The first and most important step in growing your ductless heat pump business, is to decide. Companies that are installing 200-300 systems a year, or in some cases more, all have something in common. They have developed systems and put them in place to focus on the selling and servicing of ductless heat pumps. This doesn’t happen by accident. The following are three reasons as to why companies need to make the decision to grow their ductless business. TODAY
Reason 1: More Profitability
When I ask HVAC contractors what they are selling, the answer is almost always incomplete. I generally hear the usual suspects of comfort, warmth, peace of mind, and energy savings. The problem is that this is what customers are buying, not what the contractor is selling. An HVAC contractor can provide the expertise and skill that most homeowners do not have. So, in actuality, contractors are in the business of selling their time and knowledge. Billable hours for an HVAC contractor are just as important as they would be for a lawyer at your local law firm.
Given this reality, successful contractors have the capacity to increase their profit per man hour. The quickest way to improve profitability is to shift your business to low labor jobs. Jobs with low labor, have less risk of something going wrong.
Some examples of items that can go wrong include, but are not limited to:
- Not finishing in allotted time.
- Not having the right materials
- Damaging the home
- Call backs
The problem is that any of the above items can reduce, or possibly even eliminate your profit per man hour. At the end of this post is an exercise that can be helpful if used to analyze your own business in this regard. It is short and will only take about 15 minutes to complete. I have used this review with dozens of contractors and the majority are amazed by the results.
Reason 2: Employee Morale
Recently, a successful contractor in Central Massachusetts reported that everyone he works with loves installing our product, beginning with the installer all the way to the owner. The owners enjoy it because of all the reasons listed above related to profitability. The same contractor told me that when his installation crews get to the shop in the morning to see ductless jobs lined up in the garage, they’re hoping that they get that assigment. From an employee point of view, these are the jobs to get as the installation of ductless heat pumps is much more predictable than any other installation. It is cleaner, less risk of problems arising, less heavy lifting and generally they will finish on time.
Another benefit not to be overlooked, is that it is easier to learn how to install ductless heat pumps than boilers or anything involving duct work.
Reason 3: Segment is Rapidly Growing
It has become clear over the last four years that the ductless heat pump segment is rapidly growing. The average contractor I visit is expanding this part of their business at a rate of 20-30% per year. Many times, when I ask them why this is happening, they aren’t able to give me the exact reason. Imagine what would happen if a contractor dedicated a portion of their marketing budget to grow this segment? Instead of growing by accident, they would be growing deliberately. What a concept?
Over the last 14 years, sales of unitary equipment has declined by 20%. Over that same time frame, sales of ductless heat pumps has increased by 500%. That increase includes the great recession, which only saw a slowdown of sales of ductless heat pumps, not a reduction of sales like the unitary market. Further supporting this trend is the fact that most unitary manufacturers have partnered with International companies to re-brand their own version of a ductless heat pump.
The exercise below is a great way for you to determine what business on which you should be spending your marketing dollars. If you have a choice of where to focus your budget, you should identify your most profitable business. If it is not ductless heat pumps, not a problem. You should do what is right for your business, but I have yet to see this happen. I’m not recommending that you should get out of the business that you are in currently. What I do want to convey is that the time has come for ductless heat pumps to become a larger part of your business. The best way to do this, is to decide to make this a focus of your business in the weeks and months to come.
“You can’t manage, what you don’t measure” – W. Edwards Deming
Most of the time, contractors don’t know what type of work is their most profitable. Don’t take my word for it. I want you to take out 5 different job folders that you have completed and costed out.
- Air conditioner (full cut-in)
- Air conditioner replacement (air handler and condenser)
- Single zone ductless heat pump
- Multi-zone ductless heat pump
Take the profitability of each job and the total man hours. Divide profitability by man hours to determine your profit per man hour. You now have the information to determine exactly what business to focus your efforts on.
What did your results look like? Please share your results in the comment section, or e-mail me at firstname.lastname@example.org.