Monday, November 24, 2014
A Better Bottom Line in Your Service Department
It's Easier Than You Think!
By Jim D'Amico*The Old Days
I remember the days when oil dealers were content to pump oil and take some of the profits to subsidize their service department. Oil burner service was often provided to customers at or near breakeven. In the early 1970’s, while working in my family's fuel business, I was told by a grizzly, old oil burner mechanic, "Oil companies are supposed to lose money on service." Even back then I found that to be perplexing, considering the significant investment in providing quality, heating service.
Implementing Dealer Programs
By Jim D'Amico and Ken Cederquist*
There are multiple ways for you to get involved with your dealers to allow them to get more out of their HVACR businesses which in turn keeps your dealer base strong and profitable for you. You and your territory managers play an important role in taking your dealer to a higher level.
Offering good programs or business methods can change the tone of your business and that of your dealers in a positive way. However, good ideas offer no value to you or your customers without an implementation plan and a positive attitude. Your implementation plan should include focus groups, dealer development programs, developing your territory managers and placing them in consulting roles with your dealers and perhaps most importantly mentoring and coaching your dealers.
There are multiple ways for you to get involved with your dealers to allow them to get more out of their HVACR businesses which in turn keeps your dealer base strong and profitable for you. You and your territory managers play an important role in taking your dealer to a higher level.
Offering good programs or business methods can change the tone of your business and that of your dealers in a positive way. However, good ideas offer no value to you or your customers without an implementation plan and a positive attitude. Your implementation plan should include focus groups, dealer development programs, developing your territory managers and placing them in consulting roles with your dealers and perhaps most importantly mentoring and coaching your dealers.
Improving Relations Between Your Dealers and Their Customers
By Jim D'Amico and Ken Cederquist*
Focusing on those concepts and products that improve your customers’ businesses should dovetail into improved sales and better business relationships for you. In addition, you can benefit from improved customer relations between your dealers and their customers. The role you play in educating your dealers in this area can contribute to their success, and in turn, yours.
Focusing on those concepts and products that improve your customers’ businesses should dovetail into improved sales and better business relationships for you. In addition, you can benefit from improved customer relations between your dealers and their customers. The role you play in educating your dealers in this area can contribute to their success, and in turn, yours.
Selling Equipment using Good-Better-Best
By Jim D'Amico and Ken Cederquist*
A key ingredient to your dealers’ success is a pricing guide dedicated to equipment replacement. Now, we know we’re speaking your language when we talk about selling equipment and we assume this concept will peak your interest and that of your TM’s.
A key ingredient to your dealers’ success is a pricing guide dedicated to equipment replacement. Now, we know we’re speaking your language when we talk about selling equipment and we assume this concept will peak your interest and that of your TM’s.
Building a Strong Business with Service Agreements
By Jim D'Amico and Ken Cederquist*
We all know that typically the more you do for your customers the more you get from your relationship with those customers. We also know that our industry should not be weather driven and that successful contracting businesses are not weather dependent. To help your dealers improve their businesses, you will need to determine what areas will help your dealers most.
The best way to help your dealers is to educate them on the need to diversify their product offerings to provide steady work in their contracting businesses. For years, consultants in the industry have preached to dealers at national and regional conferences about the need to have a good service to installation ratio, a good product mix, a solid offering of ancillary products and a consistent effort to market and sell service agreements.
In all of this, service agreements are the key component. Once again your territory managers’ involvement in the education of your dealers is very important. And if he genuinely believes in the benefits of the program it will be easy for him to promote it to his customers.
Service agreements build a strong customer base and generate repeat business. One very successful contractor determined several years ago that each service agreement customer generated on average seven hundred dollars in revenue every year for his company. Not surprisingly, his full list of service and installation offerings came into the mix in the seven hundred dollars per customer he billed. The simple math of multiplying the number of service agreement customers, times seven hundred dollars quickly brings us to the true value of a properly implemented service agreement program.
However, it is service agreements that so often pose the biggest challenge. Developing a successful service agreement program is easier said than done. Surely a dealer can more easily focus his attention on the concept of service agreements. The number of scheduled maintenance appointments, checklist of service items, and the appropriate fee for the service agreement is the easy part. The hard part is inspiring your employees to sell the service agreements consistently. As you know, selling any product takes a consistent effort.
