Question: If you had a crystal ball, how do you see our business in 10 years? What changes does the contractor need to embrace today in order to be prepared for the future?

Gary Elekes; Founder, EPC Training:

I do believe there’s going to be some substantial changes in the next 10 years. It’ll be probably driven a lot around the technology enhancements that we’re running right now with respect to, you know, 10 years ago essentially the iPhone came out, so you didn’t really have a mobile device back then; you were using desktops. And now, pretty much, most of the searches and most of the people out there are touching a mobile device of some sort.

And so I think the future, while it’s awful hard to predict trends-wise, we’re usually pretty good. So the manufacturers and the people who are building the equipment will undoubtedly be launching smart technologies on their equipment that will tie back to the contractors’ universe for an alert system, much like we’ve done on the commercial side for years and years and years. That cost of technology is now coming down, and I think that people will absolutely have that on their equipment. It’ll probably be on the higher-end equipment of course, but, gosh, probably 60% to 70% of the equipment now that we sell is the higher-end products and services. So that client base is going to expect that kind of a product or service.

So that requires us to understand the service agreement model. Having the customer attached to us, it really even offers the value chain benefit that we just talked about – why they would be on the club program. So the club program itself, that’s an extension for me, to be able to say, “Hey, I’m going to put in this 24 SEER VRF technology for you, it’s got smart technology on it, it’s going to alert me if anything’s happening, so I’ll reach out to you. That’s going to be $13.95 a month, and that’s perpetual and we’re just going to keep track of it for you.”

And so I think that’s one of those first trends that’s probably going to hit us fairly quickly. I also think the continuation of ecommerce and just the online platforms for clients; how the consumers are behaving and what they’re doing. I see a large-scale initiative – somebody will be very successful at this I’m sure – selling parts and accessories and filters and everything. If it’s not Amazon, it might be a contractor. So that’s all good.

The question came up at the EGIA conference about: Do we think the industry will be “Ubered,” so to speak, as a verb? And I think the question is not when that will happen, it’s who’s going to launch the first version of the app, so that I can click on a technician and have a technician show up at my house based on an application? How that evolves, I really don’t know, I’m not necessarily in the position to release those details, but I think that’s imminent. Within the next 3-5 years, I think that probably launches. So consumers will see advertising, you know, “If you’re not satisfied with your utility” or “you’re not satisfied with your home comfort, dial or click on 1-800-Tech in the app,” and you go from there.

And then I also believe that, as we go forward, the big box retailers will continue to be a part of that. Another trend that’s back, that has its cycles, is consolidation. There’s a group of hedge funds that are out there right now that are actively acquiring businesses, and many of the people at EGIA are very familiar with that, so it’s not a surprise. We did that in the ‘80s, we did it again in the ‘90s, we’re doing it again in the 2000s. So the companies that scale and consolidate tend to have equipment buying power. They tend to have volume rebates. They tend to be able to market a brand in a community a little differently than those of us who are small business owners.

So off the top of my head, those are four or five trends that are out there and they’re instantaneous. I think how we defend against all that is we take care of our customers, we build club agreement programs, we train, we create great culture, we recruit smartly based on the idea that we’re going to be more productive – not necessarily that we’re going to need a larger business, but that we want to get more productivity out of our folks. We employ technology, and we create a brand in the marketplace that’s known, based on the reputation of your company, as the brand of choice – you become top of mind. And then in any and all instances, technology will be supportive of you as a brand and not necessarily harm you.

I think it’s the middle guy in contracting, it’s not the one-truck or one-man operation that suffers, nor is it the scaled business, it’s usually the company that’s in the middle. So it’s probably one of those things where you either need to grow or get smaller. Wally?

This is the weekly Ask the Experts free excerpt. To listen to all of this week’s calls, or to see the schedule and register for future call, click here.

You’re in the home, you’re working with the homeowner to establish trust and make the right sale for that person. How do you ensure they buy in to the process? Focus on the client agenda.

Gary Elekes joins us in our latest “clip of the week” from Cracking the Code, to elucidate the sales process including focusing on the client agenda, persuading by involving, and much more.

Watch the clip below, and visit EGIA.org/Show to watch the full show, before it goes in the members-only archive on October 29.

Question: What are your thoughts on offering extended labor guarantees on new installs and existing equipment?

Drew Cameron; President, HVAC Sellutions & Energy Design Systems, Inc.:

Well, new installs and new equipment for sure, I’m a big fan of offering the extended warranties as part of the job – and it’s included in the price. And then it sounds like we’re talking about, if we’re taking on a job, let’s say where we’re replacing the air conditioning but we’re keeping the existing furnace – that’s the way I kind of read that question.

On existing equipment with a new component sale only, I would take that on time and inspection of the equipment – not necessarily by my salesperson, per se, but by my service technician or installation technician who goes on that job. Inspect the existing piece of equipment that’s remaining in place, make any repairs that are necessary to bring that equipment up to acceptable condition, as well as including a tune-up, and that would, obviously – the cost to incur that would be included in the price of the job.

