In this short conversation, Bill Brown and a colleague discuss how HVAC contractors can benchmark and grow their businesses, especially through membership programs. They stress the importance of establishing legacy benchmarks to understand a starting point and identify key improvement areas. Operational indicators—such as aligning commission plans to incentivize employees, tracking revenue per ticket, and monitoring truck rolls per home—are presented as early‑stage levers that drive true change. The speakers outline a timeline for evaluating membership program profitability: basic benchmark hurdles are checked after six months, but a full, line‑by‑line P&L ROI requires roughly two years of data. They note that most revenue from memberships does not appear in year one; instead, sensor‑triggered service events (e.g., water sensors) create repeat opportunities, with a noticeable revenue uptick around 18–24 months and a significant jump in year three. An example is given of Smart AC’s detailed membership P&L analysis, illustrating how the program adds measurable dollar value over time.
Chapters
The way we look at it is when we first start to work with somebody, we always try to make sure that they've got legacy benchmarks in place. And it's so, sometimes they do, sometimes they don't have the complexity. And if not, we try to help put that together because we wanna know where we're starting and we wanna identify where are the key areas we're trying to improve on. And then right out of the, the gate, we're really looking at, are you doing the operational activities that lead to true change? So like David said, we increase our commission plan a little bit to drive a little incentive that you would not believe how important those things are. Because a renewed sense of interest from the employees drives a lot of engagement. And right out of the gate, you're setting the right path, right? So we kind of put together what was a list of like operational indicators that you're doing the right activities. You structured the plan the right way, people are aligned and you're doing the right things. And then over time we have like benchmark hurdles. So let's say after 6 months you look back and we look at some basic things like how has your revenue per ticket changed? How's your truck roll per home? Like, are you continuing to go the right way and are the numbers starting to add up? We can't put a really, I'd say, meaningful, complicated, full membership P&L ROI together until you've got about 2 years of data. But what we can do every step along the way, look at the activities that lead towards that. And we've got customers that have been there long enough that we can build literally a line-by-line complete P&L, their entire membership program, and tell them, you've exactly what they're making, what they were doing before, what they're making now, and the exact, you know, to the cent dollar value that Smart AC has brought to 'em. But that takes time because, as you pointed out, most of your revenue isn't returned in year 1, right? I mean, think about how this transition happens. They called you to fix something, and if your people did their job, they just did a great service, a great repair or a great replacement. That thing's running well. The chances of you being back to fix something on that system in that first year are actually pretty low. Yeah, right. Where you do get the opportunity is like having a water sensor or something in there because those things can change rapidly. They have nothing to do with the actual, you know, performance of delta T of the system. But really we start to see that tipping point and then that 18 to 24 months, that's when the repeat revenue starts. And then in year 3, like it's a big jump.
So you think that, so I'm gonna ask you, Andy, do you, do contractors come to you like looking to improve their memberships? Is that kind of how they find you? On the membership side, is it more about the sensors? What kind of, what kind of things you think introduce that conversation?