Since service technicians are presenting repair pricing, the greatest opportunity for your dealers to sell service agreements is through their service technicians. That’s where a service agreement program and a properly implemented flat rate pricing system come together. Service agreements can be sold more easily from a flat rate service repair guide where a discounted fee for repairs is available to service agreement customers. All the technician needs to do is to know how to properly present that discounted price to the customer.
Often the technician is the only face a customer can associate with a contracting company and therefore technicians usually carry the most credibility with HVAC customers. Customers generally place faith in the technicians’ opinion about the repairs or other recommendations. Consequently, when a technician makes an offer to a customer to save money on needed repairs the customer will listen. Unfortunately, technicians generally come up short in their confidence to affectively sell, unless they have been educated on the value of the service agreements and coached to improve their confidence level.
That’s where you come in. Earlier we discussed the need to provide dealer meetings. Dealer meetings provide the opportunity to also offer sales training and role playing. Sales training provides the opportunity for a dealer and his technicians to learn how to present the features and benefits of their products to their customers. Role playing allows technicians the ability to learn to communicate the features and benefits of their product and to handle questions and objections.
Role playing before a group will be difficult for some and that’s the great opportunity it provides! If a dealer or his technicians are uncomfortable while role playing in front of a group, how will they gain the confidence needed to make a simple product presentation, in this case a service agreement, before a customer?
Role playing gives technicians the opportunity to gather their thoughts, draw from the knowledge they have gained about the product and to think on their feet. It exposes technicians to new ideas and thought processes and ultimately boosts their confidence level. If done properly, role playing can build self esteem.
By placing your customer’s needs as the focus of your programs you ultimately place your company in a stronger position. Educating and making an effort to get your dealers involved in developing a service agreement program will have a lasting effect. We have already established that dealers who offer service agreements to their customers tend to make more money per customer than those that don’t. Certainly, there is a trickle down effect for you as their distributor since those dealers will buy more add-on and replacement products from you. Therefore, what is good for your dealers, is also good for your territory managers and you.
The importance here is to recognize the role your territory managers play is a key component. Your TM’s can get your dealers out to your meetings or they can bring the message to your dealers by working one on one with them. When your dealers see the benefits of their involvement with your programs they will continue to buy from your company. A dedicated TM will see the advantages of training his dealers for the opportunities that present themselves by way of higher sales per account. His enthusiasm in his role as consultant and coach will make it happen.
The biggest advantage is your customers will view their relationship with your company as a partnership to improve their business and that’s good!
* Jim D’Amico and Ken Cederquist are two of the founders of Profit Strategies, a provider of service pricing systems for the HVAC, Plumbing, and Electrical trades. Jim is a former HVAC contractor and Ken is a former distributor.
We all know that typically the more you do for your customers the more you get from your relationship with those customers. We also know that our industry should not be weather driven and that successful contracting businesses are not weather dependent. To help your dealers improve their businesses, you will need to determine what areas will help your dealers most.
Education is Key
The best way to help your dealers is to educate them on the need to diversify their product offerings to provide steady work in their contracting businesses. For years, consultants in the industry have preached to dealers at national and regional conferences about the need to have a good service to installation ratio, a good product mix, a solid offering of ancillary products and a consistent effort to market and sell service agreements.
In all of this, service agreements are the key component. Once again your territory managers’ involvement in the education of your dealers is very important. And if he genuinely believes in the benefits of the program it will be easy for him to promote it to his customers.
Service Agreements
Service agreements build a strong customer base and generate repeat business. One very successful contractor determined several years ago that each service agreement customer generated on average seven hundred dollars in revenue every year for his company. Not surprisingly, his full list of service and installation offerings came into the mix in the seven hundred dollars per customer he billed. The simple math of multiplying the number of service agreement customers, times seven hundred dollars quickly brings us to the true value of a properly implemented service agreement program.
However, it is service agreements that so often pose the biggest challenge. Developing a successful service agreement program is easier said than done. Surely a dealer can more easily focus his attention on the concept of service agreements. The number of scheduled maintenance appointments, checklist of service items, and the appropriate fee for the service agreement is the easy part. The hard part is inspiring your employees to sell the service agreements consistently. As you know, selling any product takes a consistent effort.
Getting Technicians Involved in the Process
Since service technicians are presenting repair pricing, the greatest opportunity for your dealers to sell service agreements is through their service technicians. That’s where a service agreement program and a properly implemented flat rate pricing system come together. Service agreements can be sold more easily from a flat rate service repair guide where a discounted fee for repairs is available to service agreement customers. All the technician needs to do is to know how to properly present that discounted price to the customer.
