eCommerce Offers New Revenue Stream

November 22, 2010
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To an HVAC contractor, there is a lot of gratification in keeping customers away from the big box retail stores who offer competing products and services. Something as simple as a pleated air filter - multiplied several times by the number of customers - can be a huge revenue stream for HVAC contractors.

Many of these businesses are already selling replacement parts like filters and new products such as smoke/carbon monoxide detectors via walk-in sales to parts counters and showrooms. That has been going on for years, but it has been a slight inconvenience for customers to walk in and buy parts, especially since they are likely to find better pricing down the street at the big box retailer or local hardware store.

Today, HVAC contractors have turned to eCommerce - using their own websites - to sell products to customers, some of whom are former brick-and-mortar, walk-in buyers. There is much more convenience to ordering products online and having them shipped direct, especially if customers are reminded how and when to make purchases. In addition, the customers remain loyal to the HVAC contractor.

“Our clients like eCommerce because they can order at their own convenience,” said John McCarthy of McCarthy’s One Hour Heating & Air Conditioning, Omaha, Neb. “The older people over 50 still come in to buy replacement filters, but the younger customer base likes to buy online.”

Dave Squires, an HVAC contractor from Port Huron, Mich., and founder of Online Access, which designs contractor websites, including eCommerce programs, said that having an eCommerce program has a number of advantages.

“eCommerce gives the contractor’s customer 24/7 availability,” he said. “In systems like ours, where others do the fulfillment, it also allows contractors to be more price competitive since they don’t need to stock the product, handle the product, lose the product to damage on the trucks, or pay for the product until they have already collected for it.

“These advantages let the dealer lower his margin and be competitive since he or she is only ‘pushing paper’ to make the sale.”

Besides the obvious cash flow generated by online selling, having an eCommerce site allows contractors to stay in touch with customers - an added “touch point” that can result in future business and referrals.

John Francis, owner of Webstack.com, developer of eBusiness websites, said eCommerce is an important part of keeping customers local. “I would say that the biggest advantage is maintaining an ongoing dialog with local homeowners through the recurring sale of replacement products like filters,” he said. “There is also a good deal of indirect sales from service requests placed through the websites. But the most important advantage is having a website so that homeowners can get the contractor’s phone number when they have a problem.”

Ken Justo of ASI Hastings Heating & Air, San Diego, Calif., said that his company puts a lot of effort into maintaining its website, and intends to expand more into eCommerce from what it is currently offering. “Right now we are only selling replacement air filters,” he said. “We are still dabbling, but we intend to put a larger emphasis on eCommerce in the near future.”

PARTNERING OPPORTUNITIES

One reason for HVAC contractors to make an easy entrance into eCommerce is because of the partnering opportunities available to them from wholesalers and manufacturers. While customers can order products from an HVAC contractor’s website, the actual fulfillment and shipment usually takes place from the wholesaler or manufacturer.

“We set up and host eCommerce websites for Honeywell contractors,” said Francis. “We custom design and build an eCommerce website for the contractor and maintain it through a monthly subscription fee.”

Squires works through wholesalers to set up eCommerce sites. “Our eCommerce system is set up so that any wholesaler can participate in fulfilling product orders for the contractors at no cost,” he said. “Contractors are excited to partner with their wholesaler where all the material costs are maintained by their wholesaler who also does the fulfillment. They now can set up the store in less than an hour by just choosing the products and setting their mark up.”

Once the eCommerce site is up and running, customers are encouraged by contractors like McCarthy to maintain their equipment and keep it in working order - all while channeling money into the business. “With our eCommerce site, we encourage customers to buy three or four filters at a time,” McCarthy said. “We hope this encourages them to change their filters more often.”

The set-up and ordering process can be very simple. A good example is IsaacHeating.com, where visitors are given a simple menu of products and pricing. They can place their orders via e-mail.

STAYING IN TOUCH IS KEY

The benefit of any online ordering or feedback system is to gather contact information - namely e-mails. This allows HVAC contractors to stay in touch with customers and inform them of upcoming service or product specials.

“We collect all clients’ e-mail addresses and send out an e-mail blast that they can respond to,” said McCarthy. “We currently have 6,000 e-mail addresses. We will be increasing the number of e-mails during the winter months by calling everyone in our computer system that we have serviced and asking if we can send them pre-sales announcement - which are at a discounted price - and allows them to move to the front of the line.”

Just because a business has a lot of website visitors does not necessarily guarantee success. The visitors need to be mined and marketed to. “Communication is key to eCommerce success,” said Squires. “We give our customers an automated reminder system that they can utilize to automatically remind their customers on a set schedule to check their filters and other products to see if they should be replaced. Once set up, the reminders automatically go out forever, giving you a continuous point of contact for top-of-mind customer awareness.

“Our system even lets you reward the customers by offering them a special discount for being involved with you that automatically shows them their special discounted price. Every reminder becomes a marketing opportunity since each reminder e-mail will go out with whatever marketing message the dealer sets up to teach them of all the services they offer.”

Francis added that eCommerce means repeated contact with the customers. “It requires good knowledge of the competition and the business’ customer base,” he added.

“It has to be easy and secure to conduct transactions. There are large online retailers of replaceable HVAC parts, so beating the competition with pricing is very difficult. On the other hand, the homeowners seem willing to pay a small premium for doing business locally. So focusing on them will generate a significant revenue stream and keep the contractor’s name in the mind of the homeowner. The conduct of small, convenient transactions is good for relationship building that leads to larger equipment sales and repairs down the road.”

Francis has some tips on marketing websites, too. “Local advertising is the best,” he said. Advertise in localized directories. I also think that it is essential for the websites to be search engine optimized for locality. Most homeowners are looking for local HVAC service firms through the Internet, not the Yellow Pages anymore.”

Squires added that an old standby - stickers - are still a big part of marketing. “We offer stickers that can be placed on the equipment telling customers that they can conveniently buy replacements on our HVAC contractor website. The stickers have detachable arrows that are then used to signify which accessories require replacement material.”

For more information, visit www.webstack.com or www.online-access.com.

Publication date: 11/22/2010

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