Do you have a vision for your company? Although for many years I have helped lots of companies in strategic planning I never realized that the first step should be visioning. Strategic planning is the second step. In Germany I led a group through the entire process of:  first, a  vision; second, refining the vision with a strategic plan; and third, managing change from where the company presently is to where the company will be with the strategic plan fully in place. Change can be described as moving from the present state of affairs to a new state of affairs.  It was really a good exercise and we all learned a lot. A vision is basically a description and picture of what your company will look like at a predetermined time (I recommend five years). A vision tells us where we are going.

The line between visioning and strategic planning is often somewhat blurred.  You will find that visioning is fun. Here are just a few of the visioning and then strategic planning considerations: What products and services will your company offer? Geographically, in what area will you provide those products and services? How will your training be accomplished? How about your operating system? What new processes are required? Will your plan require additional leaders, if so what positions? How many coworkers will be required and what type? How will you stay up with the technological changes? How will you market? How about the acquisition of smaller competing companies as a method of growing? Will you be diversifying, if so what will be added? What professionals, alliances and organizations  should you consider and team up with?

A vision tells us where we are going, a strategic plan is detailed and tells us how  to get there. My managing change explanation was well accepted. The formula is clearly explained in my book and/or 9 disc audio CD set HVAC Spells Wealth. Cost of change (COC) equals Model X Process X Dissatisfaction with the present state of affairs.

While in Germany we attended the ISH HVAC Trade Show, a huge event held every two years and always in Frankfurt. Imagine a trade show with well over 2,000 exhibitors, over 200,000 attendees and 3.5 million square feet of space (eight to ten times larger than our very largest annual AHR shows). Some of the displays were huge and they were all very well staffed with knowledgeable representatives. Although I have heard for many years about the show it far exceeded my highest expectations. I recommend that you someday attend the ISH show, you will not be disappointed.

Lapolla Industries has recently launched a national HVAC program in an effort to unite top level HVAC contracting companies with Lapolla’s leading edge spray polyurethane foam insulation technologies. No two building components, whether it is new homes and businesses or retrofit/replacement installations, complement each other better than HVAC and insulation. Lapolla furnishes the complete package including the material, application equipment, training in both sales and application, technical support, marketing, etc.

I have spent considerable time with Lapolla, met their executives, actually observed several jobs being performed and understand their resources. They are a good company that can help HVAC contractors sell more jobs and certainly sell them for higher prices by including poly insulation as a part of the installation. Their foam insulation product is far superior to the more traditional fiberglass product and has many additional benefits. Most importantly, it is the right thing to do for customers. It adds value and significantly reduces their energy costs. For more information check out their website at www.lapolla.com or phone 888-4-lapolla.

Have a great summer!

Simply replacing older 10 and 12 SEER equipment with new 16 and higher SEER equipment is doing an injustice to the customer. As I have said for many years equipment is only a component of an HVAC system. It is not the system. Today’s customers are much better informed than ever before. They not only deserve more, they expect more. As an example, the days of replacing equipment while the ductwork continues to leak air is over.

The Internet has changed everything. Websites worldwide are approaching 300 million in number. There are over 3 billion assigned email addresses. Consumers now spend time searching and learning. How do we know this? All we have to do is listen to them and interact with them and it won’t take long to realize how knowledgeable they now are compared to only a few years ago. We also know that 92% of consumers’ purchase decisions are made after they have searched the Internet. They not only learn from the Internet. They also learn from talking to HVAC retail contractors that have recognized where the industry is headed and have changed their companies.

Those leading edge HVAC retail contractors seal and when appropriate replace ductwork. That alone has become big business and good business. Improperly sized, improperly installed and improperly sealed ductwork is everywhere. They are offering and installing geothermal systems, they have recognized the opportunity presented by offering and installing solar and they install home insulation. In addition and this is big, complete weatherization is a perfect fit for HVAC contractors. Energy efficiency and green is a way of life with these companies.

I am really excited about where our industry is headed and encourage you to study and learn more about these opportunities and decide where you will direct your company. It will be an investment in time, energy and capitol, but it will not only serve your company’s survival in the new world of HVAC retail contracting but it will place you up front in the parade of highly successful contractors. For many contractors it will mean new relationships with providers, upgraded websites and better methods of reaching your present customers as well as adding new customers.

