Hot HVAC Promotion Strategy

Posted by David Flash on

Here's a hot loss leader that generates some cool profits in the HVAC business! In Jay Abraham's book, The Sticking Point Solution, he outlines the following "losing" strategy to help a Texas air conditioning company grow its sales and profits with a promotional offer on service calls over 30% below cost:

A few years ago, I worked with a small company in Texas that provided heating/air conditioning services. The owners and I did a thorough analysis of its metrics and determined that the majority of its business was driven by people who hired the company to come out and simply check up on their equipment. Out of every 100 furnaces or air conditioning units, it turned out that 80 needed work done—a solid 80 percent. This company, however, had never assessed its numbers in a strategic way. Once the owners consciously confronted the statistics, they recognized a gold mine of opportunity. I worked with them to create a new service that we called a "tune-up and seasonal readiness package" and offered it twice yearly, once in winter and once in summer, for only $19. The company lost $10 to $15 on that deal because it paid the technician $30, but on the back-end it made an average of $800 per call. With this new strategy in place, the company offered its seasonal pack-age twice a year, and that package spawned almost all of the company's business.