HVAC is one of the few industries generally regarded as recession-proof. The thinking behind this is simple. Even during economic downturns, consumers need reliable heating and air conditioning. That is the primary reason HVAC companies were considered essential workers during the pandemic lockdown. It also explains why the U.S. Bureau of Labor Statistics projects HVAC employment will increase 13% by 2028.
While it’s hard to argue with that, the facts are that one in five HVAC companies fail annually. Seventy percent fail in their first year of operation. With memories of 2008’s Great Recession still fresh in many owners’ minds and increasingly soft economic indicators leading some experts to predict the country is on the verge of another recession, smart HVAC companies are already taking steps to ensure their continued viability.
Make Your Own Workers Job No. 1
The first step HVAC owners can take to offset a down economy — or even fear of a down economy — is to make sure staff remain confident that their jobs will still be there and the company is working not just to survive but to thrive, regardless of economic conditions. To do that, owners need to be true leaders. They need to inspire confidence by making an emotional connection with their workforce. They also need to maintain open lines of communication to respond to worker inquiries, confront any rumors making the rounds, and allay fears about layoffs or business losses. By doing so, owners can send a positive message that we’re all in this together, which encourages workers to stay on board and do their best work.
Get Control of Your Finances
While money management skills are vital to any business owner’s skill set, they become even more important during an economic slowdown. Too many companies get comfortable with the profits being made in good times to recognize their expenses are out of control or their cash flow is inconsistent. With that in mind, HVAC owners need to take a hard look at the company books, pruning unnecessary expenses and evaluating both payroll and cash flow to maintain an acceptable level of profitability. Owners must also analyze whether they are estimating jobs accurately. Low estimates can hurt the company’s bottom line, while high estimates might lose lucrative projects.
Know Your Competition
It is equally important for HVAC owners to know what the market will bear. This is always easier in an up market, where customers might be willing to pay a little more for the same service or the same provider they’ve been using for years. When the economy dips, however, provider loyalty can disappear and price can sway decision-making.
Given that, HVAC owners need to do their homework. Determine how much competitors charge for similar services and what they pay employees. This may mean making blind calls to competitors or checking their websites for pricing. If charges are too high or low compared to the competition, adjustments must be made to maintain employees and the current customer base and attract new business.
HVAC owners should also develop a simplified, effective quoting process that differentiates them from their competitors. To generate a professional quote faster and easier, owners might invest in business software that offers quote templates customized with the company’s own branding, up-to-date price books, and prior experience.
Market Consistently
The first casualty of a slumping economy is often a company’s marketing efforts. Looking to cut costs wherever possible, HVAC firms sometimes eliminate marketing under the belief that most HVAC leads come from word-of-mouth referrals. While referrals certainly represent one way to generate business leads and drive sales, cutting all marketing efforts is a critical mistake.
Be Proactive
There are a number of simple but proactive marketing tactics HVAC business can undertake to keep the pipeline full. Low-cost options, such as promotional fliers distributed door-to-door, ads in church bulletins, and listings on local sports team calendars that can be posted on kitchen refrigerators, may be old-school but remain surprisingly effective marketing tools.
Tight economies also offer an ideal opportunity to ramp up customer service. While customer service should always be a prime consideration, it becomes even more important when budgets are stretched thin. HVAC companies should go above and beyond to make sure they are fully meeting their customers’ needs. Consider assigning reps to specific customers so they can forge a relationship. Provide VIP treatment for repeat customers so they know they are appreciated. Be personally available to build customer trust. Offer annual service agreements or incentive referral programs to entice customers to act now and generate additional business.
Think Digitally
HVAC companies should also take advantage of society’s dependence on technology. Numerous studies point to the fact that digital marketing is the most effective marketing channel for most businesses. One recent study, for example, shows that 55% of home service consumers search for a business online before ever scheduling an appointment, while another report indicates a whopping 97% of consumers learn more about a local company online than on any other platform.
Given that, HVAC companies should make sure they take care of the basics. Building a responsive, mobile-friendly website is an absolute must to provide basic details about the company and make the case for why consumers should choose the business to handle their HVAC needs. Optimizing the site using search engine optimization and a keyword strategy will boost Internet traffic by assuring the site will show up at or near the top whenever a visitor searches for “HVAC contractors.”
Given recent data that indicates the average working-age internet user now spends more than 2 ½ hours per day using social media, it’s equally important to take advantage of social platforms, like Facebook, Twitter, Nextdoor, Yelp, and even TikTok. Doing so enables HVAC businesses to “put a face” on the company by posting pictures or videos of the team at work, responding directly to customer inquiries, and offering discounts and promotions.
Similarly, emails and text messages can provide a proactive mechanism for staying in touch with customers. Marketing-oriented text messages have an incredibly high open rate of about 99% compared to the average email open rate, which hovers around 30%. Because texting represents that comfortable space between an email and a phone call, it has become a preferred means for connecting with customers, answering their questions quickly, and providing the kind of high-level customer service that leads to higher customer retention.
Finally, consumers’ shifting focus to digital has made advertising a viable, often cost-effective option. Pay-per-click (PPC) ads, for example, allow HVAC firms to advertise on search engines and platforms, paying the hosting network only when a potential customer clicks on the ad. Ad data indicates that HVAC companies using PPC get as high as a 1,214% return on their investment. Google Local Service Ads, another option, are unique search results that appear on top of PPC ads, map listings, and organic search results when a user searches for local services.
Bottom line, HVAC companies cannot afford to be passive and simply wait for a recession to end. By that time, they may not have a company left. Smart businesses recognize that in both good times and bad they need to be laser-focused on customer retention, while aggressively pursuing new business opportunities that will fuel constant growth.
Garrett Wilson is the president and co-founder of FieldBin. He has been a serial entrepreneur and expert at building and branding startups for more than 20 years. His experience includes multiple high-growth startups, SaaS products, M&A, fund raising, and agencies that leveraged his deep knowledge in both B2B and consumer markets.
