Owned and Operated #92 - Managing HVAC Demand in Extreme Cold Weather

Brave the Cold.
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In the home service industry, extreme weather can significantly impact business. In this episode, John and Jack dive into the challenges posed by freezing temperatures and discuss effective strategies to manage the increased demand that accompanies such weather events. They cover the high demand for HVAC services during cold weather, the benefits of offering whole-home memberships, and the growth of their electrical department. Additionally, they touch on revenue opportunities from maintenance calls, and share valuable lessons learned in driving growth and profit in a weather-dependent industry.

Episode Hosts: 🎤
John Wilson: @WilsonCompanies on Twitter
Jack Carr: @TheHVACJack on Twitter

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John Wilson, CEO of Wilson Companies

Jack Carr, CEO of Rapid HVAC

Owned and Operated Episode #92 Transcript

John Wilson: I'm John Wilson. Welcome to Owned and Operated. Twice a week, we talk about home service businesses, and if you're a home service entrepreneur, then this is going to be the show for you. We talk about our own business in residential plumbing, HVAC, and electric, and we also talk about business models that we just find interesting.

Let's get into it.

Hey, this episode is sponsored by Service Scalers. So Service Scalers is actually a brand that I've used personally with our companies for a little bit over a year now. They've helped us manage our digital advertising. Frankly, they did a lot better than our last agency. Leads went through the roof and cost per click went way down.

Check out Service Scalers if you're a plumbing, HVAC, or electrical home service company. That's what they knock out of the park and they did a great job for me.

Welcome back to owned and operated. Today, Jack and I talk about the weather. So, you know, last week we were diving into how to prep your business for extreme weather events. And this week we're in the middle of it. So today it was negative 20 something at my headquarters. And our team was actively in the thick of it, helping customers keep their heat on, keep their water flowing.

So we dive into some numbers that came out of our business, phone calls, actual revenue. And we talk about how to set your business up for success to make the most out of these harsh weather events. Thanks for checking it out.

Welcome back to Owned and operated. How you doing, Jack?

Jack Carr: Owned and operated. Doing tired.

John Wilson: Yeah. Tired for different reasons over here, but yeah.

Jack Carr: Yeah, I'm jealous. I'm so jealous. I wish I was skiing right now.

John Wilson: We're in the middle of, I think we talked about this last week, like how to prepare for crazy weather, we're recording in the crazy weather. So I'm not in Akron right now. I'm in Colorado skiing, but it's been like negative 10. It was negative 20 this morning. In like at our shop. So it's been a week and mainly filled up HVAC. Plumbing is going to get there because it's still frozen. It starts thawing tomorrow and the next day. So that's when plumbing is going to start just like blowing at the seams.

Jack Carr: Yeah, I mean, the problem with us is plumbing. We saw plumbing issues, right? You see your water heater for whatever reason to go out. You have frozen pipes. We had two frozen pipe calls but they thought on their own like they thought out throughout the day because they hit 27 degrees And so plumbing for us it didn't get as bad. This sounds terrible to say, but how terrible it was didn't dictate any business over anything ridiculous like we saw in the HVAC.

On the HVAC side, you want to hear some numbers, I came loaded.

John Wilson: Dude let's go. I want to hear it.

Jack Carr: I turned off my LSA at 1230, I want to say 1245 today. Because by 1245, starting at 6, we got emails starting at 1243 a. m. last night. Phones started ringing heavily around 730. And between 730 and 1230 we had 180 calls on the board. Or not on the board, but from LSA.

Inbound LSA only like I only counted the LSA because I just looked at the emails so we had our regular customers on top of that. We had all the groups were in my wife was sending promising people that we were gonna help them out, too. I'm like, oh we are

John Wilson: Yeah. Get rid of your kind heart. Yeah. . That's funny. So 180 calls by 1230. What's a normal day like? Gimme some perspective here.

Jack Carr: 40

John Wilson: Oh, wow.

Jack Carr: 60 on a cold day.

John Wilson: Okay.

Jack Carr: Maybe it's more than that, but no, it's probably around 60. We're running 60 calls a day or have 60 calls incoming a day. And I'm referring to like lead calls. We get calls that are, hey, we need you to come out or hey, we want to quote or hey, but I'm talking about like emergency service calls.

John Wilson: All right. I'm looking at mine now. So we are 2,500 calls into the week. It's Wednesday night. So that's about, probably 20% higher. Then what it usually would be now. What is going to be interesting is like what's the mix between inbound and outbound because that's total calls. So I'd have to get a little bit deeper into the data.

