In Today’s Newsletter

• Five things I stopped doing that made me better

• Things you should do…

• The Membership model

• “People First” paradox

• The other half of the AI equation

• The bridge: insurance-to-retail conversion

• Favorite Tweets from the past week

Technology Corner with ServiceTitan

The Membership Model Is Not a Marketing Tactic. It's a Business Model Decision.

I want to ask you a question. Sit with it before moving on.

If you had 5,000 members paying $300 a year, and a marketing program spending the equivalent on Google, which business would you rather own?

Most operators would take the marketing spend. It feels controllable. You put money in, calls come out.

That instinct is exactly why most membership programs underperform.

We are sitting at approximately 20,000 members across our brands. That is not a marketing program. That is a revenue model running alongside our primary business -- one that does not care what Google charges per click, does not fluctuate with the weather, and does not require someone to search for us before we have a relationship with them.

Getting there required us to stop thinking about membership as a customer acquisition tactic and start treating it as a business architecture decision. Those two approaches produce fundamentally different companies over a decade.

The math that should change how you think about this

Membership customers spend more per visit. They call more frequently. They convert on estimates at higher rates. They stay longer. They refer more often.

If you have not run the comparison between your member and non-member customer base -- average annual revenue, retention at one, two, and three years, average ticket on service visits -- that is the most important thirty minutes you could spend this month. The numbers will almost certainly surprise you.

A member is not just a more loyal customer. They are a structurally different one. They have made a financial commitment to your company. Every interaction starts from a different place than a cold inbound call from someone who found you on Google.

The part nobody talks about: you have to build the fulfillment engine

Most membership programs underperform not because of pricing or the sales pitch. They underperform because of the operational infrastructure required to keep the promise after someone signs up.

Twenty thousand members means 20,000 customers owed a defined service on a defined schedule. If you are managing that with spreadsheets and manual callbacks, you are either leaving visits on the table or burning your CSR team on work that should not require a human to initiate.

This is where ServiceTitan changes the economics of running a membership at scale -- not through automation that replaces the human touch, but through structure that makes consistent execution possible.

The platform configures membership types with billing cycles, included services, discount schedules, and renewal logic in one place. Member status is visible on every customer record, every call, every job. When a technician arrives at a member's home, they know exactly what the customer is owed, what equipment is on site, and what the service history looks like -- before they touch anything.

The real differentiator for us, though, is custom forms.

Every maintenance visit in our business runs off a ServiceTitan inspection form built specifically for that trade and that equipment type. The technician does not decide what to check. The form decides. It walks through every system component in a defined sequence, requires a condition rating on each item, and will not let the job close without completion. What that produces is not just a consistent customer experience -- it is a documented condition report that becomes the foundation of every recommendation made on that visit.

This matters for membership profitability in a specific way. Memberships typically do not produce profit on the maintenance call alone. The technician who works through a thorough inspection, finds something real, and offers a documented recommendation is the difference between a visit that breaks even and one that generates two or three times the plan fee in the same appointment. The form is not a compliance tool. It is a revenue enabler.

ServiceTitan also tracks average ticket per maintenance visit and add-on revenue by technician across your membership base. You can see exactly who is executing the inspection the way it was designed and who is not -- and manage to that standard with data instead of intuition.

The actual decision

Google spend gives you inbound calls this month. Stop spending, calls stop. Every customer acquired that way starts with no relationship and no particular reason to call you again before the next emergency.

A membership base gives you a scheduled relationship, predictable recurring revenue, and access to the home built into the program.

The operators who look most different in ten years decided, at some point, to build membership as a parallel revenue model rather than an afterthought. They priced it right, built the fulfillment engine, and used the right technology to execute it consistently at scale.

ServiceTitan is the infrastructure that makes it possible to keep 20,000 promises without losing the quality that makes those promises worth keeping.

#grateful to have ServiceTitan sponsoring this section of TPLT

CEO: Growth Mindset

The People First Paradox

I've said "people first" thousands of times. It's on our walls. It's in our values. It's in the way I talk about this company to anyone who will listen.

