Becoming a Top National Painting Franchisor With Analytics

Ryan: I’m Ryan with Data Crunch. I have Stuart Nokes on the call with us here to discuss how he used analytics in his business to grow from something that was very small to something that’s become much larger over just the space of a few years.

Stuart Nokes: You know in seven years of operation in our franchise, we are number two in the franchise. So number two in the entire country for Five Star Painting. And we’re closing in on about three million dollars of sales this year.

Ryan: How many franchisees are there in the nation?

Stuart Nokes: About 200. And so we’re number two out of two hundred. We’ve used a variety of analytics in the business. Tableau has been a phenomenal tool for us to be able to quickly look at data. We can look at data from QuickBooks. We can look at data from Excel spreadsheets and we can pull that data together and aggregation that allows us to do a lot of things like for instance, well, just simply tracking. What is the annual revenue? Out of Quickbooks. How does that compare month over month? Those are some quick charts that we have and we could also look at what our marketing expenses out of QuickBooks? And we could from that then determine what our return on investment for the marketing. So for us the franchise showed us about different marketing channels and then we discovered after that about 12 that we could use and then we developed tools to address- How much are we going to spend in this Channel? And how what is it going to return for our business? That’s the Rosetta Stone of understanding what to do in your business if you know your spending on your marketing, which if you are clear in your books about where those costs are going, and then if you know what they’re returning because every time someone calls in there are ask where did you find out about us? And then that’s noted so we have the data then if we combine those two data sources we end up with the idea of what is our return on investment for any marketing channel. And you know, what’s the return on investment for networking? What’s the return on investment for Facebook, for HomeAdvisor, for Yelp? What are we spending on these channels? Should we spend more? Well, the analytics helps us understand where we stand and what those things cost and what they yield.

Ryan: The painting industry, or any kind of home services, you don’t expect really to be very analytically driven, but you’ve got data pulling from Google Calendar, from your estimating software, from QuickBooks, looking at marketing channels. So there’s a lot that you’re doing there to pull in information and look at the business. What do you think would happen if you didn’t have these tools? What kind of gaps do you think exist out there that most people are ignoring?

Stuart Nokes: Analytics, you know, like the idea of a dashboard, of course, is the idea that like a pilot you or even just a car driver you would see status and conditions of various factors for your aircraft that would help you fly it. If you don’t have that, then you’re essentially flying blind. And so you’re flying by feel and you can run a business by feel, but businesses that have analytics in place can compete and can actually dominate the market because they’re doing something that the other competitors aren’t doing, and they’re doing it better. And then they can improve on that because they’re measuring their results. They can improve on those results much quicker. I don’t want to fly blind. I want analytics to tell me what’s going on in the business. And that’s sometimes a lot more than just looking at a profit and loss statement in my Quickbooks. From day one with QuickBooks, we wanted it set up to be able to reflect what our profit and loss was on every job because then if we found a certain type of job like exterior, are we underbidding carpentry repair on exteriors? Are we losing money on exteriors? Is our margin the same on exteriors as it is on interiors? If it’s not, we can adjust our pricing, we can go to our pricing tool and adjust our parameters per square footage for exteriors versus interiors. And we make those distinctions and not over price or product across the board. But fine-tune our pricing so that it meets the market competitiveness criteria but also so that it helps us hit our cost of goods sold margins that we’re looking for. And so the analytics help you fine tune it so out of QuickBooks, we wanted job costing. Well then to take that job costing information and QuickBooks is sort of like, how do I get a report out and it’s just voluminous, you know, I would really like to visualize this thing and look at the cost of goods sold from a perspective of what are the outliers, what is below my target? These five are below the target. Let’s go back. Why is this below the target? Did we underbid labor? Did we underbid the materials? Did that mean that we under measured? Does that mean that we have to adjust some of our parameters? And so the analytics helps you then know what the issues are and you start asking questions about those issues to determine how to come up with a root cause solution to the situation. You want your accounting system to be rather granular. You don’t want to run it from a large P&L perspective, or a balance sheet perspective, and not really be able to drill down into what your cost structure is and what your job costing is because it doesn’t help you enough. Then you’re still flying with minimal instrumentation. You’re flying with just an altitude indicator. You’re not flying with full instrumentation to tells you other things you need to know and so you do want your accounting data to be drilled in. And any small business can change that to be better at doing that.

Ryan: So you’d say having the right mindset of – we want to capture this data – and setting up some systems and processes to do that, then this becomes much more attainable.

Stuart Nokes: Exactly. And then if you can automate that so that it becomes really easily retrievable, it’s gold. It’s golden. Being able to just run a little Excel sheet and get the information can be kind of time-consuming, and honestly, for years and years, our marketing return on investment was very time-consuming. It was time-consuming enough that I only did it maybe two times a year. But then we developed with Tableau a way to integrate Quickbooks data and Excel data and our estimating data together to then bring this together in a way that then we could see this and I can see it every day in real-time. And so I’ve got a report that comes right to my e-mail. I can open it up or I can just log into my little dashboard and I can see my marketing return on investment daily. I can look at it for the last month or the last year. I can look at it by various parameters to see what was the lead source? How’s it doing? If you can take anything and make it a system and then from that system automate it so that you have data available at your fingertips, then you have got something that is very actionable because you know, I can check various parameters of the business very quickly and say okay how are we doing with net promoter score. Let’s drill into the detail. How are we doing on cost of goods sold? How are we doing on our lease? You know, there’s more to it but once you get on this journey, I think you begin to see the power of it and then you say okay, let’s get a little more predictive analytics involved. Let’s forecast our lead flow instead of just knowing what happened in the past, you can start to look forward. Any business that decided to improve their analytics is going to, I think, as a result, see greater success. I think that if a business is struggling I would go into their analytics quickly and say what, you know, what are you doing? I mean it could be other things. But the analytics should then show what the issues are and using that kind of root cause approach –  go in and correct those issues and then see the correction manifest and you know, the current analytics on the business. But it’s not just like this accounting sense, it’s much broader than that. That’s why I say it’s fundamental. It’s not just about accounting. It’s about the entire business.

Ryan: Great, well thanks to you for being on the show with us and sharing some of your experiences with us and how this is a help to you. We wish you continued success in your goals and growth. Thanks for being with us.

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