Many things take you by surprise, whether you are watching an NFL game and see a horrific injury... or your son is racing girls which leads to a surgeon's bill. What isn't surprising is the success of CertaPro Painters.
Jeff Bien stops by on this podcast episode to discuss why this long-standing franchise remains successful for franchisees.
Pete: Well Nat, how are you man?
Nat: I'm doing great. How's your week going?
Pete: Oh, it's the beginning of the week, it's always good, I got to tell you. Just the weather is changing, the fall is here, all that kind of stuff. We've got football going on, both the pro and I'm looking for the big 10 to come back here. I think it's next week. So very exciting; I love the fall.
Nat: Are these guys going to be playing like big ten? Are they going to be playing in November, December?
Pete: The end of this month, they start in a week, right?
Nat: So it's going to be called games, I think.
Pete: Yes. I just read the Alabama coach just got diagnosed with COVID-19, but they say he might even be coaching four days after he's been diagnosed. So people just keep going and stuff like that.
Nat: Exactly. Those football players are almost as crazy as the wrestlers.
Pete: Yes. So I don't watch much pro football, but did you hear the news of what happened last week with Zach Prescott?
Nat: No.
Pete: Oh my word. We were watching a little bit of the game, we turned it on late, but I guess a horrific accident. So Zach Prescott was running, and he got tackled he got pulled down. Well, his ankle got caught under the tackler in a compound fracture; his ankles actually kind of twisted the wrong direction.
Nat: Oh man.
Pete: It's one of those situations like you remember Joe Feisman or Tom Brady, those horrific accidents they have in football.
Nat: I wonder were they playing on turf, or were they on grass?
Pete: Well, I don't know what they're playing on. But that's one of those things; it's just part of the game. But crazy, you never want to see that. And you think a little bit about him; I mean crazy, he was negotiating his contract, right? And trying to get, I think, a four-year contract.
And ultimately, he didn't come to terms, and so I think he's playing under the franchise tag at 31 million dollars, which isn't all bad, right? But the leverage he was hoping to get is he's had a lights-out season so far, first four games, playing incredible.
With this idea have incredible season, I got more leverage going into the contract, right? Free agency could sign one of those 500 million contracts, and then he gets injured.
Nat: I mean, it's kind of one of those black swan events, right?
Pete: Right. I mean, I think that's the thing; it's unbelievable that in a second, something can change, right? Your situation can change; it's a different direction. Certainly, for him, he's got a lot of work to do, and I think he's out for the season.
And hopefully, we wish him a great recovery, crazy stuff. But you think about in life, I'm sure you've had things in your life where all sudden it just, you're going one direction and all sudden bam, something happens. Anything happen like that to you?
Nat: No, nothing ever happens like that, Pete. I think for like most recently, like the COVID and all that, and then just that being a complete black swan event and something we weren't anticipating. And then I know a couple of years ago, I was sitting at my office at my desk, and I got this phone call from my wife, your son hurt his arm.
I'm like, oh, just go to Walgreens and get a brace and tape it up because I'm kind of old school. No, you don't understand; he's in the ambulance, like being taken to the emergency room. Then well, I'm like; this sounds really serious.
So hopped in my car, and they were kind of downplaying it, to be honest. He hurt himself at school; he was running. He was racing the girls, of course; girls were involved, right?
Pete: Of course.
Nat: And not wanting to having to be first, he was racing the girls and then like reached out and to touch the door where they're trying to get to and put his arm right through it. He basically cut his artery, cut all his tendons, and it looked like a bunch of red meat; his arm was just hanging loose.
Almost bled to death there. I think God kind of gives you grace or prepares you for those type of things, and he had a good attitude, and even though he's like, oh, this is how I'm going to die. We had the good surgeons and got back in action. But yes, I think the important thing is just live every day without regrets, and do your best, right?
Pete: Yes, absolutely, because you just never know. You could be in a car accident, or something like that could happen, and certainly, I had something with my daughter too. So that is just life, is always about going forward and just making it happen. So welcome to the hire yourself podcast, Nat Truitt and I are guys that have been in business for a very long time.
We always like to share learnings and stuff like that. And we have a very special guest today as part of our podcast. We have Jeff Bien from CertaPro painters. Jeff has been around for a very long time. So welcome, Jeff.