Because we might have like outbounds has been a bigger portion to keep our three day call board up but what I suspect happened is we roughly hit the same like 20 higher capacity and phone calls But much more of it was inbound. So that's yeah, that's interesting. I'm curious what happens tomorrow

Jack Carr: We are 300 percent higher. Just unhandleable. We had our salespeople taking calls today as also running calls. We sold five or six units today. It's just ridiculous numbers. Which is good, really good, but we're doing two a day installs on packages, and that had priority, or, it's still icy roads and everything, and we're getting it done, but really good numbers LSA, we didn't have LSA last year when we had the freeze, so LSA this year really was a game changer, and I'm sure I paid way too much and should have turned it off earlier.

John Wilson: Yeah. I mean it keeps you fed like the freeze that we had last december I'm sure we said this last episode but like that kept a few of our businesses busy for 30 to 60 days like our restoration business they just sold two or three months at work in the past three days and they're gonna sell even more in the next couple days which is just crazy.

Jack Carr: Are you expecting that during the thaw?

Oh, yeah,

John Wilson: The thaw gonna hit. Yep. Yep So we've only you know, they typically sell three to four jobs a week We have been selling we're at six this week like pipes started thawing yet Only a few and those are the six that we sold so that's gonna turn into a pretty big situation here shortly so that's gonna be fun.

So our numbers for the week. Plumbing and electric have doing okay. We've been struggling with conversions a little bit which has been interesting in plumbing and electric. I think that's going to change again, starting tomorrow. Tomorrow's the big thaw for us. So we'll see how that goes. I know like that's when everything happens in plumbing is after the thaw. So that's plumbing electric has just been low conversions in general but obviously as you would expect hvac had an absolutely dumb week. and hvac has been going nuts this entire month so far i'm gonna pull it up because now i'm curious, but i'm pretty sure that we are about to pass december hvac revenue and

Jack Carr: We just did yeah,

Yeah. We just passed our December revenue on the 15th. We passed December. We are going to at this rate beat our summer numbers, which will be wild. Absolutely wild. To beat Tennessee Summer numbers in like really just dictating from one week.

Yeah, we're one day behind. So we're 40, 000 less than the entirety of December for HVAC. And that's achieved. That's not like sold waiting to be completed. That is completed revenue. So that's absolutely ridiculous. But it's just been, I don't know, we had a good start to the year.

John Wilson: I do have to share you this because I don't think anyone would believe me without screen sharing HVAC over the past.

I'm ready.

Am I gonna be mad about seeing this?

Yes. Yes.

Jack Carr: That's stupid.

John Wilson: Dude, that's HBAC.

Jack Carr: For anybody looking, it looks like the stock market from, like, 2008 to now, it's John's numbers just go up into the right, regardless of season or month. Like, your August September is a little bit less than your July.

Your October, which was a moderate month this year, moderate at best, and November was a moderate month, surpassed your middle of summer offers. Turn this episode off. This is, this is wild.

John Wilson: HVAC has been an interesting project So what we have discovered with HVAC Which like I think we knew for a long time. It just gets better when it's bigger. It just does and we say this constantly, but HVAC is going to go from being the smallest trade in our business to second largest this year and probably largest by 2025 because like revenue per employee is so high in comparison and like we've made little tweaks to HVAC. And like what you just saw in that graph is little tweaks. I mean, sometimes a big tweak, like let's hire a sales guy.

We got a new install manager. Like we've made investment. It's not like we're like, Oh, how did we get here? No, we did the thing, but it just takes less effort to get bigger numbers than plumbing and electric. It just does. So it's going to naturally be larger sooner than later, like for the first time ever this month, it will likely actually compete with plumbing, which is like almost unfathomable that that's possible that anything would touch our plumbing department, we're about to.

Jack Carr: That's neat. Yeah, I would agree. I'd find that it's very similar. And, you could say that about any business, right? The bigger you get, the bigger your name is. The more you're seen, the more people utilize you. Cheaper your cost, customer acquisition costs, blah, blah, blah, blah, blah.

So as that grows, it becomes more prevalent and a bigger department.

John Wilson: And HVAC's been riding the coats, exactly like you said, like plumbing, electric, they've been bringing in new clients all day long, they've been selling memberships, they've been doing all these things, and now HVAC is just like, riding that

Jack Carr: The playbook for anybody who's listening. It's have a giant secondary department and then build your other department off of it. Yeah.

