Performance Testing for Profit. An Incentive Program

July 1, 2004
by Allen Kent In March 1999, I pledged that our entire business would revolve around whole house diagnostics. Sales and margins have steadily grown since

by Allen Kent

In March 1999, I pledged that our entire business would revolve around whole house diagnostics. Sales and margins have steadily grown since then; even through the recent recession we’ve held our own, as other contractors have floundered. I attribute the difference to our commitment to deliver comfort to customers.

Granted, not all my customers are initially interested in true comfort once they hear how much it will cost. However, even with renewed price pressures, we’ve been able to stop offering value-added services for free. For years, we offered a complete infiltrometer test (blower door) at no charge. That was our way of getting a foot in the door, as we proved to the customer that a healthy, comfortable home would indeed be worth the price. Now, our reputation has earned us the ability to charge for that pre-testing of the home.

To do the best job possible for our customers, Kent Heating and Air Conditioning offers infiltrometer testing, duct sealing, and complete diagnostic test-in/test-out verification, along h our regular HVAC services. We work with several builders who support whole house diagnostic services, making the new home construction market one that can be quite profitable.

The retrofit market is one that we’re making an even greater push into of late. There are so many existing homes that simply weren’t built correctly in the first place. I’ve seen everything from duct leakage resulting from improper installation, to negative pressure inside of homes brought on by poor construction practices. I recently came from a house that had 22 air changes per hour. Normal is between six and eight per hour. Can you imagine how many times a day their overworked HVAC system is cycling trying to keep up with that demand?

Customers are looking for ideas that can turn their homes into ones that are comfortable. Still, homeowners want to see the proof that what we’re telling them isn’t just smoke and mirrors technology. I mentioned, above, that we’re now charging for blower door testing rather than giving it away for free. The secret to this success is to get complete buy-in from your salespeople, whether technicians or full-time sales staff, to show the customer a short CD/video presentation prior to or at the onset of a sales call opportunity.

I know that by properly testing a home’s performance, and allowing the customer to see the test results, she will become a highly profitable client. A completed test nearly always leads to additional customer sales. I had to find a way to get our people to believe in performance testing as much as do I. We recently invested in an incentive program whereby salespeople earn half the sales price of a $289 infiltrometer test.

The incentive to earn more on the initial test has worked. We’re not only selling this service, we’re also realizing heftier profit margins on installation jobs because customers insist that we do the job right. Duct sealing has become very standard on retrofit work, and yields as much as 70% gross margin. It certainly makes sense to pay out more in incentives when we’re able to have such a profound impact on the bottom line.

Let’s face it, employee turnover in our industry is relatively high, and we find ourselves constantly training new people. To successfully implement whole house diagnostics, we invested over 800 hours in technical training the first year that we adopted the new strategy. The training regimen hasn’t let up since. However, diligent training wasn’t enough to allow us to begin to charge for some of the services that we had heretofore, given away as value added benefits.

The next time you’re trying to implement a new strategy in your business, think about how you encourage your employees to participate.

Allen Kent is the president of Kent Heating and Air Conditioning, Inc. The company is primarily a residential
replacement, service, new construction, and light commercial design/build contracting firm. He may be reached at [email protected]. You can see Allen, as a speaker, at HVAC Comfortech 2004, September 15-18, St. Louis.