Tax Rebates: How One Distributor Turned the Stimulus Bill into a Profit

Tax Rebates: How One Distributor Turned the Stimulus Bill into a Profit

When APR Supply heard about President Obama's stimulus bill in February, it had the knock-knock sound of opportunity. Recognizing that distributors could parlay some economic advantage with the offer of tax rebates might be an assessment that savvy managers like Jeff Thompson might make. But Thompson, HVAC product manager of Lebanon, Pa.-based APR Supply Inc., did two unusual things that even the best managers sometimes fail to do. After recognizing that the stimulus package could impact sales, he took action and did so immediately.

Rather than wait for the proverbial air to clear, within four days of the President's speech, he put together a comprehensive, clear and detailed package to help his dealers understand the implications of the tax benefits.

“I started on the presentation, specific sales and product information almost immediately,” says Thompson, a nine-year veteran at APR Supply. “We're given a great deal of freedom to run with an idea at APR,” Thompson says, “and I knew that we would have this temporary window to get our contractors and their customers on board to take advantage of the bill.”

Several issues were at play. The first was simple business economics. APR Supply wanted to be the first distributor in the marketplace with thorough and easy-to-understand information about the federal tax credits. He also wanted his contractors to be the first to have a crack at the customers. “Everyone wants to be first out there in the marketplace with a product, idea or message,” he says. “We intended to be the first with the information our contractors needed to succeed,” Thompson says.

It started with “Federal Tax Credits for Energy Efficiency,” a colorful, comprehensive and focused 38-page slide show (right) that covered aspects of the federal tax credits and what it meant for consumers.

That, of course, gave the broad picture. Then, he boiled down the information to a three-page “cheatsheet,” consisting of one page (with the HARDI logo) that outlined the general categories for the tax deductions. (This is still available from HARDI.) The other two pages were a list of all the specific products APR carried that qualified for the tax credit.

But the thinking cap at APR Supply was still on. The last step was to present these information-packed seminars to contractors who could get the information. APR recognized that a single seminar topic might limit the number of attendees and so wisely created a three-topic training seminar session at restaurant locations throughout their service area, resulting in 14 separate meetings. Obama gave his stimulus speech on Feb. 17. APR already had 14 training dates scheduled, beginning with April 2. In addition to the tax credits issue, they also offered Geothermal Basics Training and R-410A Training.

Over a continental breakfast (or lunch, if they stayed for all three sessions), Thompson was able to impart valuable tax information to the attendees while Ed Howell, APR's tech trainer, handled the other topics.

Heavy attendance characterized the training sessions, and the response was overwhelmingly positive. “We could tell by the popularity of the training sessions, the questions and their enthusiasm that we had made a successful move,” says Thompson.

And while Thompson readily acknowledges the first-to-market mentality, he had added a twist to the idea. Because the tax credit aspects of the bill had a cap related to spending and an expiration date, it was important to get to the consumers — the contractor's customers — before someone else had sold them items and canceled out a potential purchase from an APR customer. Just as bad would be a consumer who didn't take advantage of the tax credit before it expires next year. The reality was that you had two races going on at the same time, says Thompson. The first was to reach the contractor who could take the information out into the field, and the second was to ensure that you were reaching customers before they spent tax rebate dollars with a competitor or that they might eventually allowed the opportunity to expire.

Regardless of how exciting a campaign sounds, there is, of course, generally one way to measure its success. Was it profitable for HARDI member APR Supply (owned by John Tice and Scott Weaver)? Thompson, not surprisingly, declined to discuss exact figures. But he was willing to provide a morsel that revealed the numbers side of his quick-start campaign.

“We were extremely pleased with the sales we saw as the contractors had time to digest the information, take our information out into the field and close sales,” he says. Thompson pointed out that the trajectory of sales and the specific items (those on their tax rebate hit list) made it relatively easy to gauge the success of the program. “I can add that even now [June], we're seeing the results.”

Tom Peric' is the editor of HVACR Distribution Business magazine. Contact him at 856/874-0049 or [email protected].

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