How long has it been since you have taken the time to sit back, consider and plan where your company is going? Now is the time to do exactly that.

I am now in a position where I can add a few consulting/coaching clients either by making on-sites visits or by telephone. If you have an interest just give me a phone call at 615-791-8474 or send a message to ronlsmith2@bellsouth.net.

Additional information:

1)    Check out our website, www.ronsmithhvac.com and take a look at our Affiliates Page. We occasionally add a new Affiliate and have just done so with Earthsponse, www.earthsponse.com. They have a complete program that can certainly help should you have an interest in solar.

2)    If your company is not sending out blogs (which is an excellent method of staying in touch with your customers) it’s probably because you feel you do not have the time. Check out Social Tract, another Affiliate, www.socialtract.com.

3)    Outdoor University, training in a unique setting, has its next training program set for April 11. Pull them up on our Affiliate Page, www.topratetraining.com, 706-888-0815.

The problem is that most companies do not in a regular manner communicate with their customers. Instead, they spend more time, energy and certainly money trying to sell products and services to new customers and they forget to stay in touch with their present customers.  I’m certainly for constantly adding new customers to my present customer base but not at the sake of ignoring my  valuable present customers.

This leads to two questions. First, how frequently should I communicate (I call it touch) my customers; and then secondly, how do I accomplish this?  Let’s start with our very best and most precious customers – those that own one of our residential service agreements. We touch them a minimum of 13 times a year. How? With each of the semi-annual precision tune-ups we phone to schedule the tune-up, phone to confirm the tune-up, perform the tune-up and then call the next day with a “happy call” to find out how well we did and if the customers has any information they can share with us. Doing this twice annually results in 8 touches. We send a direct mail piece each quarter and a Thanksgiving Day card each November. That’s the 13 touches a year.

All of our customers who do not own a service agreement will at a minimum receive the 4 direct mail pieces and the Thanksgiving Day card for a total of 5 touches.

Every service call and non-service agreement tune-up is followed by a next day happy call. Anyone who invests in an equipment replacement job or one our system enhancement products (accessory products to most contractors) receives a thank you card and a happy call.

Remember, these are all examples of minimum touches. I’m a fan of blogs and they are an excellent method of communicating with customers. Just think of the possible number of touches with your customers if you were also, in addition to what I have presented, frequently blogging with good content or, because of your busy work schedule, had a blogging service doing it for you. It is vitally important that you are collecting your customers’ email addresses. In the near future I’ll be writing more on collecting email addresses and sending out blogs. 

QR codes originated in Japan and the term QR is short for quick response. My guess is that you have seen them but probably didn’t think much about it. To make you more familiar with QR they are the square matrix codes that look like a maze. Normally, they are black modules on a white background and can carry a ton of information. They are two dimensional and can be read by smart phones, cell phone cameras and QR scanners.

Regarding marketing they are seen on business cards, print ads, websites, direct mail, billboards ads, displays and coupons just to name some of more common uses. They are very helpful in being able to accurately measure response rates. The codes would be a great tool in home or trade shows. A big benefit is that customers or prospective customers can take immediate action such as subscribing to a mailer, entering a contest or making a purchase decision.

Actually, marketing is just one way the codes can be utilized but the one that most interests and excites me. Your company’s use of QR codes would be a great way to assist in helping your company to be recognized as the leading edge HVAC provider in your market area while at the same time helping you better determine your various marketing efforts’ acquisition costs and contributing to your revenues.

A couple of side notes: Outdoor University’s spring training class will be coming up soon and it’s time to consider registering your technicians, installers or leaders in the program featuring communications, sales and leadership principles. For more information including dates you can go to www.toprate.com.

On your 2011 calendar make a note of the annual Comfortech show which will be in Indianapolis this year on September 21 thru 23.  As always there will be meaningful seminars, interesting speakers and the trade show. And, to me it’s an annual reunion of the many wonderful people I know in our HVAC industry.

This being mid-December you should have your 2011 budget completed and in place. If not, you’re fast running out of time. Carefully preparing a well thought through budget is great but, actually, it is only the first step.

The second step, and it’s very important, is – what’s your strategy in achieving the budget?  Assuming you projected revenue growth in 2011 where are the additional revenues coming from? Here are four examples: are you going to add certain products and/or services to your present portfolio of products and services? If so, what are they? Are you planning on geographically expanding your market area? Will you be allocating a larger investment in marketing? How about acquisitions – have you considered a tuck-in acquisition of a small company?

