HVAC Full Blast

Welcome to HVAC Full Blast, where industry wisdom meets actionable insights. Today, Mary Carter from Trane and Steven Ross from Sandler dive into the highs and lows of sales during the summer months and the art of managing margins. Let's dive into the conversation.

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Alright.

Alright, Steven. Good to see you. What's on your mind this week?

Oh, I have lots of stuff. I mean, it's, we're getting into summer. It's hot.

Phones are are ringing around the country. I think, people have been waiting for heat, and it's finally here. So it's Yeah. Good good start to the summertime for sure.

That's a good feeling. Are you team summer or team winter? I am team summer. Bring me the heat. Bring me the humidity. I love it. It's my favorite.

I'm team fall. I there's something about football and just the a little bit of chill in the air and not quite winter yet, but you're you're through the heat of the summer, and you get to wear a sweatshirt for the first time and maybe even a fire pit in the backyard. That's that's what team I'm on. I don't know what team that is, but I'm on that team for sure.

That's that's fair. That's fair. Although I could argue that with an efficient cooling system in the summer, you could wear a sweatshirt all year round.

That's very true.

We're in the swing of getting things going and getting a little busier.

You know, just what what are we hearing? What's top of mind right now? What when the phones are hot and we're getting lots of customers through the door?

Yeah. You know, it's interesting. I mean, this time of year, had a coaching call with some contractors yesterday and one of the things that sometimes happens in the summer is we have trouble we have troubles contractors transitioning from spring into summer. So, that transition, there's two things that happen. One is in the springtime, we're used to customers taking a week, two weeks, three weeks sometimes to make a decision. And so we get a little lulled to sleep. The customer says, all right, hey, I'll think about it, get back to you.

And often they do because it's springtime, and so they're they're not saying that as a stall. They really just mean, we're gonna take our time and think about it. And and then a week later, they call you back and they and they buy.

In summertime, if it's ninety degrees outside and they're having air conditioning problem, they might say the exact same thing. Hey. We're gonna think about it. Get back to you. But they're making that buying decision that day. And so as a contractor, they look the same and sound the same, but they're those are two different scenarios. And so sometimes as a contractor, we're a week or two behind that shift because we get lulled to sleep in the springtime.

The other thing that I was encouraging the contractors that I work with to take a hard look at is what happens to your average ticket in the summertime. And so in the springtime, we've got, you know, maybe hour, hour and a half, two hours, maybe three hours to spend at a customer's house because I, a sales rep, I'm not or even a selling technician, I might only have two or three calls in a day.

By the end of June, I might have five, six, seven, eight calls in a day. And so my calls shorten up. And one of the things that you see from just the metric standpoint is average tickets go down. Uh-huh.

Because what what gets our average ticket up is, you know, upsizing returns and IAQ and and selling higher end equipment. And sometimes on our side, when we get rushed in a hurry, it it we're we're talking about just the basics. Hey. Let's just swap out the unit with what you had before and keep moving, and so those average ticket shrink.

So you could have a great month. I mean, I I talked to one guy. He said, man, I'm, you know, I'll I'll normally have a a hundred thousand dollar May, but I'll have a two hundred thousand dollar June. Mhmm.

That's great. But if you gave up two thousand dollars on your average ticket in June, what you coulda had maybe was a two hundred and fifty thousand dollar June. So the fact that we have a good month in the summertime sometimes masks that really our sales process got sloppy, and that cost us some money on our average ticket. So pricing pricing going into the summertime, it's worth just thinking through making sure at the beginning of the summer, hey, we're good with our strategy.

We know what we're trying to do. We know what we're trying to accomplish, and then sticking to your guns and not watching your average ticket slip. So that was kind of where we we spent our time talking about this week on the contractor side of things.

Mhmm. Yeah. I mean, it's hard for me to sell on value and get that conversation rolling when I better make seven more stops or else my call board's gonna be lit up and I'm gonna have a manager breathing down my neck because I didn't get to everywhere I needed to be. Right?

Yeah. That's it it's harder to get into that conversation. I can totally relate because, you know, we're all tasked with growth. Right?

At the end of the day, you know, we need all those tickets, but we also need all those tickets to turn into good high dollar sales, but I'm not gonna let them lose the sale at all. Like, yeah. Like, you know Yeah. It gets tense.

