Contractors Branch Out to Beat Economy

November 8, 2010
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Most of the contractors The NEWS has interacted with in recent months are still talking about the recession and how they’re handling its effects on their business. One way both small and large contractors are surviving the harsh economic climate is by branching out to offer new product lines and services to current customers. Read on to learn about the experiences of a small contractor in Idaho and a large contractor in Florida.

BRANCHING OUT IN BOISE

Chance Oswalt is a system designer and manages the Nampa, Idaho, branch of Boise-based Western Heating and Air Conditioning. He’s been with Western for the past seven years, and has been involved in the industry since he started working for a contractor at age 14.

These days, his firm mainly focuses on residential retrofits in a 300-mile radius around Boise that extends into eastern Oregon. And they’ve expanded their focus with residential customers to include more than just furnaces and air conditioners.

“We sell quite a bit of tankless water heaters,” Oswalt said, adding that they have had a lot of success with the Navien brand. Western also carries Eternal Hybrid water heaters manufactured by Grand Hall USA, Oswalt noted. “We’ve had pretty good results with that, too.”

Peaden intends to offer one-stop shopping for the majority of the main trades that service existing homes. A Peaden plumber installs a tankless water heater.

Oswalt clarified that his company doesn’t offer a lot of plumbing services, but it’s fairly easy for an HVAC contractor to complement its business with water heaters.

“Most of the time in our market, the furnace and the water heater are right next to each other,” he said. “It’s a pretty simple step to say, ‘You’ve got a 20-year-old furnace and an 18-year-old water heater right next to each other, and we can get you a pretty good deal on a water heater.’” He pointed out that it’s less of a hassle for homeowners to have the same team of technicians come to install both pieces of equipment. “It’s always going to help to offer more.”

According to Oswalt, business at Western has been pretty good. In addition to offering more products, Western has also chosen to focus on the retrofit market. “Five years ago we were a bit more of a new construction company,” Oswalt said. But with the housing market meltdown, this aspect of business no longer makes up a large percentage of the bottom line. “It’s not all about finding builders anymore,” he said. “It’s about finding and keeping customers and having those customers send up other customers.”

Another tactic that Western is using to survive and thrive is better marketing. According to Oswalt, Western has always been a good, ethical company, but now it’s working harder to market these qualities to customers. Western has a trust-certified program that ensures a background check for credit, criminal activity, driving record, etc., on all technicians that enter residences. “Now it’s more about letting people know [about this] before we come to their house.”

Along with focusing on customer service for retention and referral, the company is also moving toward whole-house performance contracting. “We’ve got a couple guys that are already BPI-certified,” Oswalt said. “It seems that us and our good competitors in town are all starting to look at things from the whole-house perspective instead of just going in and changing the furnace or air conditioner.”

Peaden Air Conditioning, Heating & Plumbing in Panama City, Fla., recently added whole-house generators to its product line.

MOVING FORWARD ON ALL FRONTS IN FLORIDA

“We didn’t intend to be out of the box, but we certainly have that label,” said Robert Wilkos, business leader at Peaden Air Conditioning, Heating & Plumbing in Panama City, Fla. For starters, his company stands out for its determination to attract and retain customers. According to Wilkos, this is reflected in his company’s success with service agreements. “We have 13,000 active service agreements in an area with 70,000 total domestic households,” he said. “And that percentage of active service agreements to total households is the highest percentage in the country that I’ve found.”

Building from its solid foundation of customer retention, Peaden has been able to diversify and grow. Wilkos’ philosophy is simple. “If you have that type of loyal customer base and you have that type of market penetration in one specific industry and in only one aspect of that industry, why not take better advantage of that strong base that you’ve already got?”

So, according to Wilkos, Peaden has actively spent the last three years branching out in all kinds of new ways. “In the past three years, we’ve added home performance testing, whole-house generators, plumbing [residential and commercial], commercial HVAC service, and insulation.” He continued, “We soon will add insulation removal and electrical service [residential and commercial].”

A Peaden technician services a generator. The company has 13,000 active service agreements in an area with 70,000 total households.

Wilkos said that Peaden intends to offer one-stop shopping “for the majority of the main trades that would go into an existing home.” He pointed to power generation, which the company just added in the last 40 days. “We purchased a small, local single-person generator company,” he said. “Our initial perspective is that generator sales will mainly be to high-priced homes and commercial buildings. They will be most popular should a hurricane enter the Gulf of Mexico.” He added, “Generators fit well with knowledgeable HVAC and plumbing techs so the ramp-up time is fairly short.”

Wilkos also noted the acquisition of the power generation firm was the result of an opportunity created by the recession. The owner wanted to retire and was willing to sell to Peaden. “The longer the recession lasts, some of the other contracting businesses can’t withstand the stress and they’re looking to get out. And so we’re able to hire talented and skilled personnel maybe from their rosters. Or they bring their business to us and see if they can find a management position with us,” Wilkos said.

As Peaden continues to develop its business, all new employees are trained to recognize that “part of our mission statement here is creating customers for life,” Wilkos said. “When you’re trying to create customers for life, you’re going to have to behave differently. It’s not so much ‘What did we sell them today?’ but ‘Are they satisfied with whatever we did for them?’”

Wilkos believes that Peaden has a template that spells success for the future. Peaden recently opened a new branch in Fort Walton Beach, Fla., and will open its third location in Pensacola by early 2011.

This multifaceted approach that combines growth, expanded service offerings, and customer retention has paid off so far. “We’ve done well,” Wilkos said. “2008 was our best year in history. 2009 was better, and 2010 is not over, but it has all the ingredients to be the best yet.”

Publication date: 11/08/2010

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