I often wonder why people come to my hydronic seminars, take copious notes, ask lots of questions and then proceed to tell me, in great detail, why no one will buy it in their market because of cost. Seems kinda like a waste of time, doesn't it?
I remember one guy who forked over $300 for tuition, plus another $400 for airfare to spend an entire weekend in Minnesota — in February, no less — arguing with me that since people were cheap, no one was going to buy hydronic heating, so I was just wasting my time.
I'm wasting my time? This guy took $700 out of his pocket and four days out of his life to prove a point, and I'm wasting my time?
Our industry relies, for the most part, on contractors to do our end-user selling. Amazingly, we (manufacturers, reps and wholesalers) do very little to help them succeed at it. Contractors are the ones who deliver the job proposal to the builder or homeowner, and they're the ones who have to answer the tough questions. Listen to their counter-talk sometime: “…those no-good builders are the anti-Christ… so-and-so cut my throat for $50…that blood-sucking leach was doing it for less than my cost…”
And guess what? Put a group of wholesale salespeople together in the same room to talk about their customers and is the conversation any different?
We in the hydronics industry are very good at teaching technical skills. Scores of manufacturers, reps and wholesalers do an excellent job helping their customers learn how products work and how to do things the right way. But who's teaching them the other part of the equation — how to sell at prices needed to be profitable?
Well, to quote the famous line from Pogo, “We have met the enemy, and they is us!”
A friend once told me the plumbing, heating and cooling industry is the only industry in the world in which the contractor decides in advance what the customer can and can't afford. As a former contractor, I can remember the feeling in the pit of my stomach when I knew — absolutely, positively and for sure knew — my customers would balk at my price. I've seen so many contractors over the years absolutely, positively and for sure know that the customers in their markets would “never pay for it.” And in a world ruled by self-fulfilling prophecies, when you expect someone to act in a certain way and treat them as though they will act in a certain way, don't be surprised when they actually do act in a certain way.
What's the logical conclusion? That people only care about price. And as we all know, that flows back to the desk of the wholesaler.
A young contractor in Prescott, AZ, attended one of my seminars a few years back and spent a good half-hour telling me that ethically he would have trouble selling radiant heating because people didn't need it. They could get by with something cheaper. He didn't think he could live with himself. I asked him to think about all the stuff he had in his house that he didn't really need. You don't need cable TV or satellite dishes. You don't need cell phones, laptop computers or iPods. And you don't need HDTV, TiVo or the Internet. If you want to get right down to it, you don't even need indoor plumbing — we got along fine for centuries without it. Yet people sell this stuff and still sleep at night. And people buy all this stuff. Why?
Easy — to make life easier, more fun, more enjoyable, more comfortable. Let's face it, buying stuff we don't need is one of the things that separates us from the Soviets, and we all know what happened to them. We live in a society that allows us, even encourages us, to buy stuff to make life easier, more fun, more enjoyable and more comfortable. It's the American Way!
That same night, we discussed pricing for radiant floor heating, and one contractor mentioned his customers were paying up to $7 per square foot for radiant. To say the young guy was shocked is like saying Enron accounting was a little shaky. He simply could not believe anyone would pay that kind of money, called the other guy a rip-off artist and that it was way, way overpriced. The other contractor had the perfect comeback: “Guess what, Sunshine — it ain't your money! It's the customer's money, and he's earned the right to spend it any way he wants.” And apparently he wants to spend it on radiant floor heating at $7 per square foot. It's his money, his choice.
What a great answer! If we could bottle whatever that guy has and share it with our customers, well, to paraphrase Sam Cooke, what a wonderful world it would be.
In an industry that depends on the contractor for end-user and builder sales, it seems only obvious that manufacturers, reps and wholesalers should be responsible for teaching our sales force basic selling skills. You know the drill — planning and preparation, prospecting, asking questions, developing proposals, answering objections, explaining value. If any salesperson struggles with those basics, then the whole process implodes into a price battle.
But do contractors want to learn how to sell? From questions I receive in training programs, I believe they do.
