Service Tips


Elements of a Marketing Plan

When you talk with small and sometimes medium-sized contractors about the need for a marketing plan, you can almost see eyes roll. Many such contractors got into business for themselves so they could be their own boss. The ones who successfully survive the startup years then often find themselves a victim of their own success. They find that their business is succeeding, often beyond their own expectations, yet they don’t want their role in the company to change. If profitability is to be maximized and further growth achieved however, their role must change. It must evolve from being a startup entrepreneur and knowledgeable technician to a business owner. In short, they must learn to work on the business as opposed to in the business.

 

Elements of a Marketing Plan

Courtesy of Chriscolotti .us

Recently we published a blog about the need for having a marketing plan. Such a plan need not be long and complicated, as we will illustrate in this blog. Essentially, there are 3 elements of a marketing plan, and they are:

  • Promotions Planning Calendar
  • Marketing & Advertising Calendar
  • Marketing & Advertising Budget

 

What are promotions? In short, promotions are offers that give your customers and potential customers a reason to contact and purchase from your firm. The stronger the offer, the more likely you will be contacted. Depending on the makeup of your operation, you want your promotions to address the following areas in your business. Residential Replacement Installations – IAQ Accessories – Demand Service Calls – Service/Maintenance Agreements.

 

There are a number of sources you can tap in order to develop your promotions. For example, equipment suppliers or manufacturers typically offer consumer financing or equipment rebates at various times of the year. The downside to these is that many contractors have access to the same or similar programs from competitive suppliers. Sometimes government entities and local utilities will run promotions for efficiency upgrades as well, but again these are available to everyone. Perhaps the best source for offers come from in-house promotions. While these may or may not have the opportunity to attract supplier or government money to help fund them, you have complete control over the type and timing of the promotion. The creativity for in-house promotions is limited only to what you can devise, and the advantage here is that no one else in the market will be offering what you are. The following table is a small example of the different types of in-house promotions you can develop – let this serve to fuel your own imagination!

 

The next blog in this series will discuss when and how many types of promotions you should run, along with how you make people aware of these offers.

 

Product Related Service Related Other
Free Thermostat Free 2nd Year Service Agreement Free Gas Grill
Free Merv Filter/ Upgrade Extended Warranties Free Christmas Tree
Free CO/Smoke Detectors Product Checkup Discount Cause Marketing Offer
Free evaporator coil with AC purchase Duct Leakage Analysis and Sealing Event Tickets (i.e. ballgames, museums etc.)
Free Humidifier Air Distribution Analysis Getaway Vacation
Free Energy Analysis Free Blower Door Test Staycation Package
Free Duct Cleaning Svce Agmt W/combo Pch Free AC Cover
Free Attic Insulation Total Performance Diagnostic Through Call Smart W/Service Call Consumer Electronic Giveaway (i.e. TV, Tablets etc.)
Free Dehumidifier Reduced Rate Service Calls For Certain Time Periods Free American Flag & Mounting System
Free Grill/Register Upgrade Free Evaluation for Generator W/Service Call Free Thanksgiving Turkey

 

Courtesy of The HVAC Business Dr.

 

 


What Is a Top Rate Contractor?

Don't Make Your Customers Look like This

Don’t Make Your Customers Look like This

I had a recent experience with a service contractor who shall go unnamed, but unfortunately the business practice they displayed is still all too typical in the contracting trades industry.

We needed some work done at the house, the same type of work that a number of homes in our neighborhood are looking for.  One of her neighbors had spoken with a contractor who gave her a preferred rate for his services, based upon leveraging that work across a number of homes in our subdivision.  I called the contractor and he sounded knowledgeable and well-organized over the phone.  He came to our house at the appointed time, evaluated the work to be done, showed us samples of his work, provided references and gave us a price.  It was a verbal price, he did not follow with any type of written quote.  Nevertheless, we told him we wanted to follow up with his references so we could see for ourselves the quality of his work.  When we did, we weren’t overly pleased.  It wasn’t that the quality of his work was bad, it’s just that it wasn’t great.

