• Distributors Are Key to Success at Mitsubishi Electric HVAC

    Oct. 1, 2007
    The Mitsubishi Electric HVAC Advanced Products Division faced a conundrum in the early 1990s. The company had a fantastic split-ductless air-conditioning

    The Mitsubishi Electric HVAC Advanced Products Division faced a conundrum in the early 1990s. The company had a fantastic split-ductless air-conditioning solution with its Mr. Slim® product line that was unique to the market. Installation was simple, callbacks minimal and it solved the problem of uneven air balance. Contractors, however, balked precisely because it was so different. As a result, sales of Mr. Slim systems for the first 14 years were fair, but hardly spectacular.

    Instead of giving up on Mr. Slim systems, Mitsubishi officials decided to “relaunch” the product and target the contractors and dealers. Win them over and you have opened up the marketplace. “The approach that we used was to encourage contractors to come back and try it. Take a different look,” says William Rau, senior vice president and general manager of the Mitsubishi Electric HVAC Advanced Products Division.

    Working with its distributors, Mitsubishi waged a full-court press, holding training sessions across the country on how to install Mr. Slim systems and troubleshoot problems. They laid out the tremendous sales opportunities offered by Mr. Slim systems and walked contractors through the sales process. They also made the case that Mr. Slim systems could make them more money because installation times were faster, did not require the senior technicians and there were minimal callbacks. As an added incentive, the company repriced its product.

    The relaunch worked. Contractors are installing the split-ductless concept in homes, restaurants and everything in between. Sales for Mr. Slim systems have been through the roof over the past five years, making the manufacturer and its distributors very happy indeed. “It's a very, very exciting time,” Rau says.

    Based in Suwanee, GA, the Mitsubishi Electric HVAC Advanced Products Division has been in the U.S. market for 27 years. In addition to its Mr. Slim product, Mitsubishi manufactures CITY MULTI®, an innovative zoning system, as well as compressors. In addition to Atlanta, the company has training facilities in Dallas and Chicago, and recently opened an office and training center in Irvine, CA.

    Rau says that the opportunities in the U.S. market for Mitsubishi products are unlimited. “There are 83 million detached single-family houses and we don't know how many commercial buildings, offices, schools, healthcare facilities and hospitality venues,” Rau says. “And what's good for us is that almost every one of them has heating or cooling problems, even if they have central air.”

    As Mitsubishi planned its training sessions as part of the relaunch, it had to first figure out the barriers. The company sent their people into the field with contractors to cost out jobs. What they found helped them to develop more-targeted marketing materials for contractors. Because contractors were unfamiliar with Mr. Slim systems, they were sending out their most experienced technicians, who incurred higher costs, and they were adding a cushion into the costs because they were worried about callbacks. As a result, the price of Mr. Slim systems to consumers was much higher than most were willing to pay.

    Armed with this information, Mitsubishi created a brand-new set of training sessions to address each issue. “We had always done training, but we made an effort on application and installation,” Rau says. “We took away the fear factor and opened the contactors' perspective to a much broader horizon about the opportunities for split-ductless.”

    Training sessions emphasize that installations can be handled by almost any trained technician.

    Because of the unit's construction, there are no air balance issues and no worries about ducts, dampers and registers, making for a simpler installation. Contractors also learned that Mr. Slim systems came 80 percent finished, so there was little labor or shop work needed on the job.

    The training also focused on sales opportunities missed by contractors. Rau says that contractors would often ignore a complaint by a building owner about uneven cooling or heating because they had no answers. But Mr. Slim systems gave contractors an easy solution. “We all get conditioned to what we know how to do,” Rau says. “But contractors were walking past opportunities.” The final piece to the relaunch was cost. In encouraging contractors to try its product, Mitsubishi set a lower price to “reset everyone on pricing,” Rau says. With lower product costs and the contractors feeling more confident about setting lower rates for its installation, consumers were taking second looks at Mr. Slim systems — and they liked what they saw.

