I want to start by saying that our thoughts, concerns and prayers go out to so many people that are going through an extremely tough time both health related and financially during this coronavirus threat.

I’ve never experienced anything like this is my lifetime. Not something where businesses in many industries like restaurants, bars, movie theatres and retail stores are required to close. You have industries like travel, retail shopping and others where consumer demand has all but vanished.

Plus, when people are concerned about the economy and have lost money in the stock market, they’re not in the mood to buy cars, boats or vacation homes.
This should make all of us pause for a BIG moment of thanks. A thanks for all the benefits of working in the HVAC service and replacement industry. An industry where so much of what we do is an absolute necessity for homeowners. In fact, that’s why an HVAC service business is listed as one of the “essential businesses” that can continue operating even if companies in that city are required to close by the federal government during this virus threat.

Here’s an example of how this industry has advantages during tough economic times, last Friday evening around 6:30 p.m. (in a week where so many companies were doing nothing) James Holland, who runs Hans Air, called to tell me he just closed a $12,000 replacement sale. It came as a result of a repair call where we found a bad compressor and leaky evaporator coil.

Before the first of each month Hans Air sets a residential replacement goal for the coming month. Then based on our estimated rate of converting service calls to replacement sales we determine how many homes we need to be in on a daily basis to hit our goal. It’s a numbers game. If we want to increase replacement sales we just need to be in more homes. We don’t need to use high pressure sales tactics.

Now when it comes to March, keep in mind when we set a strong growth goal (before the month started) we didn’t know the coronavirus would be an issue.
So here’s the goal we set… Hans Air’s replacement goal for March was set at $275,000. Now that was an ambitious goal considering in March of last year we billed $181,000 in replacements. March’s 2020 goal was a 52% increase over prior year.

Since there are 22 works days in March, our $275,000 replacement goal meant we need to average $62,500 in replacement sales per week.

Okay so here’s how the work week of March 16^th through March 20^th went. Remember this was the first full week in Montgomery, Alabama when the coronavirus restrictions were put in place on a lot of businesses and all schools. Instead of hitting March’s weekly replacement goal of $62,500, Hans Air sold $109,570 of replacements that week.

In fact, by March 20^th Hans Air had already sold $223,054 in replacements with 11 days left in the month. We had already passed last year’s March replacement sales by $42,000.

Now we don’t know what lies ahead, and I’m not trying to make this sound easy. Actually I’m very thankful. There’s no doubt – whether your goal during this challenging time is to just be able to pay your employees and keep some extra money in the bank OR if your game plan is to continue growing your sales and profits above what you did last year – at least in this short term, business is going to be tougher.

But this is critical… now IS NOT the time to take a “wait-and-see” passive approach to your business. This is one of those times when we all need to take the bull by the horns and be proactive.

This means you have access to a business strategy that is specifically designed for sales and profit growth EVEN in difficult times.

During the Great Recession that began in 2007 we went back to the drawing board to work on new service and replacement strategies in the areas of marketing, sales, operations and financial models. EverRest’s programs and strategies were designed to help you build a strong high profit business in a tough economic condition.

During that recession, when a lot of HVAC companies were on their last leg, many HVAC companies that were executing the EverRest Group’s programs were growing faster than they ever had before and at profit margins like they never thought were possible.

Plus, don’t forget, you have the EverRest team to help you. In fact, we’re starting a new weekly series of training web conferences to help you.

HOWEVER, THESE SAME “COMPONENTS OF SUCCESS” ARE ALSO THE BEST GAME PLAN YOU CAN HAVE for operating your business during this difficult time.

1. Your company’s service & replacement sales mix should be at least 80% replacements and 20% or less service. In 2019 Hans Air’s sales mix was 88% replacements & 12% service.
2. Execute the EverRest Group’s “World’s Greatest Strategy for Maximizing Replacement Leads & Sales from Techs.” Get your techs and whoever sells replacements to follow this strategy in detail. No changes to this process should be needed.
3. Keep each tech in at least 4 to 5 homes per day regardless of the weather conditions. In 2019 Hans Air ran 1,070 repair calls and 3,589 tune-ups. 77% of the calls our techs ran were tune-ups. We DON’T want OUR success to depend on the weather. And I have to put a BIG SHOUT OUT to Precision Media. They are doing a phenomenal job of booking tune-ups for Hans Air and many other EverRest Group members.
4. Maximize your replacement gross margin. In fact, our selling strategy will allow you to greatly increase both your gross margin and your closing rate. In 2019 Hans Air had a replacement gross margin of 57% before sales commissions, an annual closing rate of over 85% and a 23.4% net profit. Do you know what Carrier taught in their training? Carrier considered peak performance to be a 40% replacement gross margin, a closing rate of 45% and a net profit of 7%. Your EverRest Group can blow that away.
5. Track your key performance indicators daily using EverRest’s peak performance tracking system, and make adjustments as needed to hit your KPIs