It is. So I thought we'd talk about pricing today. Can we just jump in and just dissect the whole thing?

Well, and one thing that you said in particular is strategy. Right? You know, like, what what beyond, you know, buying up all the properties on monopoly so that I school my family at a board game. What is real strategy in the real world?

What does that look like? Because I'll be honest, it seems to me like I'm handed a price book and I gotta go sell. So where where's where's the strategy? Help me find my way there.

Yeah. Well, I mean, I've, I've always mostly been on the contractor side of the fence. And so I look over there at the manufacturer, and I go, well, hey.

Manufacturers are big companies. They've got lots of marketing teams and market research and they kinda know what they're doing. So to some extent, I've always said, alright, wearing my dealer hat over here, I probably want to mimic what I see the manufacturer doing because they're doing it for a reason.

And I don't have, you know, a billion dollars to drop into marketing and market research and all that other kind of stuff. So I can just kind of mooch off of you guys and go, alright. What are you doing? Mary, here's what it looks like to me.

If I, again, having never worked on the manufacturing side, I'm I'm shooting from the hip a little bit, but most of the heating and air market still today is single stage kind of builder grade unit. And I've heard numbers like sixty five, seventy, seventy five percent of the market, and that's including new construction and multifamily and stuff like that. So that certainly weights that average down. But that's a that's a huge chunk of the market.

And so what I see the manufacturer doing is margins look pretty slim on that equipment. Is that is that fair to say?

Oh, yeah. We've seen that. Right? I mean, that's that's not where I'm going to, you know, cash out. Great to churn some boxes, but maybe not where I'm going to go make my money.

Mary, what I think we've learned from retail is if you're gonna sell cheap stuff, you gotta sell a lot of it to make money. Is that is that kind of the mentality? I know that's retail versus manufacturing, but does that carry over to the the manufacturing side?

I think it does in supply and demand economics one zero one. Right? Totally.

Yeah. So I've never worked for a heating and air company that did mass new construction. My niche in the world was really selling to existing homes and homeowners. And we maybe would do some custom homes or a little bit of new construction here and there, but but pretty limited. So, what we saw on that entry level equipment was pretty thin margins because the kind of buyer and this is maybe where you gotta think a step ahead. Who buys that equipment?

What are they looking for? What are they buying it for? So, the kind of buyer that's buying builder grade entry level equipment, they don't have very high expectations of it. Either they're not living in the house that long.

They're strapped financially. Maybe they're not gonna live in the house at all. Maybe it's a landlord or there's somebody else. And so from a efficiency, IAQ, all that kind of stuff, a lot of times they don't care.

So that that makes it hard to upsell those types of systems. So therefore, as a contractor, I would say, okay. I've gotta have pretty competitive margins on that type of equipment. Also, because on the contractor side of things, every contractor I compete against can sell and install entry level equipment.

So I've got a lot more competition in that area.

I'm gonna make some assumptions, Mary, but here's what it seems like to me again sitting on the outside. So that upper end, if if seventy percent of the market is kind of single stage with or without tax credit eligibility, but but basically single stage, the top twenty or thirty percent is where manufacturers seem to put a lot of their margin. And so the margin is what pays for their advertising and their dealer programs and the training and all that kind of stuff and so, I've always said as a dealer, well, I probably should put my margin there or at least know, a decent amount of margin on those types of jobs because that the kind of people that buy those kinds of systems tend to be a little less price sensitive. So, again, I'm making some assumptions based on on maybe your side of the table, but is that does that sound accurate?

Yeah, I mean, it's interesting because it is accurate and also those products come with, like you're mentioning, accessories, more value, more efficiency, maybe more sensor technology, right? So yeah, I mean, at its bare bones, that is a strategy. Absolutely. Even if you think about like vehicles and how people buy fleet vehicles, right?

If I'm buying a hundred cars for my delivery service, you know, the camera's gonna be all right. But if it's me, myself on the weekend, you know, maybe I wanna go wild, a little more features, a little more screens, little more accessory on my seats. Heated seats have been a thing forever. Cooling seats, really nice.

But that's a different conversation and therefore more prices built into it, but also probably more margin. Yeah.

