Interest rates have skyrocketed over the last year, high inflation has made headlines for two, major corporations have announced layoffs, and consumers are pulling back.
A recession is here, or just around the corner. Or is it?
“There has definitely been a downshift in consumer spending. We are seeing it across the country, and manufacturers are also feeling the crunch,” said Angie Snow, principal industry advisor at ServiceTitan, which offers business management software for trades businesses.
Contractors’ phones aren’t ringing as much, Snow added, and more consumers are opting for repairs than equipment replacement. “I am personally hearing stories ... that their consumers are less patient, more demanding, and unwilling to pay for certain services,” she said.
Whether we’re heading into a recession or in one already, or whether we’re just jittery about the economic damage left by a once-in-a-century pandemic, Snow and other experts in running field-service businesses have advice to help HVAC contractors stay the course and make it through the slump — or whatever it is.
At the top of that list: Don’t panic.
“Sometimes I think contractors are more wary than consumers,” said Rodney Koop, founder and CEO at The New Flat Rate, which offers sales software for field-service firms. Contractors should tamp down the fear, Koop said, and not let it spread to employees.
“Tough times never last, but tough people do,” said Koop, quoting the title of a book by the late motivational speaker Robert Schuller.
“Companies are needing to be very intentional with outreach to find work for their teams,” said Snow.
For Snow, Koop, and Pete Danielson, vice president of market development at Service Nation Inc., a contractors group that offers consulting and mentoring, that means sticking to some basics that can help businesses through bad times and good.
Their tips include:
- Set sensible goals, aim for sustainable profits, and try to run the business with less drama.
“Stop taking every call at every hour of the day and in every location just to keep your head above water,” said Koop.
- Track progress toward goals by noting markers like the average number of tickets for maintenance, for repairs, and for installations, and other basics of the operation.
“Are technicians completing required forms and completing all required steps during a service call? Are they looking for additional opportunities? Are they generating reviews from customers?” Snow said. “Contractors should also be strategic by creating incentives for the outcomes they desire and the goals they set.”
- Don’t skimp on marketing.
“Marketing, marketing, marketing,” said Danielson. “The winning contractors are leaning into more marketing efforts.”
- Maintain an online presence.
“We live in a digital world. So contractors must have a good website, a good brand, and a good reputation,” said Snow. “We have seen much success during slow times and busy times when we invest in Google Local Services, or paid ads, but that only works when backed up by a good website and good reviews.”
- Offer multiple ways to book an appointment — online, by phone, and by text, for example.
“Consumers like to communicate in a variety of ways, so contractors must be available on a variety of platforms as well,” said Snow. And make sure the employees scheduling those appointments are empathetic and can connect with customers, she added.
- Embrace the service and repair business. In October of last year, Snow said, ServiceTitan’s contractor customers saw more than 70% of their work in maintenance and repair jobs.
“We teach that there is more money in service than replacements,” said Koop. “The replacements will come with very little effort and much higher profit if you focus on serving the customer, with your basis being giving them what they want, not what you think they need.”
- Take advantage of available consumer incentives for higher-efficiency equipment, such as the 25C tax credits and the yet-to-come Inflation Reduction Act rebates.
“The most successful contractors are not lowering prices right now. Instead, keep pricing steady and consistent,” Snow said. “The contractors that will stay on top are the ones that do leverage consumer energy efficiency incentives.”
- Pay attention to fundamentals such as professionalism, updated employee training, employees’ work-life balance, and showing what sets one’s shop apart.
Contractors “should never stop emphasizing their differentiators,” said Danielson.
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