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Interestingly, we have continued to spend about the same amount on advertising in each of the years, with some changes in media to reflect what we see as the changes in our times. Additionally, and maybe surprisingly, our number of maintenance agreement customers has remained fairly constant over the last several years. That number did drop three years ago when we implemented a very necessary price increase, but the drop was almost exactly what we budgeted for, so it was not a surprise. Of course, one of the things we wonder is if this is a trend for all HVAC contractors, just a local thing, or, worst of all, is it just a single company issue.
As I indicated, we have debated this issue extensively within our company and here are some of the ideas we have hit upon as possible causes:
• Naturally, weather is always one of the major drivers in bringing about service calls. That would certainly explain a drop between 2012 and 2013. We had 21 days over 100°F in 2012 and only two in 2013. In looking back, however, we didn’t see a significant spike in 2012, which may mean that some of the other factors we discussed may be driving influences.
• Maintenance is helping. We sell several thousand maintenance agreements each year, with a major customer benefit being that less repair service will be required. Since we have had this large number of maintenance agreements for a number of years now, perhaps we are, in fact, significantly reducing the amount of repair service required.
• Our mix of equipment has changed significantly over the last several years and we are installing a much higher percentage of higher-efficiency equipment. The manufacturers say that the higher-efficiency equipment is truly being built to higher standards, which should result in fewer breakdowns. Perhaps we are seeing all of that come to fruition.
• What effect are the extended warranties from manufacturers on parts, and sometimes even on labor, having on our overall service business? The thought is that perhaps since the manufacturers are providing longer warranties on the equipment, they are going to greater extremes to ensure that there are fewer problems with the equipment. This would seem to have some validity because either they or their vendor is going to be responsible for any excessive failures.
• Some of the issues regarding why our company may not be receiving as many service calls are internal issues which obviously are the most troubling, but are also the ones that can be addressed in search of corrections. The first, is as an old (118 years) company with a long-time customer base, it is possible our customers are no longer in need of our services because they have moved into a condo, retirement home, etc. Secondly, the feeling among our employees is that loyalty may not be as strong with younger consumers as it was with previous consumers.
As you can tell, this issue created a great deal of discussion and debate within our company. I would be very interested to know what your thoughts are regarding this situation. Hopefully, someone out there will have experienced the same situation. In any case I would be very interested to hear your thoughts on this topic. Hopefully I will get enough responses to share them with our readers in a future article.
Publication date: 11/18/2013