So if you're if you're let's say you're a a territory manager, account manager, and you come in and sit down with a dealer, and let's say they say something to you like, well, we build in several thousand dollars a day just kind of as a flat rate for the install, and then we add the equipment price on top of that. Is that do you go, hey. Wait a minute. You're leaving money on the table or you're losing market share? Or what do you when you're looking at your market share numbers, what what do you guys see based on how dealers do it?

Well, it's a bit of a mixed bag. And I think there's what we see the good dealers do and what we see the middle of the road dealers do with maybe some room for improvement. And just like all industries, where you really can own and run your own franchise, survival of the fittest sort of bakes itself out, right?

So there's definitely strategy in how manufacturers price. And when we see strategy and how dealers price mimic that behavior, there's a lot of success that we absolutely correlate to share, price, value, things that really help a business grow and be sustainable for a long time.

Yeah.

One of the challenges, you know, I think sometimes, again, having talked to lots of different people in this industry, some people say, hey. Wait a minute. Maybe it's unethical to have varying margins. Like, why would I put different margins on different products? Like, do you ever get into, like, an ethics conversation? Or how how would you approach something like that?

Yeah. I don't know that I'm just kinda really thinking on that. I don't know that I've ever really even myself considered it ethical because in general when you do look at a product mix, can explain why things are priced a different way. Just like I don't expect you know, a pair of flip flops that I pick up off the rack on a grocery store cabin because boy, I really needed flip flops at the beach today and I forgot them to cost the same as something, you know, like a nice slide that I'm buying from Nordstrom's.

Know, I have an expectation in my mind already. So when I look at pricing in general for, you know, more of a a mass market item, the same rules kind of apply. If you're gonna put more features and benefits into it and it's gonna be more valuable and yield a better result anyway, it's probably gonna be more expensive. There's gonna be more components within it.

It makes sense that the manufacturer is therefore expecting return on that.

But that's me. That's sort of how I shop and how I think about money. I'd be curious to know your take on it too.

Yeah. I mean, it's hard to change somebody's mind if they've got you know, something like that that they're holding on to. I think, you know, I kinda feel like in for the most part of free market economy, we got our pricing out there and people can buy it or not buy it, and they get the choice. Like, I'm not forcing anybody to buy it. So as a business owner, I have to run a good business because if I don't, I won't be in business a couple years from now. So I have both a duty to my employees to be in business a couple years from now, but also a duty to my customers to be around.

I felt like as a business owner, I had some competitors that weren't so ethical sometimes. And if I go out of business, there's nobody left for somebody to choose other than those guys. So my strategy was like, hey, we're going to put our margin where partially because higher end systems maybe you're a little more finicky. Your refrigeration's got to be perfect.

Your refrigerant, your airflow has got to be perfect. So we're spending more time on those installs, and we're maybe even have a service tech do the startup versus installers or different strategies there to make sure it goes well. But we needed to make sure that we had enough margin in there to cover the labor that maybe sneaks up on you sometimes. So that was part of it too.

Definitely, yeah. Margin can feel like an ethics problem, but I think when we really think about what it's there to do, it's there to create operating income for us to use to make money, reinvest in the business, and keep growing. That's what it's there to do. It's not there to be evil and take advantage of you and make you feel bad about what you bought. It's there for companies to do what they do every single day, is make more products and innovate more and really go out there and win business. So it's interesting to think about margin and ethics in the same pile.

So if we acknowledge that these higher end systems are going to yield more margin, Why then do we see so many people going towards lower end product?

And maybe even answering my own question here, as we talked about a little bit earlier, if the sales call windows are getting shorter and shorter and shorter, and I don't have time to explain value, how do I get these higher end sales, especially when my phones are lit up in the summer?

Oh, yeah. I think one is from a ownership level, I think the owner needs to understand what's the value of selling high end equipment. Because if your salespeople are running six, seven, eight calls in a day, there is no way for them to really slow down and spend enough time to do a thorough job to get that higher end customer. So I think step one is, at our company, we had to say, hey.

Either we're gonna prioritize this or we're not. If we're not, then it's just a crapshoot. Right? Like, the salespeople go out.

