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Price Is Going to Sell Today, Not Cost Savings

July 21, 2008
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John R. Hall

Yes, it is time for another spirited debate between my mean-spirited boss, Murph the goof, and me. He seems to think that HVACR contractors should continue to sell systems based on life-cycle costs and they should also pick and choose the right customers to sell to.

Hogwash.

Er, I mean, in keeping with the spirit of a friendly disagreement, The NEWS is presenting both sides to these issues with sometimes-rational explanations. Let the debate begin.

First of all, this is 2008 not 1998. Disposable income is going into the gas tanks and adjustable-rate mortgages. The price of food is skyrocketing as natural disasters, China, and an increased demand for everything is pushing up the price of everything. Heck, even copper thieves are making our HVACR products more costly. OK, now for the bad news…

All of these factors are taking the quality-conscious, pay-at-all-costs customers out of the market and replacing them with price shoppers - the traditional customers that most successful HVACR contractors have historically ignored.

Well, it’s time to take the blinders off and look at where you are stepping.

PRICE IS KING NOW

Your customers are not going to want to hear phrases like payback or future cost savings. It’s tough to quote a high-efficiency system which is simply out of the reach of many household budgets, even if it will save homeowners money in the long run. That’s like a salesperson telling me that if I buy a new higher-priced laptop computer today, I can enjoy more functions, speed, and memory immediately. The problem is, none of that matters when I can’t afford the high-priced model today. And don’t forget, the high-priced laptop will be deeply discounted within a year and become a technological dinosaur.

Your customers want the best they can afford today. For example, let’s say Mrs. Smith is a smart consumer with fairly good credit, but little money in the bank for things other than groceries, utilities, doctor visits, etc. She wants a new system but she has maxed out her credit cards and simply cannot float another loan. She has little or no equity in her devalued home to borrow against yet she needs a new split system.

And you are going to sell her on future savings? Wake up my friends. This is reality and the situation I just described is more common than you think. People are cash- and credit-strapped and you want to sell them high efficiency? They just want something to keep them cool or warm to replace a system that can no longer be bandaged.

You can have clean trucks, well-groomed and well-mannered employees, and a sterling reputation for quality work. It doesn’t mean squat to someone who lives paycheck to paycheck, who happens to be the very representative of people who need you right now.

STOP QUALIFYING EVERYONE

OK, Mrs. Smith has a neighbor named Mr. Jones. He needs a new split system and has been calling everyone in town from the phone book listings, especially the ones whose name begins with A or AA or AAA. This guy wants a system that he can afford right now but the price has to match the number of dollar bills in his wallet.

He is a cash customer looking for a bargain. In the past, you may have turned your aristocratic nose up at him because you didn’t need his business. You had enough real customers who didn’t mind snipping a few measly thousands from their dollar trees. But this is 2008, remember?

This guy - along with many others - is willing to help your cash flow. And after all, isn’t cash flow the lifeblood of your business? So what if you take a temporary hit on your margins, this guy has a lot of Benjamins to distribute into your coffers. You are going to pass him up because he isn’t the most profitable sale you will have today?

If he says he would like to pay using his shaky credit, pre-qualify him for a loan. Once the bank pays you, who cares if the guy can’t keep up with the payments? You aren’t George Bailey, after all. And so what if he can’t afford an extended warranty or service agreement plan? Let him call the $19.95 clean-and-inspect guys down the street for that nonsense.

Stop trying to qualify everyone and stop picking the ones who can pay because they have an Escalade in the driveway instead of a Focus. Get off your pedestal and start selling to the price shoppers.

OK Murphy, try using some of your hot air to blow my logic out of the water…

Publication date: 07/21/2008
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