Tim Brooks, CEO and co-owner at Lohmiller & Company, has over 35 years of experience driving growth. Brooks has built a highly successful company based on extensive employee training, aggressive expansion of value-added services, a willingness to invest in new technologies and a focus on building an exceptional culture.
Jonathan Bein, Ph.D., talked with Brooks about how Lohmiller has maintained its competitive edge.
Jonathan Bein: Tim, you’ve had an extraordinary career. Tell us about your business and the virtual relationship you’ve created between employees and customers.
Tim Brooks: I kind of lucked into the HVAC distribution business. My girlfriend then – now wife –convinced me to take a job at a company that’s no longer in business in Denver. And I was a forklift driver and warehouse guy while I went to college. I can honestly say I have had every job between the back of the house to the front of the house – and now as CEO. I gained a tremendous amount of system intelligence along the way. When I started at Lohmiller in 1991, our business was just below $4 million and about 13 or 14 of us in the business; today we’re 213 employees. We have four locations on the Front Range, and last year we did just under $250 million in revenue. The business has changed tremendously along the way.
We’re a value-added distributor. Our mission, purpose and goal are to partner up with our customers and vendors and help everybody we come in contact with be more successful as a result of our efforts. That’s been the fight song since day one and will be as long as I’m involved in the business.
Bein: The most rudimentary value proposition for a distributor is that we have what you need, when you need it and where you need it. How does Lohmiller & Company go beyond the basic value proposition that all distributors do?
Brooks: I’ll pick a market segment. For example, let’s take the residential HVAC market segment which is divided into a few different verticals. There is the residential contractor who comes to your home and services the furnace or the air conditioner. We also have residential new construction and the multifamily market. In the add-on replacement and service market, we are a training facility. We offer business training, sales training and technical training. We also act as a marketing agency.
Our value add is to help our dealers make their phones ring and keep their employees trained. We also try to be a back office for them as much as possible. We might be working with one dealer to help them understand their financials and another dealer to help them write their employee handbook. It takes on a lot of different facets.
Bein: In your description of the metrics in the business, you mentioned the revenue and the number of employees. Simple math says you have extraordinarily high revenue per employee. We see a lot of data about distributors depending on the sector. We look at numbers like $600,000-$800,000 per employee. That’s very typical. You’re 50% to 100% bigger than that. That’s extraordinary. You’ve managed to create hyper-efficiency in the business. How did you do it?
Brooks: It was very intentional. We started measuring that in the late nineties. We didn’t like the numbers and felt like they could be improved. Our business as a distributor is divided up into three areas. I call it the concrete, the carpet and the tile. The concrete would be the logistics system — forklift drivers and truck drivers. We have to bring the product in, put it away and then send it back out as fast as possible. The carpet would be our sales staff, our general administrative support and our executive team. The tile would be our parts and supplies showrooms. I started looking at it and realized we had a lot of people sitting on the carpet that were taking phone calls. When one of our customers calls us, they only want two things. Where’s my stuff? Or they want more stuff.
I worked hard to resolve that and give them tools via the website to find the status of their order at any given time. We continually invest in that. As far as online ordering, our B2B system ran 29% of our business through online ordering. That saved us 15-30 people on the phones alone. It’s much more efficient. I’ve learned in business that if I measure it, we can get it to where we want it to be. First, you have to say, where are we now? And then where do we want to be, and how long will it realistically take to get there?
Back to the concrete, the largest staff is the logistics team. We had to measure and understand just how productive each person was. Once we did that, we can now pay for performance. We started doing this 7-8 years ago and realized our best warehouse guy was better than the next three. We didn’t want to lose him, so we made sure we were paying him the correct rate. I’ll never forget when we gave him his raise, he said he wouldn’t tell anyone.
I said, “Do me a favor. Tell everybody how much I am paying you. And I’ll explain why you get that rate.”
We have safer operations as well. Fewer forklifts. And less turnover increases efficiency. I look for efficiency everywhere. How can I leverage technology to help?
We implemented a new software called PathGuide in our warehouses last year. We can measure travel time for every team member in logistics. How long are they on the forklift? How efficient are they? Everybody has an efficiency number. We have learned a ton, and we’ve been live for about 11 months. We’ll probably redesign all our warehouses and change them to some sort of velocity flow to minimize travel time on those lists. Everything we do, we challenge. Are we adding value to the customer? Are we increasing the efficiency of our overall business? In my world, business is math. What are the numbers? What do they look like? It makes it pretty easy to make those investments.
