HVACR Business Publisher Terry Tanker recently interviewed Dave McIlwaine, president of HVAC Distributors, Inc., which has 14 locations throughout Pa., N.Y., Md. and Va. McIlwaine, who serves on the board of trustees for North American Technician Excellence (NATE), discussed driving sales, training and the challenge of finding competent technicians.

1. How's the business climate in your area?

The residential new construction market is a little slow, due to the cold winter and the delay in getting houses out of the ground, but there is activity coming. We need some warmer weather to get the residential air conditioning season kicked off. Commercially, the activity levels are finally improving and we're expecting growth.

2. How did the extremely harsh winter affect heating product sales?

Heating season sales were positively impacted. The bigger impact was also the fact that we didn't get much snow. Snow slows everything down.

3. Is one sector growing better than others?

For right now, it's commercial. If we could get some consistent weather out of the 60F range, residential replacement will be active this year.

4. To what do you attribute this?

Commercial has been soft for nearly four years, so I believe there's a great deal of pent up demand in this sector. We had a very mild summer last year and with some normal summer weather it will be busy, again, due to the aging installed base.

5. Assuming commercial picks up like you expect, what products will be popular?

We expect to see lots of activity in package rooftop units, ductless splits and VRF products.

6. What trends do you see moving forward?

I think commercial will continue a slow and steady growth for the next few years. In addition, residential high efficiency products and commercial VRF products will be growing segments as we move forward.

7. What techniques are you using to drive sales?

We're focused on adding to and growing customers who promote and sell our equipment. Our market share is low enough that there is plenty of opportunity to grow. We've also improved our technology offering so customers now have the ability to order from us via mobile devices, in addition to the web capability we've had for more than 10 years.

8. How do you keep your staff busy during slow times?

Because we're still in acquisition integration and transformation mode, we had plenty to do. We use RF barcoding in all locations, so we implemented that in the five new western branches. Additionally, we now have more than 350 unitary equipment dealers, so we implemented a software program to generate price books instead of creating them manually.

9. Your company is expanding … could you tell us about your recent growth?

We expanded fairly dramatically last year, growing from six locations at the end of 2014 to 14 locations currently. Three of the locations were start ups, where we expanded our footprint to include Del., Md., Northern Va. and W.Va. The other five locations were part of the GBG acquisition where we expanded to Western Pa. and Upstate N.Y.

10. Why was the GBG acquisition such a good fit?

GBG was the distributor for Amana and Goodman, which is our unitary line and was also on Eclipse, the same software as us. The ability to expand our footprint with a team of customer service focused individuals selling mostly the same products and operating on the same ERP system was very attractive to us. We're really excited about our future prospects for growth with the expanded footprint we now possess.

11. What do you see successful contractors doing that others are not?

They manage their business by having relevant and impactful metrics that are tracked, posted and communicated daily.

12. Would you explain your philosophy on training?

Since our founding, we've focused on employing technically competent team members who can provide value to our customers. We do monthly training for our people in-house, encourage them to use our Blue Hawk University and Heating, Air-conditioning & Refrigeration Distributors International (HARDI) educational resources and have implemented a formalized career path development program.

13. Could you tell us about your training center?

We opened our first training center back in 1989, only our second full year of being in business. I've always believed our value is demonstrated by helping our customers succeed, thus our Partners for Success tag line. We have training areas in 13 of our 14 branches so we can provide technical, business, sales and NATE training to our customers and team members.

14. What are the three largest challenges contractors face in coming years?

First is the challenge of finding technically competent technicians. Second is the introduction and growth of more technically complex products. Third is the battle to own the customer.

15. Could you elaborate?

Between Internet sellers, big box stores, consolidators and the general competitiveness of the industry, coupled with a consumer who requires higher levels of responsiveness and customer service, contractors will be challenged to improve their performance.

16. How are you positioned to help contractors with these challenges?

In addition to our training centers and commitment to assist our customers in developing their people, we're enthusiastic promoters of the EverRest Success Group, a business management and improvement program we offer in partnership with Amana and Goodman. We also heavily promote NATE. I serve on the board of trustees and all our technical employees are NATE certified. We work very hard to assist our customers in gaining NATE certification and recertification for their technicians.

17. What is your customer service philosophy?

We have a companywide focus on lean and continuous improvement, so we're the most cost-effective supplier for our customers. It's our job to make our customer partners look good to their customers. If we do that, we will win in the marketplace.

18. Your company has almost 150 employees, have you also found it difficult to find employees?

It's most difficult to find people to fill the sales positions — inside, outside and counter. This is one of the reasons we've embarked on our career path development program.

19. What strategies do you employ to recruit?

We have referral programs for our team members, but mostly we're now running year-round recruiting ads to develop a pool of qualified candidates for when we have openings.

20. What types of marketing do you find most successful?

We market for ourselves and then we assist in marketing for our customers. For us, it's mostly direct mail coupled with outbound calling and personal visits from our sales team. For our customers, we've had success with installation direct mailers and search engine optimization.