Nat: Let's talk about painting today.
Pete: Jeff, good morning.
Jeff: Good morning, guys.
Pete: Hey, it's good to have you here.
Jeff: Thank you for having me. I appreciate it.
Pete: I got to tell you. How the heck do you spray CertaPro painters on your fireplace in the background?
Jeff: So I had our marketing folks figure that one out. It's some type of zoom background that they were able to put that on there.
Pete: Well, that's awesome. I know you guys are always proud; you're wearing the colors. The yellow, the gold from that standpoint.
Jeff: It sticks out.
Pete: Yes, it sure does. And we've known you forever; you've been with CertaPro; I think you're the vice president of franchise development. So how long you been with CertaPro painters?
Jeff: So June was 14 years, so 14 years.
Pete: Wow, that's amazing; that's a great run.
Jeff: It's been fun; it really has. Obviously, it's a different CertaPro than it was 14 years ago. But it's been, we're a lot bigger, but it's been a blast.
Pete: Yes, absolutely.
Jeff: CertaPro is one of the kind of the grandfathers in the industry, right? They've been around for; how long have they been around franchising?
Jeff: 28 years. So we were founded 92, franchising immediately. And then so we kind of created the space, right? The national painting space. And then kind of had, we were a house painting company when we started, and then morphed. I think the vision if you talk to our founders was, hey, we want 300 businesses doing thousand dollars a year. The early thing with, hey, let's just see what this can be, and it's taken off.
Pete: Yes. And you guys ran for many years as the number one residential painting franchise, is that correct?
Jeff: Correct, yes.
Nat: I feel like I hear your advertisements on the radio here in Chicago like all the time; it's like you guys dominate.
Jeff: Yes. The radio and TV was not something we could do 10, 12 years ago, right? So the bigger we've got, and the bigger our business has gotten, now we can do all this media advertising.
So we got the TV commercials, got the radio spots, so now the brand is tipped to where lead flow, it used to be very assertive marketing, used to be signage, and you would knock on doors even 10, 15 years ago. Now because of the brand name being more well-known, because of media now, from a leaflet perspective, that's helped us out obviously.
Pete: Yes. So you guys are a mature brand, right? You've been around for 28 years. And my first question I got for you is that there's a lot of people coming into the painting space, right? So it's a crowded space, but there's new franchises all the time that are getting into painting. So what I always like to find out if you guys been around 28 years, you're the big dogs.
So let's start with what makes you guys different from all these other people that are entering the space? We know that you guys are kind of a strong brand, but let's go through one at a time; tell me your competitive advantages or what separate you from all the people that are also playing in the space?
Jeff: Well, I think you hit one of the things, which is just experience, right? So having been around, we've learned from our mistakes over the years, and we've made plenty. So we've had time to refine the model and refine who is a fit for our model. And again, learn from the things that we've done.
So I give you an example there, and that's the commercial space, right? Commercial is not an easy space to play. So we start off as a house painting company, and then now 40 to 45% of our revenues come from the commercial side of the business. Well, that takes time to understand okay, what commercial segments do your franchisees need to play in?
How do you train them properly on the commercial side because there are a lot of nuances there? Are your businesses big enough to handle the cash flow needs on the commercial side, right? Residential is great; they pay in. You pay your crew, and you're good. But the cash flow on the commercial side is obviously a very different thing.
So I think the experience in the business and the tenure certainly helps, right? And from a marketing perspective. I think one of the core differentiators is has always been, and I think if you talk to anybody on our executive team or anybody who was part of the founding of this company.
They tell you hey look; the focus has always been on brand experience, always. We used to call customer experience; it's like, hey, the customer has to have a great experience. We do this thing called painting, and we go into people's environments. We go into their homes, and it's a bit of a collision for them.
So we've got to respect their homes, and it morphed into brand experience, meaning hey, anybody who touches our brands really got to have a great experience. And that's painters because painters hold on to our customers the longest. People's homes for 40 hours, they can be in a commercial property even longer than that.
But it's that constant measurement of and feeding that information or a business owner. So, for example, we use net promoter score, right? So that's the same system American express and Amazon and these folks. And this was implemented 14 years ago.
Pete: Okay. So you guys were an early adopter with that. What is your net promoter score? How do you guys do it?
