July 23, 2015

The Importance of a Maintenance Agreement Program Pt. 2

Blond businesswoman with clipboard writing noteIn part one of this two-part series, I sat down with HVAC Learning Solutions instructor Tom Wittman to discuss the benefits you can receive by promoting maintenance agreements to customers.

Today, we’ll touch on other ways maintenance agreements can affect your business, including hiring procedures and cash flow.

M: Is there a rule of thumb for how many technicians you should have per maintenance agreement?

T: Typically one technician can manage around 200 to 250 maintenance agreements. I have two simple rules:

  • Make yourself accessible and available during demand months by not scheduling maintenance agreements during the busy season.
  • During slower months, schedule enough work to keep technicians in front of four to five customers a day.

Once you approach 200 to 225 agreements above your benchmark, start recruiting a new technician.

M: What KPIs can technicians use to gauge their progress?

T: There are two performance indicators technicians should follow:

  • Sell maintenance agreements — 60 percent of service calls should result in a maintenance agreement.
  • Bring urgency to non-urgent issues — Demonstrate how preventive repairs or additional accessories can solve a customer problem.

On average, one technician can contribute $55,000–$65,000 in revenue per month. Couple that with the ability to calculate when it’s time to recruit a new technician and it’s the lowest-risk way to build a business.

M: What else should dealers know about promoting maintenance agreements?

T: It’s important to understand the difference between implementing change and influencing change. Implementing change in the company culture, habits, and behavior can cause a high level of resistance from employees. If you learn to influence change by supporting your team and talking through the issues, you’ll get results more quickly.

Guest blogger Tom Wittman is an HVAC Learning Solutions instructor from Carmel, Ind.

July 21, 2015

The Importance of a Maintenance Agreement Program Pt. 1

iStock_000024888859_SmallSales may be unpredictable, but maintenance agreements  can guarantee success for the fiscal year. These programs are not only profitable for your business, but they can also help you build sustainable relationships with your customers. Why would you want to miss your chance to turn a one-time client into a lifelong customer?

I sat down with HVAC Learning Solutions instructor Tom Wittman to find out how promoting a maintenance program to your customers can smooth out the highs and lows and ultimately benefit your business.

M: Tom, what would you say are the most important reasons to offer a maintenance program?

T: I would say there are three main reasons HVAC dealers should offer a maintenance agreement:

  1. Maintenance programs are the lowest risk method of building a business since they are fairly predictable.
  2. They help you determine at what point you’ll need to recruit more technicians based on the number of maintenance agreements you have.
  3. Maintenance programs even out the sales peaks and valleys and stabilize cash flow in your business from month to month.

M: How would you explain the low risk associated with maintenance agreements to a dealer who doesn’t already offer one?

T: The equation for delivering quality customer service  is simple — great people plus a great process equals excellent results. Companies that proactively predict when they’ll need to hire a technician  have the opportunity to teach their work process and ensure the new hire is capable of delivering results before the demand season starts. This way, the business has enough work to support another technician year-round. Plus, the new hire can be brought in early enough to completely learn the culture and understand the company’s way of doing business.

In part two of this two-part series, we’ll dive deeper into the maintenance agreement discussion with Tom and review how maintenance programs affect your recruitment efforts and your bottom line.

Guest blogger Tom Wittman is an HVAC Learning Solutions instructor from Carmel, Ind.

July 16, 2015

Why should I departmentalize my company? Pt. 2

Why should I part 2In part one of this blog, I discussed how departmentalization can help you manage your business more efficiently. Today, I’d like to continue this topic by covering important factors you should address before dividing up your company.

First, it’s imperative be well organized. If you’re going to departmentalize, you need to have  a person who is fully qualified to handle the accounting function and a solid accounting system to track how everything is allocated. For example, if a technician goes on a service call, to which division does that call get charged? Is it a normal call that can be charged to the service division, or is it a callback that should be charged to warranty? You also have to make sure all services and inventory are recorded properly.

Establishing your accounting system and allocation procedures before departmentalizing will simplify the process immensely. You’ll have a disaster on your hands if you try to put things in place after you’ve split your business into different divisions, so you should make sure you have a formal and disciplined system before taking any action.

Next, you need to understand what contributes to your gross profits, such as how your direct costs and overhead costs compare. You should be aware of these factors no matter what, but these numbers become even more important if you segment your business, because it’s easier to make mistakes.

While maintaining disciplined procedures is essential to departmentalization, you must remember the importance of helping your team through this transition.  Any time you make changes, you must thoroughly communicate with your team. Employees perceive changes in their own way, so be clear on your reasoning for introducing new processes. A fundamental change to the business model affects the company culture, and clear communication will help your team adjust and thrive.