    Distributors have played a large role throughout Mitsubishi's history in the United States. Since entering the market, Mitsubishi has only sold through its distributors. “It's worked out well for them and for us,” Rau says. “They have contacts within the marketplace and they know who the forward-thinking contractors are.” Its distributors also serve as valuable contacts for the company. For example, when Mitsubishi set out to relaunch Mr. Slim systems, its distributors put them in touch with their top customers so they could use them as sounding boards.

    Training remains a big part of Mitsubishi's marketing and sales efforts with anywhere from one-third to one-half of all training sessions held in the field, either directly with the distributor or at an offsite location. Mitsubishi also holds sessions in training centers in Atlanta, Dallas, Chicago and Irvine, CA. Distributors are also important conduits to connect consumers with contractors. Rau says that Mitsubishi receives 50,000 to 60,000 consumer inquiries each year, and distributors are the key in following up on those leads.

    For those dealers who put in the resources to train their employees on Mitsubishi products, the reward is in Diamond Dealer status, which is considered by Mitsubishi to be the highest level of accreditation among dealers. It confers status on the Mitsubishi website, where Diamond Dealers are highlighted as those who have experience and knowledge with Mitsubishi products.

    “Those with Diamond Dealer status have set themselves apart,” Rau says. “They have demonstrated a willingness to spend time and money through training to make their business amenable to the consumer in understanding our product.” There are also Diamond programs for distributors and design engineers.

    Mitsubishi enjoys a healthy relationship with its distributors. There are regular visits by its sales force, which provide valuable insights into the distributor's business as well as the local market. Its annual national distributor conference is an important event for both Mitsubishi and its distributors to come together for presentations and more informal feedback sessions. Mitsubishi also hosts regular Distributor Advisory Council meetings that bring in eight distributors from around the country for frank and open discussions.

    Rau says that Mitsubishi is pleased with the growth of its national base of distributors.

    As the company plans for aggressive growth in the years ahead, it will do so through its existing distributors.

    Rau attributes a good part of this growth to its CITY MULTI line, a zoning system that uses inverter technology to vary the speed of the compressor and simultaneously cool and heat different zones. CITY MULTI made its debut in Latin America and has been in the U.S. market for the past five years. Like its Mr. Slim product, CITY MULTI's technology is groundbreaking. But Mitsubishi has learned lessons from the Mr. Slim product relaunch, and the company is confident of CITY MULTI's success. “It's growth has been spectacular,” Rau says of CITY MULTI's first five years.

    Mitsubishi has worked closely with professionals like architects and engineers to explain the system and how it can lower energy costs and energy usage. It is now reaching out to national associations to raise its awareness. “One of the things that CITY MULTI does is provide such a level of flexibility in how the product is applied,” Rau says. This is not a central-ducted system or a water system. Each zone has its own indoor air unit that precisely controls the temperature while operating at peak efficiency levels. “It's this kind of flexibility that people have never seen before,” he adds.

    Mitsubishi employs a sales force, supplemented in some areas by manufacturers' reps, that works with distributors and contractors. Rau says that the salespeople are cross-trained so that they know all of the product lines, although there are some who specialize in CITY MULTI.

    As the CITY MULTI and Mr. Slim product lines grow, the competition is not far behind. Rau acknowledges that there are rivals and they are, in many cases, less expensive than Mitsubishi. The company has proven to contractors, however, that selling Mitsubishi products will increase their revenues while providing their customers with total satisfaction. “We have to defend our position in the food chain, and we do that by pioneering applications and developing products,” Rau says. “We have a handle on what people have said they are willing to pay, and we deliver for them and open their eyes to opportunities.”

    As a company, Rau says that Mitsubishi sets itself apart from its competition by focusing on its five core competencies: training, product application, product availability, service, and advertising and lead generation. “We're working on our core competencies all the time,” Rau says. Mitsubishi also engages its employees, empowering them to make decisions and developing them to grow with the company and take on new levels of responsibility. “We're making ways for employees to make maximum contributions to the company.”