Sometimes they sell high end. Sometimes they don't. Or we prioritize it and we say, hey, this is what we're aiming towards. And then sometimes we still sell single stage or builder grade or something.

Right? But but, hey, our priority is the higher end equipment. So from the ownership management level, if you go, hey. This is our business strategy.

Well, then you build everything around that. You it's not just something that accidentally happens every now and then. Now it's something that, like, hey. That's the expectation.

We'll accept occasionally something that isn't a higher end system, but but let's go for the gold in that sense. So here's I mean, here is again, if I put my business owner hat on, here's some things I saw as a sales rep that made me when I then owned a business go, okay. This is how I wanna run my business. One was, you know, I read some books that weren't HVAC books, but they were on pricing and strategy and psychology.

And one of the things that came out of those books is they said, the more money people spend, the happier they tend to be. And I thought that's really interesting.

Spend more money and I'm happier. Yeah.

So it's it's interesting because we don't necessarily or we think a lot of times, oh, I gotta get my price down low. And so in order to get my price down low, I'm leaving out IAQ. I'm leaving out replacing ductwork or adding returns or replacing the line set or whatever I'm I'm whatever having to do to get the cost down as low as I can. And so I'm putting all my time and energy and effort into getting the price down because I view myself as a commodity.

If I view myself as a commodity, I gotta get my price down to compete against these other companies because they're down here. If on the other hand, I mean, if there's a a hundred heating and air companies within a ten mile radius of me, all of them can install probably a basic system fairly easily. Right? I mean, that's everybody can do that.

But if you look at the high end systems, how many companies do those systems well? Well, there's not a hundred. Maybe there's only ten. So part of it is, okay.

I want my company to be up here.

So that was part of the thinking. The other part of the thinking was even if margins were the same, because my average ticket's more, what do I wanna make on a on a day of install? I mean, I could make a thousand bucks on a day of install of just net profit, or I could make two thousand bucks. Right?

And so over the course of time, that makes an enormous difference in terms of what I'm able to do at my company, paying my employees better, providing benefits, those kind of things. So that higher end equipment allows me to recruit and retain better employees than some of my competitors. So that that was part of the strategy. But then going back to just the psychology of it, where where the more money people spend, the happier they are.

The other piece of that was that it changes the way your customer talks about you. So I I actually put this to the test. Now this is I'm old, Mary, so forgive me. But, like, two thousand ten, I did my own little case study, twenty ten.

And here's what I did. So I I kinda lined up. We had thirteen SEER back then. I mean, is old school.

And I I tracked all of my referrals. So who are the referrals that I got that year? And it was my fourth year in sales. So I had been at the same heating and air company for a while.

I had some repeat customers.

I had referrals coming in. And so I had a pretty decent track record of being able to track, all right, who are my referrals? So I take my referrals and then I go back and I look at, well, where did they come from? So if Mary bought a system from me and she was a referral, how did Mary hear about me?

Well, Mary heard about me from Bob. Well, what did Bob buy? Because that's that's what I was really trying to figure out. I mean, what was it that we put in Bob's house that made me get that referral?

And so here's what in in kinda my numbers. I did roughly three hundred installs in two thousand ten. And so when I go back and I figure out how many of the referrals, where they come from, if I sold somebody a thirteen SEER unit, which back then that was entry level basic system, I would have to sell eight to ten of those to get one referral.

And when I would go talk to customers, because I get on the phone during slow months and I call my customers and go, hey, how's that system working? And you need anything else or whatever I could do to drum up business?

Here's what they would say. I mean, was something like this. Like, well, you know, on Monday, we had air conditioning and it was fine. And then Tuesday, our air conditioner was out and now we don't have air conditioning. And then on Wednesday, you guys put a new air conditioner in and now it's fine again.

Mhmm.

And so the only Delta, like, we like that term delta in heating air, but the delta between Monday and Wednesday is just now they're out ten grand or whatever it was. Right? Sure.

Fine. Yeah.

Yeah. If they're talking to their neighbor and Joe's like, how's your week going? They're like, hey. I'm ten grand less than I had on Monday because I had to buy a new heating system, and that's their talking point. So what kind of referral does that lead to? Well, not a great one. Right?

I mean, if I get one If one out of all.

