Ten Tall Tales
Contractor Marketing Gimmicks Exposed
Author Seth Godin says it best: All marketers are liars. And in case you didn’t know, the heating and air conditioning industry has been taken over by marketers. From the multimillion dollar operation down to the mom and pop shop, they’ve all been taught to sell and sell hard. Joe the HVAC’er is no longer a frumpy introvert trained to turn a wrench. He’s a slick salesman trained to turn a profit.
There are exceptions of course. How do you recognize them? How do you tell the true tradesmen from the misleading marketers? Learn a little about the tradesman’s craft. Learn a lot about the marketer’s gimmicks. Tradesmen speak passionately about their craft, just as I do here. Marketers masquerading as tradesmen have no such passion. Profit is their passion, so they deliver rehearsed lines designed to increase sales.
Read on to learn the top ten lines, aka marketing gimmicks, used by contractors today.
A cheap trip charge is a marketing gimmick? Oh yeah. It is, in fact, bait and switch.
When you factor in taxes and benefits, an experienced technician may cost around $50 per hour to employ. By the time he’s driven to your home and diagnosed the problem, the technician will have consumed that hour. Add in overhead and it’s obvious that a contractor can’t send a top tech to your home for $49 or some similarly low fee and remain profitable. On the other hand, a contractor can send a recent parolee who got his “mad skillz” in work rehab and remain quite profitable. But seriously, no matter what kind of tech you get, he’s likely to perform an expensive repair whether it’s needed or not. There are bills to be paid. $49 does not pay them.
Proponents of the cheap service call myth say it’s a loss leader. I don’t think so. A true loss leader puts you in control. You can go to the store and buy just the loss leader if you so desire. The store can entice you to buy more, but they can’t force you. When it comes to repairing your HVAC equipment, you have no such luxury. The technician holds the knowledge and will do what he wants to. If he wants to pad the bill a little to cover the loss on the trip charge, then that’s what he’s going to do. And once your on-commission technician gets into the habit of padding a little, it’s not long before he’s padding a lot.
Would you trust a doctor who sells diagnostic services at a loss? What about a doctor who mails postcards advertising a preseason special? Then neither should you trust a contractor who sells his services with hokey promotions. This trade is not as complicated as medicine, but it requires tremendous expertise nonetheless. A skilled professional doesn’t sell his services as though they’re on clearance. A marketing organization fronting as a contractor, on the other hand, does exactly that. As you’ll learn here, they also “do” incredibly high repair prices. What appears to be a loss leader in this trade is, more often than not, a form of bait and switch.
The out-the-door price from contractors that offer a free service call (if they perform the repair) is probably going to be higher than from contractors that don’t play marketing games. The free service call is indeed a game in that the repair price will be padded to cover the supposedly free service call. They’re robbing Peter to pay Paul. You happen to be Peter. If you want proof then ask them for a time and materials breakdown of the repair price. You probably won’t get it. Then go online to see what the part costs. Then you just might start to get it.
In some cases the contractor has to pad the bill because of scenarios like this: What if they find that the fuse blew because of a power outage? If they’re only charging for the repair, how much can they legitimately charge for replacing a fuse? Even if you factor in an additional charge for routine maintenance, they can’t charge much. They could lose money as a result. But of course they won’t. All they have to do is blame the problem on an expensive part and replace the fuse while they’re at it. This scenario plays out every day of the week and twice on Sunday.
These first two marketing gimmicks have this in common: The single most important thing a technician does is diagnose. Everything else, including the recommended repair and the price you pay, flows from the diagnosis. That’s why I explicitly invite all of my customers to watch as I make the diagnosis. I talk them through the process in easy to understand language. It’s that important to me. It should be that important to you. To try and get the single most important part of the repair process on the cheap is to ask for trouble.
