< Previous20 MARCH 2020HIGH-PERFORMANCE HVAC TODAY The problem I see with most companies is that their service agreement program only offers a sin- gular agreement. Even my Hilton Honors American Express cred- it card offers me choices for which card to carry. The Blue card carries no annual fee, has the fewest benefits, and lowest point earnings. The Surpass card costs $95/year, has more benefits, and earns more points. The Aspire card costs $450/year, has the most benefits, and earns the most points, in- cluding reward weekends. For me, the Aspire card makes sense because what I earn pays me back more than the fee in benefits, points for future stays, and reward weekends. A CHOICE OF ONE IS A CHOICE OF NONE Customers want options not ultimatums (by definition, a final proposition, especially one whose rejection will end negotiations, can cause a resort to force or other action, often in the oppo- site desired direction). Most service companies offer maintenance Customers Want Access And Options T he most successful residential HVAC companies have a lot of service agreement customers. This committed captive audi- ence yields recurring revenue, online visits, and opportunities for other purchases and cross-promotion of other services many home ser- vices contractors now offer. The Key Performance In- dicator (KPI) for a healthy home services company is to have 1000 agreements per million dollars of resi- dential revenue. A vibrant and thriving company has at least 1500 agreements per million dollars of reve- nue. Another KPI is for the company to secure 50% or more of their customers on service agreements. How to Create More Opportunities for Customer Connections By Drew Cameron SALES A VIBRANT AND THRIVING COMPANY HAS AT LEAST 1500 AGREEMENTS PER MILLION DOLLARS OF REVENUEMARCH 2020 21HVACTODAY.COM choices offered. Some will still say ‘no’ to buying a TV from you now (they may come back later or never). In the multi-offering scenario, the customer must state they want noth- ing offered (a 75% chance of earning the customer’s business – 3 choic- es vs. no offers). Compare that to the first scenario where the customer can say ‘yes’ or ‘no’ (a 50% chance based on math, but less than a 25% chance based on buyer psychology and sta- tistics when the only choices offered are a ‘yes’ or ‘no.’ To have options the customer must consider other service companies). ACTIVE CUSTOMERS DRIVE REVENUE We all know the more active custom- ers (someone who has paid for a prod- uct or service in the last 36 months) a company has, the greater the reve- nue and profit generation potential. Service agreement customers meet this criterion since they pay for their agreement monthly or annually. However, if you only offer one type agreements that include periodic tune-ups, priority service, and dis- counts. Because this is usually the only option, many customers choose not to purchase it. Some customers don’t want to pay anything for maintenance but desire a discount should a repair arise. Afflu- ent customers tend to want the high- est levels of access and service. Dis- counts don’t typically move the needle for them. GIVE CUSTOMERS SOMETHING TO SAY ‘NO’ TO Think about it this way: If you are an electronics retailer and you ask peo- ple who are in the market for a new big screen TV, “Would you like to buy a TV from us,” many will say ‘no’. If you ask, “Of the various TVs we offer, which model is most appealing to you: the 4K, plasma, or OLED model?” Now the customer has several things to consider. This makes you appealing to a larger segment of the market and more customers will select one of the 22 MARCH 2020HIGH-PERFORMANCE HVAC TODAY 24. Change light bulbs and smoke/fire/ carbon monoxide detector batteries 25. Change air filter, UV bulbs, humidi- fier pads, water filter, etc. as needed. Company Benefits ● More revenue ● More profit ● Steady cash flow ● Reduce revenue dips in shoulder seasons ● More ancillary product sales ● Customer loyalty and repeat sales ● More referrals ● More opportunities to build customer relationships ● Guaranteed and balanced workload for company ● Year-round full-time employment for co-workers ● Job security ● Happier co-workers ● Reduced marketing costs ● Ability to cross-market services ● Healthier more valuable business for potential sale of company. Creating more opportunities for connection to your company is more sustainable with less of a marketing expense to create future purchase op- portunities for other services. A multi-tier service agreement pro- gram will make your company stickier to more customers and help you build your ecosystem of customers and en- sure your business longevity. Figure 1 shows examples of tiered benefit and access agreement programs (dollar amounts and percentages are for demonstration purposes only). MULTI-TIER SERVICE AGREEMENT BENEFITS Here is how a multi-tier service agree- ment offering is mutually beneficial: Customer Benefits 1. Reduces hassle 2. Restores lost capacity 3. Increases equipment life 4. Priority service 5. Scheduled preventative mainte- nance with precision tune-ups and professional cleanings 6. Avoid or reduced trip/diagnostic charges 7. Discounted service 8. Discounted maintenance 9. Saves money on energy and repairs - pays for itself 10. Peace of mind 11. Expense predictability 12. Prevents unnecessary breakdowns 13. Avoid downtime 14. Increased safety 15. Improved health 16. Enhanced comfort 17. Loyalty credits 18. Company newsletter 19. Special offers and events 20. Safety, service and helpful tips, bulletins 21. Happier homeowners 22. Remove holiday lights 23. Remove bulk trash of agreement, the odds of locking in the maximum amount of people are less than if you offered various options to become agreement customers. ICE CREAM ISN’T THE ONLY THING THAT SELLS BETTER WITH CHOICE Offering multiple levels of service lets customers choose the access, ser- vice, engagement, benefits, protec- tion, etc. that makes sense to them. It also offers things to which they can say ‘no.’ Now more than ever, people will consider paying for greater levels of access, service, and value-added ben- efits. They will pay a premium for avoiding or solving pain and prob- lems, life impacts, extraordinary and exclusive experiences, status, identity, and more. Think of it this way, ice cream par- lors always offer a variety of flavors even though vanilla may be favored by many. They do so because they will attract more people to their store who will buy more as a result. Service companies become more alluring and compelling to more consumers when they do the same thing. A TACTICAL APPROACH TO CONSIDER My recommendation is to vary the level of service access you offer. Offer service at the customers’ convenience. Be sure all customers get a world-class service and customer-care experience. SALES OFFER SERVICE AT THE CUSTOMERS’ CONVENIENCE. AT THE CUSTOMERS’ CONVENIENCE. BE SURE ALL CUSTOMERS GET A WORLD-CLASS BE SURE ALL CUSTOMERS GET A WORLD-CLASS SERVICE AND CUSTOMER-CARE EXPERIENCE.SERVICE AND CUSTOMER-CARE EXPERIENCE. Drew Cameron is president of both HVAC Sellutions and Energy Design Systems, LLC. The latter is an alliance providing industry-leading marketing and sales consultative support as well as sales recruiting, training, coaching, and more for Home Services Contactors. In addition, Drew serves as a trainer for Electric and Gas industries Association (EGIA). Contact him at 610-745-7020 or by email at dcameron@egia.org.MARCH 2020 23HVACTODAY.COM PHOTO OF THE MONTH “Dead Wasps in the Middle of the Pipe” — Aaron Courier, A.A. Courier & Sons, Roebuck, SC While performing the combustion test during routine maintenance a rattling noise was observed. Our technician shut down the furnace, disconnected the flue, and found this pile of dead wasps. Aaron Courier from A.A. Courier & Sons is the MARCH 2020 winner of our Photo-of-the-Month contest, as voted on by the subscribers to the High-Performance HVAC Today magazine and visitors to the website. He will receive a $50 gift card. You can too – submissions are always welcome. If you’d like to submit a photo for consideration in our Photo-of-the-Month contest, go to ncilink. com/POMSubmit and fill out the information as requested. THE APRIL CONTEST OPENS ON MARCH 9, 2020. That gives you plenty of time to submit something in any of our three categories: The Good, The Bad, or the WTH (What the heck).24 MARCH 2020HIGH-PERFORMANCE HVAC TODAY NCI MEMBER UPDATE Get Your MARCH 2020 PowerPack Online Now One of the great things about your PowerPack is that each one includes items that are curated to help you as you grow your High-Performance HVAC business. Let’s drill down on what’s included in the MARCH 2020 PowerPack! ➤ Balancing Hood Basics (Online Training) ➤ Traverse Grilles and Registers (Webinar) ➤ Generic Fan Performance Data (Download) ➤ How Air Balancing Saves Money (Article). Be sure to share your March PowerPack with your entire team! So get started today. Access it by going to: ncilink.com/PwrPak . If you have any questions, or if you are unable to access any of the tools in this program, please contact your Customer Care team at 800-633-7058. Consider Moving to Premiere Membership Thank you for being an NCI mem- ber and for being part of the Perfor- mance-Based Contracting™ movement. That is the first step. But are you mak- ing the most of your membership and all that comes with it? Think about this: if you upgrade to a Learning Excellence Premium sub- scription, the first huge benefit you re- ceive is one FREE High-Performance HVAC Summit registration (ncilink. com/Summit2020Reg)!! Summit is really the only place for ad- vanced contractors like you to network, learn, and share. It also is the best place to get to know your fellow members in-person. One of the best benefits of member- ship is the camaraderie and support you get from your peers. You really owe it to your High-Performance Contract- ing™ journey to attend. Make it even easier — add the Learn- ing Excellence Premium option to your membership and get a free seat — along with all the other Premium benefits (ncilink.com/Premium)! It’s really simple to upgrade to Premi- um — simply give us a call at 800-633- 7058 and we’ll get you set up, along with your free Sum- mit registration! If you have any questions about your membership, we’re happy to help, just give us a call. We look forward to seeing you at Summit this April in Scottsdale! Connect with NCI Customer Care Reps Do you realize that NCI provides access to Experts who can anwer your questions, whether they revolve around membership and its benefits, or the availablilty of classes and so much more. Set up some time with your dedicated NCI Customer Care Representative, they’re here to help! To make an appontment with Bill Ritchie , go to ncilink.com/BillRitchie To make an appointment with Michael Pae , go to ncilink.com/MikePae To make an appointment with Andrew Weidman, Jr., go to ncilink.com/AndyWeidman.MARCH 2020 25HVACTODAY.COM HVAC SMART MART Advertiser Index HIGH-PERFORMANCE HVAC TODAYHVAC TODAY TM AD INDEX Arzel Zoning Technology, Inc. | www.arzelzoning.com ........................................................9 Bacharach, Inc. | www.MyBacharach.com ...................................................................................7 Baker Distributing Company | www.BakerDist.com ............................................................. 