In the last six weeks, the news verified the casualties of the winter that wasn’t. In Massachusetts, the media reported the closing of a discount fuel company that kept tens of thousands of dollars of customer pre-buy money when it shut its doors. A different story didn’t make the papers, but was important news nevertheless. In New York, one of the more prominent members of the oil heat community was taken over shortly before it could make the same kind of headlines. This was no fly-by-night discounter, but an esteemed full-service dealer with an association pedigree, several generations in business and thousands of customers. They were taken over with little to show but the avoidance of an ugly public mess.
This second example, the one that didn’t make headlines, is the more cautionary tale for most of you who run “full service” businesses. It falls into the category of “Wow, if that could happen to a company like that, everyone is vulnerable.”
The fact is, there is little margin for error these days and our markets are changing at an accelerated rate. I started our breakthrough groups because I thought we all needed to get smarter, faster. We needed to break out of our comfortable surroundings so we could break through our challenges. And one of the best ways to do that is to tap into the knowledge and experience of our peers and facilitators, unencumbered by the concern that a competitor might be listening.
I received enough positive feedback from my last article that I was asked to share some more of the lessons/ideas that have come up in our groups. So here’s a couple more.
Some of you have concluded that if your business is going to survive, much less thrive, you’ve got to reinvent your approach to business – particularly your service departments. You can no longer afford having them only to subsidize your fuel margins. You need to break even at worst, and, even better, start generating real profits.
This makes sense on several levels. While price sensitivity to oil has risen, many dealers find that customers are much more tolerant of higher service charges. Moreover, you can start competing for other business outside of your own oil footprint – whether it’s a/c installs, gas and heat pump service, plumbing, etc.
All these things are doable – but they are not necessarily doable with your current team. This topic came up hot and heavy at one our groups, which has a special focus on business diversification. According to several of the guys who have aggressively gone down this path, the issue is not so much a mismatch of skill sets, but a mismatch of attitudes. Skills can be learned. But many of you have employees who are stuck doing things “the old way.”
You have service techs who can’t be bothered to recommend new equipment, implement flat rate or sell service plans – all the things that are the “bread and butter” of profitable stand-alone HVAC companies. More important, many of you have service managers who are bottlenecks to making any real change happen.
Make a real commitment to helping your team get on the same page. One of our guys does a weekly meeting with his techs, come hell or high water. He has brought in trainers to help them learn new communication skills and people skills. He makes the equipment salespeople participate in the meetings and give updates on what’s happened to every lead the techs provide. He sends them to school to upgrade their technical skills. You get the picture. And while this has really transformed his team and led to a 50% increase in HVAC billings over three years, the naysayers remain, and it brings down the team.
So, it boils down to this. At a certain point, if you can’t change the people, you’ve got to change the people. Evaluate whether they are really suited for the world to come. This goes for your CSRs, your salespeople and anyone else in your business. Help them make the transition as much as you can, but if they can’t or won’t, you owe it to yourself and to the rest of your team to make changes. If you don’t, your naysayers will be an anchor that slows down the rest of the team.
Implement a smarter spiffing program. Many of you are starting to incent your techs for generating leads. This makes good sense and is a core practice of successful HVAC companies. The question is how to do that most effectively. One company had a breakthrough that increased effective lead generation (leads that end up in actual sales) by 30%. What did they do?
In the past, they would spiff their techs $50 on any lead that turned into a new furnace or boiler. This can work pretty well if you train the techs properly about how to interact with customers to generate the right kind of lead, and make sure your equipment salespeople keep the techs updated on the status of the lead. Otherwise, a credibility gap emerges; the techs start losing confidence and they revert to form.
So what was the breakthrough? One company started giving techs $25 just for generating the lead – sale or no sale. The catch? They needed to call the office from the customer’s house and put the customer on the phone with the salesman or sales coordinator. Lead generation and closed sales shot up 30%. Why? Because if a tech is going to get a customer on the phone at their house, you can bet there was a good reason for the recommended upgrade and that he talked with the customer about it (and his credibility really helps). The tech’s income is no longer tied to the performance of the salesman, which removed several obstacles. And the sales rep is able to strike while the iron is hot. Lastly, it eliminates some tracking complexity. The result was a big win for the company, on multiple levels.
If you’ve got to make your money count, count your results. Too many of you are making important marketing decisions based on a good guess. And guess what? Those guesses usually aren’t so good. I know because I spend a great deal of time showing our clients how their assumptions turn out to be off, sometimes way off.
Two meetings back, one of our members described an ongoing disagreement he was having with his father about newspaper ads. His dad was a big believer and had been for years. His son, not so much – at least not any more. The only way he convinced his dad was to put a special phone number on his newspaper ads, which not only allowed them to see the number of calls but also to listen to them.
And here’s an extra kicker. His CSRs weren’t really finding out what prompted the callers to call. So all the data that they had been going by in order to figure out what had been working was clearly junk.
I can’t tell you how powerful it is to look at your leads objectively, and listen to how your salespeople and CSRs handle them. Often, you can vastly improve your results without spending another cent. And you can focus your marketing dollars where they will do the most good.