John Wilson: So like, HVAC is outwardly affected by our membership. If electric sells a membership to a customer, electric gets one visit a year, plumbing gets one visit a year, and HVAC gets two. So every membership that every other department sells is like just pouring gas onto HVAC.

It's been a big deal. And then we have about triple the amount of memberships we had last December too, so that obviously helps a lot. Like the team's just been able to grow.

Jack Carr: Yeah. You figured out the membership and then

John Wilson: We basically figured out how to sell them through every other department of the company, including HVAC, and then maximize it along the way.

Jack Carr: Yeah, we've noticed that with plumbing is when people are interested in a plumbing membership, they're most likely also interested. Do you sell them as two separate memberships?

John Wilson: One one whole home membership.

Jack Carr: Oh, I might need to do that. That's kind of genius.

John Wilson: It's the way to do it. Because then what's interesting is like, one of Chris Hoffman has appliance repair and I was like, Chris, like walk me through this. Why do you have appliance repair? And he's like, dude, I have 16, 000 members. Like I just sent an email one day. And like we added appliance repair. So that's the benefit of doing whole home. Like we're getting ready to launch drains into our membership, probably in the next six months, that's kind of on the roadmap and that's going to be a huge additional value to our customers. I don't think we're changing the price and it's going to be an added value for us, keep our guys moving and like we're able to just push stuff through the membership So one membership helps because you can do stuff like that where you can just like launch new things

Jack Carr: Yeah. I mean, that's also why, I was looking at the number sale on Chris's membership things. He posts them on Twitter. I was thinking, man, he charges a premium, like it's not a small amount. 35 a month plus four memberships. I think this is one unit. He does have a secondary unit

John Wilson: Ours is like 29. 99.

Jack Carr: Yeah.

So 30 times 16, 000, people out there can do the math. That's some good money. That's some good reoccurring revenue, but I mean, that's where the value comes from. Whereas, if you just have an HVAC membership and then you add on a plumbing membership, like this bolt on method, I don't know if it's the same kind of value or, it's also confusing.

And there's like, if you say, whole home, everything,

John Wilson: Whole home Yeah, because then like one day you're gonna be like i'm ready to add electric and instead of having to struggle through, like, how do I get leads? You're like, Hey, everyone, electrical safety inspection is now You just booked out. However many members you have in appointments

Jack Carr: We outbound.

Yeah, we services on, Hey, we're doing electrical now. Would you guys be interested? You're getting your plumbing. That's what we did for plumbing and it worked really well. So I imagine it works exactly as well for electrical as well.

John Wilson: We have a membership coordinator now, so this is our full time job is to manage that. But that just happened in the last couple of months. So we've tried to really smooth the onboarding. Because we were having higher churn because people didn't know the benefits or whatever. So, now somebody, a membership sells, immediately membership coordinator calls, walks them through the benefits, how it works, how to use it and then begin setting up the appointments in three month increments to sort of help ease that transition.

And ideally, we set them for our hotspot zones. We're mainly worried about February through April. If we can nail February through April, the other nine months are a breeze. Just the easiest thing in the world.

If you like what we talk about on our social media, on Twitter, on this podcast, then you should be signed up for our newsletter. Go to ownedandoperated.com where every Friday we break down our business, we break down insights, things we're learning, things we're working on, and it's good stuff. Check it out, ownedandoperated.com.

Jack Carr: Don't answer this obviously if it's too in depth, but what's the revenue return. How am I trying to put this, out of a hundred calls you run, how many of those maintenance calls are generating revenue?

John Wilson: It depends on the department

Jack Carr: I guess electrical is my real question. So I want to know uh, what are making?

John Wilson: Electrical is the highest by no small amount.

Jack Carr: I could see that because you go through the whole house, you find a bad plug and they're just like, Hey, it's 200

John Wilson: Like literally you have a bad plug.

Or like, there's just more going on with electric. Like, hey, you walk through the house, like, hey, you want to do anything with your electric? Yeah. I do, you know, the living room's really dark. I do want to add eight cans. I hate where this switch is.

Like, It's the easiest thing to upgrade or it's the easiest thing to imagine upgrading like not many people think about their toilet,

Jack Carr: it's also, you can't move your toilet, you have to remodel your whole bathroom move a lightswitch

John Wilson: But you can move where

Jack Carr: switch.

John Wilson: Or you can add a light switch or hey this room has one receptacle and that kind of annoys me because I have to run the extension cord. Can we put a receptacle over here? So like it is the highest value membership, for anyone not watching Jack is giddy.

losing it I'm losing it that makes so much sense. And in my area, we like Brentwood, tennessee. The highest net worth, county, Williamson County, highest net worth, blah, blah, blah.

