From A/C to Shining A/C

Are you interested in a piece of a $3.2 billion pie? Estimates from industry sources place the potential size of the commercial national accounts market in North America at anywhere from $1.8 to $3.2 billion.

In an effort to streamline operations and improve efficiency, a growing number of large companies are looking to consolidate their purchasing activities. For the HVAC industry, this means more multi-location accounts are turning to a single HVAC provider to handle all of their facilities regionally or nationally.

For the national account customer looking to single-source its HVAC needs, the benefits include less paperwork, one point of contact, standardization of services and procedures, closer working relationships, cost savings, and increased consistency.

In the past, the majority of national accounts were primarily retail-type businesses. Although many retailers still purchase HVAC services nationally, they are no longer alone. Many other industries, including technology companies, banks, and property management firms are looking for HVAC contractors to handle large regions — or even the entire country — for them.

What are these national account customers looking for? Increasingly, they want more than just performance of maintenance and service work. They’re looking for maintenance management, detailed maintenance information, and equipment service tracking. They want predictive maintenance so they can plan for repairs and upgrades far in advance. In short, they want their HVAC provider to become their HVAC consultant.

As a consultant, the HVAC contractor has the responsibility to inform and educate national buyers. The contractor must quantify and demonstrate the value of performing proper preventive maintenance, planned equipment replacement programs, and life cycle cost analyses.

Start With What You Know

Many contractors avoid getting involved with national work because it seems like unfamiliar territory. Actually, performing HVAC maintenance and service nationally is not all that different from performing it locally. It involves most of the same activities that we all do on a local level: performing preventive maintenance inspections, responding to emergencies, scheduling, invoicing, and collecting.

Our involvement with national service began in earnest about 15 years ago with a telecommunications company. The company, a prospect at the time, had requested that we propose a maintenance agreement for several locations in the area. The prospect then decided to entertain proposals for all of its 75 locations across the country. Although we had no experience managing an account nationally, we nevertheless decided to give it a shot.

We were successful at selling the agreement, and began putting together a network of contractors to deliver the work, starting with the contractors in our ACCA Management Information Exchange (MIX) Group. Our national accounts division has grown from that one account sold 15 years ago into a separate profit center in our company with several million dollars in annual sales. We started with what we knew (how to estimate and sell maintenance agreements), and with who we knew (the prospect that we were pursuing and contractors from our MIX group in other parts of the country). We figured the rest out as we went along.

Feel Their Pain

When talking to a national account prospect, find out the key problems and challenges they’ve experienced in managing the maintenance for multiple locations. This involves asking many questions, and often probing beyond initial responses to find the real issues. Not every prospect has the same issues, but every prospect has pain — you just need to find it.

Remember, not every multi-location national account is going to be a good prospect for the quality HVAC contractor. In fact, many of these companies are just not willing to listen to the kind of recommendations that quality-driven HVAC contractors bring to the table. Sometimes this is due to their focus on short-term cost cutting. Sometimes they lease their facilities instead of own them, decreasing what they have invested in the long-term life of the HVAC equipment. Whatever the case may be, determine if you and the customer have a good “fit’ as early in the dialog as possible, and walk away if it isn’t right.

You also may find that you must battle the “fix it when it breaks” syndrome. Many customers don’t understand or appreciate the value of a predictive and preventive maintenance program.

As HVAC contractors, this situation is our fault. We haven’t adequately quantified and demonstrated the return on investment of proper maintenance. Therefore, our customers don’t view it as an investment, but as a cost. They believe that by not paying that cost, they’ll save money. Nothing is further from the truth, but we need to demonstrate this fact.

We should first demonstrate how performing proper preventive maintenance on a rooftop unit versus performing minimum maintenance can extend the life of that equipment from, for example, 12 years to 17 years. Then we can translate the appropriate cost of this increased life into annual dollars that the customer can see. Do this, and the customer will see the light regarding the importance of preventive maintenance.

Closely Examine Pricing and Delivery

When pricing a multi-location preventive maintenance agreement to a regional or national account, be sure to consider the costs of administration and coordination. As the HVAC contractor responsible for maintaining and servicing dozens or hundreds of locations around the country, you’ll have additional cost to coordinate the work, receive and dispatch service calls, schedule inspections, invoice the customer, coordinate with partners and subcontractors, etc.

Your pricing must go beyond the direct costs of preventive maintenance inspection hours, filters, etc., and include some realistic and informed estimate of these additional administrative costs. Failure to do this will amount to giving away your services. The net effect will be that what appeared to be a profitable maintenance agreement on the surface actually will be costing you more money than what you’re charging.

The delivery mechanism for your services is also critical. It’s one thing to sell a national HVAC maintenance agreement, and another to properly execute the work.

Many brokers simply subcontract the maintenance and service. They search the Yellow Pages, find 20 HVAC contractors in a given area, then sign up the one with the lowest labor rates. This is fine if you want a short-term relationship with both the customer and the subcontractor.

There’s a better approach: partner with like-minded, quality-driven contractors. In our case, the delivery mechanism is The Unified Group, a national alliance of independent contractors with similar capabilities and a common commitment to quality.

Whatever the delivery mechanism, it’s important to standardize procedures and services as much as possible and provide a uniform level of quality. National accounts customers want all of their locations to receive the same level of service. It’s also important to you, as the prime HVAC contractor, to facilitate the coordination of a successful HVAC maintenance agreement on a national basis.

Our involvement with The Unified Group has been instrumental to our ability to provide consistent, quality service on a national basis. As members of The Unified Group, we attend training sessions on a quarterly basis, which ensures that we’re all on the same page.

We’ve developed standardization of tasking and created a code of conduct for national work, which spells out the practices and performance standards we all have agreed to adhere to. Strong bonds have developed among us, so that as members of The Unified Group, we can truly work as partners to provide solutions for our customers.

If you don’t have national contacts through an association such as The Unified Group or an ACCA MIX Group, your road may be more difficult. The goal, however, is the same: serving a national client base with the same consistent service you provide on a local level.

Remember, the bigger the potential reward, the bigger the risk. The opportunities in the commercial national accounts market are huge, but so are the pitfalls. Look before you leap. n

Tim Smerz is president of Air Comfort Corporation, a 68-year-old, full-service mechanical contractor headquartered in Broadview, IL. Tim can be reached at 800/466-3779, or by e-mail, [email protected].

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