The third step, and it’s equally important, is to translate your financial budget numbers into measurable units. Measurable units is vital information that can easily be shared with all coworkers. Here is an example: Let’s suppose your residential replacement systems are budgeted at $1,690,000.  What’s your average sale? Suppose it is $7,400. That means you need to sell and install 228 jobs. Now, suppose the closing rate on your presentations is 40%. That means you must create 570 sales leads and make those presentations. Informing your coworkers of the required measurable units and constantly sharing the results will motivate your coworkers to take action in helping to achieving the numbers.

Step number four, the last step, is to spread your budget across the months, weeks and days of the year – both the financial numbers and the measurable units. As an example, let’s suppose you budget 9% of your replacement systems in April. Excluding Sundays there are 26 days in April, 2011. That means you must get and make presentations on 51 sales leads and close 20 of them. If you do so you will achieve your financial budget of $155,400 for the month.

Although it is not part of the budget I recommend that you get a daily snapshot report each day of the measurable unit budget, the results through yesterday and the monthly pace you are on. If you do this you are running your company like a true retailer.

I am very excited about the growing appreciation of an HVAC’s complete system and how it is being addressed. Just think of all the items that must go together in a system. The equipment, any system enhancements (accessories to most people), controls, ductwork, condensate piping, low voltage electrical, line voltage electrical, grilles and registers, refrigerant piping, refrigerant, often zoning, and many other items make up a system. Everything must be sized correctly, positioned where it should be and balanced.

However, even if everything is selected carefully and sized properly it makes little difference if it is not installed properly. That means we must recruit and hire the right coworkers, we must train them and keep on training them, NATE certification, in my opinion, is very important. They must have the right tools. We must challenge and then inspire them to do the very best job possible. Finally, we must inspect the finished product (your complete system) and be assured it was installed in the very best manner possible.

For years I have been talking about how many contractors will sell and install high efficiency replacement equipment but not install a high efficiency system. As an example, I consider it malpractice to remove old 10 SEER (when it was new) equipment from a customer’s home and replace it with 16 SEER equipment and at the same time not address the existing ductwork. If the ductwork is not sized properly, the tape is coming loose, or there are holes in it the customer is not getting a 16 SEER system, they are simply getting 16 SEER equipment.

There seems to be a growing appreciation by contractors in our industry of the complete system and I am pleased as well as excited about what is happening. Our customers are more informed and more knowledgeable than they have ever been in the past. They now ask the right questions and can recognize the value you are providing when you take the time to explain your focus on doing things the way they should be done by first addressing and secondly installing a complete system. Let’s keep this positive trend moving forward!

Ron Smith, ronlsmith2[at]bellsouth.net

Like everything else in a company the owner or general manager must believe in the meetings as being important, take the time to study how the meetings can be most productive, provide leadership, facilitate, and then apply the correct proven direction and techniques. The following are the meeting techniques I recommend:

1. Establish a schedule for the meetings with definite starting and ending times. As an example it could be always on Tuesday morning from 10:00 AM to 11:30 AM. You should start the meeting on time every session whether all attendees are there or not and you should always conclude the meeting at the appointed time. Some companies meet every week, others find that meeting every other week works well.
2. Allow no interruptions or disturbances except for emergencies.
3. Each attendee brings a short list of what they wish to present. The facilitator collects the attendees’ lists, quickly puts together an agenda and letters it clearly on a whiteboard or a flip chart. No other items can be discussed. This rule forces attendees to think carefully before submitting their lists and keeps the meeting on track.
4. The facilitator, normally the owner or general manager, must be firm in handling the meeting. He or she should set the tone by keeping initial remarks positive. The facilitator must not permit any rambling or redundancy. These sessions are important and should not be taken lightly.
5. An interesting technique that helps set a positive meeting tone or mood is to have one of the attendees present a short company success story.
6. All attendees must be prepared to discuss the items they submit for the agenda.
7. Remember, it is not a meeting if the facilitator does all of the talking – it’s a lecture. Everyone needs to be able to speak and to be heard.
8. Debates, not out of control arguments, are OK and often healthy to the organization.
9. Arrange the chairs around a table so all attendees can see one another.
10. Occasionally, as an example every third or fourth meeting, before the meeting ends the facilitator asks all attendees to critique the meeting with this question: Was the meeting meaningful and if so how could it have been even more meaningful?”
11. All attendees will not always agree on everything. Remind them that we as a team do not have to be in agreement, but we must be in alignment!
12. Before the meeting ends the facilitator should summarize the session and if appropriate make certain assignments. Then the date and time of the next meeting is confirmed.
13. Remember, while your management team is in a meeting other coworkers are wondering what is going behind the closed door. It is critical that the attendees communicate any appropriate meeting decisions or changes that could affect the other coworkers. The meetings should not be a big mystery.

