To The Point - Home Services Podcast
Episode: RYNOx 2025: Expansion Wars with Tommy Mello & Tom Howard
Release Date: April 8, 2025
Host/Author: RYNO Strategic Solutions
Introduction to Expansion Strategies
In this engaging episode of the To The Point - Home Services Podcast, hosts Tommy Mello and Tom Howard delve into the intricate dynamics of expanding home service businesses through acquisitions versus organic growth. The discussion provides invaluable insights for HVAC, Plumbing, Electrical, Roofing, and other service companies aiming to scale their operations efficiently.
Starting from Scratch vs. Acquisitions
Tommy Mello opens the conversation by addressing the challenges of building a company from the ground up. He emphasizes the initial hardships during the first two years and contrasts the growth trajectory of organically scaling a business with that of acquiring an existing company.
"If you grow 100%, the next year, you're at 2 million. If I go buy a company, I'm able to get it for cheap, and it's 5 million of revenue. I grow at 100%, I'm adding another 5 million of revenue. Speed, to me, is the thing that."
— Tommy Mello [00:00]
Tommy underscores the advantage of acquisitions in accelerating growth by bypassing the slow buildup of infrastructure, such as setting up dispatchers, customer service representatives (CSRs), and management teams.
Tom Howard concurs, highlighting his preference for acquisitions due to their scalability and efficiency.
"Tommy tends to take his top few guys with him to every company... What's important is to do it fast and just do ex. Go through that process. Just get it done."
— Tom Howard [27:23]
Greenfielding and Market Entry
The hosts explore the concept of greenfielding—establishing operations in a new market from scratch—and its viability compared to acquisitions.
Tom Howard presents a compelling case for greenfielding, especially for private equity firms aiming to generate perfect opportunities across multiple markets.
"If you master the art of greenfielding... It’s not good enough anymore. Your goal should be top three, ideally number one."
— Tom Howard [03:58]
He discusses the significance of SEO in establishing a strong online presence in new markets, detailing strategies like structuring content for clarity and aligning with search intent to dominate AI snippets.
Tommy Mello shares his experience managing market share, advocating for deep penetration into existing markets before considering expansion.
"Focus on your market. If you're in LA, Los Angeles, LA. Can theoretically sustain a billion dollar HVAC and plumbing and electrical company."
— Tommy Mello [08:56]
He advises calculating true market share and warns against expanding prematurely, emphasizing that local growth often holds more value than merely increasing the number of locations.
Marketing Strategies and Budgeting
A significant portion of the discussion centers on effective marketing strategies and budgeting for growth.
Tom Howard recounts a pivotal decision to double the marketing budget in high-performing markets like Houston and Denver, attributing their success to enhanced branding and persistent marketing efforts.
"I'm a firm believer I'm going to spend a fortune on branding even if it's not direct response... You have to go all in on this stuff."
— Tom Howard [06:43]
He introduces the concept of "long term greed," emphasizing sustainable growth that benefits both the team and their families.
"If you're long term greedy, that means my team wins and my family wins."
— Tom Howard [30:57]
Tommy Mello advises against relying solely on percentage-based marketing budgets. Instead, he recommends focusing on Cost of Customer Acquisition (CAC) to determine marketing spend.
"I would look as cost of customer acquisition and say, how many customers do I want to acquire this year? If it's going to cost me a thousand dollars a customer, then I need to spend a million dollars, period."
— Tommy Mello [29:20]
Goal Setting and Team Commitment
The episode transitions into the importance of goal setting and fostering commitment within the team to drive performance.
Tom Howard references Robert Cialdini's Influence and the Seven Laws of Influence, particularly the law of commitment, which posits that people are more likely to follow through on goals they set themselves openly.
"People feel strongly committed to what they say out loud. They need to choose their numbers... They need to believe in it, they need to say it out louder."
— Tom Howard [15:50]
He emphasizes the necessity of aligning personal goals with company objectives, encouraging leaders to understand what motivates their team members on a personal level.
Tommy Mello adds that clarity in mission and vision statements is crucial, advocating for simple, memorable statements that everyone in the company can recall and embrace.
"Serve people. Our customers are coworkers in our community and have fun doing it."
— Tommy Mello [19:23]
Incentive Structures for Performance
A pivotal segment discusses creating effective incentive structures that motivate employees by tying rewards to controllable metrics.
Tom Howard shares his approach to incentivizing managers based on departmental gross margins rather than overarching company metrics, ensuring that bonuses are directly linked to performance that managers can influence.
"He can control the labor because he sets your hourly rates and he sets your incentive plans... He is going to study at least his portion of the budget every day."
— Tom Howard [32:04]
Tommy Mello reinforces the importance of immediate rewards, drawing parallels to behavioral techniques used in autism therapy to ensure incentives are closely tied to actions.
"If you wait till the end of the year to give them a bonus, it's like telling the kid, if you act well today, I'll take you for ice cream on the way home."
— Tommy Mello [21:26]
He underscores that incentives must be simple and transparent to effectively motivate employees, preventing confusion and ensuring that rewards drive desired behaviors.
Conclusion
In summary, To The Point - Home Services Podcast episode "RYNOx 2025: Expansion Wars with Tommy Mello & Tom Howard" offers a comprehensive exploration of growth strategies through acquisitions and greenfielding. The hosts provide practical advice on marketing budgeting, goal setting, team commitment, and designing incentive structures that align with controllable performance metrics. Their insights serve as a valuable roadmap for home service companies aiming to scale efficiently while maintaining a motivated and committed workforce.
Notable Quotes:
- "Speed, to me, is the thing that... We all only have 24 hours in the day." — Tommy Mello [00:00]
- "If you master the art of greenfielding... Your goal should be top three, ideally number one." — Tom Howard [03:58]
- "I'm long term greedy... If you're long term greedy, that means my team wins and my family wins." — Tom Howard [30:57]
- "People feel strongly committed to what they say out loud." — Tom Howard [15:50]
- "Serve people. Our customers are coworkers in our community and have fun doing it." — Tommy Mello [19:23]
This summary excludes advertisements, intros, outros, and non-content sections to focus solely on the valuable discussions and insights shared by Tommy Mello and Tom Howard.