Bein: Culture always reflects leadership. What are the key elements of your culture, and how do you reinforce those aspects?
Brooks: It’s a passion of mine. I’ll never forget when, in 2018, my business partner and our CFO, Roger Lee, walked into my office and closed the door. When people walk into my office and close the door, they’re usually quitting. But I knew my business partner wasn’t quitting. He said, “Hey, I was just at an executive luncheon. They asked me to talk about our culture because they thought we had a really good culture. I declined because I didn’t think we had a great culture.”
And I said, “Holy cow, Roger. That’s not true.”
He said, “If you could just tell me what it is I screwed up, I’ll make sure I carry the message next month when I go back to the meeting.”
I said, “We sell.”
He said, “That’s not culture.” I said, “We are professional.” He said, “That’s not culture.”
The first consultant we ever hired was for our culture process. We spent three consecutive days with our ownership group, executives and our key team. We defined what our intentional culture was going to be and how it will be designed to help us reach our full potential.
We talked about the pillars of our business. We all have an impact. Sure, we celebrate the salesperson who sells $25 million a year, but without the rest of us, he or she couldn’t do that.
We’re also huge advocates of the community. It’s provided so much for us, and we want to make sure we give it back. For the last eight years, we’ve provided every furnace that Habitat for Humanity has needed in Colorado and Wyoming. We’re a huge part of The Food Bank of the Rockies.
Then, we have behaviors and habits built into all our pillars. I’m so passionate about it that no matter where I am on the planet, I send an email out every morning. It’s about the behavior of the week and then the habit of the day and then whatever my twist is on it. Today’s habit is that we’re responsible for our words and our actions. It’s a reminder to everybody. If you’re having to live your life saying you’re sorry, you’re not doing it correctly. We’ve created a second language with our culture that we can use to hold each other accountable.
Bein: You have somebody on staff whose title involves employee retention.
Brooks: Yes. We have a person in our HR department who handles employee retention and recruiting. Regan Brooks is my daughter, and she fulfills that role. When she started with us, she was in digital marketing. Now she’s in employee retention. She really loves the company and is the eyes and ears. She does an exit interview with every single person as they leave the business. We learn a lot from those.
Last week, she was recruiting at the University of Colorado job fair. On Friday, we had an Employee Appreciation Day. We brought breakfast in the morning and had massage therapists at all of our branches throughout the day. I was at our Johnstown branch. We had a happy hour at the end of the day. It was to get caught up and see pictures of kids and it was really fun.
Bein: What other tech innovations have created efficiencies for you?
Brooks: I take them for granted at this point, but I’ll go to employee stickiness. It’s expensive to hire people. It’s even more expensive to train them. With technology, I have a dozen of those 213 employees who do not live in the state of Colorado. We learned during COVID-19 that we can do remote work. I have two key managers. One lives in Montana, and another one lives in South Carolina. And because of technology, they can do their job remotely. We use a software called Fusion, which allows us to have a soft phone wherever their laptop is. That way, I can see productivity. I can see performance. I can see efficiency. I don’t have to go to the expense of rehiring, retraining and watching good experience walk out the door. It’s on a job-by-job basis. I did have a forklift driver who said he wanted to work from home. That doesn’t work. It doesn’t fit for everybody, but it can fit for the right person.
Bein: Are there other things you do with touchless ordering, whether it’s EDI, punch out, email or order automation?
Brooks: Yes, I have a partner. It’s a Canadian company called Conexiom. The customers that generate a printed purchase order would email my internal team, and then I’d have to pay somebody to put that order in the system. Conexiom takes that order and maps it. I have to have a customer raise their hand and say they’re willing to try it. I map it with them, and when they send me an order, it’s in my system within 15 seconds. Completely touchless. It’s a lifesaver.
Bein: The beauty of that is you get efficiency, and you create a better customer experience. They get that immediate order acknowledgment within minutes instead of hours or days.
Brooks: You’re exactly right. And staying on that topic, we have a product that we’re beta testing with a dozen of our customers. It’s called Scan to Stock. We’re literally managing the inventory on the service truck. As they use the product, they scan it and can set it up in two different ways. The order can come directly to me, or it can go into their purchasing team. If they have a purchasing team, the purchasing team can approve it, and we place the order to replenish.
Instead of them walking into the warehouse writing down what they need, coming back in and sending me an email that goes into the system, they can scan the barcode, put quantity and build orders as they go. They love it. I have a meeting with all of them next week, and they are excited about rolling it out; they want their peers to be able to use it as well. That’s one of the exciting projects I’m working on this year.