The caveat in my mind, for the company’s protection – and really truly for the best interest of the customer – is that we’ll make any repairs to that existing equipment that we put under this extended warranty free of charge, other than, in my mind: failed compressors or coils; cracked heat exchangers or boiler box on boilers; act of god or vandalism; or if the value of the repair exceeds the value of the system.

Gary and I talked about the 4K rule on these calls in the past, the other thing you could look at is the value of the system, and I’ll talk more about how to calculate that in a second. But in these events, I’d recommend a $300 – or some amount – but we used to offer a $300 credit toward the replacement as long as the maintenance agreement had been maintained on that piece of equipment after we did that initial job.

So let’s say you sell that job today, and three years out you’re at a point where one of those instances kind of shows up here – it’s beyond the value or it’s an act of god or it’s a cracked heat exchanger or a dead compressor, something like that – on the existing piece of equipment that you have on this warranty. I’m then going to say, OK, you’ve maintained the service agreement for the last three or so years, we’ll go ahead and replace that (let’s say) cracked heat exchanger or furnace for you at whatever prices we have that particular day, and you’ll qualify for a $300 credit towards the replacement of that furnace because you had this warranty in place on that existing piece of equipment.

That’s typically how I’ve done it, and done it with my clients over the years, and make sure I include an allowance, like I say, in the price for the job based on the age and condition of that existing equipment. So we even had a service agreement that we would offer years ago called the “ultimate service agreement,” which included not just the tune-up but also the parts and labor up to the value of the repair exceeding the value of the system. So we also had that service agreement priced based on the age of the equipment. So 0 to 5 years was a certain cost, and 6 to 10 years was a different cost, and over 10 years was the highest level of price.

So you could do the same thing on an existing install where you take on an existing piece of equipment and just, to protect yourself, have a higher allowance allowed in the job to cover your costs there. Now what I did to figure out the value of the system if we weren’t using that 4K rule — and the 4K rule is simply take the cost of the repair times the age of the equipment, and if that exceeded $4,000 then you would go ahead and tell the customer it’s beyond repair, and we would offer to go to a replacement there.

The other scenario I talked about is just picking the value of the system. So we looked at what we called annual depreciation of the system. I’d typically know what a component of that nature would cost when it was installed new, let’s say 10 years ago; so take that estimated original install price divided by the life expectancy. So let’s say I’m looking at a 10-year-old system, if I estimate it was $4,000 when it was put in new I think it should last about 15 years, then I would take $4,000 divided by 15 and I’m going to get my annual deprecation on that machine. So gonna say now we’re at 10 years – we’re not at 15, we’re at 10 years — $4,000 divided by 15 to get my annual number, then multiply that by 10 years, that’s going to tell me how much of that system’s life has been depreciated. And then look at the cost of repair versus the remaining life on that system and come up with a number.

Then you tell the customer if we’re beyond that number we’ll go ahead and replace, and if we’re below that we can repair if they want. Again, setting aside cracked heat exchangers, leaking coils and failed compressors; those are the three caveats we always make allowances for to take out of that.

This is the weekly Ask the Experts free excerpt. To listen to all of this week’s calls, or to see the schedule and register for future calls, click here.

This week, a viewer wrote in to ask Weldon Long how to use the online reputation management process — Yelp, Google Reviews, Angie’s List and the like — to actually influence service techs’ behaviors.

Check out this week’s “clip of the week” from Cracking the Code for Weldon’s answer, which ties together incenting behaviors while maximizing reviews.

In the September 2018 Snapshot Survey, we asked contractors all about local events and home shows. Here’s one survey question and its results from the summary report, which is now available in its entirety to EGIA members.

Question: How many local events does your company participate in per year?

While the vast majority of respondents indicated their companies do attend local events, the frequency of those events varied widely. Two local events per year was the leading response, by 20% of those surveyed, followed closely by four (17%) and three (16%) events.

Events can be a great lead generation platform, but the exact number of local events a company engages in is less important than how they strategically fit into a company’s overall marketing budget, seasonal personnel availability and other considerations

Login to access the full research report on local events and home shows.

For a deep dive into local events and event marketing, and to access training materials, recommendations and education pieces, visit the Contracting Best Practices Library at the EGIA Member Dashboard.

Question: How do I know if a marketing campaign is successful?

Gary Elekes; Founder, EPC Training:

I think the high-level question is “How do I know my marketing dollars are working?” So, you basically have two mechanisms working at the same time in marketing. You always have brand – and brand is something we simply identify as trust, and how someone is feeling about your overall experience, and how much they trust that particular brand.

And the second issue is lead generation. We’re small business owners, we don’t have unlimited resources, so we’ve got to be focused on the idea that we’re creating a lead, we’re creating an opportunity for the company so that we can convert; conversion is just as important for a company as the lead. So we look at cost per lead, but we also look at the cost per conversion. So those are both metrics.