“How can I justify this price to my customer when I'm having a hard time justifying it to myself?” a contractor asked me in class one day. There's no magic answer to that question, but I told the contractor that the first step would be to look at it from the customer's point of view: “If I was this guy and this was my house, how would radiant floor heating make my house better?” I asked him to think about the rooms in the house, ceiling heights, floor coverings and use patterns; think about true comfort, and how radiant would wrap you in warmth and make that imported Italian marble feel like a foot massage from a Body Heat-era Kathleen Turner; and how the basement rooms would simply ooze with cozy; think about drafts, and how much you'll miss them; think about stepping out of the shower on a cold winter day, all wet and naked, onto a floor that's warmer than a Jimmy Buffett concert. Think about getting all these things and lower fuel bills to boot.
Next, I asked him, “If you were this guy, this was your house, and you had this guy's money, would you want to spend some of it on radiant floor heating?” I then told him if he's planning to sell radiant heating at premium prices, he'd better plan on answering an emphatic yes. Otherwise, he didn't have a chance.
Better to help the contractor sell that way than to go back to the wholesaler and beat them up for a few bucks so he could lower his price, don't you think?
Our job in training is to teach contractors everything they need to know about our products and services, absolutely. But to truly differentiate ourselves in the eyes of our customers, our job is to teach them how to be profitable, as well. The contractor has a very difficult job — installation, service, dispatching, human resources, financial planning, business operation, job estimation, marketing, sales. Wholesalers and manufacturers have staffs to handle those different tasks. Most contractors have only themselves or a handful of employees.
There's lots of talk about contractor “loyalty” in the HVACR industry. Some manufacturers even have “loyalty” departments. I think it's naïve to expect contractors to be loyal simply because we're nice people. The contractor is the ultimate free agent who can buy whatever they want from whomever they want for whatever reason they want. The most successful manufacturers and wholesalers are the ones who realize they need the contractor a lot more than the contractor needs them. The most successful manufacturers and wholesalers are the one who not only teach about products, but how, when, where and especially why to apply those products. On top of that, they teach contractors how to sell their services to their customers at profitable prices.
I went to a seminar once where a guy talked about selling pens. He asked if anyone had a Mont Blanc pen. A couple of folks said yes. He then asked how much they had spent for it. One said $100. He asked why would anyone spend that kind of money for a pen, when a 29-cent BIC® would work just as well?
He asked the class if we thought $100 was too much to pay for a pen. Some said yes. He then whipped out a catalog that showed a pen for $2,500! Was THAT too much to pay for a pen? More said yes. Another catalog, another pen — this one for $50,000. Too much for a pen? You bet your retractable ballpoint it is! The last catalog showed a pen shaped like a six-shooter, encrusted with jewels for $250,000! Is a quarter of a freakin' million dollars too much to pay for a pen?
Tell you what — the folks that sell them sure don't think so. If you think $250,000 is too much to pay for a pen, I guarantee you'll NEVER sell one.
When compared to forced hot air, hydronic heating is usually going to be a more expensive option, and that means the front-line sales force — the contractor — needs to be able to sell. Believing you can is the critical first step, but only the first step. Technical skills and product awareness are a must, like Jacks-or-better to open in poker — if you don't have them, you can't play. Helping your contractor customers to learn how to sell is an equally important but far less appreciated element of achieving that success.
The notion that most folks “dance with who brung 'em” is a valid one. The manufacturers and wholesalers who help their contractors be more profitable through product and application knowledge as well as through solid sales training will find they have stronger relationships with those contractors. And profitable contractors make the best customers!
John Barba is the residential training/trade program manager with TACO Inc. Contact him at firstname.lastname@example.org or 952/447-1704.
Don't miss the HYDRONICS & RADIANT HEAT COUNCIL at the 2007 HARDI Annual Conference!
Hydronics 2007 — Challenges and Opportunities
Presented by: John Barba, Residential Training/Trade Program Manager, TACO, Inc.
Challenges and opportunities are two sides of the same coin. The business of hydronics represents tremendous opportunity for contractors, wholesalers and manufacturers, yet these pesky challenges are getting in the way. Heating with water offers comfort, efficiency and flexibility, yet its overall market share is remarkably unchanged over the past 35 years. With an aging and affluent population, the time is ripe for the hydronic heating industry to capitalize on the tremendous opportunity that lies before it. This presentation will discuss the opportunities, the roadblocks and how wholesalers and manufacturers can work together to help contractors seize the moment and make hydronic heating a larger and more profitable segment of their businesses.