And then we embraced AI in a way that required us to eliminate roles.

So I want to answer the obvious question honestly: how can both of those things be true?

I built this company with my brother Joe. We bought a $9 million HVAC business from a father who trusted us fast and handed us the keys early. We didn't raise a dollar of outside capital. We grew it to >$150 million in ten years, mostly organic, across St. Louis, Nashville, and Denver, adding plumbing, electrical, appliances, and roofing along the way.

People were the answer to almost every hard problem we faced in that decade. Hire better. Train harder. Invest in culture. Hold the standard. Get the right people in the right seats. That wasn't just philosophy. It was the actual operating model.

So when AI started becoming real, not theoretical, but genuinely capable of replacing functions that humans had always performed in our business, I had a decision to make. And I want to walk you through how I actually thought about it. Including the parts I'd rather skip.

What we actually built

About eighteen months ago, we stopped treating AI as a tool and started treating it as an operating system for demand.

Every door into our business, phone calls, texts, web inquiries, chat, third-party leads, all of it, now runs through AI first before it reaches a human. Around the clock, every day of the year. During weather surges, when we historically lost roughly 35% of inbound calls to abandonment, we now lose almost none. The capacity that used to walk out the door during our busiest moments is now captured.

AI manages our dispatch board in real time. It prioritizes high-value, time-sensitive work over low-margin filler, and it protects capacity for the jobs that matter. The board used to be a human puzzle, solved by judgment and pattern recognition built up over years. Now it runs with more consistency and at a speed no human dispatcher could match.

We also flipped how we think about marketing spend. When the board is full, we pull back on paid ads. When capacity opens, we lean in. Marketing dollars now follow our ability to deliver, in real time, instead of the other way around. That alone changed the economics of how we run peak season.

And then there is the outbound side, which is the part that surprised me most. Autonomous campaigns now reach the right customer at the right moment with no human initiating them. Before a heat wave hits. Before a membership lapses. On an estimate that went cold three weeks ago. Our outbound booking rate went from around 10% to around 25%. In April, pre-summer, it booked over 1,100 cooling visits.

After a full year of operating this way, 70% of eligible jobs are booked entirely by AI.

Each layer feeds the next. The machine gets smarter every cycle. It compounds.

The part nobody wants to say out loud

Here is the truth I owe you.

It takes fewer people to serve the same customer.

How we got there was a mix of three things. Some of the efficiency was absorbed by growth -- the work grew, and headcount simply did not have to grow as fast. Some was attrition we chose not to backfill -- when people left, some seats stayed empty by design. And some were roles that were eliminated. People I knew by name. I am not going to dress that one up.

So the tension is real. And I am not going to talk around it.

The comfortable lie

When AI started becoming unavoidable, the principled-sounding response was available to me. I could have said: we are people first, so we are going to sit this one out. We will protect every job and let AI be someone else's problem.

It would have felt principled. In certain rooms, it would have gotten applause.

And it would have been a slow-motion betrayal of everyone on my payroll.

Because here is the reality. Competitive intensity in the trades is only going up. Private equity is consolidating our space in every market we serve. Well-capitalized operators with enterprise technology, centralized infrastructure, and structural cost advantages are competing directly against independent companies like ours every single day.

If I refuse to adapt in the name of protecting forty roles, what I actually do is put all seven hundred jobs at risk.

A business that cannot compete eventually cannot employ anyone. The sidelines are not safe. Choosing not to play is still a choice -- it just gets made for you later, and with a lot less control over the outcome.

The reframe

People first has never meant a frozen headcount.

Protecting every seat forever is what a museum does, not a business. A business that cannot evolve does not protect its people. It just delays the reckoning.

What people first actually means, in practice, is a promise to invest. Top-of-market pay. Real benefits. Genuine training and development. The best tools. The kind of environment where a skilled tradesperson can build a real career.

