Customer preferences are changing away from the endless and conspicuous accumulation of possessions. In place of “buying more stuff”, there is an increasing number of customers who seek something more meaningful. For today’s customer, memorable experiences are more valuable than boxes of stuff. More and more customers would rather promote the right kind of social values. Another trend now sought after is the ability to buy time, a transaction increasingly seen as the ultimate luxury purchase.
What do these trends mean for HVAC contractors? In two words: customer convenience.
Amazon.com seems to understand customer convenience better than anyone. Price Waterhouse Cooper (PWC) reports that 56% of today’s shoppers buy on Amazon. This trend indicates that our customers’ convenience expectations are being heightened by Amazon. PWC also advises businesses to invest in the Amazon strategy.
How is Amazon tapping into the customer convenience trend? The answer lies in the number of fulfillment centers that Amazon has been and is still building in densely populated regions. In 2012, only 12% of the USA population lived within 20 miles of an Amazon fulfillment center. That 20 mile ratio grew to 46% earlier this year. Clearly, Amazon wants to deliver more immediate gratification along with convenience.
Readers of my Service Savvy column know that I invest lots of time behind the wheel of my pickup. All that dashboard time makes listening to audiobooks a terrific learning opportunity. One of the best books I heard this year is entitled: The Everything Store: Jeff Bezos and the Age of Amazon, by Brad Stone.
This book is a three-pronged history of the man (Jeff Bezos), his vision for worldwide market domination (the everything store) and the platform on which he plans to achieve his goals (amazon.com). The author delved deep into the logistics and supply chain challenges that Bezos and his team overcame. This accomplishment ensures in-stock availability of whatever consumers wanted on any given day.
Air-conditioning contractors might maintain inventories for a few thousand parts and that can be a struggle. However, the scale on which Amazon accomplishes this feat seems unimaginable.
Then Amazon took it a step further with same day delivery. Clearly Amazon has tapped into what customers want. Very simply, customers want convenience. Amazon invests heavily in making their customer’s buying experiences more convenient.
Amazon is already a threat to numerous retail stores in many product categories. Retails chains such as Radio Shack, Sears and J.C. Penney have been impacted by Amazon’s aggressive growth. Most recently, a new threat has emerged from Amazon’s business practices.
Among the stores being affected by Amazon are the supply houses that sell air-conditioning, heating and plumbing parts. And Amazon will sell these parts to anyone.
Not only is Amazon selling the parts, Amazon connects their customers with a local professional who will install the part. During the last year or so, Amazon has been building a list of tradespeople. Yes, Amazon has been inviting electrical and mechanical professionals to sign up as product installers for everything from flat panel televisions to water heaters.
So if you buy an 80 gallon water heater on Amazon, you are given two purchase choices: choice one is, “Buy Without Expert Installation” and choice two is, “Buy With Expert Installation.”
Selecting choice two renders user-friendly options for your preferred date and time for the water heater installation. In addition, Amazon confirms your phone number so the installer can contact you beforehand. The installation fee includes hauling away your old water heater. And all this happens from the comfort of your chair while you click the options that work best. This is customer convenience.
Naturally, Amazon collects a percentage of the installation fee.
My own experience, as an Amazon vendor (Amazon sells my HVAC Customer Service Handbook) is bittersweet.
It’s bitter because Amazon keeps 55% of each sale. But sweet are the high volume sales and new market penetration with the help of Amazon’s adwords.
Any industry that feels insulated from Amazon’s business practices is in denial. Jeff Bezos is on a mission for worldwide domination of every industry and Amazon’s logistics and supply infrastructure give him an edge. In addition, Amazon’s laser sharp focus on convenience keeps their customers coming back for more.
Today’s air-conditioning contractors would be smart to put more effort into their customer’s convenience by focusing on the whole experience. Put yourself in your customer’s frame of mind and consider each and every touch point by which a customer interacts with your employees, your website and your products.
And regarding your website as a touch point, be mindful to the growing number of customers who use their mobile phone for just about everything. PWC reports that 35% of customers say the mobile/smartphone will become their main purchasing tool. Smart contractors must also invest in a secure online infrastructure to alleviate customer concerns about a data breach. 65% of customers fear their personal information being hacked.
During a recent HVAC customer service seminar, I asked the company owners in the room if they would ever consider working with Amazon as an installer. The answers were immediate and emotional. “No,” said one contractor. “Never,” said another. The room erupted in a negative response to my question.
Among these company owners, Amazon is the enemy.
And yet, we have seen dramatic shifts in HVAC industry attitude driven by other factors. For example, ten years ago many contractors said that they’d never hire technicians and installers with tattoos and/or body piercings. Then the diminishing supply of mechanical workers resulted in a new labor market paradigm and those same company owners are now hiring tattooed and pierced employees.
Are we on the brink of more demographic and economic upheaval? You bet.
The 2018 economic forecast looks positive. GDP growth of 2.5% or higher should boost business momentum. As more businesses invest in infrastructure, this spending should result in a strong labor market. As more affluent customers seek convenience and memorable experiences, it would benefit contractors to focus on every nuance of their touch point deliverables.
When it comes to sales and installation, customers want more than a box. Smart contractors sell experiences, not boxes.