Contractors Choose New Business Paths
December 10, 2007
Market shifts, technology, economic changes, legislation, and evolving customer service requirements are compelling the HVACR industry to face new challenges. Although multiple supply chain participants are affected by these evolutions and shifts, contractors find themselves on the front lines of change, endeavoring to emerge with profit victory in one hand and a satisfied customer in the other. Keeping up with what consumers want, expect, and demand obligates contractors to focus on three crucial sectors within their business - sales, service, and communication.
PRICING CONCERNS?Across the nation, new ideas of environmental responsibility, clean air, and economic security are driving consumers to carefully consider their HVACR purchases. Consumers who once purchased strictly on price are now considering purchases through a green looking glass. Health, safety, and environmental value are beginning to trump the almighty dollar.
“Customers want higher efficiency, and quieter and healthier equipment,” said Tom Vatter, president of Kool Breeze, Navarre, Fla. “These are the top three trends we are seeing.”
According to Vatter, 10 years ago, people were just happy to be cool. Now they are looking to be cool and comfortable with perfect air and a controllable power bill.
“We’re seeing many more people buying our 16 SEER equipment,” he pointed out. “Of our customers, about 20-25 percent are buying higher SEER equipment than they were before. They are now asking about efficiency and cost as well.”
Chris Howell, service manager for Haught Air Conditioning Inc., Waco, Texas, noted that in the midst of increasing efficiency demands and decreasing price concerns, consumers are expecting contractors to “furnish open pricing requests and provide financing.”
“Customers, however, are still looking for the payback (efficiency savings),” he cautioned. “Very few will upgrade to higher efficiency equipment if the payback isn’t there.”
Other contractors are experiencing much the same results in their daily sales scenarios. Dave Hutchins, president and owner of Bay Area A/C, Crystal River, Fla., cautioned contractors to be careful of assuming that these better-educated customers are prepared to make a good HVACR decisions.
“A few percent more are still buying on price, and that means we lose the sale,” commented Hutchins. “Customers are more knowledgeable about products in our industry, but fail to understand that the design, install, and service after the sale is likely more important than the brand of the product.”
SERVICE REQUIRED ... NOW!Customers aren’t only requiring energy and financial efficiency, but they are also requiring service efficiency and flexibility.
“There is an increasing desire for a service company that can actually fix a customer’s HVAC and control system problems,” said Ann Kahn, owner, Kahn Mechanical, Dallas. “There are also increasing calls for a service company that really cares about customers, has increased technical savvy, and increased environmental awareness.”
Although speed, accuracy, and good customer service are not new concepts in the industry, HVAC contractors are facing increasingly tough demands from a new generation of customers.
“Customers want on-time delivery, and they want it on their time schedule, not ours,” noted Larry Taylor, president, AirRite A/C Co., Fort Worth, Texas.
“Depending on urgency, some requests are for immediate service, same day or even one to two hours,” cited Kahn.
According to Hutchins, many customers are also looking for more available service hours at regular rate prices.
“They expect quicker response on service calls and on the parts ordered,” he said. “Most think we should have everything in stock. They want the system fixed, including parts, same day, which is not always possible.”
HVACR service is also extending its definition to include multiple types of services. IAQ diagnostics and duct cleaning are just two of the add-on services that contractors are beginning to offer their customers.
“Customers are looking for a single trusted source for a range of services,” said Roger Grochmal, owner, Atlas Air/Climate Care, Mississauga, Ontario, Canada. “Once a homeowner has someone they trust, they want to source as much as they can so they don’t have to let anyone else in.”
Grochmal believes that as time progresses, there will be more companies that are multi-trade and multi-service so as to meet the needs of the evolving customer.
LET'S CHATCommunication is the final crucial sector that HVACR contractors are working to improve and enhance. The same generation exacting better customer service is also looking for new and improved ways to communicate. Electronic communication has become more than a mere trend. For many, it is a way of life.
“My customers want to communicate electronically,” said Howell. “Many want to receive their service requests and invoicing via e-mail.”
According to Grochmal, there is also more pressure to gain information instantly through Websites as well.
“I have noticed that customers have become much more educated about efficiency levels, zoning, and air filtration,” said Dewey Neese, co-owner, Neese-Jones Heating Cooling, Alpharetta, Ga. “This seems to be correlated with the information that is now easily obtainable on the Internet.”
Communication, however, is not limited to the Internet, Websites, and e-mail. In the midst of mixed messages bombarding customers from every side, contractors are also having to deal with the responsibility of communicating directly with customers, educating them on principles such as SEER, IAQ, green, zoning, etc.
“It has been our job to keep our customers current with technology and regulatory issues forever,” said Ken Bodwell, CFO and operations manager, Innovative Service Solutions, Orlando, Fla. “The fact that changes are occurring faster and at a higher frequency does not change our role or responsibility.”
As some contractors attempt to educate their customers, they look for innovative means to do it quickly and cost effectively.
“I have found that there is more interest than ever in high efficiency and green products, duct sealing, and duct cleaning,” noted Hutchins. “We are developing consumer handouts to convince consumers there is much more than just the box they buy.”
Other contractors are finding that the IAQ concept is still difficult for consumers to grasp.
“IAQ is still an unknown area that most customers don’t understand,” said Brian Boysen, owner, Choice Heating & Air Conditioning Inc., Manassas, Va. “Our technicians have to know how this equipment works in order to convey an understanding of the equipment to the customer.”
FUTURE PLANNINGAs contractors predict and handle the current and rising trends in the HVACR industry, future trends begin to build. Taylor, for example, is concerned about the public awareness factor that is changing so rapidly and what that will mean to litigation down the road.
“In the next years, the public awareness of what customers can have, and how poor of a job our industry has done to communicate that, will become more of an issue,” he predicted. “We are already seeing new homes, three years and up, that owners are mad about because the builder and the cheap contractor took advantage of them. I think more litigation will come as related to construction practices.”
Grochmal predicted that controls will become a major point of differentiation and that completely mobile technology for sales, service, and installation personnel will become the norm, not the exception.
Facing an election year, shifting economies, the informed public, and a new generation of consumers, contractors will find themselves evolving in order to meet these challenges. “I think businesses need to have a five-year business plan that offers the flexibility to change and to take advantage of opportunity,” advised Bodwell. “I think businesses need to understand their financial position, control costs, and have solid marketing plans. It will be a time to increase market share through communication and education.”
Publication date: 12/10/2007