It's what everybody thinks about. Yeah. We're like, Hey, I'm ready for that electric car or, Hey I want to put an outdoor patio in like some of that stuff comes up with plumbing. Like I need gas maybe, but it all comes up with electric.

Jack Carr: I could see that, I bet that conversion rate is higher. See, at first I was imagining it, it was a low revenue, that makes a lot of sense, is you go when HVAC's working, you're not doing anything with HVAC. They're not going to add a surge protector.

They're not going to, like, you can try to get them to buy something, unless something's wrong, they're not going to. You would do that with your electrical. You would move a plug. You would move this.

John Wilson: Yeah. It's the easiest thing to imagine an upgrade or like, Hey, do you want a dimmer? Like since owning a home, I have never turned the lights on full blast ever. Like every switch has a dimmer. single one. So like if I had a room that I mean if I had a room that didn't have a dimmer be like, I'm gonna need that because like I don't want to walk in there blinded.

Jack Carr: That's poor folk just have to have it on full blast

John Wilson: Go get yourself. a dimmer.

Jack Carr: Oh, that's so great, man. One of the companies we're talking to trying to get under LOI has an electrical department, very small electrical department, but that makes me very excited. Three tier company.

John Wilson: That's good.

On weather. HVAC for us has been strong and we expect it to get stronger this just really put heating systems to the test. I have no idea what weather is over the next 10 days. Have you been watching

Jack Carr: Yeah, it's still bad it goes up like in the next Thursday it's gonna peak up again a teeny bit and then drops right back down through the weekend and then normal again normal middle temperatures, we still have about six more days of this

John Wilson: if you're not inside HVAC, I'm looking at the weather right now. Oh yeah, this is tough for the next little bit. If you're not inside HVAC the big news has been all these PE companies bought up all these HVAC companies and then they immediately had two mild winters and two mild summers.

They're just getting smoked to the tunes of like 50 percent revenue drops has become pretty common. This is really interesting that we're having like a big winter storm. I know it doesn't sound that interesting cause we're in winter, but like this is extreme temperatures for Akron that we haven't seen in a couple of years.

Jack Carr: I do wonder though if they are prepared two mild winters, two mild summers, you're not ready for this craziness. We tried to be ready for this and we still weren't ready for this. Though the parts on the trucks helped out ton. We were able to run a increased capacity at 50%.

So we ran an additional two to three calls a day. For the last three days because we've had every single part we could possibly need And then we talked with the supply warehouse and they said, yeah, if by the time you're done with this, if you don't use anything, just return it.

John Wilson: Yeah. That's the best.

Jack Carr: Fine with that

John Wilson: Yeah, only HVAC ran above capacity, but it was good stuff. I don't know. I think the lesson here, if we're gonna take one away, is especially in anything weather enhanced. Like, landscaping, snowplow, that type of thing, HVAC obviously, plumbing, anything weather enhanced. Like it is our job to drive growth and drive profit even when the weather doesn't like us But it's also our job to maximize when the weather does I think that's becoming increasingly important because it's very hard to grow a business relying on this week.

Jack Carr: Yeah, though, what I will say about that, that I found interesting this time because I was able to watch it better was the attrition rate from other companies. What we were picking up and what we are potentially losing, right? So the number of our customers who names are in our system that pop up and we were not able to serve them.

If you just say in your head, Hey, we lost that customer versus the, what we picked up. Hey, this is not a customer that's normally ours. Now it's our customer. I'm gonna try and run those numbers to see what that looks like post because I find that's gonna be an interesting fact and These weeks are really is what could move the dial in either direction

Because I mean, we picked up some great customers that I know first hand, like personally, they are just these multi unit houses that we got that signed up for our program.

We clubbed them all and so we know they're now our customers and they were from other large companies. It'll be interesting to see. I want to see how many we lost because I know there was some we couldn't get to. On 150 calls, you just, guys you don't get there.

John Wilson: 100%. This was good. Good breakdown of the weather. It's going to be interesting over the next week to see even more what happens. So we'll touch base on this again next week with basically how plumbing did. Hey, we thawed here's what happened. The weather update 2024. This was good.

Thanks everybody for tuning in to owned and operated.

Thanks for tuning in to Owned and Operated, the podcast for home service entrepreneurs. If you enjoyed today's episode, please hit the like button and subscribe to the podcast. If you have any questions or topics you'd like us to cover, feel free to reach out. You can find me on Twitter at at Wilson companies.

I'll see you next time.

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