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Several Trends Point to Better Times
Originally published: 05.01.10 by Bruce Christensen
The national economy is showing signs of recovery, and consumer confidence is stronger, translating into good news for hvacr professionals. There are other reasons to be optimistic about our industry:
Pent-up demand – Millions of Americans are choosing to stay in their existing homes rather than moving into new ones. Many have put off routine maintenance, so there is a pent-up demand for improvement projects, including work on comfort systems.
Tax credits – Homeowners can earn up to a 30% tax credit for hvacr and insulation work through the end of 2010 by purchasing qualifying energy-efficient equipment. It’s a great incentive that helps make an expensive purchase more attractive.
Energy savings – No one wants to waste money or energy. Modern hvacr equipment and proper insulation can cut home heating and cooling bills substantially. Energy Star-qualified air conditioners and furnaces are up to 15% more efficient than standard models — a valuable selling feature.
Rebates – Several manufacturers are offering rebates in order to move existing stock. When you add the previously listed benefits to a nice manufacturer’s rebate, you have a very compelling sales pitch.
Many dealers are using these
Generally speaking, high-performing dealers are doing three things that drive sales: working hard to generate and cultivate leads; maintaining a positive attitude every day; and using financing to close the sale. “You have to commit to a strong marketing program and stay with it,” said Wade Sedgwick, president of Pronto Heating and Air Conditioning in Edina, Minn.
“You can still make sales if you can get into enough homes. Professionalism and a strong presentation will get results.”
The competition for leads is tougher than ever. The new-home construction market continues to languish, and hvacr dealers who used to specialize in new home systems are now competing in the replacement market, so margins are tighter, and customers can be more selective.
In addition to advertising and direct marketing, dealers are exploring the Internet to find potential customers and networking for referrals.
“Everyone is scrambling to get a better handle on online marketing,” Sedgwick said. “Key word searches and social media are very important.” Sedgwick also said that obtaining leads is only part of the equation.
“Following up after the initial presentation is also important,” he said. “A good follow-up program can earn us the opportunity for a second or third chance to interact with that homeowner. We remind our sales team to be very organized and take good notes. By doing follow up well, we may see a 3% to 5% increase in our closing percentage at the end of the year, and that can make a very big difference in our profits.”
Many dealers will admit that while there are plenty of potential customers out there, their closing percentages are lower than they were a couple of years ago. The most likely causes are lower consumer confidence and greater competition for customers in the heating and air conditioning business.
“We used to consider 40% a decent closing percentage, but now 30% to 35% is more the norm,” Sedgwick said. “Fortunately, we are making a lot of presentations these days, more than we used to, so our sales numbers have worked out.”
As selling has gotten tougher, it has become increasingly important for sales representatives to maintain a positive, upbeat attitude. Not only is it important for personal and company morale, it helps with customers, too. Sedgwick says enthusiasm is something he preaches to his sales team regularly.
“Attitude is very important,” said Sedgwick. “People want to be with energetic, positive people. It’s important for our sales reps to stay positive even when they are 0-for-5. You can detect a bad attitude in conversation and body language, so I try to remind our team to stay upbeat and positive when they are making a presentation.”
Heating and air conditioning equipment is typically expensive, and customers are always concerned about paying for a new system. That’s why now, more than ever, financing is a crucial component of the selling process. However, at the same time, Congress is enacting new legislation to change some promotional financing programs.
Beginning in February 2010, the new guidelines required contractors and lenders to stop offering “no pay” promotions. Likewise, any promotion of less than six months, such as “90 days, no interest,” is no longer allowed.
GE Money, after consultation with our home improvement partners, has already implemented a new financing program to help replace no-pay plans and meet the current consumer credit trends. Our new promotion offers no interest financing for up to six months, which is certain to be popular with homeowners who want the predictability of structured payments. It allows them to budget for necessary work on a monthly basis and is an excellent financing tool that can help dealers provide more options to their customers.
This can be a banner year for hvacr dealers if they take advantage of the opportunities that are out there. Home and business owners still need your services, but competition is tough. Look for and cultivate sales leads, stay optimistic and reinforce that attitude every day, and utilize financing to close sales and you’ll have a great year in 2010 and beyond.
Bruce Christensen is vice president and general manager of GE Money’s Home Improvement division. He and his team provide consumer-financing programs to thousands of hvacr dealers nationwide.
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Your ability to use financing to close sales can be a key differentiator from your competitors because offering payment options makes it less likely your customers will take their business elsewhere.
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In many cases, a new heating and/or AC unit amy be an unplanned expense. A consumer credit program is a powerful sales tool that also helps customers.