9 Duct Saddles | www.DuctSaddles.com .......................................................................................13 Dwyer Instruments, Inc. | www.dwyer-inst.com ............................................................. 2, 21 Goodman Manufacturing | www.GoodmanMfg.com ............................................4, 16, 27 Lazco Corp. | www.LazcoCorp.com ...............................................................................................8 R.E. Michel Company | www.REMichel.com ....................................................................12, 19 The New Flat Rate | www.TheNewFlatRate.com .............................................................7, 25 To Your Success | ToYourSuccess.com ..................................................................................7, 25 United Refrigeration Inc. | www.uri.com ..................................................................................23 To Subscribe to High-Performance HVAC Today: ONLINE: Visit HVACToday.com/subscribe for a FREE digital subscription. PRINT: 1 year/$72; single copy $7. Canada: 1 year/$92; single copy $9. Payable in advance with U.S. funds. Prepaid subscriptions may be sent to: High-Performance HVAC Today, PO Box 147, Avon Lake, OH 44012. Phone: 440-949-1850; toll free 800-633-7058; Fax: 440-949-1851, or visit HVACToday.com/subscribe to order online. Publisher Dominick Guarino Editor-in-Chief and Associate Publisher Mike Weil Art Director Connie Conklin Online Development Director Brian Roseman Circulation Manager Andrea Begany- Garsed Editorial Assistant Marge Smith Email us at contactus@hvactoday.com with your comments and questions.26 MARCH 2020HIGH-PERFORMANCE HVAC TODAY by both low equipment discharge temperatures com- pared to gas furnaces, and poor air distribution sys- tems blowing cold drafty air onto building occupants. Equipment manufacturers have stepped up and raised Delta Ts significantly on heat pumps. Unfor- tunately, air distribution design and installation, both in residential and light commercial buildings is still significantly lagging compared to equipment improvements. THE BIGGEST HURDLES In new construction, much of this lag is caused by the typical low-bid mentality that is still perva- sive with builders and HVAC contractors. Duct systems in new homes, particularly in the south, still consist of octopus-like flex duct systems with impossibly long runs, inferior splitter boxes, and too many restrictive bends and elbows. Cou- pled with cheap registers and grilles, insufficient number of returns, and poor design and installa- tion, we have the perfect storm for poorly perform- ing all-electric HVAC systems. But it’s not just new construction. Most of the existing home stock currently operates at 57% of heating and cooling capacity delivered into a home or building. Not only does this negate most of the equipment efficiency gains, it also impacts comfort – especially in heating mode. As utilities continue to roll out electrification programs, they would be wise to focus on this in- sidious problem with delivered efficiency, and build their incentive and training programs around mea- sured, delivered capacity, not just the equipment’s efficiency ratings. With thoughtful attention by those driving elec- trification to look beyond SEER and HSPFs, to total system performance, there’s great potential for re- sponsibly shifting energy use. While Electrification got a big black eye 30-plus years ago, we now have better technology, tools, and verification methods to ensure it doesn’t happen again. Now it’s up to us to get it right! E lectrification is expected to have a huge impact on the transportation and HVAC industries in the very near future. So, it’s probably a good idea to learn more about it and look for ways to benefit from it. What is Electrification? Essentially it means fully or partially switching from technologies that direct- ly use fossil fuel to those that use electricity. The in- dustries most impacted by this are the electric vehi- cle market, indoor heating, and water heating. In the transportation industry, there are current- ly more than one million electric vehicles (EVs) on the road today. According to the Edison Electric In- stitute (EEI), there will be a 700% increase (sev- en million EVs) by 2025. That’s just five years from now! This includes both passenger vehicles as well as commercial/industrial transportation. Imagine that kind of increase for the HVAC in- dustry? Over the past year, we’ve seen a big push for Electrification by utilities and Public Utility Com- missions (PUCs) in numerous states. And it’s only going to intensify over the months and years ahead. GOOD OR BAD? Will Electrification be good or bad for the HVAC in- dustry? The short answer is, it depends. If it’s done in a practical, thoughtful way, as opposed to a sweep- ing “single-solution” approach to energy efficiency, it could be very good for our industry. It can present sig- nificant opportunities for early retirement of older, in- efficient furnaces and air conditioners, as well as im- provements in both new and existing HVAC systems. One of the challenges to Electrification, both in new construction and in existing homes, is the air distribution system. If corners are cut and the same poorly designed ductwork and inferior components including fittings, grilles, and registers are installed, all-electric HVAC systems will perform poorly, par- ticularly in heating mode. Many of us remember heat pump conversions of the eighties and early nineties when customers com- plained about cold and drafty homes. This was caused ONE MORE THING... By Dom Guarino How Will the New Electrification Movement Affect You? Dominick Guarino is publisher of High-Performance HVAC Today magazine and CEO of National Comfort Institute, Inc. He can be reached at domg@ncihvac.com Next >