Challenged By Covid-19, Commercial HVAC Business Grows Residential Division
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Like many companies providing plumbing and HVAC services to mostly commercial clients, RainForest Plumbing & Air needed to quickly adapt when the Covid-19 pandemic closed businesses throughout the state of Arizona.
How do you keep a commercial plumbing and HVAC company operating and your technicians busy during a state-mandated shutdown?
“It was definitely scary,” RainForest Process Director Dallin Tippets said during a recent ServiceTitan webinar. “We’ve always had this idea around here that plumbing and air conditioning are recession-proof. But, when businesses are all of a sudden shutting down and just not operating, that’s like ‘Whoa!’ That’s different from just an economic downturn.”
To adapt, RainForest Plumbing & Air adjusted its marketing message, retrained its staff, and continued efforts to diversify its operations by growing a residential division still in its infancy.
RainForest services about 80 percent commercial businesses and 20 percent residential homes. The family-owned company, based in Mesa since 1999, earned about $12 million in sales last year, Tippets said, with about $10 million coming from commercial customers.
The company started growing its residential services division about a year ago, according to webinar host Tom Howard, ServiceTitan’s Vice President of Customer Experience. Despite the global pandemic, he said, RainForest’s residential sales doubled from January to April 2020, compared with the same period last year.
While Arizona and other states weigh the pros and cons of allowing businesses to reopen, Tippets shared ways RainForest continues to thrive despite a statewide stay-at-home order.
“We’re trying to set up right now for what it’s going to be like when things get back to normal. Whenever that’s going to be.”
In the webinar, Howard asked Tippets for tips on how to service commercial businesses during Covid-19 and grow a residential division at the same time. Here’s what we learned:
Take a pause on door-knocking and start calling commercial customers
Once Covid-19 hit, RainForest immediately pulled in field staff to retrain them on how to do outbound calling to commercial customers, designating some to work in the office and others remotely. For the first couple of weeks, they simply called customers to check in.
“It was just about calling them and letting them know we are still here, we’re deemed an essential service, and we have protective equipment,” Tippets said. “Not a whole lot of asks in those phone calls. It was simply to let them know we’re still alive.
“Now, we’re getting back to what we do best, which is a little more sales-focused.”
Over the years, Tippetts said, RainForest created a niche commercial operation that serviced multifamily apartment communities, which need to maintain their mechanical systems for residents at all times, especially during a global pandemic with more people at home.
Building on those relationships with multifamily properties, the RainForest sales team evolved past the check-ins to calling customers to book property visits, or “property walks,” with its management staff out in the field.
“We’ve really had a lot of success there, they’ve been able to book these up like crazy—almost to the point that our management staff can barely get to all of them,” Tippets said.
Change your marketing message to help customers save money
While most RainForest Plumbing & Air clients are used to the company calling to schedule property walks to discuss future improvements, Tippets said, it’s not what they want to talk about right now.
“Before the crisis, they might have had more tenant improvements in mind to make the property more attractive,” he said. “Right now, they’re not really thinking that way. They’re thinking, how can we save money?
“We’re trying to align ourselves and use that same language, let them know, ‘Hey, here in Arizona it’s going to get hot. … This is a smart business decision right now. How can we help you save some money?’”
RainForest changed all of its messaging for both commercial and residential customers, focusing on how to help each group cut energy costs instead of trying to sell them something.
Make no assumptions about consumer spending
When trying to market commercial or residential home services, it’s best not to make assumptions. We’re all living in a different business climate now than before the virus.
“You’re trying not to get any preconceived ideas on what they’re willing to spend,” said Howard, who also co-owns Lee’s Air, a leading HVAC and plumbing service provider in Fresno, Calif. “But some companies are spending capital expenditures right now. What are they spending it on?”
Tippets said multifamily apartment properties often schedule improvements, such as doing a re-pipe for a building with multiple units or installing hose bibs for their maintenance staff. While Covid-19 was like “a bucket of cold water being dumped on that,” with some property owners pulling back on projects, he said things are starting to thaw out.
