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2002 2003

Breakthrough Article

By Dean Ferrara:

I recently visited with a property manager friend that asked me to help him understand what a service company was offering him in a possible service agreement.

In looking at the proposal left by the service company, all they provided for an explanation as to what was being provided, was the following:

"Filter changes four times per year and maintenance."

And then they gave the price and a whole lot of terms and conditions.

I ask you this question, would you buy maintenance for your car if the person or company providing you the proposal said, “we will change your air filters and perform maintenance for $1,000.00 dollars?” I hope not! Don’t you want to know what you are getting for your money?

So why does our industry and most service companies in it think they can provide so little tangible information to the customers? And is there a connection between customers buying lower priced service, and us as service contractors not providing adequate details of the service we are providing?

I often get a laugh from HVAC contractors that I speak to when I ask them this question. “Do you know what the most reliable piece of refrigeration equipment is?” I get many different answers but the response I always give is this, “the refrigerator.” How many times over the course of its life does anyone perform routine maintenance on it? Sometimes never, and don’t they last for a really long time?

Unfortunately for our customers, the HVAC equipment that provides comfort, fills process needs, and maintains indoor air quality can’t run its useful life with little to no maintenance. When I was providing service solutions, I use to tell my customers that it wasn’t a question of if a piece of equipment would break down, it was a question of when, and in most cases, equipment doesn’t breakdown when the temperatures are comfortable, or between the hours of 8 and 5.

By asking the following question of my customers we would start down the path to understanding the value of service and thereby developing the right service solution. I would ask, “If you bought a car and ran it 24 hours a day, 365 days a year, and you never maintained it, what would happen?” Ninety nine percent of the time I would get the same answer – “it would breakdown a lot and probably not last very long.” I know that this is a simple question, but I am here to tell you many customers do not make the connection that HVAC equipment runs 365 days per year, 24 hours per day and needs dedicated maintenance. So why don’t customers really understand the need for maintenance and appreciate how much we as HVAC service companies do for so very little money?

I will answer that last question in a moment, but let’s first look at an interesting comparison between Copier service companies and HVAC service companies and then talk about how Auto Service companies operate.

Copier service companies bill their services at $125.00 per hour or more. In the same market HVAC service companies bill their services $90.00 per hour or less.

So why do we as HVAC service companies invoice for less?

The Copier service company has made a relatively small investment in training and the copier technician has spent a few months learning the skills needed to service copiers. They have copier tools and inventory that will fit in the trunk of a small car. The HVAC service company has made and continues to make substantial investments in training, tools and equipment and the technician has spent a lifetime developing the skills needed to service the many different types of equipment. In order to carry the tool and inventory to service this equipment, it requires at least a one-ton van or larger to carry it all.

So why do we as HVAC service companies invoice for less?

To diagnose problems, copier technicians are led to the problem copier by the customer and then they use the self-diagnose function within the copier to tell them what services and repair parts are needed. The HVAC technician is led to the general area in the building that is uncomfortable, and then begins the thorough and painstaking process of finding what components in multiple units are causing the problem. Through the HVAC technician’s extensive knowledge and tools, they skillfully diagnose the problem and solve it. And they do all of this in extreme heat, cold, rain and snow.

So why do we as HVAC service companies invoice for less?

The copier technician wears gloves to keep from getting dirty, hardly breaks a sweat and spends most of his or her billable time filling out the paper work required for invoicing. The HVAC technician wears sweat and the grime of the job and spends most of his or her billable time actually performing work.

So why do we as HVAC service companies invoice for less?

Now lets talk about Auto service companies. Customers bring their vehicles to the service shop between 8 and 5, take a shuttle or arrange for a ride, and then go through this same process to pick up their vehicle. The auto service shop does not come to the customer for service and does not offer emergency service if your car was to quit in the middle of the night.

So why don’t customers really understand the need for maintenance and appreciate how much we as HVAC service companies do for so very little money? And why do we as HVAC service companies invoice for less than other types of service companies?

I think there are two primary reasons. First we do not fully understand and appreciate our own value to our customers, and in most cases our sales people do not. And second and more importantly, we have not educated our customers as to the values they receive in a maintenance service program. Why? Because generally speaking, most service companies do not have the tools or training to educate their customers on the value of service.

Today more than ever before, people need and have access to information they might not have had previously. Buyers are smarter because they have this information and can make informed decisions. No longer are most decisions made from emotion, they are made from reason and logic. As contractors who are looking to take care of our information-needful customers and our bank accounts, we owe it to ourselves, our sales people, our technicians and to our customers to provide detailed proposals that educate and inform everyone involved on the services being provided along with their value.

