All businesses — HVACR wholesale distributors included — talk about customer service. But how many businesses — HVACR wholesale distributors included — are willing to guarantee it in writing?
Virginia Air wrote it down. What they committed to paper were 11 service guarantees that tell their customers what Virginia Air will do to make them successful. Embodied in those service guarantees are the principles that built Virginia Air from one York factory store in 1987 to a $100 million business with 13 locations in five states today. The most well-known service guarantee is the three-ring policy created by Virginia Air's founder, Kenneth Baker. If a phone at a Virginia Air branch rings more than three times, the caller gets $100. “Our customers love it,” says Chris Baker, Ken's son and Virginia Air's president & COO.
Virginia Air was established in 1987 after Ken Baker, who was then vice president of finance for York International along with the current president of York, visited Richmond, VA, to interview potential distributors for the conversion of the Richmond factory branch to independent distribution. Finding no suitable candidates, Ken jokingly told the president that he would shoot himself if he could not do a better job at running a distribution center than the candidates they had just interviewed. Six months later, Ken took over as the distributor, and the store thrived.
It was in that first store that Kenneth Baker established a culture that placed customer service above everything else. Chris Baker came to understand the importance of this culture when he joined the business to run Virginia Air's second location in Chesapeake, VA. Chris Baker said that branch was the “red-headed stepchild” compared to the success that the Richmond store enjoyed. “When I got down there, it was a bit lackadaisical,” Baker recalls. “They weren't committed to our customer service principles.”
What it took to turn the branch around was a passionate embrace of customer service. “We have a culture, but it takes time to buy into that culture,” Chris says. Hiring employees for attitude and intellect takes precedence over HVACR experience. Baker says Virginia Air can provide its employees with the training and technical skills to work with customers. But attitude and a desire to do right by the customer is something even more important. Those are the people that Baker looks for when hiring employees.
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Virginia Air has developed an ongoing management trainee program, hiring bright college graduates to work their way up in the company. Three employees are typically going through its program at any given time. In addition to the management training programs, all employees are encouraged to take courses, increasingly through Virginia Air's web-based tools, that will help them to get ahead and move to the next level within the business.
“It becomes self-accountable with our employees,” Baker says. Along with solid performance reviews, they know the courses or trainings that they complete help to put them on an upward trajectory within the organization. Virginia Air is in the process of revamping its training program to create a more rigorous and centralized curriculum.
As Virginia Air grew and expanded to markets outside of Virginia, an obvious question customers and employees asked was, “Are you going to continue calling it Virginia Air?” After all, they established branches in North Carolina, Ohio, Pennsylvania and West Virginia. Would customers shy away from a business with an out-of-state name? Baker says the issue quickly fades away as customers are drawn to the company's service focus of the branches.
“We do look for a consistent feel and look to our facilities and our people,” Baker says. “We've elevated the perspective of the industry from the mentality of a branch that is dirty and disorganized to one that is professionally organized and well lit.” He says they're continuing to upgrade some of their more recent acquisitions.
The focus on professional-looking branches also relates to how customers are treated: as professional contractors and not dealers. Each year, Virginia Air hosts a series of Professional Contractor business meetings throughout their markets in January to bring their customers up to speed on the state of the industry, their business and marketing initiatives, product roll-outs and trends for the upcoming year. While some may not see a difference between “dealer” and “professional contractor,” Baker says words do matter.
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By treating their customers like professional contractors, Virginia Air is acknowledging that they are business people and they want to help contractors grow their business. “In this industry, our niche has been about going out and helping people that want to truly form partnerships with distributors and suppliers,” Baker says.
Instead of being a distributor that pushes the brands they represent and passes along marketing materials and sales incentives, Baker is talking about building their customers' brands. Baker acknowledges that customers don't always believe him. After all, customers have heard that from distributors many times before and it's typically nothing more than a sales pitch. But once they work with Virginia Air, they rarely leave. “They're very pleased with the decision and the partnership,” he says.
