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Adding Products and Services to the Mix

November 26, 2007
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Butch Welsch

On a recent trip to visit our one-year-old grandson, we stayed in a typical moderately priced hotel. Not the overly fancy kind, but with free breakfast, indoor pool, and weight room. You know the type. During my first shower, I was surprised by the very nice showerhead.

I didn’t think too much about it except I did think that it was a kind that would be found in a higher priced hotel. Then for the real surprise, on the bathroom sink was a little standing card asking if I liked the showerhead, and if so, I was given instructions on how to go about purchasing it. This was diversification at its utmost. A middle-of-the-road hotel adding to its revenue by selling showerheads!

This experience got me thinking about how the big retailing companies have diversified and have included additional products and services to their main business offering. Think about how things have changed over the last 10-15 years. Take the grocery store. With video rentals, floral shops, pharmacy areas, sometimes it’s actually hard to find the groceries.

And what about drug stores? Have you noticed that in the new, large pharmacies, which are located on nearly every street corner, the counter where prescriptions are sold is located at the far back corner of the store. This causes us as customers to walk through all of the aisles and aisles of various types of products to obtain a simple prescription. It is as if the pharmacy and the prescription are merely ways to get us into the store.

AN HVAC VARIETY STORE?

The grocery store and the drug store have certainly broadened the scope of products and services which they offer. Did Ray Kroc ever think that you would be able to rent a movie at one of his McDonald’s restaurants? But what a great idea. You come into the store to rent a movie and then you have to come back to the store to return it. If kids are involved, is there any chance of making those two trips without buying a Mc-something?

I wondered how we could apply these types of principles to our HVAC contracting businesses. The things that came to mind immediately are maintenance agreements, water panels for humidifiers, and replacement media for media air cleaners. We should already be attempting to sell maintenance agreements on every service call we make. (For a free copy of our maintenance agreement and agreement sales form just e-mail me.)

These maintenance agreements bring the customer back to our “store” just like the red box at McDonalds. And water panels for humidifiers and replacement media both are items that need periodic replacing. Who better to be the one to provide a replacement than us, the contractor?

We need these additional ways to stay in the minds of our customers on a regular basis. We need to take advantage of opportunities like these so that our customers will have a continual reminder that we are their contractor.

IMPORTANT TO DIVERSIFY

The obvious point to all of this is that we need to consider diversifying the products and services we provide. The approach has been very successful for many types of businesses so there should be opportunities there for us.

A word of caution, however: As contractors, we typically don’t have the resources, either financial or in personnel, to vary greatly from our core business. While we need to expand our offerings, we need to make sure that we expand in markets that are related enough to our core HVAC business that we can profitably manage the expansion.

If you have established a customer base that trusts and respects the way you do business, then capitalize on that and expand the number of products and services you offer to that customer base. We are expanding our sales of humidifier panels and air cleaner media and are even offering specials on those products on our Website. We feel it is important that we diversify and expand our markets. But customers shouldn’t expect to buy a showerhead from us - yet.

Publication date: 11/26/2007
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