How does the small time HVAC contractor beat the large Companies?
If there is one question that penetrates the minds of local hvac contractors (and really most small/medium sized business owners) it is how to compete against the ‘long’ established bigger companies. How do you compete and win against larger enterprises? How do you gain more customers and how do you outflank the companies that seemingly have more money, talent, resources at their disposal. Is it possible to overturn the status quo and make gains against your competitors?
The following information should function to inspire you: to think about how to grow your HVAC business and outwork the big boys.
Market Status: Houston Air Conditioning
My business is residential Air Conditioning and Heating in Houston Texas. For us, the larger players consume about 10-20% of the overall residential repair market. Leaving a very stratified remaining 80% where no single player controls the remaining market. The reason for this is probably that service businesses like HVAC repair and installation are very difficult to scale. In a specialty trade like HVAC, It is hard to retain quality as a business expands. Though I believe a majority of small contractors could handle significant growth without having a decline in quality. This does not come without hard(and smart) work but the smaller contractor is often able to maintain high quality and consistent service more so during extreme growth than the huge companies.
Watch the following Marketing videos to begin thinking about how to improve your Air Conditioning and Heating Company
#1. Malcolm Gladwell’s David and Goliath
“Sometimes giants are not as strong and powerful as they seem… and sometimes the shepherd boy has a sling in his pocket”
– Malcolm Gladwell
#2. Al Ries’ Different VS Better
“Approach the market by being different”
– Al Ries
Conclusion
I am giving away the keys to the castle here but I figure this information could a) become valuable to a lot of contractors and b) Improve my model as it becomes increasingly exposed and questioned. I invite you to enter the conversation on whether the HVAC industry can pivot under a more streamlined approach. An approach that is both Different (as Ries instructs) and has unique advantages (like Gladwell shows). Here are the differences and advantages I see in my own business compared to the long time players.
What Mission Air Conditioning Does different and better?
1. Personal – Face to Face – Look at ARS, John Moore, Airtron, One Hour. These are the bigger players in Houston. They are all impersonal brands. They have much more transient work forces and management. More personal, local, feel builds greater trust and affinity for our customers. We want customers who are friends.
2. Product & Knowledge – What are the big boys selling? Mid level cheap equipment, right? Who are your customers and what do they want? High end? Is name brand important? How do you position your offerings? Have you explained the importance of quality installation? Where have you build margin? Product knowledge and positioning profits effect your bottom line tremendously. If you have not dug deep into who you customer is and what they value you are missing a huge tactical advantage and thousands and thousands of dollars in revenue. Focus your profits toward what your customer needs and wants. Mission has a very targeted approach where we have a standard list of 3 products that we believe provide the greatest value to our customers based on their expressed needs and wants. We build this off of comfort and efficiency.
3. Price – ‘Value’ is actually a better word for this but price works because it expresses the value they place on something in real dollars. If a customer likes you more AND you save them significant money more than the competitors you have the opportunity to create HUGE fans. For more info on creating fans see Seth Godin’s concepts about creating tribes.
4. Marketing Tactics – Content focus. The likes of the larger players have very large marketing budgets. They at times spend up to 20% or more of their budgets on marketing alone. This translates to millions of dollars in marketing expenses and requires much higher average prices to justify marketing dollars. My prediction is that this creates a more volatile system that works for the time being but could become less viable as time goes on. Arms races work but all it takes is one disruptive player to throw a wrench in the traditional model.
Don’t get me wrong, marketing is a must. But how do you do it ‘differently’ ie. cheaper and more effectively than your competitors? Spend less with a deeper impact. I believe it can be done especially now as distributing and sharing information has become increasingly less expensive. Think youtube, itunes podcasts, blogging, etc.
Mission seeks to focus marketing on impact NOT just blasting messages on a prayer but on highly specific and targeted agenda.
How do you position your business compared to your competitors AND show how you are different?
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