And here is the thing about that promise: you cannot keep it from a business that is losing. The math of caring requires a financially healthy company. Profitability is not the enemy of people first. It is the precondition for it.

What we owe the people who are affected

When this gets tested -- and it does get tested -- we have tried to hold to two things.

Redeploy first. When a role is affected, we look for another seat. A different function. A different trade. Wherever we honestly could find a fit. Many of the people whose original roles changed are still with us in different capacities.

And when we cannot, we owe a real bridge and an honest goodbye. Face to face. Not a press release, not a templated email, not a meeting with HR and a box. A direct conversation from leadership that respects what the person contributed and gives them something real to land on.

That is not comfortable. It is not supposed to be. But it is what the values actually require when they cost something.

The resolution

I said at the beginning that I wanted to answer how "people first" and "AI means fewer people" can both be true. Here is where I land.

Refusing to embrace AI in the name of people would be the least people-first thing I could do.

A people-first leader builds a business strong enough to keep its promises. Strong enough to pay at the top of the market. Strong enough to invest in training when it is inconvenient. Strong enough to still be standing when a PE-backed competitor decides to outspend you for a decade.

Caring about your team and embracing AI are not in tension.

Caring is the reason to embrace it.

If you run a business, here is my challenge to you.

Stop using "people first" as a reason to wait. Name what you are actually afraid of. In most cases, it is the conversation, not the technology.

Do the hard math honestly, and then do the hard thing with dignity. The how is where your values actually show up. Anyone can articulate values when they are cost-free.

And reinvest the gains in the people who stay. Top of market pay. Real tools. Real development. That, and only that, is what earns the words.

Profit and purpose were never enemies.

The enemy is standing still.

CyberNetic Labs - bringing powerful Agentic AI tools to the trades

The Other Half of the AI Equation

Every conversation about AI in the trades right now sounds the same.

The tool is going to answer your phones. Book your jobs. Score your calls. Run your outbound campaigns. Manage your capacity. The demo is impressive. The pitch deck is clean. The ROI math works on paper.

What nobody puts in the pitch deck: you have to bring the ball 50 yards yourself.

I am a genuine believer in what Netic has built. I have written about it in this newsletter. I have talked about it publicly. The results we have seen in our business over the past fourteen months are real -- abandoned call rates near zero during surge events, outbound booking rates that have more than doubled, AI handling 70% of eligible job bookings without a human in the loop.

But I want to tell you something that does not make it into most AI vendor conversations, because I think operators deserve the honest version before they sign a contract.

The best AI tools in this industry are not plug and play. Not even close. And the gap between a company that gets transformative results and one that gets a expensive underperforming pilot is almost never the technology. It is the internal capacity to implement it.

What 14 months actually looks like

We are fourteen months from our Netic launch date. We have a dedicated internal project manager whose primary job is managing the implementation, the ongoing configuration, the change requests, and the communication between our operations team and the Netic team.

Here is a sample of what was on her active list in a single week recently -- not at month one, not at month three, but fourteen months in:

Inbound analytics reporting enhancements across four brands. Outbound calling activation for a new entity. Capacity configuration issues requiring escalation. First-call routing logic for a new market. Speech-to-text call scoring integration with a third-party platform. Roofing lead workflow for inputting customer data and triggering outbound calls. Cancel reason hardcoding for campaign triggers. A CXR widget for membership availability. Zone mapping and skills configuration for technician assignment. Post-job inspection workflows. Customer-supplied install workflows. Duct cleaning workflow design. Past-due balance flagging. Sewer sales question routing. Zapier integration for lead sources. Outbound call and text analytics for a newer market. A dozen additional items in the change request queue.

That is not a struggling implementation. That is a healthy one. That is what it looks like when a large, multi-brand, multi-market home services company is genuinely extracting value from an AI platform -- constant configuration, constant refinement, constant expansion into new use cases.

It also means someone has to own it internally. Consistently. Every week.

