• Contractingbusiness 1334 0810 Benchmarking Haycock
    Contractingbusiness 1334 0810 Benchmarking Haycock
    Contractingbusiness 1334 0810 Benchmarking Haycock
    Contractingbusiness 1334 0810 Benchmarking Haycock
    Contractingbusiness 1334 0810 Benchmarking Haycock

    The Value of Performance Benchmarks

    Aug. 1, 2010
    You can 'get it done and go home,' or measure your residential and commercial HVAC work against established methods for evaluating business performance. Benchmarking helps you get better, and 'get it done' more profitably.

    Benchmarking — comparing business processes and performance metrics to industry bests — is like the slogan for the old Red Ball Jets tennis shoes: it can help your HVAC business run faster and jump higher. All great performers need something to compare themselves to, even if it's only two or three key metrics. If you're not matching your business performance to a higher standard, your business can stagnate and never reach its full potential. Here's a look at how leading contractors use benchmarking in their residential and commercial HVAC businesses.

    Be Ready for Informed Customers
    Joe Haycock named his boat "Full Circle," to signify his career in the HVAC industry. He started as an apprentice, and moved up the ranks, to service technician, installation technician, hydronics specialist, and business owner, twice.

    Haycock, an industry veteran of 33 years, started his current company — Fresh Air Concepts — in 2003, after he realized the growing demand for residential indoor air quality (IAQ). IAQ is a cornerstone of the business, and is supported by sales of a private labeled UV air purificaton unit. The company's overall excellence in HVAC contracting has made it a four-time Carrier President's Award winner.

    Haycock says sales benchmarks are the rudders that keep a business going in the right direction in many categories. One of those categories is providing information to customers, who Haycock says have become much more product savvy than he's ever seen in more than 20 years of HVAC estimating. He's amazed by the dynamics involved in making a sale today compared to his early years.

    "I used to be able to go in to a home, give an estimate, and they'd say 'let's do it.' Today, more customers are getting multiple estimates. Chances are good you're not going to close that sale in a single meeting. With the Internet at their disposal, the general public are very well informed. Now, you might as well tell them to get other estimates. It's going to come down to selling yourself and your company. The product speaks for itself. Your technical knowledge, product knowledge and trustworthiness take it to the next level."

    One of Haycock's top benchmarking standards is related to how his 14 technicians use commissioning in every phase of a residential HVAC installation.

    "Commissioning ensures things are getting done properly and efficiently. Everything can be benchmarked," he says.

    Tracking Revenue Per Lead
    The final proof of the quality of a company's benchmarking efforts is to be found nowhere else but at the bottom line. For residential contractor Weldon Long, president, Wright Total Indoor Comfort, the big number he tracks is "revenue per lead."

    "'Revenue per lead'" is a little bit different than average ticket or close rate," he explains. "Your average sale could be $10,000, but if you're only closing 10% of your leads, you’re not doing very well. On the other hand, you could be selling 80% of your leads with a very low average ticket. Revenue per lead, is total volume divided by total number of leads, including cancelled leads, sold, lost, everything," Long says.

    "If a guy had 40 leads in a month and did a total of $100,000 in sales, you have $2,500 per lead. That's the best metric we've found," says Long, whose life story is a testament to personal renewal. After 13 years in Federal prison, during which time he earned a Bachelor's degree and an MBA, he turned his life around. His book, "The Upside of Fear," tells the story of his transformation from criminal to successful business owner.

    The Importance of 'Sales Technicians'
    Eric Kaiser, director of operations for Wright Total Indoor Comfort, adds that a low "revenue per ticket," number is largely caused by improper troubleshooting, or the technician is doing a poor job of explaining the problem.

    "Every technician should be a sales technician," Kaiser says. "If the blower motor is bad, you have to put on your salesman's cap and tell them it has to be repaired. If they come to the customer 'hat in hand,' almost apologetic that they're doing their job correctly, that has to change. They have to approach the customer with confidence when suggesting a new igniter, or telling them that a condensor fan motor has the potential to fail. They have to make suggestions as 'preemptive strikes' that lead to quality service."

    Measure Time Spent at Assigned Locations
    Regional President Ted Lynch, Ph.D., is responsible for the mid-Atlantic and Southwest divisions at Southland Industries, the 2001 Contracting Business Commercial Contractor of the Year.

    Project excellence benchmarking for Southland Industries includes a process in which technicians come to learn and live the systems they service.

    "Most of our work involves servicing facilities that we've designed and built, therefore we want technicians to spend more time at those facilities. We need technicians who think like engineers, and who understand the design's intent, and how it operates. Quality of service is key for us, as is feedback from customers on how technicians are servicing their facilities."