A relative of my wife’s had the same work performed in her home 10 years ago and was quite pleased with the contractor they used.  The quality of the work still shown after 10 years, so we contacted this company.  Based on not being overly satisfied with the quality of work by the first contractor we first had out, we made an appointment with the second company.  The day they were to come out, they called and said they were running late and would make it late in the day.  They didn’t.  Come out or call.  Rather, they called the next day and wanted to know if they could come by that morning.  Even though we were a bit irritated we said yes.  When the contractor came out, she seemed very knowledgeable and answered all our questions.  She evaluated the work to be done and provided references where we could see her work.  She promised to drop off samples later that week.  She didn’t.  The following weekend after she was out, we followed up on her references and were very pleased with the quality of their work.  Based on that we called to remind her about the samples, which she said she would deliver in the next couple of days.  She did, and based on everything we knew we contracted with her for the work, even though her price was about 10% higher than the first company.  It seemed well worth it, and due to our discussions with adjoining neighbors she sold another job next door.  She described her schedule and gave us a 5 day window for starting and completing the work.

On day 4 of the window I called the contractor because I had not seen or heard from them.  She called me right back and said the previous project they had been working on had taken a little longer than she thought so that they would start the following Monday.  As I was expecting this response, I was not particularly bothered by it but I know some homeowners would be.  Monday came and went with no sign of the contractor, but with some concern for the weather the remainder of the week.  Inclement weather would only delay the project some more.

As of this moment it is 5:30 PM on the “following Monday”, and I realistically don’t expect her phone call until Tuesday.  I know we will eventually complete this project and be happy with it, but I will not be giving her company the rave reviews her work will most likely have earned.  While I have no reason to doubt their technical competence and quality of work, their business practices are terrible.  Contractors, take note.  In this day and age it is no longer sufficient to take pride in your quality of work.  Your overall business practices must be of the same caliber as your work if you are to truly call yourself a top rate company!


Treating a Customer like a Second-Class Citizen

Treating a Customer like a Second-Class Citizen

Courtesy of global teleforcesocial.com

Recently I read an article in a trade publication that talked about the best way to deal with a customer who only wants to hear about lower prices. Have you ever had one of those? Of course you have. My issue is not with that type of customer, after all, all of us have the made some type of purchase where price was our driving influence. That doesn’t make us bad customers or second-class citizens. My issue is with this article and how the writer suggests we handle this type of customer.

The writer first suggests three things that make sense. He suggests that you not train the customer to push for lower prices by making price the primary subject of your conversation. He also advises that reducing your price with a customer trains them to push for that in their next transaction with you. Finally, he says that you should not ask the customer to make sure they give you the last look. Doing any of these things is like shooting yourself in the foot. Doing all of them will certainly cripple your chances for profitable selling. No argument here.

As long as you are not doing the things described above, the writer suggests that a true price driven customer is one that does not respond to any value added proposition, has no problems to solve (if this were the case, why would they be talking to you in the first place) or goals in which you could assist with, and one where you are talking to the ultimate decision-maker. If that is the case, the writers suggest you have a frank conversation with the customer and explain that you can no longer afford to call on them in person and that you should ask them to e-mail you their specifications. Better yet the writer suggests turn them over to an inside sales person who will deal with them exclusively on the phone.

I am not advocating that you not spend your time where you can achieve the best return for your company, but I would draw the line at letting a customer know you think they are second class material because they’re only interested in price. Just because they’re only interested in price with regard to this particular transaction, you don’t know that they will be on the next transaction. If they sense you do not value their business for any given reason, they may well look elsewhere the next time they need a product or service which you can offer. The key is to make every customer feel like a King, even if they are only a prince!


Don’t Be Your Own Worst Enemy

Why did you go into business for yourself? You did it because you thought you could do a better job than others, you did it for the opportunity to make more money and you did it so you could be the boss. After all, no one else can match the passion, dedication and hard work that you bring to your business. There’s one thing you might not have thought of however, and that is that like all of us, you are not equally talented at all things. And now that you are a business owner – you have to do all things! You have to run the load calculations, you have to make the sales, you have to run the service calls, you have to do the books and you have to collect the bills. Some days, perhaps many days, there just isn’t enough time to do everything, so those last two things get set aside for “later”. Those last two things being the books and collecting the bills. The second of those two – collecting bills – is a lot more important to your business than you might think. Consider the chart from last week’s blog, shown below.

The Irresistible Lure of the Large Customer

Chart courtesy of the Commercial Collection Agency Association

What is that really telling you? For one, it shows you that the job of collecting the bills cannot be sloughed off until “later”. According to the Commercial Collection Agency Association who developed this chart, you have less than a 90% chance of collecting a bill that is only 30 days old. By 90 days, your odds are less than 70%. Now, let’s turn that into dollars. What is the value of a 90 day old receivable that you originally billed out at $3000? According to this chart, it’s only worth about $2100 because by all odds you’re only going to collect about 70% of your 90 day old bills. Even worse, what happens if you have to write off that $3000 sale. Consider the following chart which defines the amount of sales you need to recover a bad debt write-off of $3000, given your company’s net operating profit.