Right? Yeah.

If I put in a nice system, right? And I kind of went up, alright, thirteen SEER. What about two stage? We had two stage back then, right?

Like, what about that? And then if I then I had another category. If somebody spent more than twenty thousand dollars with me, which in two thousand ten was a decent chunk of change. Yeah.

I think I had eighteen or twenty customers that year that that spent more than twenty thousand dollars.

I averaged about three referrals for every twenty thousand dollar job I did. So instead having to do ten, thirteen SEER jobs to get one referral, if I did one twenty thousand dollar job, on average, I was getting about three referrals because the conversations were different. So Bob says to Joe, how's your week? Joe goes, oh man, had to buy a new heating air system, but man, I can control this thing with my phone. It's connected to Wi Fi. It's so much quieter, circulates air better. We sleep better at night.

And so that's what led to those referrals.

Yeah, Joe becomes billboard for all my features and benefits.

So I think that's what makes it a strategy.

When you say, okay, I'm gonna approach selling product mix as a business strategy because my referrals come from there, my margin comes from there. One of the things we were able to do was we grew like right after COVID, we went from four point five million to five point five million to eight million to ten million to twelve million. And most of that growth was done on about a three percent, three point five percent marketing budget. And so sometimes people are like, holy crap, how are you growing at that rate with that market budget?

Well, it's because twenty eighteen, twenty nineteen, twenty twenty, we made our growth strategy high end installs. That was it. We wanted referrals and high end equipment. And so then you see it pay dividends down the road.

So I think that that's the strategy I chose. Lots of strategies out there, but I didn't have deep pockets to spend on marketing. So I had to generate as many referrals as possible.

Is that and now if you put on your manufacturer hat, like, where do you guys see positive reviews or customer comments? Is it am I accurate in saying it's all the high end stuff is where the positive reviews come from? Or what do you guys see? I know I'm asking you broad questions.

Yeah. Well, hey. I mean, we're it's all up for discussion. Right? It's it's interesting. The the systems that come with the benefits that people are actually looking for and maybe to your point, the money that they're spending that makes them happy, which are those things like being able to control more humidity in the home or looking at pet dander.

That's one we hear about a ton or I have people living in my house with asthma, those IQ products. Well, all of those things cost that money. And when they spend that money, they are happier and they leave more favorable reviews and we absolutely see that to be true.

One thing that's happened, think, it's funny to talk about thirteen SEER because as the bottom of minimum acceptance has risen, the competitive nature of what is between fifteen and twenty SEER has gotten pretty cutthroat. And so now you're seeing really cool things happening with sensor technology and inverters and how can we actually make a twenty four volt system pretty cool? Before all we could do that with was on a crazy connected smart home kind of a thing. But now even a twenty four volt system can do well.

So you're seeing the minimum acceptable level of performance rise, and yet the technology within the top and the bottom is still finding ways to innovate. So it's very interesting to watch that too and see how the buying decisions in the market are honestly still very similar to what you were experiencing, you know, when maybe thirteen SEER was the bottom. Like, do I just get a replacement? Do I just churn and burn?

Do I just keep moving? Or, you know, do I actually take this moment to make a decision for my health my home, my family, whatever, and, you know, invest a little bit more, and therefore I'm happier, and therefore I have another referral. One way that manufacturers absolutely measure this is with consumer reports. And what do those consumer reports say?

You know, us out here in the wild, we might think that those are, you know, half truths. You know, is there a lot of campaigning that goes on behind the scenes of those? Those are real things. I mean, that's why you see car manufacturers talk about the J.

D. Power rankings. Right? Like, that's their version of it.

We love watching consumer reports to see what it is that customers really care about, and turns out they care. They really do care.

I am still a little bit hung up on people who spend more money are happier because I actually agree. That's not why I'm hung up on it. I just think about how many times in my day I'm tasked with making a money cutting decision and, know, just looking at subscriptions, right? Or we'd really like to invest in some patio furniture, but, you know, do we just get the stuff that's gonna get beat up outside or do we invest in, like, you know, sunbrella cushions and make it fabulous?

So it's interesting when it comes to HVAC, very easily another buying decision that could be like, nah, just get me through, get this house cool again.