Often the technician is the only face a customer can associate with a contracting company and therefore technicians usually carry the most credibility with HVAC customers. Customers generally place faith in the technicians’ opinion about the repairs or other recommendations. Consequently, when a technician makes an offer to a customer to save money on needed repairs the customer will listen. Unfortunately, technicians generally come up short in their confidence to affectively sell, unless they have been educated on the value of the service agreements and coached to improve their confidence level.
Sales Training and Role Playing for your Dealers and their Technicians
That’s where you come in. Earlier we discussed the need to provide dealer meetings. Dealer meetings provide the opportunity to also offer sales training and role playing. Sales training provides the opportunity for a dealer and his technicians to learn how to present the features and benefits of their products to their customers. Role playing allows technicians the ability to learn to communicate the features and benefits of their product and to handle questions and objections.
Role playing before a group will be difficult for some and that’s the great opportunity it provides! If a dealer or his technicians are uncomfortable while role playing in front of a group, how will they gain the confidence needed to make a simple product presentation, in this case a service agreement, before a customer?
Role playing gives technicians the opportunity to gather their thoughts, draw from the knowledge they have gained about the product and to think on their feet. It exposes technicians to new ideas and thought processes and ultimately boosts their confidence level. If done properly, role playing can build self esteem.
Your Customers, Your Territory Managers and You
By placing your customer’s needs as the focus of your programs you ultimately place your company in a stronger position. Educating and making an effort to get your dealers involved in developing a service agreement program will have a lasting effect. We have already established that dealers who offer service agreements to their customers tend to make more money per customer than those that don’t. Certainly, there is a trickle down effect for you as their distributor since those dealers will buy more add-on and replacement products from you. Therefore, what is good for your dealers, is also good for your territory managers and you.
The importance here is to recognize the role your territory managers play is a key component. Your TM’s can get your dealers out to your meetings or they can bring the message to your dealers by working one on one with them. When your dealers see the benefits of their involvement with your programs they will continue to buy from your company. A dedicated TM will see the advantages of training his dealers for the opportunities that present themselves by way of higher sales per account. His enthusiasm in his role as consultant and coach will make it happen.
The biggest advantage is your customers will view their relationship with your company as a partnership to improve their business and that’s good!
* Jim D’Amico and Ken Cederquist are two of the founders of Profit Strategies, a provider of service pricing systems for the HVAC, Plumbing, and Electrical trades. Jim is a former HVAC contractor and Ken is a former distributor.
It's All About the Customer
By Jim D'Amico and Ken Cederquist*
It’s not your father’s supply house anymore! Oh, but you knew that. You’ve been living it day in and day out.
It was about twenty years ago, just when your company’s growth and margins appeared to bring you into a comfort zone and the future looked bright, that the HVACR supply industry exploded with new equipment, new marketing ideas, new sales concepts and new pressure to conform and perform.
In addition, consolidation really got rolling. Many of the “little guys” could no longer hang in there and compete at the same level as the “big boys.” You heard the words over and over about “increased market share.” Brands were awarded and brands were pulled. And who would have believed that the corner hardware store would evolve into a home center and then into a multi-state billion dollar a year chain that could become your toughest competitor?
Yes, Darwin’s survival theory as applied to the HVACR supply industry uncovers several Dodo birds! But, all is not lost. The grim reaper hasn’t come for you just yet. And that’s good news!
Changing Times
It’s not your father’s supply house anymore! Oh, but you knew that. You’ve been living it day in and day out.
It was about twenty years ago, just when your company’s growth and margins appeared to bring you into a comfort zone and the future looked bright, that the HVACR supply industry exploded with new equipment, new marketing ideas, new sales concepts and new pressure to conform and perform.
In addition, consolidation really got rolling. Many of the “little guys” could no longer hang in there and compete at the same level as the “big boys.” You heard the words over and over about “increased market share.” Brands were awarded and brands were pulled. And who would have believed that the corner hardware store would evolve into a home center and then into a multi-state billion dollar a year chain that could become your toughest competitor?
Yes, Darwin’s survival theory as applied to the HVACR supply industry uncovers several Dodo birds! But, all is not lost. The grim reaper hasn’t come for you just yet. And that’s good news!
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