If you have a regular 9 to 5 job, would you willingly work evenings or weekends “at no extra charge”? Of course not. You’d want overtime. What about working nine o’clock on Sunday night? Now we’re talking double time. Contractors are no different. Even if they say they’ll work after-hours at no extra charge, it’s probably not going to happen – at least not the way you think. Call a “no extra charge contractor” for an after-hours appointment and you’ll probably get one of these two responses:
A) You call and hear the following: “That’s correct. We don’t charge extra for after-hours service. However, we’re booked until Monday. How does that work for you?”
B) Or you may very well get someone to show up after-hours for the aforementioned $49 fee. While it doesn’t happen all the time, it does happen.
When option B does happen, they’re not worried about paying their employees overtime. They’re charging more than enough to cover it. They may tell you that they have flat rate pricing, but even flat rate pricing is set by a time and materials formula. In other words, every contractor has an internal hourly rate even if they say they don’t. $300 per hour or more is quite common. Now we’re talking double time. They’ll never admit that of course. Their hourly rate is buried in a flat rate price.
If you can get a contractor to show up after hours for $49 then, technically speaking, it may be true that you’re not (yet) paying extra for after-hours service. However, will that remain true if the contractor’s hidden labor rate is $300 per hour? Throw in a parts markup of two-hundred to five-hundred percent. Add in the fact that repairmen are trained to push new equipment and useless services every chance they get. And I’d say the real truth is that you may be paying after-hours rates every hour of the day.
Same Day Service or It’s Free / On Time or It’s Free
By now some of you must think I’m a dreadful cynic. I prefer to think of myself as a dreadful realist. Spend over twenty years in the trades and you’ll be a realist too. It’s hard to be otherwise when this industry’s leaders have turned to Madison Avenue for guidance. They’ve studied consumer behavior. They’ve figured out how to push the homeowner’s buttons with one glib promise after another.
Same day service is yet another one of their many promises. While they do indeed keep that promise often, it’s quite impossible to keep it all the time. When a heat wave or a cold snap hits there just aren’t enough repairmen to take care of everyone at the same time. When that happens, those homeowners that don’t get same day service can invoke the “or it’s free” part of the promise.
Now ask yourself: What’s free? The trip out. What’s not free? The repair! And few homeowners say no to the repair even if they think the price is ridiculous. That’s because the last thing a homeowner wants to do is wait for another contractor to come out while the house is boiling or freezing. The “or-it’s-free contractor” knows this, so he dangles the “or it’s free guarantee” in front of you while staying mum about his exorbitant repair prices.
The same is true of their promise to be on time or it’s free. If they’re late and end up waiving the trip charge, they really just don’t care. To paraphrase one high-priced consultant’s thoughts on the matter: “When you’re charging $300 per hour and a three-hundred percent markup on parts, who cares about the lousy trip charge?” That’s right. If they can’t get you coming, they’ll always get you going.
Duct cleaning isn’t a marketing gimmick per se, but it is such a deceptive practice that it’s earned a well-deserved spot on the top ten. Duct cleaners promise (or at very least, they strongly imply) that they’ll deliver cleaner air, improved system performance, the removal of dust mites, the elimination of mold and mildew, improved health and the location of the lost city of Atlantis. OK. So they haven’t offered up Atlantis… yet.
The reality is that they usually deliver dirtier air. They can actually make system performance worse by damaging your ducts. Dust mites can’t live in properly functioning ducts because they’re too dry. The same goes for mold and mildew. And of course since duct cleaners don’t actually improve air quality, they’re not going to do anything for your health either. What they are improving is their bottom line. The indoor air quality side of the HVAC business runs very healthy margins. At least something is made healthy by their service.
Yes, yes… I know. A neighbor had his ducts cleaned and he just raves about it. I’d cite the infamous quote incorrectly attributed to P.T. Barnum, but that wouldn’t be nice. So instead we’ll chalk it up to the placebo effect. As you may have heard, the placebo effect isn’t limited to pills. It applies to surgical procedures too. As the NY Times reports, many such procedures have been shown to be no more effective than a useless slice down the middle. So if fake surgery can “cure” a few nutty patients, duct cleaning can cure a few nutty neighbors.