Within the strategy of all of this, guess what I keep coming back to is that sales call is getting shorter. So how are we gonna capitalize on that shortened time and still get that really awesome high efficiency, high dollar sale?

Yeah.

Yeah, that's a good question. I think when we're coaching on strategy, there's a couple of things that factor in there. We could probably break those down. But you know, if you think about the customer's anxiety level as relative to money, like that, money is probably the number one thing that makes somebody anxious when it comes to making a major purchase like heating and air conditioning.

And so if you think about how maybe the traditional sales call goes, the sales rep gets there at the beginning of the hour or whenever it is, and we do everything we can to keep the customer's anxiety low. We smile. We're friendly. If they got dogs, we like dogs.

They got kids. I pretend I like their kids.

That kind of stuff. And so we're keeping their anxiety low. We walk through the house, and then we get to the end. We're like, all right, give me a minute or two to put together a proposal. And then at some point, we split the screen around, and the first thing they see are these big numbers like twenty thousand dollars and all of a sudden their anxiety shoots through the roof. And so they're like, oh my god, I had no idea they were that expensive.

And so the sales rep's goal then is to close the sale. They got to get that homeowner to make a decision and it's right at the end of the sales call and the the anxiety just skyrocketed and so in order to get that homeowner to make a decision, we've gotta either get that anxiety back down in a hurry or we give in to them saying, hey, I wanna think it over. I'm gonna get back to you. I gotta go talk somebody else.

We're gonna get more bids or we're gonna we're thinking about going with the repair. Like all of those objections come out ahead of time, right? So it's a little counterintuitive, but what you wanna do is you wanna get their anxiety up at the beginning of the sales call. I mean, if they're gonna have this price this huge spike in anxiety due to money, well, let's get that out of the way in the first ten minutes.

Yeah. And so usually it's a conversation at the beginning where we say, hey, let's just ten thousand foot view. And I probably haven't walked through the house yet. And I think that's key is to have the money conversation before you do the walk through as the contractor because once you do the walk through, the homeowner's expectation is you know exactly what it's gonna cost and if you don't tell em, you're just being dodgy, right?

But if I haven't walked through the house yet, I can have kind of a big picture conversation where I can say, hey, here's the general range for a two thousand square foot house, single stage equipment. Here's what the range is gonna And it it could be a it could be a decent range. Right?

If you went up a little bit more, Mary, to maybe something a bit higher end, here's what the price range is, but here's why people buy those kinds of systems. Because everybody has the choice. You could buy something cheaper or you buy something more expensive. So the people that go, okay.

I'm gonna spend more money and get something better. Why do they do it? I think that's an important discussion to have. Here's what they saw that made them say, okay.

I'm gonna spend a little bit more money. And then here's maybe that higher end bracket. Here's what people typically say when they buy equipment in that range. Right?

So if I'm giving you some brackets and just to make up some numbers, I might say, hey, Mary, some customers spend ten to fifteen thousand dollars. Typically, they're not gonna live in the house that long. They're looking to sell it. Maybe just money's pretty tight at this point in time, and so that's a a bigger consideration.

You know, good unit, great warranty, but it's gonna be very similar to what you had before. Other people spend maybe fifteen to twenty thousand dollars. Here's what they're looking for. Better airflow, air circulation. They wanna sleep better at night, better humidity control, being able to control it from their phone. Usually, filtration is built in at that point.

Maybe we've had to sort out some ductwork issues, and that's what put us into that category as well.

And then some people spend twenty, dollars twenty five thousand, and here's what they say. We're gonna live in the house seven to ten years or forever.

We want the lowest possible utility bill. We want the best circulation, the best humidity control.

So those folks are in the twenty, twenty five thousand dollar range. So if we have that conversation ten minutes in, I'm not quoting specific pricing. I'm just generally saying, here's what people spend based on what they want.

Well, that that gets your anxiety up but now, we've got forty five minutes or longer to get it back down. So, I think strategy number one is, if you wanna sell high end equipment, you gotta talk about it on the front end and you mention all the things that make it worth happening, right? So, that may include a very competitive finance offer. That may include tax credits, a utility rebate, maybe there's a manufacturer rebate going on, maybe use a dealer, put your own rebate on or discount or sale on those. So you're talking about that at the front end, but your price conditioning, you're getting the anxiety out of the way, and so on.

