Unlock hidden profits

March 22, 2000
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A generation ago, it was fairly easy for dealers to make money and keep customers satisfied without having to make sacrifices. Any “value-added” service often was associated with an inflated added cost.

These days, hvac contractors must work increasingly harder to generate the same level of profit. Today’s homeowner has many dealers to choose from and expects high-level, value-added service at a much lower price. As a matter of fact, good customer service has become a key criterion for choosing an hvac dealer from which to buy equipment.

Dealers who still think it is good enough to provide run-of-the-mill service and installations are starting to see their customer bases shrink.

In today’s hvac marketplace, providing top-notch customer service is critical to remaining competitive and profitable. Considering that many experts say it costs six times as much to harvest a new customer compared with retaining one current customer, it only makes sense to become a customer-centered organization focused on service.

Building blocks of effective service

Sending a technician out on a $39.95 maintenance call and having him/her go through the motions of routine service no longer is a viable way of executing service.

From a survival standpoint, dealers must go beyond the routine; way beyond the old mindset that places service low on the business totem pole. High-quality service must become a priority — a shared philosophy that starts at the top and works its way down through the organization.

It takes time and effort to implement a top-notch service program effectively. After you implement a program, it can take a couple of years until you see bottom-line results — but those results can be dramatic.

Dealers who have taken ownership of a service-oriented philosophy and execute it well, will notice huge results in only a few years’ time in terms of happy, active customers, referrals, and bottom-line results.

There are fundamental steps every dealer needs to take to ensure success. In fact, most already have them in place in some way, shape, or form, and need only some refining to enhance execution.

I’ve outlined five critical, fundamental steps that will lead dealers towards a fruitful service experience. In this article, we’ll go deeper into these issues and see how dealers are executing these principles:

  • 1. Create a service program that is head and shoulders above the rest.
  • 2. Know how to handle any customer.
  • 3. Construct a well-designed, well-planned recovery system.
  • 4. Maintain an infrastructure that tracks and measures performance.
  • 5. Align with a manufacturer that supports your quality-service initiative.


Creating the program

Too many dealers based in a single region have a “me-too” attitude towards service and pricing, meaning most have the same service contracts at the same prices. Some may see this as a standard way of operating; some may see this as being a problem.

If this is the case in your market, you should see it as an opportunity to differentiate your business from the competition. Offer a comprehensive service program that demonstrates the true value of hvac maintenance to the homeowner. Always under-promise and over-deliver.

Let’s look at Custom Aire, Inc., of Bensalem, PA. This contractor offers comprehensive maintenance services that include full-system inspections in spring and fall, detailed and thorough coil cleaning, and CO2 tests for the homeowner where applicable.

The company’s technicians go beyond the norm by covering the homeowner’s condenser in the fall and waxing it in the spring. They also get the homeowner involved in the maintenance of the unit to demonstrate how valuable proper maintenance is to the life of the unit.

What is Custom Aire’s return on this service investment? Thirty percent of their customers on a service plan are enrolled in the company’s Platinum Service program.

Another example of the benefits of implementing top-notch service programs may be found at Caldeco Mechanical Services, Inc., Tampa, FL.

Caldeco has a maintenance department that is dedicated solely to maintenance. The dealership offers an Energy Savings Agreement (ESA) that provides two maintenance calls per year, and the company renews 95% of its customers on the agreement annually.

How does the contractor do it? The company also gets the customer involved in its service call, and offers a flat-rate, comprehensive service plan and 100% money-back guarantee if not satisfied.

Since it established its ESA program four years ago, the company reports that 1,200 homeowners have signed up. And referrals come in daily.

Know how to handle customers

When it is 100°F and the homeowner’s air conditioner is malfunctioning, negotiating can be a challenge. It is of paramount importance that your service technicians know how to handle any customer in any circumstance. This knowledge mainly comes from experience and training.

For service techs new to the vocation, proper communications training is key to helping ensure the customer’s satisfaction during a service call. From knowing how to greet the homeowner at the door, to perceiving and adapting to the homeowner’s demeanor, to dealing with emotion when the homeowner (or the service tech) is upset, human interaction is an important part of a technician’s job.