The Biannual Maintenance Agreement / Club Membership Program
As a homeowner you may have heard…
“Well as you can see, this trumped up repair is going to cost the righteous amount of $800. But if you sign up for our totally awesome maintenance program, you’ll get 15% off a price we just raised by 50%. In addition, you’ll get priority service. We always prioritize unsuspecting homeowners like you.
When I return for the next maintenance, I’ll put on a cool little dog and pony show where I buff the furnace, overcharge the air conditioner and fine tune
the system my sales technique. That’s right! I’ll get a twice-yearly opportunity to earn some serious commission on silly services that I’ll sincerely suggest.
You’ll really be doing us a favor because we need make-work during the slow seasons. You’ll be doing yourself a favor as well because you’ll think your system is running better after the so-called tune-up. After all, perception is reality. And I’m perceiving me a nice bonus check!”
OK. So you might not have heard that. But if “maintenance program contractors” were to mend their forked tongues, that’s what you’d hear. And were you to listen to those same contractors talking amongst themselves about maintenance programs, there’s one thing you would not hear: the actual benefit of twice-yearly maintenance to the homeowner. It’s been proven that maintenance program customers buy more, buy more often and shop around less. A homeowner who joins a maintenance or membership program feels obligated to that contractor. As a result, the money flows. Whether or not the maintenance program actually benefits the homeowner is beside the point.
Does your system actually need bi-annual maintenance? In some cases, especially in harsh climates where oil burning furnaces dominate, perhaps. But in the mild climes of the SF Bay, where extremely clean burning natural gas dominates, the answer is an emphatic “no”. A single yearly visit to service both the furnace and air conditioner is plenty. And as long as you’re changing the air filters a few times per year, you might need maintenance less often than that. One very large and famous HVAC manufacturer has acquiesced to as much. But you’ll never hear about that. HVAC contractors have two slow seasons every year. Hence maintenance program customers gets two visits every year whether they need it or not.
One of the most well practiced lines amongst HVAC salesmen is that their brand is the best and all others are inferior. The salesman said that last year when he sold windows. He said that the year before when he sold siding. I can’t speak to windows or siding, but when it comes to HVAC the differences between brands are largely cosmetic. Most manufacturers source their parts from the same OEMs. They use the same technologies. Some brands may offer features that others don’t. But in terms of how long your new HVAC equipment will last, you simply can’t prove that one brand is better than another. Even consumer magazines have acknowledged that they can’t account for the biggest factor in determining the quality of your system. That’s the contractor.
That’s not to say the equipment manufacturers aren’t important. Of course they are. Even so, my many years in the trade have taught me that they’ve reached a state of near parity. I’ve seen very expensive brands perform horribly due to poor installation practices. Conversely, I’ve personally installed both expensive and inexpensive brands that continue to perform wonderfully. The contractor specifies, orders and assembles the components of your HVAC system. He is the system builder. The multinational corporation that put their name on the front is but a parts supplier.
To put it another way, you can buy a Honda Accord from any dealer and get the same quality car. But now imagine if Honda shipped all Accords to their dealers as kit cars. If they did then the Accord from one dealer might not be anything like the Accord from another. One dealer might hire $15 an hour halfwits to assemble their kit cars. Another might hire $50 an hour craftsmen. One might specify cheap or even wrong parts for the things you can’t see. Another might insist on quality all the way. If that hypothetical situation was true of all cars then you’d worry less about which brand to buy and more about the dealer you’re buying from. Replace cars in that analogy with heaters and air conditioners and you’re starting to understand. If you want a good HVAC system, find a good contractor and don’t worry about the brand.
You’re on hold waiting for Full-Page Ad Heating & Air Conditioning Incorporated to pick up the line. While cheerful music plays in the background, an eloquent propagandist tells you that they have highly-trained technicians on call to serve you day and night. In this case it’s absolutely true. Most consolidators (shops that have been bought by national chains) and consolidator wannabes (franchisees and independents that operate the same way) have monthly, and in many cases weekly, training meetings. The focus of training? Why sales, of course.
