< PreviousIN THE BEGINNING …“When I bought the service division from my brother, I was the only employee. I shared an office person with my brother.”His newlywed wife, Laura (they married the year he bought the service business), held a good job at Vanguard Investments. That was a good thing because in the beginning, Vince didn’t take home a paycheck for the first seven or eight months. “I kept re-investing everything back into the business,” he explains. “Laura was working all the time. I was work-ing all the time. I sold my car because I wasn’t using it and we needed the money to live.”Today the family-owned company employs 14 people and has five service and two installation vehicles. Vince is the company CEO who handles sales and the technical side of the business. Laura is president and manages the operations and financial side. Togeth-er they built the company into a state-of-the-art high-performance contract-ing business. LET THERE BE LIGHT!Since those very ear-ly days, education and training were focal points for both DiFilip-pos. Both owners agree that training is the light that helps separate them from the pack. While Laura takes charge of the business training, Vince handles all technical training. He even built his own training laboratory right in their headquarters building. In fact, he says that it is all the training that helps them find and keep good field and office personnel.“In this day and age, the HVAC In-dustry suffers from a shortage of tech-nicians. This is particularly true in our area,” he says. “All the good techs are already employed someplace. Many of those not employed may look good on paper, but that doesn’t always translate in the field. We find it is just better for us to ‘grow’ our own technicians.”Vince adds, “We take young people with basic knowledge, and we pay for them to go to technical training. We train them from the ground up. We teach them to do things the DiFilippo Way, not the industry way.” Service is a mindset. It requires a targeted focus on the custom-er and on doing what is right. When Vince DiFilippo bought the service business from his broth-er’s HVAC company in 1989, Vince’s mission was to provide something that no one else in their marketplace was providing. He wanted to provide service per-formed by educated and certified tech-nicians with a focus on customer com-fort and safety.DiFilippo’s Service Company, Paoli, PA (a western suburb of Philadelphia) is in a heavily saturated HVAC market with very tough competition. He want-ed the company to stand out in a way that mattered.“Our focus, almost from the begin-ning, was to be highly trained and cer-tified. We pride ourselves on that. Our logo even says we are ‘Certified Home Comfort Experts,’” Vince says.“We believe people need more than just heating and air conditioning,” he continues. “They are investing in a re-lationship with a company that shares responsibility for their family’s com-fort and safety. We’ve learned that our clients want reliability, honesty, and integrity.”High Performance the DiFilippo WayCONTRACTOR SPOTLIGHTBy Mike Weil10 SEPTEMBER 2018HIGH PERFORMANCE HVAC TODAYSEPTEMBER 2018 11HVACTODAY.COM zThe Service Roundtable.Laura says it can be very expensive to join so many organizations and send team members to their training. But she also says, “I think the HVAC indus-try has done a really poor job preparing people to work in this industry. “The kids we get out of trade school come to us unprepared. Over the years we’ve watched some bigger and very successful contracting firms like Isaac Heating and Air Conditioning in Rochester, NY create their own universi-ties to train their people. “They are walking testa-ments that this approach really works. So, we model our com-pany on those concepts.”BEING THE BESTBecause of this approach, it is little wonder that DiFilippo’s Service is one of the most expensive HVAC contract-ing companies in town. After all, as Vince likes to say, “You get what you pay for.”“When one of our technicians comes to a customer’s house, we are confident that 98% of the time he will find the problem and resolve it,” Vince says. “This goes way beyond turning screwdrivers and replacing parts. It is about truly understanding the sys-tem, not just the individual applianc-es. This means they know the interre-lationship between the ductwork, the equipment, and the home itself. It is all connected. And I think this is what sets us apart and why we have been successful.”Laura DiFilippo says training means different things to different people. She says, “We operate in a high-end residential market. We don’t want our techs in front of customers until we are positive they are confident and know what they are doing.