Distributors: Eight Reasons Your HVACR Customers Should Buy from You Rather than Online

Don’t just sell great equipment and parts, sell increased cash flow, profit improvement, and personal relationships

When it comes to buying HVAC parts and supplies, your customers have a growing list of options. On-line retailers like Wal-Mart, Amazon and E-Bay are trying hard to take your parts business. The key to eliminating on-line competition is helping your customers see the dollars-and-cents benefits of being loyal to you.

Higher profits
It usually takes an hour or more for a technician to leave the job and chase a needed part. If your customized truck stocking program saved three service techs two hours a week chasing parts, then you helped generate an additional 300 annual hours to make money. If the average service ticket is $500 you could help generate up to $150,000 in added revenue.

Here’s where the numbers get exciting; gross profit becomes net profit once overhead is covered. 40% (gross margin) of $150,000 additional revenue is an increase of up to $60,000 that your truck stocking program could add to your customer’s bottom line.

Lower operating cost
How much would it cost your customer if they didn’t use your warehouse? The cost of a building, a fork lift, additional payroll, administrative time, transportation, shrinkage and obsolescence and more. When you do the math it’s amazing how your warehouse reduces your customers’ operating costs.

Reduced overhead
Do you customers know all the ways you help them cut their overhead expenses? How much would their overhead increase if you didn’t deliver to the job site? Are they aware how many hours your billing procedures and warranty return policy save? Do you deliver parts and equipment to job sites? Do they know how much using your truck, driver and insurance adds to their bottom line? Do they know how much time they save using your payment terms?

Less unapplied labor
Unapplied labor is the money paid to service technicians to do unpaid work like call backs. Call backs usually occurs when recently repaired equipment quits working. Technical training reduces call backs. The faster HVAC technology evolves the more technical training needed to reduce call backs and keep consumers happy.

One of the biggest unrecognized benefits that many distributors provide is no-cost technical consulting. Sooner or later every service technician gets stuck and needs help. Having a knowledgeable ally to call reduces call backs, cuts job time and increase profits.   Having a knowledgeable ally to call reduces callbacks, cuts job time, and increases profits. Ask your customers to imagine trying to call an online retailer (like Amazon or eBay) to find an expert who could answer their questions and help solve their problems. They know that phone call would be a pure waste of time. Customer are more loyal once they know all the profit-producing benefits you provide.

Increased sales
The way to improve your sales is to help your customers improve theirs. The investment you make in sales training should move the needle on two key performance indicators, market share and mix shift.

Increased market share
Your market share improves when your customers close more sales. Helping your customers close 10% more sales would have a big and immediate impact on your market share and their margins.

Aristotle taught the secret to closing more sales: “The fool tells me his reasons; the wise man persuades me with my own.” The most effective sales training focuses on the 3 most important elements in every sale.

.   Asking questions

.   Listening

.   Selling the way customers want to buy

Maximizing mix shift
Mix shift happens as your customers sell bigger benefit premium comfort. If given the opportunity, 80% of homeowners will pay for something better than hot and cold air on demand.  The magic of mix shift is the fact that it takes the same overhead to install premium comfort as it does basic heating and cooling. Everybody wins when you help your customers sell premium comfort.

Price $5,000 $10,000
Overhead $1,500 $ 1,500
Job Cost

Net Profit

$3,000

$   500

 

$ 6,000

$ 2,500

 

Document your value
Value not documented in your customer’s mind doesn’t exist.

The most successful company is the one that documents the most value. Therefore, there will never be a better time to sit down with your customers and monetize all the all the amazing benefits that an online retailer can never provide.

This article appeared in Distribution Center Magazine on April 5, 2018.

 

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