What will you do differently this Fall to move your company forward, increase revenues, and achieve higher profits? There’s an old saying that the definition of insanity is doing the same things over and over and expecting different results. If you own a traditional residential service and replacement HVAC company, the following questions, if answered honestly, will help you determine if your company is in an insanity loop:
1. Is your business built around selling as many replacement “boxes” as you can every week?
2. Assuming you pay yourself a salary, rather than pulling your income out of “profits,” is your company’s net profit after ALL direct costs and expenses less than 10%?
3. Do you have less than 200 Maintenance Agreements per million dollars in total sales?
4. Is your primary lead generation method for replacement sales advertising and internet?
5 Do system performance renovation revenues represent less than 5% of your total sales?
By answering yes to two or more of these questions, you are likely on track to get the same results you’ve been getting, especially in question three. Our industry still tracks at less than 3% real net profit. If your net profits are less than 10%, it might be time to try a different approach. Let’s explore some highly-profitable, low-risk services you can add to your existing business:
Maintenance Agreements
The most obvious, and most common profit center adopted by successful HVAC companies is a large maintenance agreement base. Building a solid agreement business takes a focused effort with good processes and a strong commitment to growing your maintenance agreements. Many HVAC companies have built maintenance agreement bases with as many as 1,000 agreements per million dollars in sales!
Imagine what that could do for your business! Your seasonal swings would be leveled significantly. You could capitalize on the economies of doing a high volume of maintenance work, and the resulting repair work and leads for replacements
would be HUGE!
Performance Testing
There’s another low-investment, low-risk business you can add to your existing services that dovetails nicely with a healthy maintenance agreement base: performance testing and system improvements, and renovations.
These two disciplines work really well together. Imagine how many leads you could generate if your team performs basic static pressure and airflow testing on every home in a large maintenance customer base. Remember: your
best source of leads for high performance work are existing customers, especially maintenance agreement customers. They are easily 10-times more likely to listen to how you can improve their homes than an internet or direct mail lead.
How Does the Process Work?
Good training is absolutely critical to success, but the approach is simple. It starts with service techs who have the tools to measure static pressures, interpret airflow, and test combustion during every service and maintenance call.
These highly trained techs have the training to ask the right comfort questions. When they find opportunities for improvement, which will be most of the time, they share the information with your customer in layman’s terms, then offer to bring in your comfort specialist to perform further testing.
The next step is to confirm the appointment and send in a trained salesperson with the right tools and knowledge to offer the right options to improve their HVAC system’s performance. When systems are older, or are not in very good shape, equipment replacement becomes part of the equation. The good news is when you couple the two, the results are phenomenal. When you can fix performance problems and right size a system with higher efficiency, better performing equipment, your customers will be more than satisfied, they will become raving fans and your best source for referrals!
This approach will help insure a great Fall season, and move you towards building a more profitable, sustainable, and valuable business for many years to come.
Dominick Guarino is CEO of National Comfort Institute (NCI), one of the nation’s premier Performance-BasedTM training, certification, and membership organizations, focused on helping contractors grow and become more profitable. His e-mail is [email protected]. For more info on Performance-Based Contracting™ go to WhyPBC.com or call NCI at 800/633-7058.