Jeff: It's over 70 now. It took us a while to get there, but it's over 70, right? So that puts us up there with some world-class brands. The net for our business owners, of course, is that previous customer that word of mouth that spreads based on hey, they're coming back, and they had a great experience with us.
But it's also holding on to crews because we also measuring that promoter score with our crews, make sure they're happy. Another example, guys are we use something called console NPS. So I could come out and do an estimate for you, Nat, and there's going to be one and two chance you're going to move forward with CertaPro.
Well, okay, that's a unique experience. If I go on a Southwest airline well, I obviously chose to do business with them. If I go to a grocery store, chances are I'm buying something. So there's a one or two chance you're not going to move forward with us. And like we pat ourselves on the back, that's a pretty strong success ratio.
However, our business owners need to understand why the customer said no, right? It's a very big difference if the customer delayed the project and says, hey, I just want to do it in three weeks or in a month or three months. Great, that's fine. If the customer said no because our salesperson showed up 20 minutes late, well, that's a problem, right?
And our business owner needs to be armed with that. So having the technology in the systems in order to feed that information our owners, because it's all about scaling, right? You want to scale a large business. Well, if I've got five sales guys, I need to know what's happening on all those estimates.
So I think that brand experience focus has certainly been a differentiator for us, and I think it's snowballed into more lead flow, into better business owners.
Pete: How do you teach that to the franchisees? Because that's a great culture, you have. But that's got to be something as you're rolling out to hundreds of franchisees, this ability to continue to do that. So how do you continue to be able to carry that forward?
Jeff: Well, I think at first, Pete, it was tough, right? We rolled this thing out 13 years ago; we rolled out the CertaPro services system. We're going to a business with 37 cities, we go out, and we roll this thing out.
And you're talking to business owners they're like look, you've told us that it's about the paint job, paint job's really important. But I think over time, the adoption and it's really easy to get the new people on board, because they don't know any different, right? But I think it just becomes part of the culture, the recognition, right?
At our conferences, the awards that are won, and then you have lighthouses, right? You have those guys like Matt Heffner in Milwaukee or Pat Wade on Huntington beach that not only the people see okay, these guys are doing it right, and part of what they're doing the reason they're growing these really large businesses is that focus on customer experience.
So they get to see all right, even the guys that are late adopters, see that's a smart way to run the business, and it becomes part of the culture. So the newer owners, as you bring them on board or get that sense of, I got it, this is just the way we got to do business. And the other folks, they figured out by watching the lighthouse.
Pete: All right. So let me see if I got this right. From a standpoint of commercial painting, you got a competitive advantage because you guys have been doing this for a long time, right?
So you had to start out strength residential, you shift the commercial, or you add that to your portfolio. And because you guys have the experience and you're bigger, that makes it easier to do commercial. Number two it's the brand experience, right? And you guys track that, and it's about the experience of a customer and what they have, right?
I want to touch on something you said, and it's about the painters being happy. Because I suspect it's really tough to get good painters, and the idea is keeping them happy. So tell me a little bit about how you guys do that.
Jeff: Well, first off, now that the brand's known Pete, it's not as difficult as it was, again 10-12 years ago to get the attention of the painters. Now they know CertaPro, they hear the radio spots, and like, hey, they're pretty big, they're probably good at sales and marketing. We want to paint; we want to produce.
But that creating culture is one thing that is core to what our business owners have to do in their business, is to not only find but retain them, right? So a lot of it is retention. So, for example, here in Austin, the business owner here has over 30 crews that work. He'll do painter appreciation nights; he does big dinners. In Chicago last year, I think your MLS team is called the fire, is that right?
Pete: Yes, correct.
Jeff: We did a paint appreciation night. We had over 300 people at a tailgate, right? We have painters; we have their families, right? So it's about creating a culture where they know they're appreciated. Because look paying them on time is great, new construction may not pay them on time.
But it's also saying, hey, look, we appreciate you, we're going to take care of you. We'll talk about COVID, I'm sure, here at some point. But during COVID, it was also showing them, hey, we care about you, we're going to protect you. Because we did surveying, and over 60 percent of our painters said I'm worried about my safety.
So it was making sure that we had policies and we had protocol in place to say, look, we value, we're going to take care of you. We're going to invest in the mask in the closures and just making sure that they were protected, right? So I think it starts with the business owners, and just recognizing okay, look, we got to take care of the people that hold on to our clients the longest.