“It can take up to six months before we have a technician ready to be in a truck, by himself, just to do mainte-nance,” she adds. COMMUNICATING WELL IS THE SECRET SAUCEThe DiFilippo Way includes helping everyone in the company to become better communicators. For field tech-nicians, Vince says that means asking a lot of questions and listening to the answers. He explains that many of the questions are part of scripts learned at NCI training. He says, “So many clients tell us we ask questions that no one ever asked them before. Our proposals include information that few of my competi-tors include in their proposals. The se-cret is to present information in terms customers understand, and that is CREATING EXCITEMENT“Our staff is very young. But they seem to take well to The DiFilippo Way,” Vince explains. “We hire based on attitude and train for aptitude. Our technical expertise is really a draw, es-pecially when we conduct interviews.” “During an interview, if they are ex-cited about training and are anxious to learn more, then our lab is the hook. The lab is the lottery ticket for them. “Plus, we pay for outside training. We bring in outside people -- from manufacturers to consultants. I’ll do some training. But it isn’t enough. We want our technical team to be certified in certain disciplines as well.”Vince focuses on safety training and certification – combustion and carbon monoxide (CO) safety is key. Says Laura, “From the beginning we started with CO training and certifi-cation. No one else in our market was even talking about it.”Technicians at DiFilippo’s carry cer-tifications from both the North Amer-ican Technician Excellence (NATE) and the National Comfort Institute, Inc. (NCI). The company is also affili-ated with a number of trade organiza-tions including: zACCA zBetter Business Bureau zNATE zNCI12 SEPTEMBER 2018HIGH PERFORMANCE HVAC TODAYconduct the tests, but how to help the customers understand what is hap-pening,” Laura continues. “All our technicians carry CO testers and printers. They print results on two tapes – one that goes with the invoice and one that stays with the packet in the unit. “They show customers the print-out and explain what it means to their comfort and safety. And when anoth-er of our techs comes out for service, they start with that tape for a baseline before they do any more CO testing.”“Again,” Vince says, “very few of our competitors do this.WORKING IN A FAMILY BUSINESSMany HVAC companies are fami-ly-owned and operated businesses. For housing developments where many mechanical systems aren’t being in-stalled correctly.“Vince finds a lot of ducts that go nowhere, with caps missing, and runs that have holes in them. Consumers buy these magnificent homes at outra-geous prices and can’t figure out why they aren’t comfortable,” she says.“The opportunity is that we can go in and figure out what the problem is without always needing to replace equipment. Customers LOVE that,” Vince says.Of course, CO testing and combus-tion safety also differentiates DiFilip-po’s Service, even though some of their competitors do offer it. “The difference is that our techni-cians are trained in not only how to much harder to do without the right training and coaching.”Vince adds that the measurement and diagnostic techniques – as taught by NCI – makes things easier.“It creates ‘aha’ moments with our customers. This is especially true when proposals from other contractors call for complete box or duct changeouts and we can resolve customer issues without so much bruhaha. “We are replacing undersized down drops, increasing some returns, add-ing some vents here and there. We are doing this based on measurements and testing. Everything is based on proper airflow.” OPPORTUNITIES ABOUNDLaura points out increases in new CONTRACTOR SPOTLIGHTSEPTEMBER 2018 13HVACTODAY.COMfrom business coaches, and so on. This industry has provided an amazing life for us. But we work it together, as a team,” she says.THE DIFILIPPO WAYWhat is the DiFilippo Way? It is ev-erything explained above. And it is also Vince and Laura’s take on High-Per-formance Contracting. It is about ser-vice and being the very best in terms of training and certification, so they can provide customers the very best in comfort solutions, energy efficien-cy, and safety in their homes. As Vince says, it is about doing things properly – each and every time.Which is why DiFilippo’s Service in Paoli, PA is the September 2018 Con-tractor Spotlight. He says, “Who can I trust more than my spouse? Plus, Laura brings this completely different part of the pro-cess together that I don’t like to deal with. She handles the numbers and human resources. She is the contact and the personality. “I like getting my hands dirty. I don’t like to be in meetings. Laura likes to run meetings. We have this nice bal-ance. And again, there is a cut off. “When we go home, we are done talking about business. We make it a rule to not talk business for the rest of the night or over the weekend.”“We have a great deal of respect for each other,” Laura says. “The fact that we stay in our own lanes and respect each other is key. We also aren’t afraid to ask for help – from our peer groups, the DiFilippos, being a husband and wife team poses many potential prob-lems. Laura says it can be super hard.“Being a husband and wife team can blur the lines between family, busi-ness, and your marriage,” she ex-plains. “We make a great effort to sep-arate work with family. We look out for each other. And we stay in our lanes – me on the business side, Vince on the sales and field side.”Vince adds that being in business to-gether is also a matter of great trust. 