Market Insights into HVACR Contractor Buying Decisions for Distributors
Channel erosion, fierce competition, and e-commerce are reaching into the HVAC contractor market
When it comes to doing business in the modern, technology-savvy world, it’s often easy to feel in the dark on what your channel partners are thinking. If you’re a distributor in any B2B industry, you’re likely often wondering how your business stacks up against the competition from a contractor perspective.
HMI recently commissioned a market research report in order to help shed a little light on the building trade contractor mindset. We wanted to know what’s influencing contractor buying decisions in a business landscape increasingly defined by the Internet and e-commerce tools. Respondents came from a variety of industries – electrical, plumbing, HVAC, building materials, roofing, landscaping – but today we’d like to focus in on HVAC to see where that industry stands out from the group. Let’s take a look.
Channel Erosion is Happening Now
Respondents in HVAC were much more likely than those in other industries to purchase some material from online-only companies: while overall around 66% of respondents stated that they used online only companies, for HVAC that number was about 78%.
The notion that distributors might be losing some of their business to online-only powerhouses like Amazon or Zoro shouldn’t come as a surprise to anyone, but it is a clear signal from HVAC contractors that distributors need to step it up in order to positively differentiate themselves.
The Competition is Fierce
Even putting aside the various channels contractors work through and just focusing on distributors, it’s clear there’s competition. HVAC contractors were far more likely to purchase from a variety of distributors, with 33% sharing that they regularly bought from six or more. In the overall survey, that number stood around 20%. Only 2.2% of HVAC contractors were exclusive with one distributor, compared with 8.3% in the overall study.
At the same time, though, it’s clear that loyalty still matters. Most HVAC contractors (around 66%) still felt they were loyal to between one and three distributors, only slightly below the numbers for all industries (around 71%).
The Brands You Carry Matter
So, if loyalty still matters, how do you make sure you’re one of your contractor’s favorites? When asked to identify any and all factors that influenced their sense of loyalty to distributors, HVAC contractors focused on product availability (80.1%) and what brands the distributors carry (67.1%) as their most important factors.
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This is where information-gathering strategies become vitally important for distributors: how can you find out what brands and products your contractors prefer? Are you making the most of the info that’s available to you? Aside from conducting customer surveys or just directly asking them, consider doubling down on data and analytics tactics that can lend insight into their buying preferences.
For HVAC in particular, distributors should probably be doing this already.
Incentives Can Make an Impact
Speaking of loyalty, loyalty programs and rewards can have a tangible impact according to survey respondents. When asked if they would switch business to a distributor who offers an incentive or loyalty program, 44% of contractors stated “possibly.” Another 30% responded “yes” if the services and pricing were comparable. In essence, 74% said business could be moved based on incentives if all else is equal.
The net result is that, when effectively structured and communicated, loyalty and incentive programs can be a strong value-add tool to capture incremental business and differentiate distributors among their competition.
HVAC is Ahead of the e-Commerce Curve
We’ve already noted that a greater proportion of HVAC contractors use online-only stores, and it seems as though they like to purchase electronically in general as well. When asked to name all of the e-commerce tools they use to purchase material, 56.7% of HVAC contractors said they buy via website, 25% said via text message, and 21.3% said via a retailer’s or distributor’s app (for contrast, those numbers were 41.9%, 22.3%, and 14.9% respectively for respondents across all industries).
29.1% of HVAC contractors also shared that they like to use distributor websites to place orders, while that number was only 18.4% in the overall survey. Meanwhile, 17.5% of respondents overall stated that they like to use distributor websites to conduct product research, while that number was just 7% for HVAC.
It seems, based on the report findings, that e-commerce and online presence for HVACR distributors should be made a priority if it is not already, as it is clearly more proportionately where their contractor customers seem to be.
Depending on how you build your website, it may allow your potential customers to conduct their own research on products and pricing, order online, and communicate with you in a speedy and convenient way – plus, it can provide a cornucopia of information about what influences their buying decisions.
Conclusion
No company is going to be the perfect distributor to meet all contractor preferences. Sadly, that’s not how this works. But in a crowded business landscape marked by channel erosion, there are ways that distributors can differentiate themselves from the competition. HVAC contractors are used to the convenience and speed that online retailers bring, but they also continue to feel a sense of loyalty to their favorite distributors. As a distributor, look for the ways you can enhance your customer experience and develop your e-commerce offerings. Your online presence is fast becoming just as important as your real-world presence, so don’t neglect it.
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