And we you got to value them and show them that their value. But we also have to survey them and do NPS scores with them. And not wear our opportunities.
Pete: Yes. So it's value and culture; it talks to the painters, right? Do you do continued education for them, training that kind of stuff for development?
Jeff: Yes. We do a five-star certification program, right? So they can move throughout the business where they may be a painter to start with. Then they turn into a job site supervisor Pete. We just had our first painter, started off as a painter; he is now a franchise owner of ours in Philadelphia.
So it's just an amazing success story there. But creating opportunities for growth for them. And perhaps they go from painter to job site supervisor, to production associate. Maybe they end up selling, but giving them the opportunities to advance as well, and showing them a path to where they can move within certificate.
Pete: All right, good. What other competitive advantages do you guys have?
Jeff: Well, I think right now, I think the marketing is a massive advantage, right? I think if you were to look at the investment, we've made, not only on a marketing side from a TV and radio perspective, the digital front is huge. So it used to be 15 years ago; you just sent out a bunch of direct mail.
You sent out; the business owner might look at their marketing plan, they said hey, I'm going to send out 120,000 direct mail piece, and it worked. But it wasn't a massive differentiator, right? Because Joe Painter down the street, we can send direct mail, might be Valpak or money mailer, but he can send the direct mail.
Now from a digital perspective, lead flow, for example, guys, is now up over the past four months, it's up over 30% versus a year ago. Residential leads this year are actually going to be up, despite the pandemic. And you can point a lot of that to the digital side and the advantages we have there.
Because we've got the digital footprint on not only the SEO with Google and everything else, and we've had that for years. But the know-how to get a business owner that's just coming in brand new, our average first-year business owner being able to do over half a million our average first-year did 523,000 last year.
And what that allows them to do is invest, of course, back into the business; it also allows them to go to the commercial side quicker, right? Because they have the cash flow to do the commercial.
But it's having that marketing know how to say hey, look get you on YouTube, we're going to have leads coming in from Facebook, and you're going to be able to roll with this business very quickly and grow because you've got the leads to do so. And in the service business, as you guys know it look, it's all about leads.
Pete: Yes, absolutely. And you guys do; I think it's tier two advertising, right? The group and the market get together, and they do, and Nat was talking about the radio commercials; you hear them all the time. So you guys are pretty good at that, I think too.
Jeff: Yes. So the co-op, we have over 35 co-ops that are large cities where the business owners say hey, let's just do some regional stuff, right? We've got national, we've got local with just the business owner's territory, but also being able to do co-op, that regional focus is pretty cool. It also gives the business owners a say in what kind of media they're doing.
Do we want to do radio? Do we want to do TV? Do we want to increase our spend? And our job, CertaPro, is to support that and say, look, we've got the TV commercials, we've got the firms that can place and do the negotiations for you on radio or TV and guide them that way, right?
Pete: That's pretty cool. Now you mentioned COVID-19, and that's our black swan event of the year, it's been a crazy year. So my question for you is a partnership, it's a partnership between CertaPro and the franchisee, it's a natural business partnership, right?
And my question for you is what is CertaPro done, and you mentioned some of it. But what have they done to help franchisees through this last seven months?
Jeff: So the first focus, if I back up to March, the big focus was initially with a lot of unknowns at that stage, it was cash. It was like, look; we don't know what this is going to look like, let's focus on cash. Let's make sure that you've got cash for this thing.
Our operations team did a remarkable job, and it was let's communicate, let's communicate with every single franchisee. We're going to have detailed business planning discussions, and we need to make sure, for example, that you go get that PPP money. We put him in touch with the financial institutions to say you may not even feel like you need it; you need to get cash.
And so they had that money if things didn't shake up, right? So that was the first focus was okay, let's make sure that they've got the cash to, because as you back up, you look back on it. Like Marches are marching into busy season. All of a sudden, lead flow slows down dramatically as the pandemic hits the U.S.
And there's a lot of uncertainty, a lot of their marketing dollars have already been spent, it's like let's make sure you've got the cash to grow. The second big thing that our operations team did a really great job communicating with the owners was operationalizing the health and safety basics that we put out there as all right; we need to protect our customers, we need to protect our crews.