 

$600,000 $300,000 $150,000 $100,000 $75,000 $60,000 Sales
0.5% 1% 2% 3% 4% 5% Net profit

 

Don't Be Your Own Worst Enemy

Picture courtesy of ACHR news

Therefore, if your net profit percentage is 2% you need $150,000 in additional sales to recover the $3000 you wrote off. Keep in mind on that $3000 sale that you just wrote off, you have already paid your suppliers for the materials, you have paid for the labor that created the sale and you have paid for the overhead that supported that sale. The only thing you haven’t done was to collect the debt which paid for those expenses – plus of course the profit which that sale was supposed to generate. If the two charts shown above don’t shock you into paying attention to your sales terms and accounts receivable, then it’s probably because you already know this and have good processes in place.

Of course, collecting when the job is complete – and letting the homeowner know of this requirement up front – is a great first step in reducing receivables to begin with. This policy coupled with having an array of consumer financing tools available can go a long way to avoiding some of the nasty numbers shown in these two charts.


The Irresistible Lure of the Large Customer

The Irresistible Lure of the Large Customer

Chart courtesy of the Commercial Collection Agency Association

As a business owner, it is very important to understand the power of money at work in your company. Over the life of the business, understanding the cost of not taking a vendor’s discount or of not following up on receivables until they become uncollectible can literally make the difference between success and failure. Some companies understand that all too well, (usually the large ones) and they are very good at putting your money to work in their business.

 

It all started when the RB (Really Big) Company called on Friday at 4:45 PM. While you have been a small but regular customer of theirs, you have also been trying to get their business for years. While the caller wasn’t particularly friendly, you chalked that up to the fact that he was under the gun and it was late in the week. You saw this as perhaps your chance to get a foot in the door and win some business for your firm. The request was a bit complicated, and you weren’t sure the final dollar amount of the invoice was representative of everything that was involved on your part to fulfill it. On the other hand however, you were sure the effort put forth to obtain the item you tracked down for RB Company would likely be rewarded with future business. As a customer, RB’s accounts receivable group was very efficient at collecting money owed them. Their terms were 1% 10/Net 15, and after 30 days you would begin hearing from their credit group. By 45 days they were firm in their discussions and by 60 days they were downright importunate. Based on that, you are certain their payables department would handle invoices the same way. You sent off your invoice following fulfillment of the order… And it was never heard from again.

 

Your contact at 30 days was not returned, but a busy schedule prevented you from realizing they still hadn’t paid at 60 days. You were more persistent this time when contacting them, especially since you had gone out of their way to meet their need when they were in a bind. The best you are able to get from them however was a gruff statement about they would “look into it.” By 90 days you are getting seriously aggravated and that showed in your voice when you spoke with their accounts payable department. Finally, you received payment 110 days after your initial invoice was sent – and they had taken the early payment discount!

 

Has that ever been your business? If so, you would not be alone. It’s unfortunate that there are companies who abuse their vendors by not paying them in a timely manner, but don’t be the one that lets them ensnare your funds into their deliberate web of cash flow manipulation.


Why Less Is Not More When It Comes to a Service Ticket

Why Less Is Not More When It Comes to a Service Ticket

Are you one of those consumers that keep a folder for all of the service tickets you have for work performed on your car… or your HVAC equipment?  Have you ever looked back through these tickets to get some information about an earlier point of maintenance only to see this one word in the body of the ticket?  Repaired.  That’s it, nothing more.  Maybe there is more, but the handwriting is virtually illegible.  Immediately, you feel a sense of frustration and anger toward the company and the technician who was so sloppy in their work.

So what makes for a well-written service ticket?  According to Peter Powell, a well-written ticket completely describes the nature of the repair.  In an article written for the ACH & R news, Peter writes that if the equipment fails within the warning period and document is unclear, it can lead to a dispute over a warranty claim.  In his article Peter says it is also a good idea to go over the service ticket with customers to make sure they understand what was written.  This is a great time to discuss with the consumer any recommendations for future concerns or repairs – items which should also be listed on the ticket.  He notes that some service tickets will have a list of items that were checked, such as the systems suction and discharge pressures, suction and liquid temperatures, compressor amperage, condition of the evaporator and condenser, etc.  Listing these values on the service ticket provides good verification that the equipment is operating properly – or provides an important point of reference in the future.  During a future service call, a technician can compare values recorded then to those listed in a previous call, in order to give a consumer understanding about the need for service or repair.

