So, you might be wondering or maybe feeling a bit confused about what’s happening with our economy right now. We have a mixed bag of things going on:
- prices for equipment and accessories are increasing
- demand for HVAC jobs, equipment, and services is through the roof
- there’s concern that we’re in the midst of a recession
You might be wondering what this means. Well, some of you might be experiencing:
- a down market
- a 5% decrease in revenue
- if things get worse, a potential 20% revenue decrease
We feel it’s important to talk about all of it, specifically:
- what happened last time and an important takeaway
- how to manage your customer’s response in down markets
- what can you do right now to make up for these potential losses
Let’s dig in.
What happened last time?
Right now, there’s a lot of talk that we might be in the middle of, or going into, a recession. We don’t know. We aren’t the experts on the subject.
One thing we can do is look at what happened during the last one.
The Great Recession lasted from December 2007 through June 2009. BUT… it took a whole year (December 1, 2008, to be exact) to determine that.
So let’s take a peek at the demand for central air conditioning units. For fun (and argument’s sake), let’s equate these units to “HVAC customer demand.”
Here’s what happened:
- 2005 – a spike in customer demand
- 2006 to 2007 – demand dropped 13%
- 2007 to 2010 – 17% drop
- 2011 – demand starts to pick up again
The key takeaway is that demand goes up and down. It’s what you do during the low-demand, down markets that matter.
Your customer’s reaction to down markets
Simply put, in down markets, you can expect your customers to 100% stop managing their assets (like their HVAC system) and start managing their dollars.
They will look for ways to cut expenses and save cash. Everything that costs them money will be put under a microscope and then categorized into two buckets:
- MUST-HAVES – think rent or mortgage payment, car, insurance, groceries, repairing equipment
- NICE-TO-HAVES – think service agreements, new equipment, renovations, dining out, entertainment, clothing
Remember that successful businesses aren’t built in a day or one deal. It’s doing a bunch of little things right every single day:
- putting the customer before profits
- meeting your customer in the middle
- giving your customer options competitors aren’t
- need specifics? – read this section ▼
What can you do to make up for potential losses?
This is important.
Your business might not be feeling the effects of a slow economy because you still receive frequent “not cooling” calls. Or perhaps it’s only a minor 2-5% decrease in revenue.
In 2 months, if this gets worse, you might face a 15-20% decline, which could translate to:
- struggling to make payroll
- bills not being paid on time
To avoid that, here are the little things you can do right now that will make a BIG difference. This is how you make up for the lost revenue AND grow your business in a down market:
Maximize every customer conversation
Over the phone, via chat or email, and in person. Leverage every opportunity to talk about assessments, service agreements, recommendations, comfort (HVAC), and health (IAQ).
Every time you speak with a customer, take that opportunity to highlight the benefits of your products and services, plant seeds, earn their trust, and turn customers into clients. It’s your chance to cement yourself as their first call when they need anything HVAC or IAQ-related. Go from the “filter guy” to their trusted advisor.
You’d be surprised at how few customers know they can finance your jobs. Go on the offense with this. Bring it up first, and offer it on every job. There are so many financing apps and services you have access to. Offering it can be the difference between getting the job and not losing it to a competitor.
Use common sense
It’s essential to understand your customer’s concerns and adjust the way you approach customers accordingly. In this down market, people are looking for repairs instead of replacements. So why not give them what they want?
Let’s say your customer’s 15-year-old central AC was to break down tomorrow. It’s in the middle of summer, so getting the AC back to blowing cold and comfortable air is a MUST-HAVE.
Normally, you’d recommend a new unit. In this down-market, your customer is hoping for a cost-effective repair.
You have 3 options:
- Stick to your guns – new unit or bust quote, and leave
- Begrudgingly do the cost-effective repair and leave
- Present an option to temporarily fix the unit (if possible), with a plan to revisit getting a new unit installed later
Of these options, which one do you think provides the best customer experience? Which one builds customer loyalty and your business’s reputation? Hint: it’s option 3.
Manage situations – Part 2
Your customers might want to put off signing up for service agreements right now. In their minds, this is a NICE-TO-HAVE. Sure, they’re saving money, but it comes at a cost!
There are long-term consequences of not maintaining their equipment. And it’s up to you to share with them. Not maintaining HVAC equipment will result in:
- shorter lifespan
- reduced efficiency
- potentially bad IAQ
Actually, for every dollar saved, there is a $4 increase in future capital renewal costs. Talk about a fun fact worth sharing.
Start taking some action:
- Talk to your team – specifically everyone that talks to your customers (you, techs, customer service, dispatcher)
- Develop a plan to go on the offense with customers looking to cancel or defer their maintenance plan – using the fun fact we mentioned above
- Come up with a creative or alternative coverage agreement that will include repair costs
- Get ahead of this all by reaching out to your customers now and sharing this information with them
- Retain your customers, build loyalty, and grow your business
Need more insights? Connect with Ken Grubbs on LinkedIn!
Related Links to Resources, Content, Videos, and More
- Did you hear about the HVAC tech who saved a family’s life from carbon monoxide poisoning?
- The opportunities are endless with a career in HVAC – Share this with anyone looking for some career inspiration!
- Retaining HVAC employees is hard – here are some effective tips to keep them
- Give your employees a reason to stay motivated with these 3 HVAC incentive ideas