High Yield Contractors: How Do You Measure Up?
Originally published: 11.01.14 by Pete Grasso
Editor's Note: HVACR Business contracted an independent research study to identify management approaches and trends in the adoption of products and systems by top HVACR contractors. We will present the findings of this study through a series of articles, beginning with this one and continuing throughout 2015. Our goal is to present best practices demonstrated by High Yield Contractors — those who expect annual gross revenue increases o at least 13.9 percent, are customer oriented and have large customer bases across both residential and commercial/industrial sectors.
Learn the Keys to Achieve Continued Success and Grow Sales in 2015
To be successful in business, you have to have one eye toward the future. It’s not enough to simply do what you do well — you must always look to improve and grow.
Improving and growing your business doesn’t happen overnight, though. It requires thought, and the best contractors — High Yield Contractors — have a specific plan for growth and improvement.
Focus on Customers
Nearly all High Yield Contractors (95 percent) say they strive to be customer-oriented. This means enabling your employees to put the customer in control. To truly be customer-oriented, you must first trust your customers not to take advantage of the situation, and then trust your employees with this empowerment.
The goal is to delight your customers and make them ambassadors of your company. It’s cliché, but under-promise and over-deliver truly is a cornerstone to achieving high customer service.
You need current customers to keep buying — and buy more —to consistently generate cash to grow your business. Keeping them satisfied is how you do it.
Why are you better than the rest? That is the first question most consumers ask when deciding with whom to do business. If you can’t answer that, you’re in trouble.
Whether it’s your services, your quality, your prices or something else, it’s important to differentiate your company from your competitors. You can do this by making sure potential and current customers, as well as other businesses, know who you are and what you stand for.
Most High Yield Contractors (91 percent) realize this as an important part of achieving continued success. Conduct a SWOT (strengths, weaknesses, opportunities and threats) analysis for your company and look closely at the threats and weaknesses.
Address those weaknesses and turn those threats into opportunities.
Invest in Your Business
To truly grow your business, you must be willing to invest in your business. This may seem like common sense, but often it’s an area that is overlooked when you’re trying to increase profits.
Facility investment decisions represent major commitments of corporate resources and have serious consequences on the profitability and financial stability of a corporation. Keeping up to date with the latest technology and communications systems can be a somewhat daunting task if you haven’t upgraded in a while.
High Yield Contractors constantly evaluate the needs of their companies, and invest profits into the necessary upgrades to keep them competitive.
Just as important as ensuring your own facility, equipment and systems are current is ensuring you’re offering your customers the best products, systems and solutions.
As important as great customer service is to consumers, it won’t mean much if you’re not also offering them the best solutions available.
Today, consumers are always looking for state-of-the-art — why else does Apple get a line outside their store the night before they release a new product?
When choosing your product offering, don’t simply settle for what you’ve always offered. HVACR manufacturers are always improving their products, and consumers want the best of the best.
You’ve invested in your business and the products you offer, but there’s another area in which High Yield Contractors continue to invest — their people.
Training makes employees valuable. Training your employees will reduce the number of callbacks you receive, making your business more profitable.
With a properly trained staff, you make more revenue per employee and achieve a higher return on investment (ROI) on hard assets such as equipment and trucks. Finally, education needs to be perpetual and not simply something offered in the slow months.
A great training program can also help you retain top talent. Today’s workforce is always looking toward advancement and if you can’t help them get there, they’ll gladly find an employer who will.
Market Your Services
A majority of High Yield Contractors (52 percent) understands the importance of having active marketing programs. Whether it’s advertising, promotions or ongoing public relations and social media campaigns, marketing your business is essential to achieving continued success.
The heart of your business success lies in its marketing. To succeed in any business, the products or services of that business must be communicated with consumers.
A marketing program that gives your company the best chance is a healthy mix of different forms of marketing, such as website development, public relations, print and broadcast advertising, design and printing for all print materials, trade shows and other special events.
Specialize in Solutions
Identifying a niche to exploit is often the source of many successful business growth stories.
While it may be tempting to offer as many products or services as possible to capture a wide a range of customers, High Yield Contractors (62 percent) realize a better way to go is to specialize — offer fewer solutions to a targeted potential customer base.
By specializing your systems and solutions, you’re also differentiating your company from your competitors. For example, when a consumer is looking for a green comfort solution, they’re likely to seek out a company that specializes in green solutions, rather than a company that simply offers green as one of it’s many options.
Identify what you do best — or would like to be known for doing best — and focus your efforts there.
Broaden Your Scope
Just because you’re focusing on a specialized solution offering doesn’t mean you can’t broaden the scope of that solution. Today, a lot of people are involved in the decision making process when you’re trying to sell to them.
The broader scope and bigger footprint of your solution means being able to talk to each of these stakeholders in a different way in terms of their priorities, goals, perspectives and knowledge level about your proposed solution.
On the flip side, many High Yield Contractors (47 percent) realize the benefit of expanding the number of services they offer as it relates to growing sales.
Often, contractors can best differentiate themselves by focusing on deeper customer concerns such as health and air quality; whole-house humidification or dehumidification; zoning to eliminate hot/cold spots; advanced thermostats that do more than switch systems off and on; and whole-house diagnostics and servicing for highest energy efficiency.
Emphasize Additional Market Sectors
Many High Yield Contractors (36 percent) see value in expanding their businesses to better service customers. This could include adding services such as plumbing, electrical or home performance solutions.
Your technicians are already servicing existing homes and commercial properties. By emphasizing additional market sectors — such as plumbing or building performance — they may find potential opportunities to generate additional revenue for your company.
Add New Products
In addition to wanting state-of-the art products and services, consumers also want choices. High Yield Contractors (33 percent) identify adding product lines as an obvious way to grow sales.
Adding new products and services is a common way to grow any business. Factors such as evolving homebuilding methods, changing consumer preferences and increased awareness of health and safety issues often open new product or service opportunities for High Yield Contractors.
The key to adding new product lines is to remember customers look to you as the expert to provide the best possible solution to make their home or business a comfortable, healthy and safe place to be.
Finally, to truly increase sales you’ve got to find new customers. Of the 89 percent of High Yield Contractors who have specific plans for growing revenue, 26 percent plan to do this by expanding into new geographical areas.
Once you have the products, services and staff in place to grow, the next logical step is to grow your service area. It’s important, however, not to stretch yourself too thin or make it difficult for your technicians in the field to get the support they need. But, bringing your services into neighboring cities and suburbs may be just the push you need to reach the next level of revenue growth.
As you look to grow your business in 2015, keep in mind these success factors. Pick and choose which areas you feel are most important for your business, and focus your efforts there. If you’re proactive in working toward success and set up a specific plan for growing your revenue in 2015, you’ll soon be on your way to becoming a High Yield Contractor.