Ask the Experts | Soft Skills’ Impact on Margins

Question: How can soft skills increase margins?

Weldon Long; New York Times bestselling author:

That’s a great question and one that really gets me worked up, because I make my living teaching soft skills. It’s like, when I deal with organizations oftentimes outside the HVAC industry it’s very frustrating that sometimes soft skills can be minimized in terms of their importance. Just for the benefit of our listeners, so we’re clear, when we’re talking about soft skills we’re talking about communication skills – which are talking to people, listening to people – negotiating skills, conflict resolution, teamwork, problem-solving, motivation, leadership, those types of things. But a lot of organizations the emphasis is put on the hard skills of maybe being a CPA, or a technical person, a systems programmer, that kind of thing.

But to get more directly to the answer of the question, in terms of how soft skills can drive profitability, let’s just take a couple of them, right? Let’s start with communication skills. Well what’s the number one skill you need to be effective in sales? It’s communication skills, right? It’s your ability to listen, to understand what your homeowner needs, what they want, what emotions might be driving the needs and the wants. Communication skills obviously include our ability to communicate information about our company, how we do our installations, the values of our company. Well obviously, the better we are at the “soft skills” of communication, the better we are at demonstrating to our homeowner that we’re worth a couple of thousand extra bucks. So if I’m a good communicator and a good listener, a good talker, then I can demonstrate why we’re worth a couple of thousand extra bucks, obviously that’s going to have an impact on profitability.

Let’s take negotiation. The more effectively I can negotiate – with price, at the end, when I’m trying to close – the better I can negotiate with the homeowner, the better chance I have of negotiating a higher price; therefore higher margins, therefore higher profitability.

Teamwork: I’m working a company right now in California; it’s a pretty large company, probably $40 million to $50 million revenue per year. One of the biggest challenges they’re having right now, is that there’s a lot of conflict between the sales department and the install department. Let’s face it, salespeople are not especially technical, right, because they’re strong on the communication side but not so much on the technical side. And people who are installers, who have a strong mechanical aptitude, sometimes can’t relate to the salespeople. So there’s a lot of conflict between the two groups.

This can affect the profitability of a job, obviously, because sometimes the homeowner may be telling the installer, “Well, the salesperson promised this, this and this.” If there’s bad communication between the sales department and the install department, in many cases the install department will just make the change based on what the homeowner says, because they don’t trust the sales department, and as it turns out the salesman never made that commitment. But that decision on the installer’s part killed the profitability of the job because there was more materials, more labor, that sort of thing.

Well what we’ve been doing the last few months with this company is getting installers and salespeople in the same room and working on facilitating the communication. Team-building stuff. Well, what happened is that the installers are now more willing to call the salesman or saleswoman if there’s a problem before they do some additional repair or additional installation component that would cost the company money; that’s helping the profitability. I mean I could go on for a year and a half here on the impact that so-called soft skills have on profitability. Leadership, motivation – motivation is one that’s a never-ending battle, you know, it’s like Zig Ziglar said: “Motivation is like eating, you’ve got to keep doing it over and over again with your people.” If you’ve got a sales group that’s highly motivated, they’re more likely to stick in there and hold firm on margins; that’s going to help my profitability.

Leadership: the willingness and ability of my team to believe in me and our pricing structure. The stronger leader I am, the more people believe in what I’m saying, then the more willing they are to stick to holding margins at the closing table. So whether we’re talking about teamwork, leadership, motivation, negotiating, all of those things are going to have a huge impact on profitability.

In fact, I don’t even like the term “soft skills.” I know that’s the technical term, so I understand the question, because technically that’s the term. But I don’t think soft skills are soft at all, I think soft skills are hardline, bottom line, because they make a huge difference. Drew, do you have any comments on that?

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