14 SEPTEMBER 2018HIGH PERFORMANCE HVAC TODAYdata from more than 800 commercial systems tested prior to renovation work being performed. Contractors used pre-renovation performance measurements to help customers understand how their system is currently doing, and to justi-fy the cost of the necessary upgrades to improve performance. Using this data-driven sales process resulted in more than 400 completed renovation jobs. That’s a sales success rate of about 50%! Who knew per-formance testing could help you close one out of every two deals?Let’s take a look at the data to understand typ-ical performance levels for existing equipment and systems before and after system renovations. The data is presented in statistical charts called histograms. These histograms show the percent-age of systems within different performance rang-es. The performance metrics include the Cooling Equipment Performance Score (CEPS), and the Cooling System Performance Score (CSPS). CEPS is the field-measured cooling capacity at the equipment divided by the equipment’s rated capacity under field-measurement condi-tions. The CEPS helps us understand how the equipment itself performs. The CSPS is the field-measured capacity at sup-ply registers and return grilles divided by the equipment’s rated capacity under field measure-ment conditions. The CSPS gives us the perfor-mance of the entire system including equipment and duct system.COOLING EQUIPMENT PERFORMANCE SCORESFigure 1 shows the percentage of systems on the vertical axis and ranges of CEPS on the hori-zontal axis. The bars give the percentage of sys-Commercial performance-based con-tractors know there are tons of oppor-tunities in finding and fixing issues left behind by lower quality competitors, mother nature, and father time. By measuring performance, diagnosing, and fixing issues, you’ll see the opportunities for improvement and the impact you make every day. Do you ever wonder if the systems you work on are typical compared to systems across the na-tion? What about how the level of performance you typically achieve stacks up against your per-formance-based contracting peers? Answering these questions helps us under-stand what level of performance is poor, just ok, or great. This helps us guide our custom-ers to make the right decisions about what needs to be done and how much to spend. Should a customer with a system delivering 80% of its rated capacity invest more to get to 90% or 100%? Should a customer with a tired system replace the equipment, improve their duct system, or do they need to do both? What is the specific scope of work necessary to improve performance to an acceptable level?We need to answer these questions for every unique situation, customer, and system. Know-ing where a system stands compared to a typical system provides context that can help a custom-er understand their current system condition, where it could be, and how to get it there.TYPICAL PERFORMANCE DATAThrough our ComfortMaxx™ software, National Comfort Institute, Inc. (NCI) has collected performance data on thousands of jobs that allow us to gain insight into typical system performance nationwide. For this article we took Typical Commercial Cooling System PerformanceBy Ben Lipscomb, P.E.TECHNICALSEPTEMBER 2018 15HVACTODAY.COMCOOLING SYSTEM PERFORMANCE SCORESNow we’ll look at the same data for the system score, or CSPS (see Figure 2). You’ll notice the same pattern in the shape of the data, where the Test-in distribution is wide and flat and the Test-out distribution is narrow and tall. In addition, Test-in system scores are much lower than the equipment scores across the board — 22% low-er on average — indicating significant losses through the duct system plus poor equipment performance. The Test-out system scores are still lower than the Test-out equipment scores, but there’s a much smaller gap of only 10% on average. This shows renovations significantly improved equipment operation and significantly reduced duct losses. To realize the largest improvement, you need to consider the whole system. Even if your aim is to improve equip-ment performance alone, it’s critical to evaluate the ductwork to make sure equipment can “breathe.” Undersized duct systems are the top contributor to low equipment airflow, which is the number one issue causing low equip-ment performance. In next month’s issue of High-Performance HVAC Today, we’ll take a look at the top 10 issues that impact total system performance and break down how you can diag-nose and fix them. In the meantime, I en-courage you to use this data to show customers how their system stacks up against other systems around the country. Tip: Even if you’re a residential con-tractor, or if you work on more heat-ing than cooling systems, this data holds valuable information you can reference with your customers. NCI’s data indicates that there’s only minor differences between residential and commercial or heating and cooling per-formance scores. tems performing with-in each CEPS range. The blue bars are for “Test-in” readings before reno-vations, and the orange bars are for “Test-out” after renovations. As an example of how to read the chart, we see that just under 20% of equipment tested-in between 70% and 80%. We also see that only 7% of equipment tested-out at this level after renova-tions were done.From the table we can see that the average CEPS was 70% at test-in, but the chart tells us that’s not the whole story. Al-most as many pieces of equipment tested-in be-tween 80% and 90% as