So I I would say that's probably step number one. Talk about money early and often, but talk about it in the sense that here's what other people do, here's why they do it, here's how they afford it. Yeah.

I kinda like the idea of like describing, you know, types of people or groups of people that have made those decisions rather than, you know, and they bought it because it was twenty SEER and this you know, don't give me the technical specs. Right? I'm calling you because you're the expert. I that that means great.

I've you know, if to the average homeowner, what is twenty SEER versus eighteen versus fifteen? Like but I know what it means to be someone who was has long term goals and staying in a house versus, know, nah, this is a turn and burn for me. I'm gonna rent it in a year, like whatever that means. So that's really interesting.

And you know what? I think too, manufacturers do the same thing. When they sign up with a distributor partner, they say, hey, we know that we are coming in with a price book that is this much above competitor x and this is where we sit, here's our value proposition, but also in this partnership, this is how we're gonna work with you. These are the programs we're gonna sell with you.

And and you're really creating partnership more than you're just creating transaction. And it sounds like you're doing the same thing in the home in this example too. Like, I'm here to help you accomplish your goals. Here's how we're gonna do that with my solutions. It's it's a smaller scale of that relationship. It's one on one versus distributorship, but it's very much the same strategy.

Oh, yeah. I think human psychology is human psychology.

Yeah.

And, you know, sometimes you're you're maybe you're describing different types of buyers, but they're in the same group of people. For instance, I had a sales call one day where it was pouring rain, and so I'm I'm knocking on the door. Rain's just coming down. It's messing up my hair.

And this little old lady who's retired, she opens the door, and she would not let me in. So I'm standing on the porch in the pouring rain, and she's like, hey. Before you come in, she goes, you have to promise me that you're gonna give me the lowest possible price. And I was like, no problem.

I mean, I'll say anything about it. Right. Right? So we get in and I Challenge accepted.

Yeah. I'm like, hey. I do have a question about that. She's like, okay. I said, hey.

So retired people I'm just, again, describing a group, but but maybe two different subsets of that group. Some retired people say, I want the lowest upfront cost. Meaning, money's real tight right now, and so I need the lowest possible cost to be able to afford it. Other retired people, when they say, I want the lowest possible cost, they're looking at over the next five, seven, ten years, typical repair costs, how often is the unit gonna break down, what are my utility bills gonna be.

And so when they look at total cost of ownership, they say, well, want the lowest total cost of ownership over a ten year period, which is usually more expensive upfront, but but over ten years, it's lower. Right? Versus the people who say I need the lowest upfront cost. So missus little old lady, which one do you want?

And she goes, oh, well, nobody's asked me that yet. And so that let me know because I was like the fifth estimate she had gotten. So everybody, when they walked in the door, she said, I want your lowest post possible price. So they only quoted her fourteen SEER based stuff versus me saying, hey.

If you got something a little bit more energy efficient and you got it from a little bit better manufacturer, you have less chance of needing repair in the long run too. And maybe you want a warranty and maintenance and all that kind of stuff. And so she probably spent maybe four or five thousand dollars more than my next closest competitor because she was looking at, hey. Over the next ten years, can I fix this cost?

Can I cover warranty and maintenance and everything else? So, you know, it's I think that's how you help people think through. What do I really want? They what they say they want or what she said she wanted was the lowest possible price.

Well, what does that mean? And what are you giving up? And you want the lowest possible price over the next ten years or just the lowest possible price today? And when she sat there and thought about it, she's like, well, I'm I'm not moving. So this I want the lowest possible price over the lifetime of this heating and air system. So, anyway, that was kinda interesting. I mean, it's just interesting to see somebody think through that kinda out loud with you sitting right there.

So describing the same demographic, but just different buying motivations and see which way they go in that sense.

Well, and I love that too because she says to you, no one's asked me that before. And that's odd. But first of all, as a salesperson, when that's going in a positive direction, no one's asked me that before, that feels good. That feels like we're on the right track and I'm hitting right where I need to be to move this thing into a actual sale.

But the other interesting part of that is, wow, nobody asked her that before.

