Avoid Land Mines Right Now - Warm Thoughts Communications
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Avoid Land Mines Right Now

Originally published in Indoor Comfort Marketing

Rich Goldberg

Richard Goldberg

My father used to say, Sometimes you feel like the windshield, and sometimes you feel like the bug. Right now, our industry is feeling buggy, right? Prices at current levels leave very little margin for error.

I just spent several days facilitating a few of our firm’s Breakthrough Groups. We went through the litany of risks, land mines and early-baldness-inducing challenges. I’m going to give you my take on a few of them in hopes that it may help you avoid some serious land mines, and perhaps even turn some lemons into lemonade.

1 Be wary of offering fixed price without downside protection.

It doesn’t matter if you put in big bold letters: We can’t change your price no matter what happens from here. We learned in 2008 that when prices drop a dollar or two, many customers will say, You could lower the price if you wanted to. You’re making a killing on me. Go sue me ─ I’m not paying.

Companies are then faced with a Faustian dilemma of either losing a great deal of business permanently, wasting a large amount of time and effort suing them (only to lose them permanently), or meeting them halfway and losing a bunch of money as a thanks. Plus, imagine the beating you would take on social media from these unhappy campers.
Pre-buy offers more protection, although this still carries the potential hangover as customers may be angry after the deal is done. If you are going to offer price protection, a cap is by far a better option, even if it costs customers a bundle. Sometimes doing the right thing means protecting people from themselves and protecting your company in the process.

2 Get more people on budget.

We know that when people go on budget, they stay with you longer and lose price sensitivity. This year, it will be essential to helping them pay you. Many are simply not calculating how much heating their homes will cost. You are going to have enough trouble covering the lag between paying your suppliers and getting paid. The last thing you want is to become the bank for many of your customers.

The question is: How do you get maximum percentage on budget plans? The answer is: Doing an opt-out promotion. That’s where you tell them you are enrolling them on a budget unless they say No thank you. If you do it the right way, you can add 30%–40% more budget accounts with very little push back. The conversion rate is 5–7 times the response of a normal choose-in promotion.

Although this approach may seem aggressive, we’ve done it for 40+ companies without much of a peep. The trick is how the approach is worded. However, the time to get them started is right now, so get moving. Also, work with your customer service representatives on how to sell the budget plan better. Most go too far into the weeds and miss the key benefit—a budget cuts winter payments in half without costing a cent more.

3 Increase your labor rate, service plan rate, margin, etc.

Every Breakthrough Group discussed how much the cost of parts has increased this year, and how much more they are spending on techs and drivers. Add to that increased credit card charges, bad debt, cost of money, etc., and you have compelling reasons to raise your prices, add delivery fees, etc.

In this regard, many of you are your own worst enemies. You may wait too long to increase, may not increase enough or overstate the likelihood of losing business or rupturing customer relationships. You could be afraid to shock your customers or cross some magic pricing thresholds.

I have the vantage point of seeing how this plays out over a large number of companies. We saw this in the Breakthrough Groups, where some of the participants had been quick to raise their labor rates, service plan costs, etc., with little damage, while others had been more conservative, and lost a great deal of money. In times like these, you can’t afford to be timid.

4 Communicate more.

Our industry mostly misunderstands the role that good, effective communication plays in maintaining customer loyalty during crisis. We think we need to communicate with customers only when we have to—when phones are ringing off the hook, or some event interferes with our ability to make deliveries. Instead, see customer communications as your friend.

The fact that customers understand that all energy is higher doesn’t mean they don’t think you are making more money at their expense—and if you are profiting from their pain, why shouldn’t they ditch you for a lower price? More than ever, they need to hear from you and know you are on their side—and feeling their pain, as well.

5 Turn lemons into lemonade.

Because prices are so high, more people will be looking for new fuel companies this Fall than in past years. Make sure that you take advantage of the full suite of available digital advertising tactics so you win a higher percentage of this opportunity. Make sure your site is fully optimized to attract searches and that you have many positive reviews. You will unavoidably lose business this Fall; be sure to get your share of new business, also.

6 Help your employees tell your story more effectively.

Your people are going to get beat up more than ever about prices and will be asked their opinion about where prices are going, etc. Our company does a good amount of customer service and sales training, and when we listen to some companies’ sales calls, we often cringe. You have got to drill those answering your phones on the way you want them to answer key questions.

This is not going to be easy. There are ways to mitigate the damage and avoid potential debacles, but it will require you to do some things that may feel uncomfortable at first. Have at it!


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