As a side note if you’re of those people who believe you own everything there is always something more. Want to own your own island? Go to www.PrivateIslandsOnline.com (taken from the publication Bottom Line). I’m only kidding, you don’t need an island.

It is also common when hiring a technician at the time when one is critically needed to pay the new technician a higher wage than their peers with equal skills. This nearly always results in a problem. As contractors or anyone who has ever been a contractor knows from experience there is little, if any, wage secrets in a contracting company. I’m an advocate of structured Wage Plans.

I recommend formalizing your company’s technician wages with a Plan that identifies the following three items presented in a set of columns: Classification, Wage and Skill Description. Some contractors add a fourth column titled Minimum Test Score. I always had six classes, Service Tech 1, 2, 3, 4, 5 and 6. Wages were scaled with the lowest wage for Class 6 and highest for Class 1. Likewise, the carefully identified skills in the Skill Description column improved from Class 6 to Class 1. The contractors who add Minimum Test Score to the Plan list what a technician must score for each of the Classes with the lowest minimum score for Class 6 and highest score for Class 1. No longer are there any secrets, all of the technicians have the Wage Plan and understand it.

Although there are sources of technical tests available often the best test is one you develop within your own company that considers the applications and types of systems and any peculiarities within your market area.

I’m often asked if customer relations skills, sales skills or tenure with the company are considered in the Wage Plan. They could be and if so should be identified in the Skill Description. Personally, I always felt that the customer relations skills and sales skills were well rewarded in our Coworker Spiff Program. Tenure can be addressed with your Coworker Benefit Program. As a result the Technician Wage Plan was purely based on technical skills. There now are contractors that consider NATE certification in their Wage Plan. With the Wage Plan based only on technical skills this means a service technician can make more money in three different ways: one, improve their skill level and advance to a higher Class; two, sell more of the company’s many products or turn in sales leads; or three, do both.

Similar Wage Plans can and should be developed for maintenance technicians and for installers.

Here are some more: service contract. Use the term service agreement. The word contract sounds too legal. What’s next, a lawyer, am I going to be sued? It’s been proven that more customers will invest in an agreement than will invest in a contract.

Helper. Nobody wants to be a helper. As an example, even if a coworker is in an entry level position and if they working with an installer or a technician they are an installer or technician. They just do not have the same skill level.

Clean and check. That’s certainly a worn out phrase. What does it mean to check equipment? Look at it? Inspect is equally worn out. Use a term that implies you take action by stating precision tune-up. Then, of course, make sure you perform a precision tune-up.

Maintenance guy. Use the term precision tune-up specialist. The term is very descriptive of the work they perform. Maintenance guy is also a gender driven term. As a contractor I’ve had many women in precision tune-up roles.

Total price or total cost. It’s a total investment. The term implies that there will be return on the money they are spending with you, and it’s true. Often, the return on investment is very significant. Don’t forget the return is tax free!

Monthly payment or monthly cost. No, it’s a monthly investment.

Call taker. Coworkers that answer phones are not call takers. They are customer service representatives.

Manager. People who are responsible to provide direction for others should be leaders. And, wouldn’t most coworkers rather be led than managed?

Educate. I often hear contractors and their coworkers mention how they try to educate their customers. Certainly, the intention is correct but there is a much better term. I recommend that you use the word inform. It’s simply a more appropriate and softer term.

Check. When performing a precision tune-up discontinue using the term check. Why not use words and terms that imply action. As an example we do not check the condensate line, we clean it. We clean the condenser coil. We tighten electrical connections. We verify the refrigerant charge.

Estimate. If you go to the Jones’ home you are not providing them an estimate. You are making a presentation and completing a proposal. When contractors present an estimate they do not mean an estimate in the true sense. They provide a firm total amount along with a monthly investment amount should the customer decide to finance. If the word estimate is used the customers could very easily be thinking that is truly an estimate and the final price will probably be more.

