HVAC business owner, Gene Slade Jr. shares his challenges, successes, failures, and fears that he encounters while starting his own HVAC service company in a down economy.
Air Genie has been open for business for 16 months. The part of the county in which I am located has had the highest foreclosure rate and the highest unemployment rate in the U.S. most of those 16 months.
Air Genie specializes in residential maintenance and indoor air quality (IAQ). I don’t actively solicit repair calls.
I had it in my mind that I wasn’t going to offer replacement equipment, because I didn’t want to deal with all the hassles of trying to run an installation department. Originally, my company slogan was, “We don’t sell air conditioners, we just make yours last longer.”
I’ve since relented. A few months ago, I started doing installations. Sometimes customers just want new equipment, other times it would be unethical to recommend people invest more money to improve their old equipment when it would serve them better to replace it. From a business standpoint, it also meant that, since about 10% of my customers would require a replacement every year, if I didn’t do it for them, somebody else would, and I’d lose about 10% of my hard-earned customer base every year.
I just purchased a box truck to use as a dedicated installations vehicle, and am actively searching for a full-time installer. For the time being, my three technicians and I team up to do our installations.
Most of our installations include significant improvements to the air distribution system and indoor air quality. There's just no point installing new equipment for people and ignoring deficiencies in the air distribution system, or allowing it to get dirty.
I am now renting office space after having worked out of the house for the first seven months of my business. I originally ran the office by myself, and had the company’s phone number forwarded to my cell phone while I ran calls. When I got up to two other service technicians, I was able to take myself out of the field for the most part, and run the office.
I hired my first office manager about nine months into things. I’m on my third one, and she seems to be working out. Now my mother is also helping with the office work.
Air Genie started with just my brother and I running calls. I then hired a friend of mine that I’d worked with before, but he didn’t work out. I should have let him go sooner, but I let our friendship stand in the way of smart business decision-making, and I feel the extra time I kept him on resulted in about $30,000 in lost revenue. For a small company like mine, that deficiency in revenue really hurt.
I decided that, instead of trying to teach old dogs new tricks, I’d hire people from outside of the industry, and teach them HVAC and the Air Genie way of doing things. That turned out to be a big mistake. I started with an ex-State Trooper and a young woman who had done a number of things involving sales. That lasted about six to eight weeks. It was very time-consuming and expensive. I was constantly having to run out and rescue them, and they cost me a ton of money in missed opportunities. They quit because they just couldn’t do it.
I realized that my best bet was to hire experienced service techs that wanted to work using the Air Genie system.
I put an ad on Craig’s List. I purchased an additional telephone line, which I called the “Air Genie Career Hotline.” It has a recorded message telling interested parties how to fax or e-mail their resume to me.
Being a successful business owner is more about knowing what you’re good at and not good at, than trying to be good at everything, which is why I solicited the help of a good friend of mine, Charlie Greer, to help me pre-screen applicants.
We’re being highly selective. Charlie talks with them on the phone for 45-90 minutes. In order to get past Charlie and gain an interview with me, applicants must be experienced, do meticulous work, and be believers in maintenance and indoor air quality. Since the only source of income we have is what the techs bring in, they have to have won some recognition for their salesmanship. They also have to be clean cut, in good physical condition, have a clean driving record, a clean criminal background, and be able to pass a drug test.
Out of 110 applicants, Charlie has only referred 14 for me to interview.
I’ve hired eight of them. Three are still with me and seem to be working out.
After Charlie refers them to me, I meet with them for about a half-hour. If they seem like they have potential, they ride in the truck with me for two days, so they can see how we work. If we both like what we see, I offer them the job. They then ride with another tech for a couple of days, until they feel they’re comfortable enough with the Air Genie way of doing things to go solo. They are not paid anything until they get their own truck and start riding solo.
We want every customer to have the same experience, no matter which Air Genie service tech arrives at the door, so I train them for at least 45 minutes a day, five days a week.
The Air Genie Way
I do very little marketing. I started with two and now have six one-hour talk radio shows every weekend, during which I expound on the virtues of keeping your air conditioner absolutely spotless, straightening out any problems with your air distribution system, and cleaning up the air inside your home. I tell people, “If your air conditioner runs, but not very well, call me.” For a nominal fee, one of my techs will come to your home, do a light cleaning on it, perform an over-the-top inspection, and alert you to any conditions they see that are either causing you trouble, or that may cause trouble in the near future.
I was fearful that, if I charged for tune-ups, no one would call my radio show, so initially I gave my tune-ups away for free, knowing that, if my brother and I could get into homes, we’d see enough messed up equipment to generate business in an honest, ethical way.
We offered a two- to four-hour “Total System Rejuvenation” for free. It included a full inspection and a serious cleaning of the outdoor coil. My technicians are required to spend a minimum of 1.5 hours doing a tune-up prior to making any recommendations.
We always take the tops off the condensing unit. To the best of my knowledge, no one else around here does, and customers love it.
The average customer has never had a good cleaning on his or her air conditioning system. It seems that everyone just wants to “blow and go” and try to sell them a new unit.
Because we took our time, and most people wanted extensive work done and IAQ installed, we could only run about two calls per day each. We were averaging 12-14 callers per radio show for the free tune-up offer, which has a value of $249.
My brother and I averaged 72.36% closing ratio on free tune-ups with an average ticket of $1,032. Nearly every customer decides to get on one of our service agreements. We got 350 service agreements our first 12 months in business.
My brother was the Babe Ruth of the company. He led in both home runs and strike-outs. As a rule, he either got a major cleaning, an upgraded filtration system, a Biocide Chamber (UV light), and a service agreement, or he got nothing. My brother left in April to move to California to try to break into show business.
I ran 60 calls, got three turn-downs and generated about $75,000 in revenue. That includes two replacement jobs. I average about one Biocide Chamber per call.
I’ve got all the high-end tools and electronics, and I lay them out in a neat and organized fashion. We all do meticulous work and we take our time. When customers watch me work, they often call out to their neighbors, “Hey! You gotta come see this!”
Eventually, I got over my fear of charging for my tune-ups and started charging $19.95 and actually saw an increase in responses to my radio shows. It seemed that charging for my services added to my credibility. The next week I raised it to $29.95; again, with no reduction in appointments. I even re-played the first show in which I promoted my $29.95 special and got 21 responses in one hour. Now I’m at $49.95 and will continue to gradually increase the price until I see a reduction in the number of appointments each show produces.
The quality of my leads has remained the same, no matter what I’ve charged, or if I’ve charged anything at all. That’s probably because I’m still not charging for the tune-up what it’s worth.
The price is relative to the perceived value of the offer. A customer’s perception is their reality. If they perceive it to be too good to be true, they’re less likely to take the risk of calling. Your customers can only place as much value in what you do as you do.
Gene Slade Jr. is the host of the radio show “Air Genie,” and the president of Air Genie, Inc. an HVAC residential maintenance company. He can be reached by calling 239-390-0069 or by e-mailing [email protected] Visit him on the web at www.theairgenie.com.