If you are familiar with our company, you probably have noticed how proud we are to have been in business since 1954. Like similar HVAC companies, we promote that fact because we believe it stands for something that can often be overlooked. We often weigh the idea of using different slogans or coming up with eye popping deals to use in our marketing efforts, but we almost always revert to what our company was founded on:
- Hard Work
These are just a few examples of what we strive for on a daily basis. We have even gone so far as to stamp our work trucks with our core values as a constant reminder of who we are as a company. I’ll admit, we aren’t perfect. I don’t think any business is. The idea is that we set out each day to do our best and take care of our customers. Unfortunately we have been seeing and hearing some alarming trends we wanted to discuss, but before we dive in, I want to be very clear upfront. This article is not meant to single any company out. There are a lot of hardworking, successful HVAC companies in St Louis that have been doing business the right way. The purpose of this is to discuss the “why” rather than the “who“.
The Residential HVAC Landscape Is Changing Quickly
St Louis is a very unique market compared to other markets our size. It probably has a lot to do with why they call us the “Show Me State.” Trends that hit the coastal markets in the US often take a couple of years to make their way to the good ol’ S-T-L. But there is nothing wrong with that. It is who we are as a region. Knowing this allows us to look at trends that are happening in other markets, and plan accordingly knowing that we could eventually see them happening here shortly down the road. Here are some trends we have been noticing lately.
1) The Consolidation of St Louis HVAC Companies
Consolidation should come as no surprise. It has been happening in pretty much every industry throughout the country. Consolidation is a natural direction of capitalism over time. Unfortunately for consumers, consolidation can often lead to less competition. And when there is less competition, prices generally go up. So what does this mean moving forward?
Fewer, Larger HVAC Companies
Heating and Cooling is generally one of those industries that you don’t notice until you need it. A lot of that has changed over the years with how our industry markets online and the addition of Indoor Air Quality products. So as a consumer, you probably have noticed a handful of companies having a much larger presence when it comes to vehicles on the road, commercials on TV, etc. That is not a coincidence. Many HVAC companies are merging or being bought out at a quick pace. This is a trend that has been occurring nationwide for the last decade, but has really hit St Louis the last three years.
We are Witnessing a Heavyweight Battle for Market Share
We are living in an age where it is almost a necessity to have a heating and cooling system in your home. With over 1.2 million homes in the St Louis DMA, there is a lot of money being spent in the HVAC category in this market. To the larger HVAC companies, it has now turned into a game of market share. Many larger companies appear to be discounting services in the short term and taking lower margins in order to increase earning potential over the long term by starving their competition. They do this in a number of ways which we will get to later.
The Lack of Experienced HVAC Technicians In the Market Will Play a Huge Role in Long Term Success
If you haven’t heard, there is a massive labor shortage in St Louis. For anyone looking for stable earning potential, I highly recommend enrolling in trade school. It will pay for itself very quickly. As HVAC technicians become harder and more expensive to recruit, many of the larger HVAC companies will look to exploit this as an advantage over their smaller competition. Training programs and talent development will bare a heightened importance for the success of an HVAC company over the next five to ten years.
The “Man in the Van” is Feeling the Heat
When the Fenton Chrysler plant closed in 2009, an estimated 6,365 employees were out of work. As part of a massive severance package, Chrysler offered continued education for employees being laid off. Many of them, experienced laborers, decided to enroll in trade school. What came to follow was an influx of small HVAC companies we refer to as “The Man in the Van.” These smaller HVAC operations often focused on specific areas of the St Louis region. But as mid-sized companies started merging or buying out other mid-sized St Louis HVAC companies, it became much tougher to compete for business. As larger HVAC companies become more aggressive towards growth, the “Man in the Van” becomes a much harder position to be in. This factor, combined with the shortage of experienced technicians, will lead to further consolidation as many one man operations will find it easier to work for larger competitors.