First, understand that the best way to protect your company’s financial security during this time is still to focus on MAXIMIZING YOUR REPLACEMENT SALES.

Did you know that if you are pricing your residential replacements like the EverRest Group recommends, on average, JUST ONE residential replacement system will bring the SAME PROFIT as 48 service calls?

And please remember all the information you need is covered in great detail on the EverRest Group website.

• First, have your techs perform all the Lead Generator Tasks on every repair call and every tune-up. It shouldn’t matter how busy you are with calls. If your techs take the 10 to 12 extra minutes to do this on each call and you follow the sales process, EACH tech should be able to bring between $500,000 to $700,000 in replacement sales annually.
  These Lead Generator Tasks not only uncover a ton of replacement opportunities that your competitors would miss; they also assure that the homeowner’s system is doing everything it can to lower its operating cost and keep the homeowner as comfortable as possible. The task can also extend the life of the system and find minor repairs that can be fixed before they cause major problems.
• Next, if your tech finds one of the Mandatory Lead Conditions, like a leak in the evaporator coil, a bad compressor, a cracked heat exchanger etc. have your tech call your salesperson to have them immediately come to the home to first confirm the problem in front of the customer and then to offer the replacement option.
  If the salesperson can’t go to the home while the tech is still there it’s probably best to handle the replacement sale over the phone. EverRest has a detailed phone selling process you can follow.
• If your tech finds one of the Secondary Lead Conditions, like bearings going bad in a condenser fan motor or multiple minor problems, have the tech call your salesperson to immediately come to the home to see what it will take to get this existing system back to it’s best operating condition. Give your customer the price for the repairs, then offer the replacement option.And don’t forget to offer the homeowner financing for their new equipment. This will be even more important during this time when the homeowner may be concerned about their income.Your company’s goal should be to make it so easy for homeowners to buy from your company that the homeowner wouldn’t want to take the time to get more replacement prices from your competitors.
• Now let’s assume you’ve successfully implemented this replacement lead generation and sales process, BUT your techs aren’t getting in the number of homes you need, that’s when you should put someone on the phones to sell tune-ups.Here’s a rule of thumb to remember if you want someone to call on the phone to sell tune-ups to your customers. Assume 1.5 hours of calling for every home you schedule (remember some homes have more than 1 system). So if you want to keep 1 more tech busy in 4 homes per day, you would need someone to call for 6 hours a day.Also, if you have a strong rate of converting tune-ups to replacement sales, it really doesn’t matter what you charge for the tune-up. If it takes lowering my tune-up price to get in homes I’ll definitely do it. Look at this March at Hans Air when tune-ups are keeping our techs in homes, we’re averaging $88,700 in replacement sales for every 100 homes we go in. At this conversion rate what I charge for the tune-up doesn’t matter.

Here are 2 replacement benchmarks you should remember

1. If 80% of your sales are replacements and 20% are service it means you’re converting approximately 1 out of every 12 service calls to a replacement sale. Hans Air’s 88% replacements in 2019 calculated as converting 1 out of every 8.8 service calls to a replacement sale. A service call can be either a repair or a tune-up.
2. 80% replacements equal “service sales x 4”. So if you currently bill $250,000 in service, you should be able to sell at least $1,000,000 of replacements from your service calls even in tough economic conditions.

The key is to keep your technicians in homes and create your own demand with honesty and integrity. Then respond to the replacement opportunity so fast that your competition never gets involved. If you schedule your replacement leads for a day or two days after your service call, you’re opening the door to competitive pricing.

Thank you for your time and thank you for your business. We are ready and excited to help you. All we ask is that you buy your equipment from the distributor that brought you to the EverRest Group. Thank you.