You can show me a long list of two and three letter abbreviations behind your name. Nevertheless, when it comes to HVAC the consolidators are smarter than you. They have degrees too. And it is their mission in life to separate you from your money in a highly specialized field that you know very little about. So what have these PhDs of deceit figured out? They’ve learned that of all the employees a contractor has, it is the repairman you trust the most. He’s the problem solver. He’s there to help you. As such, the consolidator masterminds have dedicated inordinate resources to training their trusted repairmen how to lie, cheat and sell.
As for technical training, contractors are reluctant to pay for for it. They lament that their repairmen might quit and take that training to their competitors. And they certainly don’t like paying for non-billable hours. As a result, most repairmen get very little ongoing education. In fact, many have never even been to trade school. You read that right. Many, if not most, repairmen have had little to no formalized technical training. Ever. It mostly happens informally by way of trial and error on the homeowner’s equipment. In other words, trade school is being held at your house and on your dime.
Sales training suffers no such neglect. It’s a win-win scenario. The boss wins bigger sales. The repairmen win spiffs and commissions. And you? Well… someone has to pay the winnings.
“We’ve been in business for X years.”
One of the most oft cited credentials in the Yellow Pages is how many years a company has been in business. The implication is three fold. First, they’ll be around to back their product. Second, if they’ve been in business for that long then they must be good at what they do. And third, such longevity must mean they’re honest. I mean surely a crook’s ways will catch up with him, right?
On the first count there is some truth. If they’ve been in business for a while then they’ll probably continue to be. But there’s little truth to counts two and three. There are limitless ways to botch this trade. I list over two dozen points here to consider when performing an installation. All of them can be performed incorrectly to one extent or another without the homeowner knowing it at first. It can take years for a botched installation to be fully realized for what it is.
Honesty is also easily compromised with little chance of consequence. Even though furnaces are much simpler, most homeowners know more about their car than they do their furnace. That being the case, it’s easy to fool them. And for the few that aren’t fooled, it matters not to the corrupt contractor. Metro areas have millions of potential victims. The worst local contractor I know of has been churning through them for decades with no consequence of importance.
What’s the real key to most contractors’ longevity? Marketing. You find a company that’s been in business for a long time and, with rare exception, the only thing you know for sure is that they know how to sell. Technical ability and strength of character are of secondary importance to the success of most companies in this profession.
Most certifications are mostly worthless. Some of the most ghastly contractors I know have some combination of Neight certification, Cubic Zirconia certification, 3B accreditation, an A rating on Angela’s Lineup and/or a 5 star rating on Yowl.
Guarantees are nice, but they’re mostly marketing gimmicks too. Industry exclusive guarantees are not based on what a contractor thinks he can do better than the competition. They’re based on what he thinks will titillate the potential customer.
Most factory authorized contractors have just one thing going for them: They sell a lot of that factory’s equipment. Does the authorized contractor install the equipment right? As long as they’re not featured in a sting on Dateline NBC, the factory doesn’t particularly care.
Some of the highest bids I’ve seen are from local contractors that work the aisles of Home Cheapo, Lows, Costmo, etc. That’s because big box stores take a rather large piece of the contractor’s pie while contributing nothing to the job except perceived value.
Most free estimates are worth what you pay for them. The salesman will give you a song and a dance and some pretty glossies to remember the occasion by. He might even give your dog a Milk-Bone. But what few give you is an engineered solution that truly fits your needs.
Don’t believe the energy savings hype. Fill-in-the-blank websites like this are especially egregious because they don’t even ask about your past usage. You certainly can save energy, but it many cases it won’t be nearly as much as you were told.
Very few duct-mounted air cleaners improve indoor air quality in a meaningful way. That’s because they usually need to run 24/7 and be serviced rather often to be effective. As for UV lamps, they simply can’t sterilize air that’s zipping by at 400 feet per minute.