So the next time you are filling out a service ticket for a consumer and you are tempted to rush through it in order to get to the next call, think about how you would like to be handled if you were the consumer of that call, and take the time to legibly record the specifics of what took place.  It will go a long way toward building value with your customer.


Competing with the Big Guys

Competing with the Big Guys

There are some that say it’s too difficult to compete with the “big guys.”  After  all, they have the wherewithal to fund a big marketing budget or take advantage of volume discounts in their purchasing.  So what’s a small company to do?  How do you not only compete but thrive in the market if you happen to be located in the same locale as a large firm?  The News Matt Bishop tackled that subject recently with some contractors whose size ranged from 7-25 employees.  Here is what they said.

Amy Turnbull of Blue Flame Heating and Air-Conditioning, Mount Terrace, Washington says “We are a company of integrity and stand behind everything we do.  Sometimes I think it’s harder for the larger companies to do that.  We do a great job with having repeat customers and really having them connect with Blue Flame” she said.  With word-of-mouth and referrals being such a big component of helping small business thrive, does it each job inherently bring more pressure?  According to Turnbull, it does.  “There’s definitely more pressure,” she said.  “There’s a huge pressure that we have to do the job right.  If it’s something we messed up on or missed, we’ll make it right.”

Brian Schraut of R.F. Schraut Heating and Cooling in St. Louis agrees.  “We’re going to go out of our way to make sure our customers are happy and satisfied, “he said.  He believes there is absolutely more pressure with each job because of how reliant the company is on referrals.  “In the residential marketplace, we do everything extremely well, if not better compared to a larger company,” Schraut said.  “The large companies are usually trained to get in and get out.  We might take an extra two hours to get something done, but it’s going to look and perform a lot better.  With the Internet and social media, you have to be very proactive in addressing any negative reviews,” he continued.  “It’s not only that though, a company’s website and social media channels need to give off the right impression – a professional one.”

It’s funny how it always seems to go back to the one key thing – taking care of the customer better than the next guy.

Article published by Matt Bishop in The News, November 11, 2013


Selling Home Performance Contracting to Consumers

Selling Home Performance Contracting to Consumers

No two homeowners are alike.  One plans to stay in their home for a long time while another plans to move in a few years.  Energy efficiency is important to one and not at all to another.  One has a plan for upgrades to the house and the resources to implement while another does not.  According to Hal Smith, co-owner of Halco Energy in Phelps, New York, “This situation illustrates the beauty of home performance contracting.  It gives you the ability to solve homeowners comfort and efficiency issues and really focus on doing what is best for them within their budget.”

According to Robin LeBaron and Kara Saul-Rinaldi, authors of national home performance council’s white paper, the budget is often the sticking point for homeowners, which is why some contractors are more successful when they offer a staged approach to HPC.  The authors several significant advantages to a staged approach, such as:

  • it reflects the way homeowners typically undertake home improvements
  • it can keep costs low, because energy efficiency measures can be bundled with other work that would be done anyway
  • it reduces the need for financing, as improvements are paid overtime

Jerry Unruh, owner of ABC Cooling and Heating in Fresno, California adds that developing an energy audit on the home helps the homeowner prioritize on the upgrades that are necessary, as well as which one gives the best bang for the buck.  “We stress that it’s not necessary for homeowners to do everything at once.”  He also noted this approach differentiates them from the competition because no one else in the area is doing what they do.

According to Cook Heating and Air of Crawfordsville, Indiana, safety is always the first priority, because a lot of their customers have gas heat.  Duct sealing is usually second on the list, as that has the largest return on investment.  From there, they recommend upgrades in the attic, followed by the crawlspace or basement.  “Once those are done, we can replace their equipment, then address ventilation and/or humidity control in the home” according to Garrett Cook, Gen. Sales manager.
Home performance contracting is about much more than simply replacing the mechanical equipment.  It’s a comprehensive approach that looks at energy savings and comfort in a way that provides the consumer a good return on their investment.

For more information about this subject, please see Joanna Turpin’s article in the December 16, 2013 ACH & R news.


Home Performance Contracting – What Training Is Required?

Home Performance Contracting - What Training Is Required?

We recently posted a blog about home performance contracting, this is a follow-up blog.  As you consider the plunge into this new business segment, you might wonder what training or accreditation is needed or even available.  Kimberly Schwartz recently wrote an article in the ACH & R news that addressed these issues.

