When you are No. 1 in your market, you are a moving target. You dominate your industry and own a substantial portion of market share. But, what got you there won’t keep you there, and the companies right behind you are hoping you’ll crash and burn around that next turn.

As Jack Welch, the legendary former CEO of GE said, “When you’re number four or five in a market, when number one sneezes, you get pneumonia. When you’re number one, you control your destiny.”

A market can be defined as the set of all actual and potential buyers of a product or service. If I’m a residential retrofit company, my market could be any home that has a heating or air-conditioning system that needs to be replaced and is located in my service area. A market leader could be defined as a brand, product, or company that has the largest percentage of total revenue in its market. A market leader often dominates its competitors in customer loyalty, customer service, urgency, image, value, prices, profit, and promotional spending.

2009 was a record-breaking year for McAfee Heating & Air Conditioning Co. We secured our place as a residential market leader in Dayton, Ohio. In 2010, we were up 46% over 2009.

How do you become a market leader? Here is what has worked for my company:

✔ Carefully evaluate strengths, identify what you do best, and then stay focused on these products and services. This will get you to the top and help keep you there. It will also:

• Reduce costs as you develop more experience.

• Increase profits as you refine your model with increased efficiency (which reduces costs).

• Increase growth as more of your business focuses on your core strengths.

• Increase market share through referrals and focused marketing. To become a market leader, it is not enough to know how to provide a service, but how to provide it more effectively
than anyone else in the market both in terms of internal processes and customer results.

✔ Without straying from what you do best, identify a “first-in” strategy that your business can offer your market before all others. This will create a lead over competition that will be difficult for them to match. The requirements for you as a leader are:

• Be willing and able to take risks. (i.e., extended service hours, guaranteed arrival times, guaranteed one day installations, floor protectors, or a promise of your money back if not satisfied.)

• Strive to stay ahead. An important factor for staying ahead is to know your competition. Know what they offer and how they offer it. An additional factor is to stay on top of the latest and greatest technology. Remember, what got you where you are may not be enough to get you where you’re going.

• Promote heavily. Advertising ability should not be based on co-op funds. I advise companies typically to start with a percentage and then gradually work up; 4% to 8% seems to be the average for most successful HVACR companies in the United States. If you are doing $1 million in sales, then spending $40,000 on advertising and marketing is no different than doing $5 million in sales and spending $200,000. The key to both of these is consistency. Just keep doing it!

• Think outside the box. For instance, at McAfee, one of the biggest challenges our installation department encountered was with special order sheet metal either not being finished, or not being made correctly, thus delaying the installation. We had a brainstorming session about the problem, and from that session, we determined we needed our own sheet metal shop. Today, our sheet metal shop is known for its cleanliness, accuracy, and production speed. We have increased our daily productivity and are able to take on more installations per day. With a shop manager and three full-time metal fabricators currently in place, we provide sheet metal to many other area companies in addition to our own work.

✔ Have a strong-commitment strategy: This means fighting off challenges aggressively by employing different forms of product, price, promotion, and service strategies.

• Defend your position within the market at all costs. When you successfully brand your business, you must maintain “top-of-mind” awareness within your market. Always distinguish yourself from other companies, and always look for innovative ways to remain unique within your industry. Others like to follow those that are leading, and if you don’t keep moving, others will eventually catch up, or even surpass you. When you begin to see others mimicking advertising and portraying similarity in products and/or services you are currently offering (as flattering as that may be), you better get to work strategizing bigger and better ideas.

• Operate optimally by knowing the important metrics of your company. When it comes to metrics, it’s important to not just measure, but have a reason for your measuring. Here are some HVACR industry metrics that you should use:

• Number of employees

• Sales volume

• Sales volume per employee

• Net profit as a percentage of
sales

• Net cost of material and equipment as a percentage of sales

• Total cost of auto/truck insurance per vehicle

• Total cost of healthcare (company portion and employee
portion)

• Company cost as a percentage of sales

• Refuse to be content with your present situation or position. Never get comfortable and never let your team get comfortable. Henry Ford would remove a comfortable manager from his position and replace him with someone who was hungry to grow and change.

• Use your resources. Observe what is happening in your market and pay close attention to trends. Review your business metrics, and review performance and expectations with your people regularly. Don’t fall into the trap of having information, but never putting it to work for your company.

Whether you’re currently leading in your market, or number four or five on the list, remember that you must incorporate vision and innovation into your organization to hold your place or to forge ahead.

Market-Leader Busters: Beware These Practices!

I’ve shared some things you should start doing, now I’ll share some things you should stop doing:

Carrying a brand that all of your competitors sell. What’s unique about your brand? Is it really any different than your competition? You’ll never see three Lexus dealers located in the same area. When Truett Cathy started Chic-fil-A, he didn’t come out with a better
hamburger; rather, he was first in with a great chicken sandwich. Wendy’s
opened up two years later.

Lowering your prices. How many times have you lowered your price because the competitor did? We all have. After all, that is how we beat them, right? What really happens is that
we lower our price $100 and we get the sale; but later, we cost out the job and
realize we won the battle, but lost the war. How many can we afford to lower?

Increasing your territory without increasing your team. How big of a radius can you travel — 20, 40, 100 miles? Driving time is down time, and too much of it decreases the amount of calls run. Figure out what a good radius is for you and then stick to it! Having work is great, but if it costs you half your net profit in driving time, you may want to rethink your strategy.

Going negative with your advertising. Advertise that you don’t do what the market leader does: You don’t use flat rate pricing, you only have 9-5 hours, and that you are the only honest company around. Bad mouthing your competition never increases revenue.

Driving dirty vehicles. Why wash a truck? It only gets dirty anyway, right? Let it get so dirty that someone writes “wash me” on the back of it. Hide the dashboard with clutter
too; it’s a great attention getter. Customers know that how your technicians
treat their trucks is how they will treat clients’ homes. Show respect to receive
respect.

Taking on all services. Do you remember doing your homework in front of the television or while
listening to the radio? Your focus and attention may not have been at its highest
level, a fact born out the next day when you panicked to correct all the mistakes
or to complete the assignment. When we try to be a “jack-of-all-trades and
master of none,” we spread our team too thin and lose focus.

Greg McAfee founded McAfee Heating & Air Conditioning Co. Inc. in 1990 when he was 27 years old. Today, in addition to running his business, Greg consults and teachers others about successful business management. For more information, visit his Website at www.gregmcafee.com