Typically, marketing, then you spend money, the resources that are allocated – it’s almost always best to be in balanced platform of some sort so you’re not heavy in one area or the other. Media tend to be specific to demographics, and how people actually engage or uptake media. So some people still like to read the newspaper. Some people, believe it or not, still have the Yellow Pages. And of course the world is moving digitally and so forth. So you can’t ignore any medium, you need balance.

So directly the answer of “Marketing, how do I know it works?” I think what you want is you want to be able to measure the quality of the leads that are coming in, the cost per lead tells you that but the quantity of the leads that are coming in also dictates that. And then, from my point of view, conversion is equally important. Training up the customer service reps; training about promotions; what technology you might have on the website; what are you selling; the message; the callbooking, getting to the 75-80% callbooking procedure. Those are forms of internal marketing, internal training, communications.

And then the operational marketing is really, Are the techs properly inventoried to be able to create the conversion? Do we actually sell the accessory off the promotion?, and so forth. So there’s three layers: There’s the external, the internal and there’s the operational side. So you want all three of those to be analyzed in terms of a marketing campaign.

So it’s pretty simple: We can send out a direct mail piece for precision tune-ups, and we might get 25% responses back and see that as successful based on the cost we spent. So the other part of the issue here is making sure that you do track the performance metrics, and that you have a unique promotion. There’s lots of technologies out there that we use today on the digital side, specific to media, so we can track all that.

Could go a long ways answering this question, we could spend a week on this topic, that’s kind of my once over, so Drew I’ll toss that over to you, I’m sure you’ve got some comments.

This is the weekly Ask the Experts free excerpt. To listen to all of this week’s calls, or to see the schedule and register for future calls, click here.

“Forget trying to sell your prospects; let them buy. People buy you.”

In the latest episode of the Contractor Coffee Club podcast, host Mark Matteson explains the power of asking “why?” — for both you and your customer.

Plus, he lays out the proven sales script he’s refined over the decades, and how to use it to maximize your close ratio.

What specific questions should you be asking — what information do you need — in order to both maximize revenue and ensure customer satisfaction?

Gary Elekes has the proven roadmap for you, in this week’s “clip of the week” from Cracking the Code.

Watch the clip below, and visit EGIA.org/Show to watch the full show, before it goes in the members-only archive on October 15.

Question: How should we deal with price objections? For example, “I can get it on Amazon for $30 and you’re charging $400. I’ll do it myself.”

Weldon Long; New York Times Bestselling Author

Well, this is a really common problem that we face, both on the sales side and on the service side, because people do know they can buy the capacitor or buy the igniter or something online for a very inexpensive number. But if a homeowner ever brings up with me, “How can you charge $400 for this capacitor? I can go online and get it for $30,” or whatever, you know, I always have a simple analogy that I use.

I say, Mr. or Mrs. Homeowner, the reality is you can buy every component you need for that car out there in your garage. You can go online and buy every single component you need to build that car from scratch. But the reality is it’s not the individual components that define the quality of the car, it’s the expertise of the assembly, the engineering, everything that goes into it. So Mr./Mrs. Homeowner I would just ask you to consider, when you look at the price of that part online, that that doesn’t include the price of someone putting it in their van and bringing it to you like I have; it certainly doesn’t include the training and experience I have over the 10 years of my career; it doesn’t include workers compensation insurance; it doesn’t include unemployment insurance, all the things we have to pay here to employ people; it doesn’t include the cost of inventory, I’ve carried that part in my van every single day.

So there’s just a variety of factors – you’re not just buying the part, you’re buying my 10 years’ experience, you’re buying my company’s guarantee that the part’s going to work properly — many companies have a guarantee that if a part fails in the first year, they’ll replace it free. So you’re not going to have that guarantee. You’re not going to have the assurance it’s done properly. And the reality is, Mr./Mrs. Homeowner, what I’ve found is that when a part fails, there’s another part causing it to fail, or there’s another part fixing to fail after this one. With my expertise I’m going to be able to diagnose this system, those situations and those problems, and I’m going to know exactly what’s going on. Because odds are it’s more than just the capacitor going on here.

So that’s just kind of the outline of the conversation I’ve trained guys to have. This is a situation that, a lot of us have a lot of different experience, and a lot of different ways to skin that cat. But the bottom line is you just have to explain to the homeowner that they’re buying a lot more than just that one individual part for $30.

This is the weekly Ask the Experts free excerpt. To listen to all of this week’s calls, or to see the schedule and register for future calls, click here.

Meet Zac Slocum, one of the first recipients of the EGIA Foundation HVAC Scholarship, and a face of the future HVAC workforce of America.

The EGIA Foundation is a 501(c)(3) nonprofit dedicated to improving and expanding the home services industry’s workforce, and it recently announced its first class of HVAC Scholarship recipients!

In a clip from Cracking the Code, Weldon Long talks with Zac, one of the recipients of a $2,500 award, about what that scholarship means to him, and how it’s affecting his entry into the industry. To learn more about the EGIA Foundation HVAC Scholarship, click here.

Watch the clip below, and visit EGIA.org/Show to watch the full show, before it goes in the members-only archive on September 24.