Dear Johnny, Have You Lost Your Mind?
Mike Murphy
It must be interesting for you to sit back at your posh desk taking a novice approach as you suggest that contractors should drop their prices when times are tough. Why not suggest a windfall profits tax on HVAC businesses while you’re at it? I think Johnny boy needs to get out in the field for a few days. A little fresh air will do you good.
Of course you are right that economic times are a bit tough for many consumers, and I agree they are pinching pennies so hard they are about to cut off the circulation at Abe Lincoln’s neck. But the answer isn’t for contractors to avoid selling systems that they perceive to be out of the price range of a customer. That would be a huge disservice to consumers.
SAVINGS ALWAYS PAY
John, if customers only bought the minimum, “the best they could afford today” as you suggest, then everyone would be driving around in the absolute cheapest vehicle with the best possible gas mileage. However, people don’t think that way. Many buy relatively expensive cars that chug a lot of gasoline. Go figure.With regard to HVAC systems that may cost more at the initial purchase, but will pay back over time (yes, the payback word), customers must simply be convinced of the long-term benefit. Mr. Jones might be having trouble forking over the dough, so he certainly does have a pronounced interest in the first cost. An astute contractor can be sensitive to Mr. Jones’ immediate financial plight, but not lose sight of the fact that Mr. Jones might want to save money in the future. Even the most down-on-his-luck pauper understands that a less expensive solution isn’t always the best solution. A high-efficiency system does have a long-term benefit as compared to a low-efficiency system. Walking in the door with an expectation of only selling your customer a low price takes the prospect of selling total life-cycle costs right out the window. Especially in this day and age, customers deserve to know how much it will cost to operate a system over its life given expected escalating energy costs.
It is true that some customers may simply not be able to afford the best solution you can offer. However, you are also going to run into people who can’t afford even a lower priced adequate solution. How far are you going to drop your prices for those people? Once you have made every effort to provide the best solution, and provided financing options, you may simply have to walk away. Make the decision to fire some of your customers.
Or, better yet: work harder at pre-qualifying your customers so you don’t waste time scattering a shotgun blast at everyone. Your time will be better spent if you take careful aim using the rifle approach. Find out as much as you can about your customers before you ever knock on a door.
Suspect - prospect - qualified lead - happy customer. If you try to round up as many suspects as you possibly can, you might turn up some cash, but you’ll be working too hard at the wrong end of the spectrum.
CHECKBOOK RICH
The industry is littered with the carcasses of companies that have tried to “make it up on volume.” I won’t argue that good companies occasionally take some cheap work to cover fixed costs. However, doing what Mr. Hall suggests - taking all the low-price work one can find - is dangerous, especially in tough times. Operating a company on a cash flow basis is about the same as not having a profit and loss statement to look at each month, and thinking everything is fine as long as there is a positive balance in your checkbook.Selling to price shoppers might be a necessary evil in this business. However, making the choice not to be a salesperson, but instead simply reduce the profession to quoting low prices to as many people as possible, is a sure-fire recipe for disaster.
Publication date: 07/21/2008