Which goes back to Virginia Air's 11 service guarantees. They did not create the guarantee that says an employee will pick up the phone within three rings as a gimmick. It says a customer's call is important and staff should handle it immediately. Baker says nine times out of 10, the Virginia Air employee who picks up the phone will be able to answer a customer's question — even if the customer was calling someone else. “Our staff has to be great at multitasking,” he says. “We have specialists for a number of things, but most of our employees are very well cross-trained. Everybody has to be willing to and want to do everything.”
York is Virginia Air's primary unitary line, and its ties with York are very strong. Each year, Virginia Air coordinates a trip with its customers to the York manufacturing facilities in Wichita, KS, and Norman, OK, with all expenses covered by York and Virginia Air. Mitsubishi, Climate-Master and Honeywell continue to show growth for Virginia Air, and they offer similar contractor rewards programs.
Virginia Air also continues to invest in its customer appreciation events. Even during the economic recession, Baker says it continued to offer its contractors incentive trips and golf tournaments as a way to demonstrate its continuing bonds with them. Virginia Air also recently allowed contractors to accrue rewards over a two-year period to allow more of its smaller and medium-size customers opportunities to take advantage of the trips.
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One of the greatest strengths of the relationships with its customers lies in marketing. As Baker points out, the marketing program does not revolve only around the products or Virginia Air but the contractors themselves. It's a bottom-up approach. “We work hard to build the contractors' brand as opposed to promoting the brand of the boxes we're selling,” Baker says. He credits York with giving Virginia Air the flexibility to tailor its marketing programs around the contractors. After all, the contractors are the ones that are out in the local markets, advertising their services and helping consumers make their HVACR decisions. “They need to get out there and promote their brand,” Baker adds.
Too often, contractors focus on the technical and business aspects of their business. That is, they're making sure that their technicians are getting the jobs done and then they have to deal with all of the associated payroll and human resources issues. In such an environment, marketing takes a back seat. “In an economy like this, marketing is critical,” Baker says. “But marketing is one of the things that most HVAC contractors need help with, and they just don't know where to put their money. We find that if we can offer them solutions, they really embrace it. They look to us for guidance and funding.”
Baker and his staff spend a “huge amount of time” and thousands of dollars focused on the curriculum for its Business Training University courses. These courses cover accounting, operations, marketing and sales and are in addition to its technical training courses. Most Virginia Air territory managers participate in the same training so they have a common understanding with their customers of the issues.
Of particular focus this year will be basic blocking and tackling issues related to sales. Baker says the $1,500 tax credit on high-efficiency systems that helped to spur sales also created a certain amount of complacency among sales teams. They didn't have to worry about financing or upselling or discuss return on investment — the $1,500 tax credit did all of that for them. Baker says Tom Piscitelli's five-day sales boot camp, offered through Virginia Air, aims to address these issues. “Business training is one of the cornerstones of our customer service and demonstrates the partnership with our customers.”
Baker reports that 2010 was Virginia Air's best year ever, and the results from 2011 finished just shy of that mark. Given the overall economy in recent years, Baker counts this as a success. His business saw a “huge shift” from midtier and premium efficiency products back to standard efficiency — a reflection of the end of the tax credit. He's optimistic that 2012 will be a good year for Virginia Air and its contractors.
Baker says Virginia Air is always evaluating strategic acquisitions to grow the business. While they are a $100 million company, “we're built on the foundation of a $250 million company,” he says. “We're very strong and we have very big plans for the next five years to get to that goal.” Baker and his team have a solid plan in place to make this happen.
He sees “massive growth opportunities” ahead. Baker expects to help their existing customers grow, and he expects that Virginia Air will continue to gain momentum in some of their newer markets in Ohio and North Carolina as more customers understand the value proposition that they bring to customers. “It's refreshing to go in a year after you've got someone as a new customer, and they're very appreciative and very happy and, most times, they're more successful than they were a year earlier.”
Michael Maynard is a contributing editor based in Providence, RI. He writes frequently on HVACR, construction and architecture issues. Contact him at micha[email protected].