2) The “Too Good To Be True” Deals
Having been in the HVAC industry my entire life, it is not hard for me to spot a deal that seems too good to be true. I’d like to believe most consumers see the same thing. Unfortunately, we live in a world where these type of incentives often do see an ROI, so someone must be falling into the trap. If there is one point I would like to make to St Louis consumers, it is that the HVAC industry is not a “Buy One Get One Free” type of industry. There are significant hard-costs that go into equipment and labor. Often, no two jobs are alike. So when you see a billboard or TV commercial promoting a price point or bundle that appears too good to be true, there is a good chance that it probably is.
Why Are You Seeing More of These Type of Deals?
As the industry becomes more consolidated, you have HVAC companies on both sides feeling a sense of urgency. For the larger companies, they are playing a game of volume. Generate as many leads as possible, get people to the front door, have them sign up for preventative maintenance programs and increase market share. Consequently, smaller companies are left trying to keep up.
The Best Deals are Transparent In Pricing
Overall, deals are a good thing. Deals are great for the consumers. It allows many homes to get into quality, updated equipment. However, there is a difference between good deals and bad deals. When receiving pricing, don’t be afraid to ask questions. A friendly HVAC consultant will always be transparent with the pricing and structure.
3) The Rise of the “HVAC Closer”
If you have not encountered one yet, consider yourself lucky. The “HVAC Closer” is a salesperson that appear as if they are a certified HVAC technician. Imagine Alec Baldwin in “Glengarry Glen Ross” mixed with Jim Carrey in “The Cable Guy.” They are usually deployed by a handful of HVAC companies in situations where someone has either inquired about a new HVAC system, or is deemed in need of a new system by a technician. They are trained to do one thing and one thing only. Get you to sign on the dotted line. While I have no problem with salesmanship, purposely deceiving consumers is something I do not think is right. If you are going to use a salesperson to help increase your closing ratio, don’t dress them up like a technician and allow them to condemn a system. That only gives our industry and the companies doing things the right way a bad name. It might allow you to make a quick buck in the short term, but will only hurt you and the industry over the long haul. It is my belief that the “Coffee’s for Closers” mentality doesn’t belong in our industry, but that is just me.
Why The Rise In Salespeople Disguised as HVAC Technicians?
As mentioned above, HVAC technicians are hard to come by. There is a major labor shortage throughout the entire country, but St Louis especially. Ideally, HVAC companies would probably like to teach salesmanship to technicians. Many HVAC companies are trying to fill technician positions at all costs. As a result, some are often left with some guys that don’t make the ideal “Sales Technician.” Salespeople on the other hand are much easier to find. Give him a technician uniform. Teach him some industry buzz words. Hand him a monthly quota. Now you have yourself an “HVAC Closer.”
Not All Salespeople Are Bad
Salespeople are often great resources. They provide excellent consultation on which system meets your home’s heating and cooling needs. They are often polite and knowledgeable. Reading customer reviews on accredited third party sites can help your learn about what their previous customers are saying. We recommend researching multiple sites to get an overall feeling about their sales process.
Bucking the Trends Since 1954
Change is inevitable. Our company has witnessed a lot of change over the last 64 years. We have seen a lot of competition come and go. Our belief is that as long as the work is good, the business will be there.
The South City Effect
Even if you do not currently live in South St Louis City, there is a good chance you either once did or have a relative that still does. Our business was founded in the Bevo neighborhood of South St Louis City back in 1954. We remain at the same location to this very day. While the neighborhood has changed over the years, many things about South City still remain the same. As a family owned business, our name and reputation mean everything to us. A lot of the staple businesses found in South City share the same principles.
- Ted Drewes Frozen Custard
- Restaurants on the Hill
The residents of South City are loyal. They prefer to do business business with their neighbors. They also expect to be treated right. For businesses operating on a “Fly by night” model, South City probably hasn’t been kind. Vitt is proud to have served South St Louis City for 64 years.
Serving the Entire St Louis Market
While South City was where we do a large portion of our business, Vitt services the entire St Louis metro area. If you are in need of any residential HVAC services in St Louis City, St Louis County or St Charles County, give us a call at (314) 351-5580.