between 70% and 80%. The shape of the Test-in distribu-tion is very wide and flat, which means your odds of guessing how a system is performing without measuring are not very good. As NCI likes to say, “If you don’t measure, you’re just guessing!” On the other hand, the Test-out distribution is tall and narrow, with more than 75% of equipment testing-out between 90% and 100%. Performance-based contractors can be reasonably confident they can bring the score up to 90% or higher. Some of these contractors are so confident in their work that they offer a performance guarantee to custom-ers. This guarantee promises the con-tractor will get performance to a cer-tain level. They will keep trying until they do, or the customer doesn’t pay! Ben Lipscomb is a registered Professional Engineer with more than 14 years experi-ence in the HVAC industry. This experience includes laboratory and field research, Design/Build contracting, and utility energy efficiency pro-gram design. He is National Comfort Institute’s engineering manager and may be contacted at benl@ncihvac.com. 12or repair agreements. Some even offer a combo agreement. Unfortunately, I find that most com-panies have defaulted to just offering mainte-nance agreement programs.This is a problem. So, what should you do? Following are three tips to help set your service agreement program on the path to success and growth.– If you want your service agreement program to take flight and soar to new heights, stop think-ing of it as something that locks your customers to your company for tune-ups in the shoulder seasons. A good service agreement program is the sin-gle most important part of your overall marketing platform to create customer loyalty and referrals. In other words, the service agreement is a rela-tionship marketing model.Typically, the most successful and profitable companies with the greatest number of service Time to elevate your game. There has been plenty written by many people in our industry about selling service agree-ments. Their articles appear in the trade publications and online. Many HVAC Industry trainers teach about how to sell service agree-ments. You can even watch videos and listen to podcasts on the subject. My tips don’t refute anything they teach or write about. I am simply going to share some in-sights based on my study, lessons learned in my company and client companies, lessons learned outside the industry, and most importantly – lessons learned from customers.To put it another way, in a service-based business model, for me to get the results I want for my business, I must deliver the outcome my customers want for their lives. The better the delivered outcome, the more people will pay. However, not all customers are willing to pay for the highest level of access or experience.IT’S ABOUT CHOICESThroughout my career, I run into contractors who offer their customers a choice between two types of service agreements – maintenance and/Three Tips for Increasing Service Agreement SalesBy Drew CameronSALESTIP #1: Realize that customer satisfaction is worthless, and that customer loyalty is priceless16 SEPTEMBER 2018HIGH PERFORMANCE HVAC TODAYSEPTEMBER 2018 17HVACTODAY.COMal customers are the best way to generate referrals. They refer 107% more than non-loyal ones. Word-of-mouth ad-vertising is 50 times more effective than any other form of advertising. Consumers are six times more likely to rely on a recommendation than on advertising and yield closing ratios of 78% versus 32% for cold acquisition. Plus, referrals are 1/8th the cost of broad market advertising acquisition. Some more facts: Customer referrals spend 200% more than the average customer. Referred customers bring you a 25% higher profit margin. A referred customer is 18% more loyal than a customer acquired by other means. Referred customers are four times more likely to refer more customers to you or your company. They do this be-cause they like to pay their being re-ferred forward and share a great idea. Customers referred by other cus-tomers have a 37% higher customer retention rate.Loyalty and referrals don’t come from simply satisfying customers and offering what someone can get through another outlet for less. You must offer something people cannot get anywhere else. Make customers so happy that they feel compelled to tell others so that the relationships you develop are PRICELESS.CREATE SOMETHING UNLIKE ANYTHING ELSE OUT THERE– Let’s consider a differentiated approach to yield better results and get more people buying our agree-ments for more money.First, don’t measure yourself against others in the industry or competitors. Aspire to a greater calling – the calling of truly serving others beyond what most companies think is practical. In other words, go beyond the things you offer and become the “boutique for the discerning homeowner.” Solve real problems. Become a Whole House, System Performance, Access, and Con-trol Customer Care Service Provider. Brand yourself as being focused on the “distinguishing customer with dis-tinctive tastes” who wants to be ca-tered to with unique custom solutions, pampered with extraordinary service, and impressed with a caring and im-pactful experience.Delivering such an experience starts with your marketing, which promotes a brand promise and expectation