More Profitable Business Model

April 30, 2007
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Michael Cappuccio (above) has become a leading Mitsubishi Electric HVAC Diamond Dealer. In less than 20 years, he has become one of New England’s largest air conditioning and refrigeration dealers.

Michael Cappuccio has grown accustomed to being one of New England’s largest and most successful air conditioning and refrigeration dealers.

President of N.E.T.R. Inc. Air Conditioning & Refrigeration, Woburn, Mass., Cappuccio enjoys responding to the inevitable question about his company’s quizzical acronym - New England Transportation Refrigeration. His response is a perfect segue to the secret of N.E.T.R.’s success. Founded in 1989, he started the company by installing refrigeration units for New England truckers and railroaders. His success soon spread to the commercial HVAC business.

A few years later, this led to the acquisition of Imperial Mechanical, an HVAC firm with a large residential base. However, Cappuccio eventually became dissatisfied with the subcontractors who were handling Imperial’s ductwork fabrication and installation.

“You couldn’t rely on them because their end product was not consistent. We tried several different subcontractors but it didn’t work out,” said Cappuccio. “We didn’t want to get into the sheet metal business, so we decided to get out of the forced air market altogether. In essence, we were forced to change course and it was the best thing that could have happened to us.”

A NEW BUSINESS MODEL

In 2003, Cappuccio turned his business model around. He realized he needed to find a more profitable business plan, so he thought about new ways to grow his business. The goal was to increase sales and profitability, decrease overhead, and find a new mode for the delivery of intelligent HVAC systems - meaning, in his estimation, an alternative to conventional, forced-air systems.

Because of the proliferation of historic buildings in New England, both residential and commercial, Cappuccio set his sights on top-line growth for this vast market of structures built in the 18th and 19th centuries. In the end, this meant going completely ductless. In his search, he discovered his future - split-ductless air conditioning systems.

To satisfy his curiosity and test the wisdom of this choice, Cappuccio sent N.E.T.R. manager Marlon Crowell to Mitsubishi Electric HVAC’s “Make a Profit Difference” workshop in Atlanta. That same summer, Cappuccio attended a contractor summit in San Diego, again put on by Mitsubishi Electric.

Both men came back impressed with their findings. The decision was made to make this business model work. Cappuccio decided to attack the residential market first, including renovations, room additions, home zone cooling, and home offices.

“We saw the remodeling business was growing rapidly because of the Baby Boomer population explosion,” said Cappuccio. “These consumers are searching for professionals to assist with home remodeling and as a result, the services of contractors are in high demand. This trend presented N.E.T.R. with opportunities to realize financial rewards and the potential for tremendous growth.”

In his estimation, split-ductless can be excellent retrofit add-ons to homes built without standard air conditioning.

“As most homes in New England were built in the 1800s and early 1900s, they are heated by radiators and have no central air conditioning,” he said. “So we thought, let’s try installing a few Mr. Slim® systems to see if we could be successful and more profitable.”

These Mr. Slim outdoor units use the company’s proprietary inverter-driven compressor technology. It is the system of choice for contractor N.E.T.R. of Dover, Mass.

MOVE PAYS OFF

Talk about a complete turnaround. Cappuccio’s new business plan paid off in a big way. In 2003, and for the next three years, N.E.T.R.’s business tripled. The year he discovered Mitsubishi Electric HVAC, N.E.T.R. became a Mr. Slim Diamond Dealer.

“It’s like getting your doctorate degree,” Cappuccio explained. “I wanted my team to be the best. “Being a Mitsubishi Diamond Dealer means hundreds of hours of testing and training. You know you have achieved the highest level of accreditation. Their training programs are exceptional.”

At the Atlanta Training Center, Diamond Dealers complete factory training in the areas of applications, sales, and service for the manufacturer’s product line.

“We have a dedicated residential installation staff that installs only Mr. Slim split-ductless air conditioning solutions. This allows our staff to focus 100 percent on a single solution and be experts in the installation process,” said Cappuccio.

When asked why he settled in on Mr. Slim, Cappuccio gave the following reasons:

• Cooling and heating without wasting a window space or costly ductwork add-on

• Extremely quiet operation of both the indoor and outdoor units

• Highly reliable technology

• Compact, space-saving design

• Solves challenging hot-and cold-spot areas

• Wireless or wired remote controller for comfort control in the palm of your hand

• An entire system can be installed in four hours, providing great labor costs savings.

And, in his estimation, Mitsubishi provides great sales, service, and marketing support for dealers.

“Through their advertising and direct mail programs, we get strong leads,” he said. “We add to this with our own marketing, such as advertising and participation in local home trade shows. Additionally, we have good relationships with our Mitsubishi reps and their technical support hotline.”

There’s no turning back for Cappuccio or N.E.T.R.

Publication date: 04/30/2007

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