. At that point in time, you could have set your pet dog on sales and they would have had a star rating conversion rate!
But then, look at when the conversion rate dropped. It came back down to normal in Q1 of 2021. three full quarters before the demand reduced. The two combined left a lot of leads sitting in the pot.
For us to ‘feel’ a drop, that is going to mean a drop in sales. We only feel a drop in leads, if we are not seeing a steady stream of sales.
A third piece of the jigsaw was also taking place. That was price rises. And with price rises, came order value increases, with order value increases, come turnover increases and before you know, it is difficult without a system like Business Pilot, to see whether you are actually making money, but you certainly feel like things are on the up.
Average Order Values
From the chart below, we can see that average order values have gone up, but we also see a them levelling off, or in fact reducing. When you look at the same data month by month, there was a clear bubble, and at the time, the barometer was suggesting this could be the type of projects had changed, hence pushing up the value. Something that is very obvious, and very stable is the growth from Q4 2019 (not shown in the chart) to Q4 2022, which is within 2% of the same distance from Q1 2020, to Q1 2023. When you look over that period, we can see that the average order value has grown 40%.
The challenge with this at first glance is that a 40% increase in order value can hide a lot of issues unless you can easily track margin. If you look at your costs (overheads and product) over that period, what increase has your business seen? That speaks more of profit, than simply whether the tap has been turned off. However, cash is king and if the profit on each job has been cut, then it will definitely feel like the tap has been turned down or off. The beauty of having Business Pilot Barometer data is that you can see where the challenges really are.
In Summary
Covid was a once in a lifetime event that had a massive impact on our industry.
“I remember sending out emails and getting out of office replies, ‘due to covid’, whilst at the same time other installers couldn’t handle all the work they had”
We saw a huge spike in demand and huge supply chain / personnel challenges. Costs rose as quickly as the number of leads coming in, and conversion rates hit all time highs which I would argue could have been even higher, had companies been able to process them and actually supply what customers wanted. Then, the tide went out. Only as it did, there was so many leads still in the pipeline that the effects were not immediate. Coupled with higher order values, you needed to be eagle eyed to spot what was happening, or keeping a close eye on the barometer.
We have now normalised into what we had before covid. the ups and downs of regular business. This, is actually positive news. It means that contrary to what the media want to sell us, or how we ‘feel’, there is still plenty of business to be had, if we compare this to pre covid. There are economic challenges around. There always have been. However, the real challenge could be if you have built up the size of your company on the back of the covid bubble. Or, if you and your sales team have become order takers. Both of these are well within your control.
If your company has changed shape, then start to market your business in a way that a company of your current size would, not how you would have done previously. If you or your sales people have become order takers, just get back to being sales people again.
During lockdown, you could burn leads. Now, you must protect each one and maximise your chance of success with it. Of course Business Pilot is all about that. As a system Business Pilot helps installers to run more efficiently in every area, including lead/sales management. As a company, we live by our ‘For Installers, By Installers’ motto. Thats why we produce the Business Pilot Barometer to help installers understand in real time what is really happening out there.
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