The 50-yard line

Here is the analogy I keep coming back to. A great AI partner meets you at the 50-yard line and shares the lift. Netic does that. The product is real, the team is responsive, and when we surface a problem, they work to solve it.

But they cannot run the ball for you. They do not know your market's technician shift structure. They do not know that your new entity routes first calls differently than your flagship location. They do not know that your roofing division has a workflow that does not match your HVAC operation. They do not know which campaign triggers need to be hardcoded before you can launch in market four.

You have to bring that knowledge. Your team has to translate your operational reality into configuration logic, test it, identify where it breaks, escalate it clearly, and push it across the finish line. Over and over again, for as long as the platform is running inside your business.

That is not a criticism of the vendor. That is the nature of deploying sophisticated AI inside a complex operating environment. The tool is only as good as the instructions you give it, and the instructions only get better when someone inside your organization is accountable for giving them.

What this means if you are considering AI

Before you evaluate any AI platform, answer this question honestly: who owns the implementation?

Not who will attend the kickoff call. Not which GM is the executive sponsor. Who is accountable, week over week, for managing the open item list, writing the change requests, testing the workflows, escalating the issues, and keeping the momentum going when something breaks -- because something will always be breaking or changing or expanding.

If the answer is "we will figure that out after we sign," you are not ready. The platform will underperform, you will blame the vendor, and you will walk away from something that could have worked.

The companies getting real results from AI right now are not necessarily the ones with the best technology partner. They are the ones with the internal discipline to implement it properly. A strong project manager sitting at the intersection of your operations and your AI vendor is not overhead. At the scale we operate, it is one of the highest-leverage roles in the building.

The honest version of the AI story is this.

The tools are ready. The question is whether your organization is ready to do its half of the work.

The 50 yards on your side of the field do not run themselves.

#grateful to have Cybernetic Labs sponsor this section of TPLT

Consumer Financing¹

The Insurance Playbook Is Changing. Is Your Close Rate Ready?

For most of the last two decades, roofing was a simpler business than it looked.

Storm hits. Homeowner calls. Adjuster approves. Contractor installs. Repeat.

That model is not dead. But it is under serious pressure. And the roofing companies that do not adapt their sales approach to what is actually happening in the insurance market right now are going to feel it.

Here is what is actually happening.

Average U.S. residential roof replacement costs jumped 33 percent in 2025 compared to the prior four-year average. At the same time, average deductibles rose 22 percent in 2025, and insurers are increasingly scrutinizing property-specific risk factors like roof age. Major carriers have quietly introduced restrictive clauses that hollow out coverage -- cosmetic damage exclusions, actual cash value policies on older roofs, percentage-based deductibles tied to rebuild costs rather than flat amounts.

The result: a homeowner who would have had a fully covered replacement three years ago is now sitting across the table from your salesperson with a denied claim, an underpaid claim, or a deductible that runs into five figures -- and no clear path to afford the work.

More roofs are shifting to retail. And since more roofs are shifting to retail, financing is more important than ever.

That sentence should be on the wall of every roofing sales meeting in the country.

The gap that kills the deal

Here is the conversion problem that most roofing operators are not talking about honestly.

A storm lead comes in. Your inspector goes out, confirms real damage, and writes a legitimate scope. The homeowner files a claim. The adjuster comes back with a number that does not cover the work, or denies the claim outright, or approves it at actual cash value after depreciation on a fifteen-year-old roof -- which means the check covers about half.

The homeowner still has a damaged roof. They still need the work done. They trust your company. They want to move forward.

And then the payment conversation happens and the deal dies.

Not because the homeowner does not want the roof. Not because your price is wrong. Because there is a gap between what they have and what the job costs -- and neither you nor they have a clear bridge across it.

That gap is where roofing revenue goes to disappear. And it is happening more frequently every year as carriers tighten, deductibles rise, and the clean insurance-to-install pipeline that built this industry gets harder to rely on.

Financing is not a closing tactic. It is a business model requirement.

