6 minute read
HVAC
from May/June 2022
Creating a membership option for customers will ensure they keep coming back and are satisfied with the job. By Glenn Mellors
eoccurring monthly revenue, or RMR, can help your company ensure it will outlast your competitors and safeguard your business for the future. Imagine for a moment that twice a month your company receives payments totalling somewhere between $10,000 and $100,000? This might sound like science-fiction, but it is possible.
To my best knowledge, Union Gas was one of the first companies that implemented a RMR strategy. Around this time, natural gas was a new and potentially dangerous fuel that could be used to heat homes with less pollution than oil or coal. Natural gas had a low cost and could be distributed into homes the same way that water and hydro were being distributed. There was only one problem, people were afraid of natural gas since it was still a bit of a novelty at this time. To solve this problem, they started to introduce natural gas through the new home builders.
Once word got out about how convenient
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Creating incentives to entice customers to return for additional services could increase your profits each month by thousands of dollars.
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natural gas can be, people welcomed the idea with open arms. To convert homes into natural gas, the utilities used the same tactics used on the builders. “Let us run gas into your home and you will get a free water heater.” It was a win-win for everyone.
It wasn’t until years later that the utility companies figured out the power they had to create an abundance of wealth.
What did they do?
I am unclear on the exact timeline of events, but at some point, someone produced the idea of charging a minimal monthly fee for the water heater to create the RMR. With hundreds of thousands of water heaters out in the field, the potential was impressive to say the least.
With 2.2 million homes in Ontario renting a water heater at an average tank rental of $33, that means a profit of almost $800,000,000 per year.
Reality check
That is great but what chance do I have a replicating a similar approach? It might not be on the grand scale as seen with utility providers. But even $10, $20, or even $30 a month multiplied by your data base of 3,000 to 5,000 customers presents quite the desirable possibility.
There are HVAC retailers that have an exceptionally large RMR occurring right now. Notice I said retailers, as the first
thing I tell my students is to stop thinking like a contractor and start thinking like a retailer. This means there is a larger focus on relationships, customer experience, ease of doing business, and making the customer always feel in control.
A good example located in Ontario is Atlas Care, formerly Atlas ClimateCare. They have over 10,000 customers that pay anywhere from $10 to $50 a month. Haven Home ClimateCare had over $900,000 a month coming in. Anchor ClimateCare had over 5,000 customers paying monthly fees, and the list could go on and on. The common denominator for each of these companies was longevity, growth, and market value. It all adds up to job security! Imagine constant and equal workflow and revenue for 12 months of the year, how simple life could be. No seasonal layoffs and constant paychecks for everyone.
Tell me more
If you look back at the water heater scenario, it all started with high value and low monthly costs. What do you offer with high value and low monthly costs? Minimal risk for the customer and negligible risk to your company?
The ideal place to start and to learn RMR best practices is through monthly memberships, like any fitness center, you sign up for a commitment of one year and after that it is month-by-month. The funds
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Developing stronger relationships with your customer base through incentives, like a membership program, will help grow your business over time.
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received in the first twelve months will fund the administration of setting up the customer, costs to acquire customers, and the costs of putting in processes to allow you to receive automated monthly payments. Once the costs are covered, there is no future obligation other than month-by-month. Create an environment of easy to do business with and easy to stop doing business with. This philosophy will attract more customers than any marketing can do. A customer only leaves if they no longer see value in the membership.
Providing extra value
It is imperative that your memberships make sense and provide value to your working team first. Without the support of every team member, membership growth will be impossible. The value needs to be based around the company culture. Have the team assist you in creating membership levels based on benefits, start low, and go up from there. You will be surprised how ownership and commitment will come when the team has input.
I have worked with and had the pleasure of seeing the creativity teams have. For example, one company started out with the monthly fee first and then added the benefits based on commitment. The result was four levels of memberships that maintains a customer base made of thousands of members. They started off with a five dollar a month club membership, which provided a free inspection and a discount of 10 per cent off future repairs.
The next one was priced at dollars a month and included things like priority service, no overtime charges, a 15 per cent discount on repairs, and as an added bonus, a free equipment tune up around the anniversary date. A third option at $15 per month is a protection only plan. This plan covers labour and material up to a limited amount annually, but the best plan is a club exclusive membership. All the benefits of the $10-plan and $15-plan for a reduced price of $20. Once the team created the terms and conditions, they hit the ground running. Now, the number of customers that have signed on to memberships has reached the thousands.
If it were easy, every company would have started the membership plans. It takes hard work with constant conversations between customers and staff. Managing growth can be a challenge, not to mention staffing to manage the memberships and delivery of benefits will be a full-time job. After all, you will be potentially booking thousands of maintenances, receiving thousands of service calls, and maybe even performing hundred of installations a year. It sounds like a great plan to me. :
Glenn Mellors was born into a plumbing family and started in the industry in 1973. He entered the HVAC side of the business in the 80s, working in wholesale, and then joined Lennox in 1992. In 2008 he joined the ClimateCare Cooperative Corporation, an Ontario contractor group, where he is director of training and implementation. Glenn can be reached at
