The rule is: What happens in Vegas, stays in Vegas. But, for those who attended the “Make More Money” seminar, held Jan. 30 at the 2017 AHR Expo, you’re going to have to break that rule.

The seminar, sponsored by Women in HVACR and hosted by David Squires, owner of Online-Access Inc. and Mike Layton, owner of Stochastic Marketing LLC, offered seeds of information for HVAC contractors to bring home, plant, and create the most fruitful marketing garden to grow their business from.

“I want you to think of the cost of marketing,” said Squires. “Is it worth trying to get your name known to get one visitor in every 10 square miles?”

The answer, according to Squires and Layton, is, “No.”

Layton has analyzed billions of dollars in HVAC sales for companies throughout the U.S., and his findings may astonish many.

“No matter how small you are, no matter how big you are, all the money is made in the primary zip codes,” he said.

By analyzing data from more than 50 million invoices, Layton has found that every company services three possible areas — primary zip codes, secondary zip codes, and other zip codes. The primary zip codes may not be the same as the company address, but they’re generally found within a five-mile radius. Secondary zip codes drum up a small return on investment [ROI] and branch out to a 10-15 mile radius.

“The other zip codes are those you go to occasionally to lose money,” Layton said.

The data and information Squires and Layton presented showed that contractors who make the most money service fewer zip codes.

“We make the decision that we will go anywhere, and we will do anything when we’re small,” said Squires. “That’s a costly decision.”

He suggests sticking to the areas that generate the most money — primary zip codes.

Squires believes there is too much emphasis on search engine optimization (SEO) strategies in marketing. Customers are more concerned with being visible on the internet than being marketable.

According to Squires, even the internet has geographical boundaries. “When you try to market outside of your five-mile radius, I can get you found there, but I can’t get you clicked there,” he said.

Only 15 percent of customers don’t have a clue who to call and turn to the internet to find an HVAC contractor, said Squires.        “Those are the people you’re trying to get with your internet marketing,” he said. “To better understand where you should be marketing, you need to know what it is that drives customers to pick your company.”

That’s where the familiar factor comes into play. Customers are looking for companies they recognize. “Fear is a motivator, and people are afraid of the unknown,” Squires said. “What better way to become familiar than to have your trucks on the road in a centralized area where customers will see the same brand repeatedly? One truck 20 miles out a few times a year is not going to make an impression, but that’s not to say you shouldn’t service areas outside of your primary zip code — simply put, your service area does not equal your marketing area.”

In addition to a geographical marketing strategy, Layton also shared the shocking fact that the target audience for your marketing campaigns is prospective customers, not existing, long-term customers.

“You make more money in the first 30 days with a customer than you will over the lifetime of your relationship with them,” Layton said.

Attending contractors were sensitive to this topic, frantically defending their loyal customers.

“It’s like the sun,” Layton said. “I walk out in the morning, the sun’s over there. Later in the day, it’s up here, and then it goes down [over there]. It must be going around the Earth, right? It makes perfect sense.”

But, as we all know, that once indisputable theory was proved wrong. The Earth revolves around the sun — just like a hefty ROI for marketing dollars revolves around new business.

“If you want to grow your business, you have to focus on the 66 percent of your sales every year that come from new business,” said Layton. “In order for your premise to be true, that you build your business from long-term customer relationships, your business has to grow at an accelerating rate once you’re in the second replacement cycle.”

“Did I believe this the first time I heard it?” asked Squires. “No, but the numbers are from your numbers. All the information is in your data.”

That’s not to say you should ignore your existing customers or deny service requests that are out of your primary zip codes. Those just aren’t the customers you want to market to, said Layton. 

You have a limited marketing budget, said Squires. The question is, “Where do you focus that budget so you’re going to be the most successful?”

“Everybody wants to make more money without working harder,” said Layton. “Nobody wants to make less working harder.”

If you traced every penny you earned from your customers back to the invoices, you would find that new customers spend two to three times more than existing ones, Layton said. “Why would you want more existing customers than new customers?” he asked.

If you hit the jackpot while you were in Vegas, and you have more money than you know what to do with, keep marketing to existing customers in other zip codes all over the map — it’s the fastest, easiest way to lose money, said Layton. But, for those of you who want to make more money and break some rules, you can take these key points back home with you. Your marketing should be focused on new customers in your primary zip codes, and the rest will take care of itself.  

Publication date: 3/6/2017

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