Small Contractors Find Ways to Compete With Big Firms
Reputation, Referrals Key to Overcoming Size Factor
HVAC companies come in all different sizes and locations. But when it comes to operating in a major metropolitan area, how much does size matter? Although the bigger companies might have sizable advertising budgets and access to large client lists, smaller firms often have a better rapport with customers, leading to more repeat business. But there’s no doubt that with a small business, reputation is everything.
“If you have 50 clients that love your service, and each of them tells two people to call you, you have 100 new clients,” said Michael Rosenberg, president, Rosenberg Indoor Comfort, San Antonio. “If you are a small or big company and you continue to upset your customers, these clients will not continue to use your company and they may tell their friends and family not to use you. Referrals are one of our biggest sources of new customers.”
Much of the success smaller companies find depends on the customer. Will they give that important referral? Will they leave a positive online review? Will they be a repeat customer?
Not only are those important factors, but so is getting the business in the first place. Smaller companies are not typically going to be able to bid low on jobs, which means finding different kinds of customers becomes key.
“There are a lot of different customers out there, and some are extremely challenging,” said Amy Turnbull, general manager of Blue Flame Heating & Air Conditioning, Mount Terrace, Wash., a Seattle suburb. “No contractor will ever make them happy, and everyone is out to take advantage of them. We try to take on as many customers, despite their requirements, and let them know what the core of Blue Flame is, and we’ll continue to satisfy their needs in every way possible. That’s one of the things I’m big on.
“We’re a company of integrity, and we’ll stand behind everything we do,” Turnbull continued. “Sometimes I think it’s harder for the larger companies to do that. They have huge marketing budgets and customers are just in the door constantly. There’s not a lot of customer retention, so we do a great job with having repeat customers and really having them connect with Blue Flame.”
Brian Schraut, principal partner, R.F. Schraut Heating & Cooling, St. Louis, said his company of seven employees uses its status as a family company heavily when it comes to selling in the residential market.
“We try to put everything on the family,” Schraut said. “It’s my family taking care of your family. Our slogan is, ‘There’s comfort with family,’ so we try to play on that. If something’s not right, we’re going to make it right, just as it is in their family.”
Schraut said that while they pride themselves on treating their customers like family, they can’t always compete with other contractors when it comes to price.
“We’re typically in the middle-to-higher amounts in our market,” he explained. “We have people working out of their garages, who are extremely inexpensive, then we’ve got the big companies that are trying to fill man-hours, and the price we’ve seen from them is just unbelievable as well. The biggest thing we can do is come in, be honest, do a good quality job, and rely on the referral going forward.”
With word-of-mouth and referrals being such a big component of helping small businesses thrive, does each job inherently bring more pressure?
According to Turnbull, yes, it does. “There’s definitely more pressure,” she said. “There’s a huge pressure that we have to do the job right. We are humans, so some times employees will make mistakes, but if that happens, we will always make it right. If it’s something we messed up on or missed, we’ll make it right. We don’t leave them high and dry.”
Schraut agreed with Turnbull, saying he absolutely believes there is more pressure with each job because of how reliant the company is on referrals and the want to maximize the impact of as many jobs as possible.
“The opportunities we have, because of our advertising dollars, are fractional compared to the big guys here. We have to take advantage of every customer we have, and try to maximize that referral,” Schraut said. “We’re going to go out of our way to make sure they’re happy and satisfied.”
Rosenberg, though, has a different approach. He said his company doesn’t really feel any added pressure with each job done by his staff of about 25 employees.
“We have high standards as far as the quality of our work,” he said. “We train our people to make sure these standards are met or exceeded. Each job is different and we approach each job with the same focus to perform well and provide excellent service.”
Making an Impact
Standing out in a crowded metropolitan marketplace can be tough. In a world where customers see direct mail and coupons — and hear or see commercials from several different HVAC companies — having something that sets your company apart is important.
“Every customer has to make his own decision, so it depends on what he values,” Turnbull said. “If he selects a larger company based purely on price, we can’t really compete with that. We can’t undersell ourselves.”
Turnbull said her team can often tell if a potential customer is a price shopper, but that doesn’t mean they give up on earning that customer’s business. “We’re not going to throw in the towel, but we know it’s going to be a harder sell unless they fully understand our company and what we promise,” she said.
High-quality service is usually a strength smaller companies want to play up. That’s how Rosenberg attracts customers to his company — by delivering outstanding service to each client.
“Each of our service technicians and office personal are trained to give personnel service to each of our clients,” he said. “We want our clients to feel like they are really cared for and can pick up the phone anytime and talk to anyone at our office, from the warehouseman to the president of the company. We want them to feel like they are our only client.”
All three contractors agreed that when it comes to doing a job, you have to be confident in your company’s abilities.
“In the residential marketplace, which is about 95 percent of our business, we do everything extremely well, if not better, compared to any large company,” Schraut said. “The large companies are usually trained to get in and get out. We might take an extra two hours to get something done, but it’s going to look and perform a lot better.”
Rosenberg said his company evaluates how it does business twice per year, in time for the heating and cooling seasons. At these meetings, they look at what they’re doing, along with what the competition is up to.
Turnbull says she evaluates the business three times a year.
“I’m always gauging how we’re doing with business,” she said. “It’s usually pretty predictable, outside of weather, when our slow times are going to be and our busy seasons are going to happen, but if we notice a trend, if you’re monitoring and tracking things, you can notice a trend pretty quickly.”
But one important factor going forward, Schraut said, is the Internet and social media. A bad review can sink a small business, he said, noting you need to be very proactive in addressing any negative reviews. It’s not only that, though. A company’s website and social media channels need to give off the right impression — a professional one.
“I fully believe that going forward, you have to be active with your website and social media,” Schraut said. “Your online presence is the only way you’re going to be able to survive. You have to be fully committed to that, because that’s where the whole marketplace is going.”
Publication date: 11/11/2013