Salesmen, sales ladies, sales representatives. We much prefer the term comfort consultant (that’s in fact what they do, consult with people about their comfort). Some contractors prefer the term comfort advisor, either one works.

Work for. This is an easy change to remember. Here’s an example: I firmly believe that coworkers would rather work with me than work for me.

Employee. I believe the word employee has sort of a bondage sound to it. That is why for more than 35 years I’ve always used the word coworker and have encouraged many others to do the same. The term is now days used fairly extensively.

The major difference between mediocre performing companies and highly successful companies is because the highly successful companies do a lot of things, not just a few, different and better than the mediocre companies.  It’s not because of one particular big item. Using these preferred words and terms, along with the ones in my August 9 blog is a perfect example of doing something different and better. Your company can have fun learning to use the new words and terms while “throwing away the bad words and terms”. One of the ways to make it fun is to establish a small “fine” of 10 cents or maybe a quarter for the use of a bad word or term. The money collected could go to a local charity or be used to help fund the next company party.

As a result of the new words and terms the company will get more customers to invest in their products and services and at higher pricing.

The information was basically lifted from my book HVAC Spells Wealth. Many of you have read the book or listened to my 9 Disc Audio CD Set of the same name. That’s great! But, are you using the recommended words or terms or still using the old “bad words”? If you do not have the book or CD set you can order them on our website www.ronsmithhvac.com.  Thanks!

Here is how some people explain confidence. “Confidence doesn’t come out of nowhere. It’s a result of something …. Hours and days and weeks and years of constant work and dedication” by Roger Staubach. “If you are prepared, then you’re able to feel confident” by Robert Ringer. “For years I’ve been accused of making snap judgments. Honestly, this is not the case because I am a profound military student and the thoughts I express, perhaps too flippantly, are the result of years of thought and study” by George S. Patton. “What I do is prepare myself until I know I can do what I have to do” by Joe Namath.

And last, time management. Many of us struggle with this one. “Make time for getting big tasks done every day. Plan your daily work load in advance. Single out the relatively few small jobs that absolutely must be done immediately in the morning. Then, go directly to the big tasks, try to pursue them to completion” by Boardroom Reports. “Everything that is wasted effort represents wasted time. The best management of our time thus becomes linked inseparably with the best utilization of our efforts” by Ted W. Engstrom and R. Alec MacKenzie. I don’t who gets credit for this quote. It is one of my favorite sayings and borrowed from the book HVAC Spells Wealth. “Be careful. The more valuable you become in your organization, the more people want some of your time. Unless you manage it properly, you’ll have no time left.”

Switching topics, in the Chapter “Business Is Not Complicated” of both the book and 9-disc audio CD set of HVAC Spells Wealth I write about some of the words or terms commonly used in our industry and then provide better words or terms that are much more customer friendly and marketing oriented. Some of them also  instill pride and boost self esteem among our coworkers. Here are a few of the words or terms:

Pitch. That’s a horrible completely worn our unprofessional word and absolute insult to professional salespeople. Use the word Presentation.

A deal. We do not make deals. Leave that term to used car sales people. We provide customers Opportunities.

Booties. Our coworkers when entering people’s homes do not wear booties. Only babies wear booties. Have your coworkers wear Floor Savers. The term itself identifies respect for customers and their homes.

Buy. Customers are much more likely to Invest rather than buy. The term invest implies a return. And, remember with most all of our HVAC industry’s products  there is a return on the investment. Often, a significant return whether it is replacement equipment, a precision tune-up, a service agreement or a system enhancement product. Never forget the return on investment on our products is tax free.

Accessory product. I much prefer the term that I began to use several years ago, System Enhancement Product.

Probation period. Does your company have a period of time, generally 60 or 90 days, before a newly hired coworker’s benefits become effective? Frankly, I have had little success getting clients to quit using the common industry term and substitute the term Training Period. Who wants to be on probation? And, newly hired coworkers should be getting plenty of training.

Bid. This is another horrible word you should not use. To some people it implies you should get two more. Substitute the word Proposal.

Theo Etzel, President and CEO of Conditioned Air Corporation in Naples, FL has an excellent article on leadership in the July issue of HVACR Business magazine. He does a really good job of explaining the difference between a consultant and a coach. Check it out.