    Southland Industries has established technician performance standards for its full realm of contract work. Each system is maintained and operated according to its original design intent. Each facility's HVAC equipment must be running properly, and customers must feel confident about the expertise of the servicing technician. "Informal feedback is exchanged between service managers and technicians, and we hold formal annual reviews. We evaluate how they're doing against budget, but also their technical expertise, how they've serviced the customers, and the nature of all customer feedback we've received," Lynch says.

    "One of our chief concerns is the amount of time they spend with a customer. That time has to involve more than just a quarterly system check up. We're typically not interested in work for customers performed once every three months. That doesn't provide for enough face time, and time spent in the facility to be aware of any potential issues."

    Benchmarking can only become part of your company culture if you take the time to establish key performance parameters for all areas of technician, financial, operations, and service sectors within your business. Start by setting aside the time to consider where you are now, and where performance benchmarking can take you in the future.

    Benchmarks Predict Future Performance

    Alan Barnes, Jr., president, Mechanical Insight Consulting, Inc., Atlanta GA, says benchmarking is especially valuable in determining how your company will perform in the future. Barnes conducted a survey of past winners of the Contracting Business Commercial HVAC Contractor of the Year Award, and found many attributes at work in the most successful HVAC businesses. "These companies have stood the test of time, and have remained successful, even in the toughest of times," Barnes says. Key attributes at the most successful companies include:

    • staying ahead of the billing curve
    • outstanding collections performance
    • product line diversity
    • specialized sales efforts, including a significant base of maintenance contracts
    • attention by company leaders to growing the business rather than being caught up in "day-to-day" duties.

    You can read more about Barnes' survey by visiting http://bit.ly/cbbenchmarks

    NATE Certification a Knowledge Benchmark

    Alex Bardi, president and CEO, Bardi Heating and Air Conditioning, Inc., Norcross, GA, recognized the need for the HVACR industry to standardize on one type of technician certification.

    “In the time between 1985 and 1989, there were several technician certification programs out there,” he recalls. “I waited until one stepped out and dominated the market. That’s when I got involved with North American Technician Excellence (NATE).”

    Almost 50% of the Bardi’s technicians are NATE-certified, with more to come. “NATE sets our company apart, and provides our customers with peace of mind, by assuring them that our technicians can correctly and efficiently handle and service any HVAC challenge they have,” Bardi says. “Just as importantly, certification serves as an important benchmark for our technicians,” he says. “We benchmark all of our technicians’ attitudes and their abilities. NATE is an indication of both — the desire and ability to achieve. If a technician is NATE certified, we know we can send that technician to a customer’s home or place of business and feel confident in their ability to address the problem.” Bardi’s service excellence has earned the company due recognition recently from the local Better Business Bureau of Metro Atlanta, as recipient of a first place award in the category of Customer Service. It took a runner-up award in the Community Service category.

    NATE, headquartered in Arlington, VA, is the nation’s largest non-profit certification organization for HVACR technicians. Candidates for NATE testing can earn installation and/or service certification in nine specialty areas, including air conditioning, air distribution, heat pumps, gas heating, oil heating, hydronic gas, hydronic oil, and commercial, light commercial refrigeration and senior efficiency analyst. Additionally, NATE certifies technicians using the International Ground Source Heat Pump exam. NATE certifications are especially important to ARC Mechanical Contractors in Bradford, VT. According to ARC general manager Wayne Vanasse, NATE testing provides a way for ARC technicians to meet various certification and licensing requirements established by Vermont and New Hampshire. “To encourage their success, we provide continuing education to help our technicians pass whatever tests they register for,” Vanasse says. “As we meet state requirements through NATE certification, we’re demonstrating a level of technical competence to our customers, which is becoming increasingly more important. Customers are conducting research prior to their purchases; in the process, they’re becoming familiar with NATE certification and what it means to them to use a NATE-certified technician,” he says.

    Dewey Jenkins, owner and president of Morris-Jenkins in Charlotte, NC, says the real value of NATE certification is in peer recognition. Morris-Jenkins was the Contracting Business 2009 Residential Contractor of the Year. “The perception in the HVAC industry is that NATE-certified technicians are a step above those technicians who aren’t certified,” Jenkins explains. “That’s why I emphasize the importance of NATE certification to my technicians. I want them to have that status among their peers. When they feel good about themselves and their accomplishments, they tend to do a better job.”

    Morris-Jenkins uses NATE certification to rate technician performance. “We look at their callbacks and their ability to deal with customers, so certification is definitely part of our benchmarking process,” Jenkins says. “I know it’s not easy to obtain. It requires a lot of hard work, study and preparation. But, as I tell my technicians, ‘show me one thing in life that’s worthwhile that isn’t hard.’ Hard though it may be, NATE certification is definitely worthwhile.”

    natex.org