The trades have certainly come a long way in terms of software and technology integration, but we have a long way to go. Other industries are miles ahead in some areas, but forward-thinking companies like Service Titan are changing the way service companies operate for the better. Technology brings better efficiency, higher profitability, and in some cases, we’re even seeing the potential for higher multiples down the line! To discuss what the future of technology in the trades looks like, we brought back former To The Point superstar Tom Howard. Owner of Lee’s Air and VP of Customer Experience at Service Titan, Tom has the unique position of being both a contractor and working on the front lines of the latest technologies for the trades.
On Tom’s previous episode, we dove deep into the strategic ways you can impact net profit for your business. Naturally, many of these ways involve integrating technology and software into your business. But what lies ahead? What will the future look like, and what trends should you expect out of your field management software going forward?
There are plenty of concerns, and discussing Google, Amazon, and other players potential moves into our industry is always a hot topic. As a contractor himself, Tom is always looking at how the industry can ensure that no matter what happens, we’ll stay competitive and control our own destiny. Technology is exactly what he believes will allow us to do just that, as well as make sure your business is running as efficiently and profitably as possible. Tom works for Service Titan so naturally much of our discussion revolves around what they are doing, but he is quick to point out there are other companies out there doing great things in the same space.
Service Titan believes that artificial intelligence machine learning is the future of the trades. Even today, some contractors are using smart dispatching software. In this model, the AI is making decisions based on available data. The more data you have, the better decisions it will make. Service Titan has been developing their own smart dispatching software for several years, and what Tom and the team have been learning is fascinating.
One of the really interesting things about AI machine learning is that it will make decisions that you won’t understand—and that’s a good thing! When you don’t have enough data, you essentially have a heuristic model; a system where you’re set up rules for how the AI should behave when given certain data. Once the AI is truly “smart”, it begins to make decisions differently based on efficiency and other factors that it believes produce the best possible outcomes.
Service Titan’s smart dispatch got so smart that some customers actually called in to say that they didn’t understand why it was doing certain things. Once it gets smart enough, you simply don’t know, and there’s no obvious answer to point to other than it has evolved to make a decision for why this specific technician is right for this specific job. They’ve had to have a lot of conversations about the best way to explain this to customers. It is complicated, but what you need to understand is that as the AI collects more data, it will continue to become smarter and make more optimal decisions based on new information.
As AI machine learning progresses, it will only get bigger and bigger. You’ll start to see it implemented in more and more software, streamlining processes and helping us make optimal decisions we may not even understand.
One of the important things to understand about field management software in the trades is that every company marks their jobs differently. We can refer to jobs as “business units”. You might call a routine maintenance visit something different than an installation in your FMS, for example. Some people don’t even differentiate in their FMS, making data harder to parse.
Service Titan has developed smart software that can now read your invoices and determine with over 97% accuracy exactly what type of call it is, even down to what the service is for. That means being able to classify on its own using just the information from the invoice if it’s an AC installation or a plumbing repair; a rewiring job or a commercial emergency service.
Using this data and algorithm, Service Titan has learned that a specific call should have specific data attached, and has averages for things like cost, time spent, and more. That means they can compare these calls and metadata between companies to help their customers identify areas that they can improve in, and even discover underserved markets. This “big data” wave of information will start to make a major impact on the trades, Tom predicts. Contractors are worried about Amazon and other players entering the market, which is why he believes building these tools and getting them into the hands of the contractors ensures we’ll be able to compete.
Earlier in 2021, Service Titan had a $500,000,000 investment. This is very significant, because it will allow Service Titan to continue making the best possible features to benefit contractors. There are lot of things contractors want in their software that don’t exist yet, and this investment will help develop these things. Service Titan has over 5,000 customers each with their own business models, and each needing different features and settings for everything. The investment will be deployed in ways that not just benefit contractors as a whole, but are designed to be usable in a multitude of ways.
Service Titan has and is making plenty of other changes, too. For starters, they are experimenting with shortening the onboarding process from 2 months to two weeks. They’re also looking at ways to make things more user friendly, and looking at expanding into other verticals. This can help their core verticals as well, Tom points out. A pest control company could want a certain feature that ends up being useful for a plumbing contractor down the line. Another feature they’ve upgraded is their pre-built templates for estimates, giving contractors the ability to empower their techs to whip out multiple estimates right on the spot for customers. Add that to tracking features like how often technicians are using certain aspects of the FMS, taking lunch breaks and more, and you can quickly see how integrating a customizable, smart, and trades-specific FMS will continue to be the future of how the top contractors operate.
In the next 6 months, you’ll see Service Titan rolling out a lot of exciting features that will continue to position them as the leading FMS for contractors. One feature that is really exciting (and just announced!) is Service Titan Leads. This will allow you integrate your leads on, say, Google. Service Titan will tell you which ads are performing the best. Using this data, Service Titan can check your capacity for the day, turning the best ads on and off to bring you to capacity and turn them off when you’re all booked up.
If you’re a Service Titan user, Tom feels there’s one thing that you may not know about that will have an immediate impact on your business. That’s Titan Advisor. It’s a rocket icon on the upper right hand of your screen; anyone who is an admin will have it. If you click on that rocket, it will ask you what your goals are for your business. Then you’ll be able to drag and drop from a list of goals and put your top 4 in order. Using this, Titan Advisor looks at all of the features you’re either using or not using in Service Titan and presents you with a list of recommendations to achieve your goals!
Having software and technology integrated in your business isn’t just great for efficiency, productivity, and profitability. It’s actually something that could come into play should you ever decide to sell. Tom has served as a consultant on both the buyer’s side and seller’s side, has sold his own business before, and is both an owner of a business as well as someone who works in the SaaS (software as a service) industry.
In today’s trades M&A landscape, it’s all about EBITDA. In the SaaS industry, it’s all about multiples based on revenue. The reason for that is SaaS companies are generally very easy to scale. Tom sees scalability as a driving factor for M&A down the line, not just how many memberships you have. He envisions a future (and is already seeing it happen) where contractors that are more tech enabled will command higher multiples. Being more tech-enabled will get investors more excited. It means efficiency, which means profitability. That’s exactly why SaaS companies get multiples based on revenue. Investors know a SaaS company can be scaled without paying for a ton of new equipment, trucks, and employees. As you’re growing your business, Tom suggests considering doing not just what will make you profitable, but scalable as well.
Service Titan is staying at the front of the pack by focusing on delivering the most beneficial technology possible and getting these tools in the hands of contractors. The top contractors today are already integrating technology into their processes. If you aren’t continually thinking ahead and looking at what will keep you ahead of the competition, you’re missing the mark. Are you part of the future, or are you getting left behind in the dust?