    Mitsubishi products are made in Japan and Thailand, which can complicate lead times. Because of the Japanese “just in time” philosophy, the pressures to keep inventory levels to a minimum and the phenomenal growth in sales, Rau is continually challenged by these dueling forces to keep up with the demand. “We need more inventory in the system, while we're pressed to take inventory out of the system,” he says.

    Rau was taught long ago that whatever is good for Mitsubishi must also be good for the distributor and for the contractor. “If it's good for the contractor and the distributor, then it will be good for us,” he says. In 27 years, Mitsubishi has developed a track record that doing good for its customers does, in fact, help every link in the supply chain. They have learned that a groundbreaking product will not break sales records. Only when the customer understands how the product can be good for their bottom line will the product do well. By retooling their sales strategies, Mitsubishi learned that lesson well, and it is reaping the benefits.

    “We're constantly reinventing our business because we don't want to get staid and set in our ways,” Rau says. “We have persuaded our customers over the years that this is an opportunity for them, and they are embracing that.”

    Michael Maynard is a business writer based in Providence, RI. He writes frequently on HVACR, construction and architecture issues. Contact him at [email protected].

    Best Practice

    Training Classes

    Definition and Example: Our goal at Mitsubishi Electric is to conduct the most comprehensive technical training possible for our customers. Our service courses combine in-depth systematic technical immersion with focused hands-on equipment experience. As a result, participants walk away both certified and confident in their abilities to install and service our CITY MULTI® and Mr. Slim® products.

    Significance: Mitsubishi Electric has conducted field training since 1992 and officially offered training classes for customers beginning in 2001. The popularity of these classes has prompted the opening of training centers in Chicago, Dallas and Irvine, CA, in addition to the home office in Suwanee, GA. Participant evaluations continue to show our classes are top notch, some of the best offered to the industry today.

    Benefits: Participants receive hands-on technical and practical information about how to specify, install and service both CITY MULTI and Mr. Slim systems. Workshops on marketing, selling and pricing skills also are available.

    Procedure: Those interested in attending training classes can register online at www.mehvac.com. Click on the Training link and follow the prompts.

    People involved: We have a team of three staff members devoted to training administration, in addition to eight employees who conduct service training both in the classroom and in the field. Every member of our sales staff (more than 30 employees) frequently conducts some form of technical or marketing training. We contract with highly regarded consultants to assist in delivering our Selling for Success and Make a Profit Difference workshops.

    Timing: Depending on the class or workshop, the time commitment varies from four hours to three days.

    Cost: We offer training classes and workshops at no cost to our customers and provide lunch as well. On a yearly basis, we invest more than $500K in our training programs.

    Other considerations: While we continue to receive accolades from our participants, we continuously work to improve our programs, researching and applying new methods to develop our training into the most engaging, interactive and effective HVACR training in the industry.

    Contact: Ken Brown
    Division Training Manager
    [email protected]

    Mitsubishi Electric HVAC at a GlanceSenior Vice President and General Manager Bill Rau Executives Bud Nardello, vice president of sales
    Lorie Quillin-Bell, director of marketing
    John Gabilondo, director of operations and logistics
    Paul Doppel, director of government affairs and factory liaison
    Allan Dziwoki, director of business process development
    Tony Hayes, national service manager Headquarters 3400 Lawrenceville Suwanee Rd.
    Suwanee, GA 30024 Operations Chicago Training Center
    2460 Wisconsin Ave.
    Downers Grove, IL 60515
    Dallas Training Center
    1920 Hutton Court, Suite 200
    Dallas, TX 75234
    Irvine Training Center
    3240 El Camino Real
    Irvine, CA 92618
    Mitsubishi Electric HVAC Warehouse & Distribution Center
    3400 Lawrenceville Suwanee Rd.
    Suwanee, GA 30024 Employees 90 Annual Sales NA Major Product Lines Mr. Slim® Split-Ductless Systems
    CITY MULTI® VRFZ Systems
    Lossnay® Energy Recovery Ventilators Website www.mehvac.com