Deciding What Size of Company is Right for You!
Every city is unique and has a spirit or culture all of its own, that culture shows up even in industries like the HVAC market.
We live in a boom and bust economy, these highs and lows have produced a unique heating and cooling industry that’s predominantly small businesses! These are referred to as Tier 1 companies. There are 3 main classifications of companies and they range from tier 1 to 3. There are companies that can overlap multiple tiers and each tier can be broken down into further categories but here’s the big picture.
These companies account for almost 60% of the businesses in the market! They employ one to nineteen persons and have that “mom and pop” feel. They’re normally specialized, focusing on one to three industry applications. Usually they’re less expensive due to lack of overhead and offer great upfront customer pricing and experience. They’re more inclined to do what it takes to earn your business, because they’re still in the early stages of growing their businesses.
Where they tend to fall short is in the “post purchase” phase! They may not offer much in the vein of guarantees or warranties and run a high risk of not being around long enough to honor any stated warranties. It’s called “Tail gate” warranties” for a reason. A vast majority of the companies in this tier are so small that the owner fills most if not all the business positions himself, sales, administration, installation and service/repairman. Also the businesses are often operated from their garage, this creates issues during peak seasons due to little to no staff or inventory of parts and materials. You should also consider that during these peak seasons there is an increased likelihood of longer wait times for services and installations and far more frequent re-scheduling of set appointments compared to tier 2 or 3 companies.
These companies account for 30% of the markets businesses but the majority of the industry’s actual work is performed by them. They’re established in the market and employ 20-99 persons. They have more of a corporate feel, pushing a plethora of written guarantees and warranties, even offering 24/7 emergency service(s). They present themselves as one stop shops for all your needs, delivering quicker appointments/installations during busy seasons and offer diverse payment plans.
The downside is “quantity over quality” culture creeps in, large range of employee skill levels, piecework installation crews and commission based technicians cause major concerns, making customer experiences hit and miss. They try to cover to much of the industry instead of focusing on a few key areas. Also they cast huge marketing nets, employing bait and switch tactics and they tend to over sell their products and/or benefits. They can create a lot of frustration/headaches for many customers by trying to satisfy to broad of a clientele base and having higher than average employee turnover rates.
The really BIG companies! You can see their TV commercials, online ads and name plastered all over the city. They account for the remaining 10%. They’re mostly national corporations employing hundreds if not thousands of persons. They have boards and committees steering the ship, live 24 hour call centers and an army of skilled technicians on call waiting to come to your aide. They offer everything and anything you could ask of them, including multiple product lines, rental plans and 18-24 month deferral payment plans. Next day installation? No problem!
Here’s the negative, that all comes with a cost, both time and money. High volume, high pressure sales with long wait times on hold being passed from department to department, talking with someone who doesn’t know you, your neighborhood or even your city, possibly even your province or country! More sub contractors and 3rd party affiliates than actual in house employees, to keep costs down and margins up. Dis-satisfied customers treated like “just a number” and no real resolution(s) offered to compensate complaints, improper billing and re-scheduled appointments are commonplace. These issues are created by too many moving parts to properly or efficiently manage. We’ve all been there, we’ve all suffered the frustration of it, big business is a double edged sword.
Now you’re in the know, now you can protect yourself and your family by asking great questions and expecting more from your contractors. Full transparency from both parties is always best. There are lots of options available and only a few great companies in each tier, you have to find the one who best fits you, your budget and expectations.
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About the author:
Don Snow has been in the HVAC industry for well over a decade, he is a certified journeyman gas fitter and has extensive experience in all fields of the trade (residential, light commercial, installer, service/repairman, management, sales, consulting, owner) and was a key employee with some of the biggest companies around. His passion for helping people in all aspects of the process flows through in the expert industry knowledge he freely provides everyone he interacts with. In addition to writing for Williams HVAC, Don also handles the majority of our in-house consultations.