There was a dark side to T&K's growth, though. Some of those revenues, as Tom would soon find out, were actually sapping the company of its strength.
* * *
"We use driving as a management tool here," says Tom. "It gives people time to talk things over. Every time the guys come back from a trip, I greet them by saying, 'OK, what are we going to do now?' "
After one particular trip in the summer of 1988 he got an especially long-winded answer. Kurt Tjelmeland and Scott Appleget had made a 12-hour drive to visit the company's troubled office in Fayetteville, Tenn. Tom had started the branch back in 1979 at a major customer's behest without much thought, he says. It showed, according to his two lieutenants. With sales of roughly $350,000, the division had barely crept much beyond that first customer. "It suffered from lack of follow-up," says Appleget. Managers came and went, but the numbers hardly budged.
In fact, Kurt had begun to think that the entire company suffered from a similar affliction. People he ran into told him stories: "I called you guys for a bid," they'd say, "but nobody ever got back to me." Kurt passed on leads to his salespeople, but they never seemed to result in jobs. What, he wondered, was happening to them? "It upset me," he says. After he delved into the problem, it soon became apparent that salespeople were not only burying leads but also bidding so low as to win jobs that were unprofitable from day one. No wonder the company's profits had slipped from a healthy 5% in 1987 to a paltry 1% in 1988. "There was a lack of control over our salespeople," says Tom. "We were getting more jobs, but we weren't reviewing the proposals."
On their return from Fayetteville, Kurt and Appleget started outlining an intricate lead-tracking and follow-up program. Appleget had already -- feeding Tom's bottomless appetite for computerization -- updated the company's computer files and even sent customers a letter heralding the company's rebirth.
Now they needed to reach out to new customers. They started collecting names from manufacturers, construction-industry reports, and newspaper articles. They sent out a low-key introductory letter, using some facts Appleget had mined from a page turner called One Hundred Years of Roofing. Within two weeks a salesperson would make a follow-up call and, if there was any interest, set up a meeting. If not, the salesperson and the general manager would do their best to unmask the decision maker -- it could be the owner or maybe the plant engineer -- and formulate a strategy. Maybe they should call back in nine months or six months or six weeks. Whatever the time frame, it would be entered in the computerized tickler system. ("Tom picks out the right software," says Kurt, "and I dig into it.")
T&K first tried the mailings in Cedar Rapids, then proceeded county by county throughout eastern Iowa until the spring of 1989. The company's salespeople buckled under the new formality; all four of them have been replaced. "Accountability is tough on some people," says Tom. Potential customers, on the other hand, didn't seem to resist. Appleget estimates the company picked up at least $1 million worth of business within a year, helping boost sales to nearly $4 million. Besides spending roughly $2,000 on the mailings, T&K has also spent $50,000 on computers, which it has been using to track where its leads come from so as to spend advertising dollars efficiently. "We'd be lost without immediate information," says Tom.
Indeed, with the technology cranked up, the company has begun sending out enough questionnaires to rival the U.S. Bureau of the Census. Hire T&K, and you'll receive a postjob questionnaire asking you to rate the company on a scale of one to 10. One question asks whether the salesperson acted in a timely fashion. When 4 out of every 100 respondents said no, "a flag went up," says Kurt. He then instituted a program in which a sales assistant records every potential customer who calls, a general manager assigns that lead to a salesperson, and everything is entered into a database. The computer regularly spits out reports enabling the general manager to tally the fate of every lead.
Even if you don't hire T&K, you'll get a questionnaire asking why. Was it the price? The type of roof? Kurt is not above picking up the phone to ask directly. If it sounds as though you're happy with the contractor, he'll ask, Who are you using? "They'll tell you something just to get rid of you," he says. "And whatever you learn is valuable. If you find out they chose a rubber roof, you can adapt your sales approach for that area."
* * *
Had Tom Tjelmeland been aware of the power of marketing -- or even its existence as a discipline -- he would have been wise to shore up the company's internal controls before charging up his marketing effort. Profits, naturally, have suffered.
Last year, for example, the company lost $30,000 -- negligible but also easily preventable. More than $100,000 worth of equipment purchases helped nudge the company into the red, but also T&K's labor costs were way out of line, gobbling up 20% of revenues, rather than the 15% target. "Nobody here has worked in a company of this size," says Kurt. "We couldn't say, Go ask Tom, and he'll tell you how to do it." By putting new superintendents in place and adding the position of assistant foreman, the company hopes to exert better control over its crews. Just to make sure all 65 or so employees feel the urgency, Tom got them together and, using a dollar bill on an overhead projector as he had seen at a conference, showed them how just 3¢ to 5¢ of every dollar turns to profit. "They were aghast," he says.
He has also worked at building -- and focusing -- his management team. Last May, using an outline handed out by a speaker he'd heard, Tom retreated to a lodge with Kurt to devise the company's first strategic plan, which ran 21 pages. He recently added an accountant to increase his corporate staff to four. Twice in the past year the corporate staff has held meetings -- in Kansas City, Mo., and in Iowa City, Iowa -- with the company's three general managers, two of whom work outside company headquarters. Aside from a newly opened Huntsville, Ala., division (see "Natural Selection," December 1990, [Article link]), Tom spent $50,000 earlier this year acquiring the assets of a roofing company in Storm Lake, Iowa, on the other side of the state. "I have aggressive people here who want to grow," says Tom, whose puritan bearing belies his own ambitions. "We don't intend to stay the same size."