“They have to keep up the community, keep it nice and keep it valuable,” Tippets said. “Those projects slowed down a little, but they’re still going.”
Find ways to help your customers save money
“GreenSky came out with some different plans related to Covid-19,” Tippetts said. “We’ve been pushing that a lot more lately, because we’re sensitive to people’s situation right now.”
Howard said ServiceTitan negotiated special rates for any integrated GreenSky payment made via the platform through June, and cut its profit from the transaction.
Tippets said he’s also following ServiceTitan’s Covid-19 Playbook to help guide RainForest and its customers with best plumbing and HVAC maintenance practices to get through the health crisis safely.
Grow residential and commercial business, but separately
One tip offered in the playbook? Keep cash flowing. Tippets agrees, pointing out how most commercial clients pay RainForest on a net 30-day pay cycle, which means the company sometimes waits to get paid.
“Diversification is a good idea,” Tippets advised. “Especially in our situation right now. This wasn’t something we anticipated. Nobody did.
“With the total shutdown, it’s nice to have that fallback to residential. It’s going, we can get cash up front, and it’s a good thing. If we didn’t have that, we probably would be panicking a little more than we are right now.”
Tippets said his brother came on six to eight months ago to grow the residential division, and “he really took the bull by the horns.”
RainForest had always offered residential services, he said, but the techs often gave priority to commercial clients they know well over new residential clients, whom they often pushed down the board.
“That didn’t work for residential. They just called someone else,” Tippets said. “We decided to take a portion of the company, a few of the technicians, and say you guys are just going to do residential. You have your own dispatcher, your own manager, and we run it as an almost totally separate thing.”
RainForest offers flat-rate pricing for both types of customers, which runs about $125 per hour for commercial plumbing and HVAC services and about $180 per hour for residential. Tippets said the company’s profit margins are definitely better on the residential side, but commercial currently brings in more sales.
Other marketing tips and bits of wisdom
Watch out for red flags. If a new commercial customer suddenly shows up and starts running up a tab in the midst of an economic downturn, they may be planning to skip out on the bill. “In my business, I’ve noticed they’ve probably run up tabs at four or five other companies, then they move to you,” Howard said. Tippets has seen that, too. “It’s an easy trap to fall into, because right now obviously we’re trying to get everything we can get,” Tippets said. “It can be very easy to say, ‘Yeah, let’s do it,’ not remembering that in 30 days we’re going to start calling them and we may not get anything.”
Don’t be afraid to change from time and materials to flat-rate pricing. Tippets said flat-rate pricing is “like a breath of fresh air” to clients, especially for commercial services. The company offers a basic rate sheet for common items and his customers know what to expect. “They know we’re not just taking them for a ride,” he said.
Create two separate marketing campaigns. For instance, RainForest focuses its Pay-Per-Click advertising on residential customers, but keeps relationship-building as its focus for commercial customers. “It’s our reps going out, it’s the trade associations we belong to” for the commercial side, Tippets said. “Primarily we do multifamily. We also work with trade associations, restaurants, hotels, industrial, distribution centers, office complexes, etc. “Our philosophy around here has always been multi-building, multi-picture — where can you get the most bang for your buck?”
Invest in training to grow residential services and incentivize customers. Tippets advises training residential techs to make the most out of every service call. “That’s what has grown our revenue. Our training led to people being more impressed with those technicians and spreading the word about RainForest,” he said. “We also benefit from commercial work bleeding over to the residential side.” RainForest gets more residential plumbing and HVAC leads by offering a flat-rate discount to employees of commercial clients as part of its VIP Friends & Family or VIP Commercial programs. “I’m writing that down right now,” Howard said. “That’s happening at Lee’s Air in Fresno next week. We should have done that a long time ago.” Tippets advises remembering that customers are people, too. “Yeah, there’s mass advertising and all of that, but at the end of the day, you’re always just dealing with people,” Tippets said. “Every single interaction is with an actual person and you can’t take that for granted.”
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