Most roofing companies treat financing as something you mention when a customer pushes back on price. It is an afterthought. A fallback. Something the salesperson brings up awkwardly after the proposal has already landed wrong.

That framing is backwards -- and it is costing you jobs.

The operators who are converting at a high rate in today's insurance environment are the ones who introduce financing at the beginning of the conversation, not the end. Before the claim outcome is known. Before the homeowner has already done the math in their head and decided they cannot afford it. Financing presented early reframes the entire conversation from "can I afford this?" to "how would I like to pay for this?" -- which is a fundamentally different psychological starting point.

At Ferguson Roofing, we operate in a storm market. We see insurance leads every week. Some convert cleanly. A growing number do not -- not because the damage is not real, but because the insurance outcome does not fully cover the work. GreenSky gives us a tool to bridge that gap. The homeowner with a $3,000 deductible on a $18,000 job who cannot write a check for the difference does not have to walk away. The homeowner whose claim came back at actual cash value instead of replacement cost has a path forward. The customer who chose not to file at all because they were worried about their premium still has an option.

Financing turns a "we'll think about it" into a scheduled install.

The roofing market is not getting easier

Insurance carriers are shortening acceptable roof ages to 15 to 20 years, driving a steady stream of re-roofing contracts -- but driving them toward retail, not insurance. Colorado homeowners insurance premiums rose 65 percent over five years, with hailstorms identified as a major driver, and that pattern is playing out in markets across the country.

The demand for roofing work is not going away. What is going away is the clean path from storm damage to fully covered insurance replacement. Every year, a larger percentage of homeowners who need a roof are going to need a financial bridge to get there.

The roofing companies that build that bridge into their sales process now -- not as an afterthought but as a standard part of how every conversation is structured -- are the ones that will convert a larger share of the leads they are already generating.

The storm is still the opportunity. Financing is how you close it when insurance does not fully show up.

#grateful to have GreenSky® Home Improvement sponsor this section of TPLT

¹ The views and opinions expressed here are owned by The Path Less Traveled and its author and may not reflect the views of GreenSky®

Friends of The Path Less Traveled

Who are the VENDORS that fuel our success?

ACCOUNTING & TAX SERVICES

I met Patrick on X (formerly Twitter), which continues to be one of the best communities for thoughtful operators sharing real insights. I’ve followed his work closely and have been consistently impressed by the quality of content he puts out around building strong finance and accounting foundations in small businesses. He brings both clarity and practicality to a topic that is often overlooked but critically important. If you’re a business doing anywhere from startup to ~$15M in revenue, Appletree is an excellent partner to have in your corner.

PAYROLL & HR

Inova Payroll & HR has been a partner to our companies for over 10 years. They have provided us with a payroll technology platform that has been able to keep pace with the demands of our fast-growing organization (now serving team members across 4 states). Inova’s platform works seamlessly with our CRM, ServiceTitan, and with our accounting back-end, Sage Intacct.

COACHING & TRAINING

If there is one organization - perhaps more than any other - that has fueled our growth over the last 10 years… that organization would be Nexstar Network. I like to say that Nexstar Network has built & refined a “process playbook” that touches on so many facets of our business. Don’t try and re-create the wheel… come and learn from the best. Reach out to my friend Kara Schuster at [email protected] and tell her that I sent you.

#grateful for the “Friends of TPLT” sponsors in this section

Hey…I could use your help connecting with like-minded business leaders:

If you know someone who should read The Path Less Traveled - please forward this email them: https://thepathlesstraveled.beehiiv.com/subscribe

Follow along on social…

Chris Hoffmann

on X at @stlChrisH

on LinkedIn @stlChrisHoffmann

on Instagram @Christopher.m.hoffmann

Our Companies:

www.hoffmannbros.com

www.fergusonroofing.com 

www.blueskyplumbing.com

www.hbsolutionsgroup.com 

If you have feedback, questions or comments - please don’t hesitate to reply to this email. I personally monitor all replies.

-Chris