EXTENDED WARRANTIES

One audience member commented that extended “out-of-the-box” warranties lock in contractors to the manufacturers for the period of the warranty, resulting in fewer selling options and less profit opportunities.

The panel agreed that it would be in the best interest of the contractors to poll the other members to see how they feel about selling out-of-the-box warranties vs. selling their own extended warranties.

Isaac said, “It is best to give our customers a variety of options regarding warranties and service agreements. We should add value to what we are selling.”

One contractor in the audience suggested that manufacturers should discount the price of their equipment and let the contractors sell warranties.

PERFORMANCE PAY

The question of performance pay was put to the panel. An audience member asked if technicians should be given incentives and perks in addition to regular pay. Ring felt that performance pay for technicians is a touchy subject, citing the fact that such a reward system would be difficult to administer.

“I tried to do a commission structure for technicians but gave it up after a couple of years,” Gardner said. “It wasn’t because people were being dishonest, but the new inexperienced guys were changing parts when maybe they didn’t have to, and were making more money than experienced techs.”

PREFERRED VENDORS

Panelists were asked to comment on the opportunity that contractors have to “partner” with the big box companies like Home Depot.

“You don’t want to be a vehicle for the big box company,” said Ring. “If a store is getting in a program of working through preferred contractors, the program should be open to all contractors. I would take advantage of this program as long as the rules are defined and as long as I have the ability to sell add-ons or offer better deals.”

“Any time you put your name second to someone else, there are going to be long-term problems,” said Isaac. “If your long-term goal is to sell equipment and not establish a relationship, then set your business plan up as a subcontractor.”

INSURANCE COSTS

Audience members wanted opinions on how to combat rising insurance costs. One contractor said he was told by his underwriter to expect a 60% to 70% increase in insurance premiums this year.

Miles said, “Our company puts out insurance for bid every couple of years. We know rates will go up, so we try and get the best and most affordable ones.”

DiFilippo said that a key to retaining employees is to have a good insurance plan. Ring went one step further, stating that employees should experience the costs of insurance.

“I believe in splitting the cost with employees so they understand how much health care costs,” he noted. “But we also strive to stay with the same plan, and not shop around.”

Sidebar: ‘Boy, Did I Make A Mistake’

KISSIMMEE, FL — Attendees of the Air Conditioning Contractors of America’s (ACCA’s) 34th annual conference had a lot of fun with the seminar titled, “Boy Did I Make a Mistake.” The forum was designed for contractors to talk about some of the blunders they have made in the past and share the lessons they learned from those mistakes. Contractors who shared their experiences were given cash rewards. ACCA president and ceo Paul Stalknecht was the moderator.

Memorable mistakes listed by participants included:

One contractor won a judgment against a customer for failure to pay for services, but the contractor failed to obtain the defendant’s social security number and driver’s license number and couldn’t track him down.

Another contractor was giving his field service people “perks” for performance bonuses but not following up to see if the perks were deserved.

An audience member shared the story about the time he hired a service tech without thoroughly checking his references. The tech stole a company vehicle and ran up hundreds of dollars in unpaid tollbooth charges.

A contractor hired an in-law, assuming that he had good references. The man went on a joy ride and drove a company service van into a group of pine trees.

After doing a customer a favor on a Saturday by installing a furnace when she needed heat, a contractor told her he’d get a price for the installation the following Monday. When he called her back, she said she got a better price from Home Depot and the contractor had to remove the equipment. He said he should have signed a contract with her.

Another contractor thought the best employees were the ones with the highest I.Q.s, so he issued I.Q. tests during the interview process. He said it was a mistake, asserting that it is better to hire the “average guy.”

A contractor couldn’t afford to give out Christmas bonuses, so he rewarded one good worker by cleaning up an older company truck and presenting it to him. Three months later the employee left and used the truck to help in his own business — as a competitor.

One contractor said his biggest mistake was not joining ACCA years earlier.

— John R. Hall

Publication date: 04/08/2002