Add this service now to boost sales and profits

Although home-performance contracting isn’t a new trend — it was introduced more than a decade ago — it’s still a relative “sleeper” business in our industry, but it absolutely shouldn’t be! The HVACR contractors who offer this service will become the dominant service providers in any given area.

Not only will home-performance contracting (HPC) differentiate you from the competition, it will:

• Increase revenue from the testing fees and new work that in the past was not detected.
• Boost profit margins due to the laborintensive work of resolving comfort issues, such as duct repair or duct system replacement, or joint re-sealing.
• Open the door to add other complementary services such as insulation, attic renovation, and crawlspace encapsulation.
• Create happier homeowners and satisfied customers.

Additionally, since performance testing has recently been added to some state codes — as well as being incorporated into national standards — expect this service to become much more commonplace, which means now is the time to get started. 

I launched an HPC program when I was business leader for Peaden Air Conditioning, Heating & Plumbing in Panama City, FL. We began discussions about adding HPC in 2004, but our talks didn’t result in any immediate decision. But I was determined to add this service and, by late 2007, we accomplished that goal.

Our HPC business had led to a higher closing ratio and increased our average system sale by $800; plus, there were significant spikes in duct repair/replacement revenues. Adding the service definitely made us more competitive. A Panama City competitor happened to call the same consultant who sold us on this service, and this competitor shared that Peaden’s Comfort Diagnostic advertising had a dramatic effect on the company’s overall sales. Now, this competitor offers homeand duct-performance service as well.

Keys to Our Success

Initially, our implementation focused on these key items:

• Choosing the right partner
• Searching for qualified personnel
• Practicing, practicing, and more practicing
• Having everyone, including all our administrative staff, witness a home and duct test
• Establishing the initial pricing strategy
• Marketing

Choosing the right partner:
Initially, we had to determine which homeperformance training entity to select, so some research and comparisons were necessary. We considered two vendors — Comfort Institute and National Comfort Institute. This was an important decision for us, because a new relationship would be established where time, effort, and money would be invested. Prior to parting with any money, I felt I needed to check my commitment level and that of my management team, because the success of bringing in a new product and/or service rested on our combined shoulders, but mainly mine. After weighing both options, we chose Comfort Institute.

The next step was determining when to pull the trigger. We circled September 2007 to finalize the deal, acquire the associated hardware, and schedule the training — which would allow us enough time to practice this new service during our off-season months.

Training:
In our search for candidates to send for training on this technology, we looked in-house first. I sought, at least, two employees to train (Never just one! This means service can continue uninterrupted if one leaves.) and the simple job requirements were that they had to be physically able, computer literate, and willing to learn something new. We never had to advertise outside of our company to find more people to send for training on this cutting-edge technology. Enough employees were interested from the start.

Practice:
To make certain we had the correct process in place, we tested in our own homes — dozens of them. Like the lawn-care provider with the tallest grass in the neighborhood, my home had the most air leakage. Our employees also learned a lot about air leakage within their own homes, and saw the benefits of offering this service.

Determining air leakage is exactly what this equipment and diagnosis uncovers, especially when an infrared camera is used in conjunction with the test. I strongly recommend the purchase of a thermal-imaging camera — a must-have item as well as a definite game-changer!

Pricing:
For the first system, we established $295 for a non-service-plan customer and $195 for a service-plan customer (another incentive to being a “plan” customer!). If there were more than one system in the residence, we charged $100 for each additional system, regardless of whether or not they were on a plan.

Marketing and promotion:
We used multiple tools, but first, we created a name for our business — Comfort Diagnostics.

• T.V. Ads: I’ve been a proponent of T.V. marketing for a long time, but it’s perfect to market this service. Why? Because to sell this service, you must convince consumers that it’s something they need to have performed, and there’s nothing more powerful than delivering an actual testing video along with your marketing spin on T.V. We produced a couple of T.V. spots specific to this testing, including footage of a camera in use. These camera shots of air infiltration were like planting seeds of curiosity in the mind of a homeowner, in addition to displaying that we had high-tech equipment (blower door, camera, flow hood, etc.) in hand. We went from having scattered and sporadic testing appointments to a significant backlog shortly after these commercials began airing. 

• Website videos: In addition to television, we added Comfort Institute videos to our website with one on our home page and others located deeper in the website. Our entire staff (inside and out) was trained to lead consumers to these videos. Seeing is believing! 

• Billboards: We also created a billboard campaign that we posted when we knew monthly power bills would be high either in hot or cold weather. One of these billboard messages stands out in my mind – High Power Bill? OMG! Comfort Diagnostics – Real Solutions!

• Gift certificates: Another way to promote this service, especially if you wish to assist non-profits with their fundraising events. Our gift certificate (a $295 value) was a popular bidding item, which in turn gave us exposure to many new customers.

Over the next couple of years, and in addition to our initial buy-in, we purchased two additional home-performance packages (instrumentation) and three infrared cameras; decreased the price of this service; and added insulation to our menu of services because we had the revenue history to know that the more tests we did, the better!

Lessons Learned

Some of the important takeaways that we learned included: Never give away this service for free. If it’s free, it’ll probably be viewed as having little value, which is completely opposite of its true value. The appointment schedule for these tests has remained consistently loaded.

Build in ample time to learn the new service. We probably spent much more time than most contractors studying a new product, as well as practicing commentary amongst ourselves in order to sharpen our product knowledge prior to unveiling Comfort Diagnostics. This might be viewed as overkill, but experience told us that getting everyone in our organization on board was important to the initial and overall success of this new venture. (In 1999, we spent more than a year before taking the covers off our Peaden Signature Series systems — HVAC equipment, which was the first of several private-labels. To date, and to my knowledge, the success of the Signature Series is unparalleled within the industry.)

Don’t be put off by the cost. Regarding our total investment to offer and upgrade this service over a four-year span, the costs were relatively significant, which included the HPC equipment as well as training, travel for training, practice time, and marketing. However, offering Comfort Diagnostics to our customers, as well as other homeowners, enhanced our ability to increase our customer base, including service agreements (many from our competitors who don’t offer this service).

In retrospect, I have no regrets —except maybe one — that we didn’t do it sooner! I strongly recommend that you consider weaving HPC into your business model to fuel future revenues, profits, and growth. Don’t be the last company to climb on board because this testing is becoming an industry standard.

Robert Wilkos has more than 30 years of senior management experience. He is former business leader for Peaden Air Conditioning, Heating & Plumbing. He is now an independent consultant focusing on healthy growth and long-term long-term prosperity of residential service businesses.