It also is important to interview applicants to determine their customer service prowess. That is a key criteria for Custom Aire, which analyzes each applicant for people skills, and requires a minimum of six years’ experience as a technician to even be considered for a service position.

The issue-response system

We all know there are times when not everything goes according to plan. That’s why dealers need to have a well-designed, well-planned issue-response system to handle problems.

Clear-cut processes and procedures that cannot be misinterpreted and are easy to execute must be developed in order to provide a systematic, consistent recovery plan. In fact, it is more important to have a solid recovery plan in place than making an initial sale.

Why? Because bad news travels much faster and farther than good news. So when the homeowner has a bad service or installation experience, their neighbors will know, and so will their families, neighbors’ neighbors….

When a complaint call comes in, I recommend it be routed to the manager of the department responsible as a first step.

Let the customer explain details fully and emotionally, and offer a heartfelt and legitimate apology. Then it would be ideal to place the caller on hold briefly — only for a minute or two — and explain to the person responsible for the issue what the customer is saying. Conduct a three-way call with all parties to detail what actions will be taken.

From there, speed is of the essence. Make sure all problems are taken care of immediately — not in three days, not in a week.

I see many dealers promote “Priority Service” to their customers. When there is a problem, they give their customers priority attention, and the installation or product defect is fixed in a timely manner.

Unfortunately, many dealers are liberal with how they define “priority” and some will take two weeks to service their customers. That is not “Priority Service,” and it will hurt your business. Don’t give the customer any window of time to tell stories about their bad experience.

Some dealers have established a system that offers 6-hr guaranteed service to nip problems almost as soon as they happen, leaving the homeowner feeling appreciated. Custom Aire, for instance, has procedures in place where all issues are directed to one dedicated customer satisfaction expert, and routed to the appropriate person or department for immediate attention.

When the problem is being fixed, it is important to exceed expectations and do anything reasonable then and there to win that customer back.

Track performance

It’s extremely important to know what your customers think of your service. Data collection can be invaluable to your bottom line and help you judge which business and training tactics are effective and which leave more to be desired.

There is a simple way to judge a customer’s satisfaction. Air Control, Inc., Clinton, IA, sends out response cards after an installation or service call.

Make sure the questions you ask are relevant to the service performed and are important to the customer. Also, paying the postage on each card will likely increase the response rate; Air Control reports nearly an 85% response rate on their mailings.

Another effective way to measure performance is to hire a third party to interview a statistical sample of customers after a service is performed. Have calls made within 72 hrs of service, and you’re likely to get more precise and unbiased opinions about your company and the service tech or installer. It also is a cost-effective way to judge performance; 10 calls per week can average about $100 per week in costs.

Align with a manufacturer

If you truly want to be a quality- and service-oriented dealer, it is important to align with a manufacturer that has programs and initiatives in place that emphasize customer care, quality, and also challenge you to raise your service level.

Besides your standard product warranties, these programs often offer:

  • All-expenses-paid sales training sessions;
  • Routine tests to gauge your technicians’ knowledge of the manufacturer’s products;
  • Employee leasing options;
  • Branded uniforms and service truck decals;
  • Leave-behind pamphlets that tell homeowners how to perform basic routine maintenance checks on their hvac systems; and
  • Access to brand information via the Internet.

Participation in these types of programs usually requires a commitment to brand loyalty, customer satisfaction, and around-the-clock service.

I’ve given you just a briefing on how to build your service offerings, as well as what it can mean to your business. I recommend that you think about how to tailor these important building blocks to your business.

For additional details and statistics, you can also explore the role customer service plays in successful organizations by picking up books written by noted customer service experts, such as Best Practices in Customer Service, by Ron Zemke, or How to Win Customers and Keep Them for Life, by Michael Leboeuf.

All dealers mentioned in this article were 1999 recipients of the annual Carrier Distinguished Dealer Award.

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