The first thing a contractor must do when venturing into this business segment is to think beyond the box.  Paul Stalknecht, president and CEO of the Air Conditioning Contractors of America said contractors need to take the whole building into account, including the shell, (roofing, doors, windows etc.)  envelope integrity, (insulation and air tightness) moisture control, (bulk water control, leak prevention, humidity management etc.) as well as efficient operation of the mechanical systems.  (HVAC system, hot water systems, ventilation equipment etc.) Obviously, tackling all this takes education and training.

Experts recommend that contractor seek accreditation with an organization that offers a nationally recognized home performance program.  One such organization is Building Performance Institute Incorporated.  (BPI) According to Lesley McDowell, BPI’s director of marketing, “BPI offers certification of individuals in residential building energy auditing and analysis; heating, air-conditioning, heat pump and envelope performance; insulation/air leakage control installation; manufactured housing and multi family designations.”  The certification process includes an online exam and practical field exam.  While no training is required before individuals take a BPI certification exam, it is recommended.  “Both classroom theory and hands-on field training are provided by a national network of more than 200 independent training organizations, including private companies, community colleges, and local nonprofit agencies.”  McDowell explained.

Another offering that BPI has rolled out is an entry-level Building Science Principles Certificate of Knowledge.  According to McDowell, this certificate is intended “for those in the residential building trades who need to learn how homes work but don’t need the hands-on technical skills required of BPI certified professionals.”  Companies seeking to attain BPI accreditation must “meet rigorous eligibility criteria and participate in BPI’s Quality Assurance Program.”

ACCA will launch a new Home Performance Contractor accreditation at the association’s upcoming conference, March 17-20, 2014 in Nashville, Tennessee.  Contractors not involved in ACCA is Residential Service and Installation accreditation program will need to apply for RS I accreditation in addition to satisfying the ACCA home performance accreditation criteria.  This program requires contractors to complete a multi session online training program on the basics of home performance and an exam to demonstrate a level of competence in this field.

It doesn’t all end there.  Certification is just the beginning, a robust in-house training program is important to ensure success, particularly as you grow.  Of course, that’s the whole point isn’t it?

Article courtesy of Kimberly Schwartz, ACH & R news, October 7, 2013


Replacing a Furnace or Air Conditioner – What about the Ductwork?

Replacing a Furnace or Air Conditioner - What about the Ductwork?

A recent blog talked about the trend towards home performance contracting.  One of the elements of home performance is ductwork, which can be the source of both energy and comfort problems if they are leaky.  According to a recent article in the ACH & R news by Joanna Turpin, homeowners ductwork could easily be leaking one third or more of their conditioned air into the attic or building envelope before it ever reaches entry into the occupied space.  The HVAC system therefore works harder and longer to heat or cool a home.  This situation represents an opportunity for contractors to do more than simply replace a furnace or air conditioner.  This provides a contractor an opportunity to become more consultantive with their customers.

The first step in rectifying any kind of problem is to first see if there is one.  If you do have a duct system that is leaking 30% of its volume, you will be able to feel it.  Smoke pens can be used to track smaller leaks and soapy water sprayed on the joints can help make leaks apparent in the form of bubbles.  According to Chris Rite, vice president of sales for M&M manufacturing, “the duct blaster test is the recognized standard for leak testing.”  “Inspecting and testing the ductwork for leaks and other issues should always be done before installing any new equipment” according to Greg D’Atille, owner of Art Plumbing and Air Conditioning in Coral Springs, Florida.

To seal ductwork, several options are available including rolled mastic sealant, spray sealant and other brush on sealants that can be applied to the exterior of the ductwork by hand.  M&M uses mechanical sealing when possible way  and spray mastic by Hard Cast for joints and seams that can’t be sealed mechanically.  According to Van Rite, “we use a latex based product that stays pliable after cured.  This ensures that the seal won’t be compromised by rough handling or expansion and contraction.”

Not ceiling ductwork will not only affect system efficiency but also IAQ according to Van Rite.  “First, we lose the energy that has been invested to remove the heat and moisture from the air, and second we create a negative pressure in the conditioned space that tries to equalize itself  by sucking in the hot, moist, dirty outside air from around doors and windows and anywhere the house leaks.  This adds to the load on the system and clogs filters and coils.”

“This isn’t trivial, this is very important.  Since well over 95% of older homes have leaky ducts, it’s something that’s relevant for almost everybody” he concluded.  Something to consider to further differentiate your firm from your competitors.

For more info see DOE: Leaky ducts are top energy waster by Jen Anesi, October 21, 2013.