Today’s proposals can’t say, “four filter changes and maintenance.” An educated buyer will perceive such a proposal in one of two ways. Either they will see this as a sign of an uneducated and lower-skilled contractor, or they will see it as a license to steal by an unscrupulous contractor. These may be hard statements to discuss, but put your self in the customer’s shoes. We not only owe it to them to provide a detailed scope of work, but we also owe it to ourselves. When is the last time you saw a design build proposal that simply said “heating and cooling with diffusers,” or a RFP for a plan & spec job that simply asked for “cold process water inclusive of pipes?” Get my point. If we as contractors are going to change the way we are perceived, we have to change the way we inform our customers.

The two previous overly simple descriptions of a design build proposal and an RFP would never hack it in the real world. This lack of information would not occur for them and it should not occur when it comes to HVAC maintenance and service. But it does.

Why aren’t service companies clarifying the actual tasks and details that make up their scope of work? Is it because they don’t actually plan on performing the service and do not want to be found out? Unfortunately, there are contractors in every market that do not want to provide information and detail for their customers. And because of this lack of definition it is these companies that drive price down and give the entire industry a black eye. But for most of us, it is more a matter of us not having the tools and knowledge to provide this information and detail. If we had access to a means of providing this detail and information, we would certainly have embraced and used it. With it, our sales people would be providing accurate and detailed proposals to their customers, and we would be providing our service technician’s detailed delivery plans so that they know what was sold and what was to be delivered. The bottom line is, our customers would know the value of what they were buying.

I know first hand that providing such information and details to customers can be both advantageous and profitable to you and your service customers. It is advantageous from the standpoint that when you are in a competitive bid situation, your customers have the ability to truly make an apples-to-apples comparison and see the differences of services provided between a higher and lower priced service agreement. You also have an advantage because your customers can verify the tangible services you are proposing to provide that your competition may be unable to demonstrate. And if and when your competition begins to provide this detailed information, your customers will never again be made to believe that they can get the same level of service for two very different prices.

So by every service company providing more detailed information to the same customers, this will act as a deterrent to lower pricing strategies that some contractors ignorantly or purposely use that results in customers perceiving value where tangible value really cannot be found.

I can remember many situations in which I was selling against three or four competitors that were not providing detailed information and I was. I made the deal and they lost the deal. Why? Because of my good looks and charming personality? Maybe, OK not really. Was it because I had tickets to a ball game or we played a round of golf? Maybe. Or was it because I said my company and technicians were the best and provided them with impressive brochures? 

You must know that in every case the other sales people had all of these tools of sales at their disposal, and yet they did not make the deal? I know if we had all described our service as “four filter changes with maintenance,” that no matter how good my intentions or my sales skills were my chances at making the deal would have been about one in four. Fortunately I did not look like the others because I had information on my side and I typically sold my service programs more times than not because of my superior information and ability to make tangible the services I was proposing.

With what we now refer to as a task-based or Information-Based service, I was able to walk my potential customers through our exact services, educating them as to the importance of the tasks being provided. When I needed to handle price objections or concerns, I would simply make sure my prospective customers fully understood and agreed, how important all the tasks were and then I would explain how we couldn’t lower the price without taking away some of the work we were going to perform. After they understood this, I would then let them make the decision as to whether or not they wanted to reduce the scope of work and price.

I found that once my customers were educated and they understood the importance of properly planned maintenance, they appreciated the higher form of service and my higher yet fair prices were rarely ever an issue. I almost always had a successful outcome with this approach.

With it, I improved my close rates and it resulted in happier customers that understood the value we were actually delivering in service. I know of other service companies across North America that have had similar experiences as mine and continue to provide such information to their customers because it just makes sense.

So what are you to do if you do not yet have the ability or tools to provide such information to your customers that allow them to see your value and to assure yourself a fair profit? We at e Performance Learning believe we might just have the answer for you.

This coming September, e Performance Learning will be formally releasing QTES, (Quality Task, Estimate and Schedule), our Information-Based computer program for both our ePL Members and non-members. This program will be provided to ePL members at no cost with their annual membership. QTES will come with a computer Program CD and an educational “how to” Training CD that will get users up and running.

For non-members, this Program CD and Training CD will be for sale in our ePL store. Besides the initial Training CD, ePL will provide ongoing training at their Learning Center and through the use of what we refer to as ePL TeleConferences.

We believe QTES will become the first national service standard in our industry – one that both contractors and their customers will value and utilize. e Performance Learning has already introduced QTES to a large influential international prospective service customer organization and their executive people. During our discussions, we educated them on the advantage of using QTES as their standard for acquiring maintenance agreements and related services. Their response and interest has been excellent, as we had hoped it would be.

We are confident QTES will prove very valuable to any open-minded and progressive service company wanting to provide their customers detailed information. Our experience tells us that your service customers will also appreciate such a refreshing approach to service.

In the next September Breakthrough, we will be sending you some more information on QTES and ePL Membership opportunities so you can educate yourself on how this Information-Based service approach and ongoing learning support at ePL may be applied to your business to make it even more successful.

Stay tuned!