keyspan

joel_14

ok , I'll admit it i had a customer go from oil to gas and i put in her free gas unit. Go ahead shoot me but here's how I look at it. If i don't do it someone will and then I'll loose this customer we've had for years. Now, knowing my actual costs of running the show i get more out of the deal then if i sold the unit myself anyhow. If I need to get x per day why does it matter if it's all on labor or labor + material. Actually there is alot of material, they are giving you the boiler only no periferal devices.
Playing the devils advocate.
Same thing with H.D. I get leads from the net service companies that I pay a fee for. I figure the cost of advertising into every job. So H.D. wants 7% on top of the job. As I understand it from a Trane guy he is getting tons of leads. He still goes out and specifies and sells the equipment and they get thier cut. So what's the big deal? just another form of advertising right?? If H.D. gives me a lead and they want 7% is that bad ? but it's ok to get a internet lead for 10%??? I don't get it. Of course I'm not going to give that up from my pocket couldn't afford to , it just gets tacked on top. Am I missing something.???

DanHolohan

What you may be missing

is they they've grown to the point where they have purchased a lot of installation/service companies and they can now offer this service without you.

The difference between this year's deal and that of previous years is that in previous years they were buying boilers only for oil-to-gas conversions. Many contractors got behind this because it was a very good deal for them. They didn't have to do any marketing since KeySpan gave them all the leads. The only ones who lost were the oil dealers, and who cares about them?

This year, they're buying boilers (or trying to) directly from a manufacturer. Eighty million dollars worth. They've turned the heads of some of the boiler manufacturers because that number can pretty much assure a boiler guy's factory capacity for the next few years. It's nice business, and they're interested only in price, not features and benefits. And these boilers are intended not just for oil-to-gas conversions but also for gas-to-gas, electric-to-gas, and general replacement. In short, everything. And that's what's different this year. They've grown to the point where they no longer need the contractors who helped bring them to the dance.

The sad part is that many contractors think that this has nothing to do with them. I keep hearing from guys who say that all their business is word of mouth, and that they get the next customer from the last customer. They do no advertising, no marketing. All they have to do is wait for the phone to ring. There are great forces moving against those guys and they don't even see them coming.

Gregg Jackson

be not afraid

Anyone who has been in business for a while can tell you of the stories of water heater programs, boiler programs, etc. The utilities have been doing it for years. They give a package price to their customer and they higher anyone who will install the product for the right number.

I personally fought this front with our local utility over the years. We were percieved as being to expensive - for them to make money with. I simply waited for the right time and finally got my meeting with the people who run the programs. I asked how their installers were doing. They could not give an accurate assessment because the installers would come and go so quickly. Customer complaints were rampant. Callbacks were common place.

I asked for them to give us a shot at our prices. Even if they broke even - they were still ahead of the game. We began doing jobs here and there and customers began calling with praise. We were well dressed. Our trucks were new and clean. Our jobs worked properly and we responded right away when problems arose. For years we did all of their commercial installations and quite a few resdiential when our schedule was open. The only thing we "lost" was the margin on the boiler. If you look at it from one perspective - we were basically paying a "fee" for constant referrals as well as a large marketing scheme. It found this to be worth losing the mark-up on the boiler. It was great - it got you into a new custmers home - and the utility could care if you left a card and sold other products and services. We actually made additonal money many times on extras.

The simple fact is that free boilers will not ruin our industry. I can't say that it is a great step forward but I think a good entrepreneur can always see good in any program like this. Service and quality will always prevail in an open market. It will only take a few bad installations before Home Depot realizes who the good guys are. Sears has been packaging home services for years and I've yet to see any of the good guys here at "The Wall" starving for work.

If you account for overhead and profit based on billable hours - you can prevail in a program like this assuming you are headstrong enough to get your price. Price your labor accordingly and material mark-up becomes gravy. If Home Depot sells boilers like they sell everything else - I have to believe there is alot of money to be made and a lot of "free" marketing to be had.

Our local utility has been through the headaches of the "low bidder" and we now get calls regardless of price. It's a battle - but a battle that can be won.

Gregg

Gregg Jackson

i agree with Dan.......but

I just fought a great battle with "the free boiler company" and came out shining.

We had a commercial customer that had 2 identical housing properties - each with 5 boiler rooms to be replaced. The first property was awarded to "the other guys". We fought a pricing battle with the owner - as "the other guy" was much cheaper than us.

"They are a big company with trained tech's - How can you be more money?"

We waited patiently and things began to go wrong with the "other guys" project. They became frustrated and signed the second contract to us.

Long story short. We completed 5 boiler rooms in about six weeks and they took about 3 months. Our system ran like a swiss watch without any call-backs. They still are waiting for "the damn Tekmar guy" - must be his fault they don't run properly. They failed inspection. We did not.

Last Friday night I spent hours with my tech's getting tenants heat because "the other guy" would not respond to their problems. They continue to point fingers instead of fixing their problems. These companies are marketing companies - not skilled heating / plumbing professionals.

I don't care what they gave the customer for free. The sweet taste of a free boiler can not overpower the bitter taste of a pissed off customer. I know as I have been on both sides! I think it is all a big cycle. You just have to know how to ride it and hopefully prevail.

Gregg

Paul Rohrs

Slippery slope

Gregg has made the "system" work for him for now. I still have questions. If there is a defective part or a defective unit, who pays to go and service it after the original install? Are you presently giving up work to satisfy your contract? Existing customers staying with you? Are you hiring more people to accomodate contractual work? The bigger question is are they relegating YOUR business to be THEIR business.

That information is obviously none of my business, but the bigger message is "Absolute power corrupts absolute". I think Dan and the others are trying to convey this, but I do not want to put words in their mouths.

I could sell all day everyday to everyone who comes to the sales counter but we don't. No lisence, no product. The number one rule of sales is know your market. I am trying to protect my market from Do-it-yourselfers that don't pull permits and follow codes to protect themselves and their family.


PR

DanHolohan

Take a look here

Just look around the site and consider:

http://www.keyspanenergy.com/ps_home/install_home/heating_system_install.cfm

KevMcG

I heard that Manufacture is Utica

Anyone else hear?