What HVAC owners don’t understand about lifetime customer value

Frankly, new customers are better than loyal ones

We’ve seen a lot of contractors do it: puff up with justified pride when asked for the secret to their success, responding, “The loyalty of our customers, of course.” It’s one of those unwritten objectives every contractor thinks about. Being called for a new project from an old customer. All these years later, they remembered the great job we did for them.

Customer loyalty doesn’t do much

For the bottom line, that is. Those are nice stories, and we do applaud you. But if your business model is predicated on customer loyalty, I’m afraid your future isn’t going to be all that bright. Oh, you’ll get plenty of business — just not the kind of business that would allow you to keep setting new sales records. Slow and steady until you’re ready to call it a day, then sell for whatever you can get.

That’s not being cynical or snarky. It’s based on research into what customers are worth financially to HVAC contractors. Every study we’ve seen reaches the same conclusion: no matter how loyal you consider each customer to be, you’ll earn nearly every penny you’ll ever make from them in the first 18 or so months of your business relationship. You consider Carl Albertson to be a loyal customer. He still talks about what a great deal you gave him on that boiler 20 years ago. It was a good deal, and it was the last dollar he ever paid you. Honestly, loyalty is nowhere near as lucrative as most people think.

Are customers staying put?

Is it possible your customer will remain in the home long enough to need another replacement? Very much so. People are moving less frequently, so they’re staying in their homes longer. Back in 2008, the National Association of Realtors said the median length of owning a home was 10 years. By 2018, it had grown to 13 years. Given the typical service life of HVAC equipment, that suggests you may get another bite at the apple — if they remember you when the time comes. The best way to make that happen is some kind of maintenance plan.

The new customer funnel

That’s why you need a strong new customer funnel, fed by a steady flow of leads generated by smart marketing strategies. That doesn’t mean you should abandon the people who helped you build the business — but if new customers are responsible for nearly all your revenue, you need to make sure more of them are coming your way. That’s especially true if you want your business to grow.

Why new customers?

The whole point of having new customers is to get your people in homes you don’t already service, so they can spot opportunities. It’s that simple.

Every home has HVAC equipment that needs regular maintenance to ensure safe, efficient operation. But that equipment needs repairs sometimes. A 2018 Harris poll reported that one in five homeowners needed a heating or air conditioning repair within the past year. Better than two in five said their home heating systems were more than a decade old, and almost a third said the same about their air conditioning. (14 percent needed repairs to toilets, 13 percent faced leaky pipes, and 11 percent had to buy a new water heater.)

Put another way, that means more than 1 in 3 of the homeowners in your community are going to need to make a major equipment purchase in the near future. Getting your technicians in their homes dramatically increases the likelihood you’ll have the first shot at that sale.

Three things you need

But you just can’t make it happen without the right offer, the right people, and the right training.

You need a price point that provides a low barrier to entry, such as a $69 “tune-up” special in which a member of your friendly tune-up team makes sure the system is operating safely and efficiently. At the same time they’re identifying the age and condition of the system while asking the homeowners about their comfort. If there’s a need for a repair or a recommendation for a replacement, they’ll explain the details and explain the available options. And every interaction is an opportunity to enroll them in your maintenance plan.

Sound too simple?

You’d be surprised how often we’ve watched it work exactly as designed. But again, it takes the right people and the right training. It takes techs (or “specialists” with limited training) who have friendly, engaging personalities and genuine like for others. It takes investing in specialized sales training to help them learn how to frame messages and overcome objections without causing stress for customers. Want them to get really effective? Provide a generous commission when their tune-up leads to the installation of a new heat pump.

And the best part

If you do what we describe here and handle it well, do you know what’s going to happen to those new customers? Not only will they join the ranks of your loyal customers, they’ll happily pay for that opportunity to do so through your maintenance plan.

If you’d like to know more about Cornerstone, and how we work as your outsourced marketing department to help grow your business, contact kerryf@cornerstonead.com. Or you can call (317) 804-5640  x108.

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