Make It The Best: Ideas For Being Profitable In 2014 And Beyond!

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November 1, 2013

2014 could be a banner year for HVAC contractors if all of their plans for the future pan out. Their ideas to increase growth in the residential market range from partnering with other companies to upping the ante on marketing campaigns, particularly those targeted at social media and talk radio.

Buck Sheppard, service manager, sees no reason to change what has been a winning strategy for his for two companies, Tri County Temp Control and First Call Heating and Cooling in Oregon City, OR. “Typically, our businesses are built on service, which leads to retrofit installations,” he says. “Our best strategies this year have been to partner with the utilities, the electric company, and the gas company, because they are the 800-pound gorillas in the room. Everybody’s got electric, and a large majority around here have gas. Those two in particular have been very good lead sources.”

The business model works like this: If they don’t have an established relationship with an HVAC company, consumers call a utility, which refers them to local companies that meet certain criteria. Sheppard admits that the utilities are very selective and “there are an awful lot of hoops you have to jump through,” but the “big chunk of business” he gets makes the process worthwhile.

He does intend to make a marketing adjustment: He’s cutting back on traditional advertising—keeping radio—to delve into the realm of social media. “We have partnerships with some of the local radio talk talent around here,” he explains. “Th e talk radio medium is growing. It doesn’t matter whether you’re conservative or liberal, people listen to it. We also do a little on sports shows, and we up that going into the football season, because of the rivalry between the two big colleges. The broadcasters for the Beavers and the Ducks are not only our spokespeople, but they’re also our customers.”

Sheppard, who believes in keeping up with the times, doesn’t use Twitter because, “there’s no way you can hold me to 140 characters.” Instead, he writes blogs several times a month for each company’s Facebook page. “Between the two companies, we have a duct cleaning division, an oil division, and the regular HVAC service and installation. At least twice a month, I try to go on each Facebook page and put some sort of special out there to keep both companies top of mind.”

Dan Kalman, vice president of home services, Lee Company, in Franklin, TN, is taking a similar approach. “We’ve had great success with the talk radio market, specifi – cally in the sports arena,” he says. “We’ve had more response from people saying, ‘I heard you on XYZ talking about your services’ than we do from a prerecorded message. By sponsoring a particular show, we get to do a live call in. Our talent is an employee who is well versed in any area the host might bring up. Those types of shows have a very loyal base who are not typical radio listeners.”

His company normally buys a block of radio time two to three times a week for four weeks in a row and then takes a week off to “keep advertising costs in check.” He is also seeing good results from print, particularly direct mail. “We continue to see a need to spend a sizeable portion of the marketing budget on direct mail,” he says.

According to Kalman, offering bundled services—including plumbing and electrical— to clients has been a boon for business, so he may bring other service solutions on board in 2014. “For us, it’s about helping homeowners meet their unrealized needs,” he says. “Besides heating and air conditioning, there are a lot of needs within a home, such as windows, insulation, doors, even siding. We off er solutions for people to get all of those things done by a single source provider.”

To provide that kind of service variety—allowing clients to have a single point of contact—he has partnered with local contractors over the past fi ve years. “Whatever needs they have for the house, clients can give our company a call and we will either do the work ourselves or facilitate getting the work done,” he says.

Look at the Whole House
Stephen Pape, general manager, Pape Service Co., DeSoto, TX, is another fan of taking the whole house approach. “We don’t live in a world where we can just sell the box,” he says. “We have to look at the insulation of the home and the overall condition of the house envelope.”

In 2014, he hopes to see a change in credit terms for HVAC equipment. “We just had a long conversation with a credit card company, exploring ways we could get better interest rates and better off erings to be more competitive,” he says. “Consumers today need it.”

While acknowledging that several manufacturers and their credit financing companies are off ering 0 percent fi nancing for 12 or 15 months, he believes the market would be better served with 8 or 9 percent for four years, instead of the prevailing 24 to 27 percent. “I would really like for my good customers with 750 credit scores to get a decent rate on a signature loan without putting a lien on their houses.”

After cutting back on marketing this year, Gregg Ray, president, Ray & Son Heating & Air Conditioning, Inc., Nashville, GA, is planning an aggressive campaign that includes more direct mail, an increased social media presence, and bringing his television budget back up to almost $4,000 a month. He will also consider seasonal blast advertising during hot or cold weather. “For example,” he says, “if something comes out in the news on allergies, we might jump on that by advertising for indoor air quality.”

To increase his company’s geographic presence, he is expanding the reach of his marketing to include a sister city, Tifton, GA, which is about 28 miles from the home office. For the expansion to be successful, he realizes he will need to become more active in Tifton’s chamber of commerce and social events. “I’m going to try to get out of the office and spend more time doing community affairs,” he says. “I’ve gotten office bound. I can’t seem to get out and do what I really ought to be doing.”

Advice From the Pros
To promote growth in the residential market in 2014, these four professionals offer four additional tips.

Watch your cashflow. Ray expresses concern about a few of the economy’s financial indicators. “I’m not sure the economy is as strong as most people believe it to be,” he cautions. “Companies need to keep a close eye on cashflow. If we had not done that over the years, we would not be here today.”

Optimize your website for search engine key words. According to Kalman, the average Google user wants a website that is content rich, but many won’t go past the first page of results. “They won’t go to page two of a search, so you have to make sure your website is set up in a fashion that puts you on page one in the organic area,” he explains. “Bring in outside resources to help you do that. That stuff is well beyond anybody in our company’s understanding. There are a lot of analytics behind it.”

Enhance services rather than lower prices. “We offer a great value to people,” Kalman says. “What we bring can change the way someone lives inside their home. We need to offer a greater line of services and higher quality so we can keep our prices where they need to be so we can continue to bring the best people into our industry.”

Pape seconds that notion, suggesting that contractors seek out their own niche in the market. “If everybody is doing exactly the same thing with exactly the same product, it becomes a price issue,” he says. “Try to figure out something, such as an extra nice thermostat or adding insulation or installing smoke detectors in the bedrooms. Look for something your competition is not doing, and offer that as a value-added service.”

Keep selling service agreements. “Make sure you stay top-of-mind awareness with your customers,” advocates Sheppard. “Every year businesses lose a certain percentage of customers who move, die, or sell the house. You have to replace them. The most important part of growth is making sure you maintain a strong service base and taking care of the customers you already have.”