Think about how many people you're up against out there that are just going through the motions. Here's my price book. Like, you know, that's my price. Great. She wants the lowest possible price. I know what that is every day of the week. And I'm gonna get a pizza party if I sell twenty of these this month and sounds good.

You could do so much better out there with just a few qualifying questions. There's so much to be had. And I think that's where I get excited about stuff like this because it is strategy, but simple, simple too. Just it's another question.

It's another layer of, you know, hey, what would really solve your need? Do you even really know what your need is? Oh, you don't? Well, let me show you some options.

That's great.

I love that.

I'm very, think maybe the word is passionate about just getting people into the right system, not necessarily just a system because we know that there's choice out there. Manufacturers make different kinds of systems because this isn't the kind of utopia where we can all just buy the same thing and that's it. So it's fun to be able to say, hey, here are your options, here's what could work for you. And sometimes the most incredible system isn't what's right for them. What if they say it really is just a rental property and I really wanna do this?

There's other kinds of tools at your disposal that you could still make that sale, but it's okay to just identify who you're selling to and put them in the right system. That's a good thing too.

I agree. I think one of the lessons that we should learn as a heating and air industry from maybe like the car industry is we've gotten stuck since the eighties on this concept of like best, better, good. So what that sounds like, if you're a homeowner, the sales rep comes in and says, hey, this system, it's amazing. It cooks and cleans. It's gonna put the bed the the kids to bed for you. It'll do the dishes later.

It'll walk your dog. It's amazing.

Then we show them yeah.

We show them a price point. They go, oh my gosh. I can't afford that. Well, that was best. Let me show you better. It cooks and cleans, but you gotta walk your dog yourself.

And then by the time they get down to good, and maybe if good's all I can afford, then by the time they get down to good, they're like, it's okay. Right? And so that that kinda takes the steam out of the homeowner going, why? I don't wanna buy something that's okay.

I mean, it's it's a lot of money. Even even our entry level equipment is a lot of money to a lot of homeowners. So, you know, if you look at how car manufacturers do it, one of the things I love from that strategy standpoint is they say, hey, here's our big SUV, best in class. Here's our midsize SUV, best in class.

Here's our four door sedan, best in class. And so rather than best, better, good, they say best, best, and best. And now they say best in class. And the way I rephrase that is in this budget range, here's some of the best options for you.

But I hate when I my pet peeve is best, better, good because if most of your customers or a lot of your customers end up in that good category, they don't wanna feel like they got some value, right, brand. Like, oh, here's our best, better, good value line. No. I would say, hey.

In this budget range, here's the best option for you here.

And then when they buy it, they're like, alright. Well, I got the best option in that budget range. And so they feel good about that purchase.

So I think that's a lesson. When you talk about strategy there, the best system for for this person may not be the absolute best thing I've got because I gotta factor in what can they afford. So what I want them to do is buy the best thing they can afford.

And so for different people, that will be at those different levels, but I don't wanna disparage maybe my bottom tier equipment either. Even though what I would say, hey, my strategy, my business strategy is so high end, not everybody can afford it. So I've got to recognize that and say, I still want to get them the best for their house, the best for them at a price point they can afford. So that is definitely a component of good sales strategy as well.

Yeah, think that's interesting because I think it's very easy to listen to two of us talking about it and they're like, wow, they really want me to sell high efficiency systems. Well, great. It's like, no. We we want you to qualify your customers based on what their needs are, what they can afford, and and make a sale every time.

That really is the goal. Yeah. Like, the tickets go up, the number of tickets go up, the average size, all of it. But, you know, the way you go about it, if you're just slinging a price book across the table and doing best, better, good, chances are you're gonna fall into some of the pitfalls that you're mentioning.

Yeah. So it's very, very interesting. Well, I am, I'm definitely just even just turning in my head here on things that have happened over the week and what I can do to go out there and get it and keep keep getting better. So as always, love the conversation.

And, man, I can't wait to see what's on your mind next time.

I got well, next time, Mary, we should argue.

I wanna argue next time, and I wanna talk about fight?

Alright.

We We fight. I wanna talk about financing.

Oh, you know I love financing.

Do you know what the difference between financing and financing is?

I do not.

Alright. Come back next time.

Sounds good.

Alright.