Building on this idea of communication, I recommend you have some kind of reward or bonus program in place when your team achieves established KPIs. It can be as simple as buying lunch for everyone or hosting a company party. Even regularly saying thank you or recognizing stand-out employees at company meetings will show people you appreciate their hard work and success. Many employees are driven by instantaneous recognition rather than end-of-the-year bonuses, so incorporating small gestures of gratitude can make a difference during extensive changes to the company culture and work processes.

Like any major business decision, departmentalization affects the entire company. If you manage your divisions with discipline and accuracy, your business will be better organized and more efficient for it.

Dave Nichols is a regional training manager with HVAC Learning Solutions.

Do you have a question for an HVAC Learning Solutions expert? Submit your question on the HVAC Learning Solutions Facebook page for a chance to have your question answered in a future blog! 

July 14, 2015

Q&A: Why should I departmentalize my company? Pt. 1

Why should I part 1Hi Dave, I’m considering departmentalizing my company, but I’m not sure if it’s a good idea. Do you think I should split my company into different divisions, and if so, how do I even start?

— Kevin D. from Houston, Texas

Hi Kevin,

Departmentalizing, or segmenting your business into measurable departments, is great for improving the success and workflow of your company.

First, you’ll have better control of managing your business. When you split your company into different segments, you know exactly the profitability of each area. I’ve worked with many contractors who say something like, “My service department is costing a fortune,” and when I ask for specific numbers, they only have aggregate financial statements. If this is the case, how do you actually know your service department is costing a lot of money? In order to accurately and efficiently manage your business, you must have a way to gauge the thought process behind determining profitability.

You’ll also be able to hold your team accountable. For example, your service department can’t be expected to generate a certain profit margin if you don’t have an established way to measure its profitability. By departmentalizing, you can hold that division supervisor accountable for delivering those numbers. This accountability opens up the opportunity for all kinds of questions: What are we doing to achieve those numbers? Why aren’t we there yet? How can we improve? Asking these essential questions will keep your employees responsible and productive.

While it’s important to keep your team accountable, you can’t lose sight of holding yourself accountable as well. People are often challenged by getting distracted, but if you know where you want to be within your company, you can stay focused on your goals.

Lastly, departmentalizing allows you to measure your company performance against that of your competitors. HVAC Learning Solutions recommends a set of key performance indicators (KPIs), and we know how the best companies in the industry are doing. By measuring your performance against that of competing businesses, you can see what gaps there might be and determine how to close that gap. For more information on defining and measuring KPIs, check out HVACLS.com or contact us about conducting a KPI coaching workshop at your business.

In part two of this Q&A about departmentalizing your company, I’ll discuss important factors you should address before dividing up your business and how to stay organized and efficient during the changes.

Dave Nichols is a regional training manager with HVAC Learning Solutions.

Do you have a question for an HVAC Learning Solutions expert? Submit your question on the HVAC Learning Solutions Facebook page for a chance to have your question answered in a future blog! 

July 10, 2015

Technology upgrades

Technology upgradesIn today’s world, you must constantly be thinking about how your business can incorporate the latest and greatest technology. Before you upgrade your software this fall, there are a few factors to understand about how this change can affect your business.

There’s been a huge movement in our industry to go mobile and paperless, making now the perfect time to consider a technology upgrade. Investing in a paperless environment allows technicians to feed data directly to your software and use resources such as DaveNet® to research information instantly, and it helps employees in the office to maintain a smooth workflow.

Choosing the right software for your business depends on several aspects:

  • Size — Smaller companies can manage their business by utilizing a basic accounting system like QuickBooks. As your company grows, you should consider purchasing advanced software packages that integrate modules such as electronic dispatching, accounting, and sales management in one system to simplify the process.
  • Need — Think about what specific business needs you’re trying to address and whether you’re looking for a system with a residential replacement and service focus or one to manage new construction projects.
  • Users — Managing a larger company means more users need to interact with the system. As your team becomes more dynamic, your software should follow suit.
  • Business changes — If you’re making significant company changes, such as adding satellite locations, advanced software can help in the transition.

Once you determine what kind of technology upgrades your business needs, do extensive research on available solutions. It’s easy to miss opportunities in the vast assortment of software available, so take time to ensure you know which selection is best for you.

It’s important to remember that transferring data from your current system to a new one is not an easy task, so undergoing a technology upgrade can be a long process. You should also think about expenses involved in a software change, such as company training and updating hardware.

Simply put, better software provides better solutions. You can improve margins and streamline administrative processes to reduce overhead just by upgrading to a more advanced system.

Guest blogger Gary Oetker is the Lennox Business Coach and a consultant for HVAC Learning Solutions.

  • Meet Mike Moore

    Mike Moore isn't just an HVAC expert;
    he also knows a thing or two about
    HVAC employee training. As one of
    HVAC Learning Solutions founders
    and Director of Training, his biggest
    goal is to help HVAC leaders and
    technicians grow their business
    and build lasting skills. This
    University of Kansas grad has
    a contagious personality, a lot
    of knowledge, and a knack for
    providing HVAC training
    and development.