Will your business survive the current HVAC slowdown?

The secret to survival is focusing on the basics

We’re heading into a tough stretch for HVAC dealers and other home services providers. The sales boom that led to healthy growth over the past several years is drying up. That means you’re going to have to work harder to find and sell to customers.

If you’ve noticed that your numbers have been slipping, rest assured you’re not alone. The Air-Conditioning, Heating, and Refrigeration Institute (AHRI) tracks U.S. HVAC manufacturing shipments, and they’re way down. Year-to-date gas furnace shipments in October 2023 were 24.2 percent lower than previous-year numbers, and oil furnace shipments were off by a whopping 27.4 percent. Combined shipments of air conditioners and heat pumps were down 14.4 percent from last year’s numbers, according to www.ahrinet.org.

Continuing trend

What makes those numbers even more concerning is the fact most contractors expected the pace of recent years to continue throughout 2023 and 2024, so they budgeted and staffed accordingly. The companies we work with have seen revenues increase by 5 to 10 percent during 2023, which represents no small success given the market and the economic conditions. Unfortunately, most contractors we’ve talked with based their budgets and staffing on expected gains of 20 percent or more.

It’s hard to blame them, given the impressive growth they’ve experienced. But that growth has been misleading. The impacts of the Covid pandemic and the extra money Washington pumped into the economy disrupted the normal replacement cycle. Many of the sales contractors would have expected to make in 2023 and 2024 already took place in 2021 and 2022. Nobody complained about getting that revenue earlier, but that means it’s no longer coming.

The effect on your customer base

In fact, thanks to inflation and other economic pressures, fewer homeowners are currently in the market for your products and services. We’re willing to bet the percentage of your homeowners choosing those “let’s fix it and see if we can get another year or two out of it” when you expected them to opt for replacements has increased.

If that wasn’t bad enough, you’ve likely been dealing with better-funded competition than you’ve seen before from bigger independents and solid franchise models fueled by private equity investments.

We’ve seen a market remarkably like this one before. It happened over 2007 and 2008, as the nation slid into a deep recession. Housing construction ground to a halt and money became so tight even the expected replacement market for HVAC and other home systems dried up. When homeowners are worried about being able to pay the bills, they’re less eager to “splurge” on new heat pumps and higher-quality water heaters.

How our clients continue to succeed

How have our clients continued to deliver impressive performance despite such a volatile economy? We’ve spent decades helping contractors stand out and capture a growing share of their markets. Along the way, we’ve learned what works again and again. It isn’t because we’re brilliant. It’s because we’ve been paying attention, testing the most promising strategies, and scrutinizing all the numbers. That’s how we help clients spend wisely instead of freely.

It’s all about going back to basics and investing in the three pillars of home services success: marketing, customer service, and the conversations that take place at your customers’ kitchen tables. Yes, you have to keep spending money to create leads, but what really counts is what happens from the moment your customer service team answers the phone. Making that experience consistently excellent demands hiring the right people and investing in training that helps better understand what really motivates homeowners to buy.

And in an era in which 5-star online ratings are worth their weight in gold, providing that level of service every single time your team works with a prospect or customer is essential to your company’s continued viability.

Don’t play the numbers game – win with Cornerstone!

We recommend using this tight market as a motivation to get back to basics. Instead of simply trying to play a numbers game by pumping even more money into digital marketing and the like, emphasize hiring people you can trust to delight customers and giving them specialized training to sharpen their skills at building customer confidence. We’d be happy to show you how we’ve helped our clients make that happen.

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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