of what is to come if they contact you. Next, your Customer Experience Coordinators need to honor the prom-ise when contacted. They need to set the next stage of expectation, which focuses on making the booking and confirmation all about information, convenience, and communication of differentiated expectations. There are some great technolo-gy platforms that can enhance these steps and put your company in a class of service all by itself. Once the technician is dispatched, agreements and highest customer happiness scores, reviews, and refer-rals get 50% of their leads from techni-cians who generate opportunities from existing customers. Twenty-five per-cent of these leads are from referrals by existing customers or by proximi-ty to existing customers. The remain-ing 25% comes from advertising and marketing efforts.Countless studies reveal that loy-al customers and their referrals yield a greater impact on a business’ top line revenue and net profit than new customers.Think about this: Your existing cus-tomer base will buy 67% more than a new customer lead from your mar-keting. Estimates show that landing a new customer actually costs five to 20 times more than selling into an exist-ing relationship. LOYAL CUSTOMERS ARE GOLDEN!Loyal customers buy 54% more quickly than non-loyal customers. A customer who buys twice is twice as likely to buy than one who buys once. They cost much less to reach and sell – It costs approximately $40 to reach, visit, and close a customer versus $325 and up for non-customers.Loyal customers yield higher closing ratios – 80% plus for loyal customers versus 35% or less for non-customers. The lifetime value of a loyal customer is 20 times their annual volume. A 5% increase in customer loyalty can mean up to an 85% increase in profits, according to Harvard Busi-ness Review.Referrals are the best form of ad-vertising and one of the greatest sources of high margin business. Loy-TIP #2: Be different, better, and more18 SEPTEMBER 2018HIGH PERFORMANCE HVAC TODAYSALESmoney and is about impacting not only the lives of those they serve but also the community, customers feel great about spending what they spend. To accomplish this, create a multi-level High-Performance Ser-vice Agreement platform to appeal to as many people as possible. This can funnel them to various levels of en-gagement over time versus offering a one-size-fits-all approach. Offer an agreement with the highest level of access and benefits. Connect the customer to your com-pany-created community. Get in-volved in charitable causes they feel are important. Then step down the level of access, benefits, and invest-ment to where you can offer a free service agreement to everyone!ENGAGE AND CONNECT– Simon Sinek in his book, “Start with Why,” states that people want to associate with people and do business with companies that believe what they believe. Today, more than ever be-fore, people want to feel fulfilled. The way to accomplish this is to be part of something bigger than the transac-tion. People want a sense of communi-ty and purpose.If a company sells products and ser-vices, the business is transactional. If a company chases a purpose bigger than it is all about communication and the customer experience. The custom-er should feel good about the process and the information shared. They should understand the things they have to do, what they should con-sider doing, and what things they don’t have to do but would enhance the sys-tem performance and improve the liv-ing experience. They should be able to make smart decisions to be better care-takers of their home and what to spend.Getting your team to deliver such an experience comes from creating a culture where your people feel good about the brand and relationship they have with the company so that cus-tomers will feel good about the brand and relationship. Passion and purpose breed passion and connection.TIP #3: Create a community with levels of engagement and connect with a causeSEPTEMBER 2018 19HVACTODAY.COMrelationship where they choose to raise their level of loyalty and/or can buy other products and services you offer in other channels (e.g. plumbing, electrical, smart home). Loyalty yields repeat business and referrals. BOTTOM LINE: Deliver a differen-tiated customer experience that makes a life impact, is memorable, ensures loyalty, generates repeat business, and is worth telling others about. Don’t fit in. Stand out. Be REMARKABLE! Next time, I’ll share the specifics of a multi-tiered High-Performance Service Agreement platform designed to offer customers choices, so you are offering options, not ultimatums. Once the prospect becomes your loyal customer, you can escalate the Drew Cameron is an advi-sor to Home Services Con-tractors and is president of both HVAC Sellutions and Energy Design Systems, Inc. Drew is an industry- recognized author, speaker, educator, coach, consul-tant, software developer, philanthropist, and an International Consul-tant Award Winner. He is also a president of the Ron Cameron Foundation; Board member, Foundation Board Trustee, and a Contractor University Founder & Faculty member for Electric & Gas Industries Association (EGIA). He is also an Air Conditioning Contractors of America member. Contact him at 610-745-7020 or drew@hvacsellutions.com.Next >