We need to protect our salespeople; what does that look like, right? Franchising is all a bunch of systems, it's like we need to have a system for this, and this is unknown. Social distancing, there was no system for that. There's no system for mask, and wearing mask and creating an interior containment spots, right?
So we're painting in someone's home, making sure the customer knows that hey, we're going to put plastic up and we're going to contain the living room, so the crew is protected, and so they operationalized a health and safety basics.
That six different protocols that were absolutely amazing, part of our touch-less services. And I'll give you another example there, it's like we had remote estimating.
Pete: Yes, tell me about that, that sounds really cool.
Jeff: So it's one of those things that you had in the toolbox, but it wasn't designed for COVID, and it just worked out. But remote estimating something we started playing with a couple of years ago.
So, in essence, guys, if I'm on the Facetime type app, right? And you and I are chatting. Now you can actually turn your phone, and we can take measurements of rooms in your house or in the exterior.
Pete: Wait a minute; I want to make sure I understand this correctly. So the person I'm Facetiming or whatever app you use, and you can face it towards the room, and it does the measurements?
Jeff: Correct. So you get on video with one of our salespeople, and you can hold the phone, and it'll take a measure of that wall, or that space, and we can do. Pete, I want to do these walls, and I want to do these colors, and I want to do the ceiling, and we can do actually an estimate remotely.
Pete: Wow.
Jeff: Actually, we're trying to get ahead of the game with customers that don't necessarily want you to come up, right? An example of that is millennials. As millennials become more and more of our customer base, we know that millennials buy differently than baby boomers.
So it's designed to say okay, well, let's we got to prepare because millennials are entering the home buying space in big numbers. They're going to be a big part of our customer base pretty soon. What just so happened that we had this thing ready to go for remote estimating when COVID hit.
And it was like, hey, we've got this, now we're going to use this in pandemic. And that's also been a big deal for us, is having the remote estimating option for customers without us coming out there and doing that estimate.
Pete: Got it, all right. So from a standpoint, you help them show up their cash positions. You put safety protocols in to keep the painters, the customers safe.
And you also basically adapted the business so that you could do virtual; you leverage the technology you had to do virtual things like that.
So my next question is how'd the business hold up, right? We went through these troubling seven months; how have you guys been doing with this crazy stuff?
Jeff: Well. Look, March and April, obviously, it was where we heading with this and didn't know what the next several months were going to look like. So the last five-six, months they've been really good. So the summation of it is residential is actually going to be up over a year ago, which is a huge victory.
I think we were deemed essential, but again the customer's going to respond. And right now, consumers are staying in their homes, they're getting a ton of work done right now. And they want to beautify it, well the easy way to do that obviously is painting. So that's worked out really well for us.
So lead flow's actually going to be up on the residential side. We have seen the contraction; I think a little bit is on the commercial side. And that's fine, we know, for example, based on our painting partners, there's going to be a lot of pent-up demand. So a lot of commercials is still fine. The warehouses, and the education and all that, where you're seeing a little dip in the commercial sides hospitality, of course. So hotels and things like that, some of the retail space is down.
But we've done very well, we're fortunate to be in the services sector. And the other nice thing is we don't have a ton of overhead guys. So we don't have storefronts, right? We don't have inventory on shelves. So we could put that money towards marketing or towards investing in growth, right? Even in a time like this.
Pete: Yes. So everybody's staying home, they're like I got to paint my walls, paint my house because I can't leave, I'm taking my vacation money putting it towards making my environment better. That makes a lot of sense.
Jeff: It is, again it's making sure they feel comfortable in marketing the health and safety basics and making sure that you get all that information out there to them. But yes, our franchisees right now are doing very well.
Pete: Wow, that's great news. Because small businesses what the united states is about is really driving business, and so that is wonderful that you guys have done a great job of helping the franchisees, and they've succeeded going through this. And so we wish them much luck going forward.
Jeff: Yes, thank you. I appreciate that.
Pete: So well, thank you for joining us; you guys got a great brand love to hear about the customer experience. I'm sure I'll be a customer down the line because my wife will want to start painting the house. And so we'll get hooked up there. So thank you for your time today, and let's rock and roll.
Jeff: Hey, thank you guys; I appreciate you having me.
Nat: Thanks, Jeff.
