The HVAC Loyalty Hack That’s Making Contractors Millions

Do you guys have recommendations of best practices, your program structure, so what you charge, what it's called, how often you come out, everything. Is there some templates that you can share with contractors so that they can utilize best practices and what's working for other shops?

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Welcome to Home Service Business Pack. We've got Wes and Andrew from Smith rdac.com here today. You know, I actually used their system when I was running my H Vac company. Today we're digging into how they're helping contractors grow memberships, kill unnecessary truck rolls, and completely rethink how customer loyalty works in H Vac. Before we get into the tech, I'd love to hear your origin story. So how did smart AC come about and what problem were you guys before.

We got into what we're doing now, we had created an energy saving product for residential air conditioning systems where it's actually evaporative cooling. So taking a concept that been around forever and commercial, commercial systems like cooling towers and using it around AC systems outside now, it was obviously new. Lots of challenges had to be overcome to make that even work. But we found that it was really, really popular with customers because of the energy savings. But channel sales, which was one of our hopes, just never really took off. So energy companies obviously didn't care about saving energy for customers. H Vac companies didn't really want to mess with any of the risk associated with altering conditions of the unit and they didn't care about savings for the homeowner. That wasn't really a big thing for them. But when we developed that product, we put some, some data ports on the back of it to grab some basic information about the system. And that's really what kind of spawned all of it is that we had some, some kind of forward thinking contractors that said, hey, what can you do with that data? Like what can you tell me? Can you tell me, can you tell me what's happening with the system when it's healthy and when it's not? That's something that might actually have some meaning for me. So we basically pivoted. The entire company went back to zero, rethought everything and created, you know, what is today smartest dot com. And that was. That really started right about seven years ago or so. A little less than that.

Okay, great. Let's talk about what's broken. Why do traditional H Vac memberships struggle with retention and profitability and buy in from techs? This is problems that I experienced a lot in my own business. How are you guys able to solve that?

We try to be very clear that the things that are broken are not the fault of the contractors. In many cases it's just due to limitations that they have. Right. The way that they make money is they have to be on site. Before we came along, there wasn't anything that was able to provide remote value. So they had to be on site. But to be on site meant they were rolling trucks to houses that they had no idea if that there was going to be issues associated with it. When they were, you know, know, even they were on a membership, it was just kind of just roll a truck and hope that you make some money. And, and also that's not particularly attractive to homeowners. You know, given the fact that less than 20% nationwide even sign up for a plan. It's not very attractive just from the pitch. So even after you sign up for something like that and then you have these truck rolls where they're trying to sell you more stuff, they end up, you know, homeowners leave. And so the, the innate limitations of the way that the, the whole system is set up. People don't sign up for, for plans much. They then tend to leave at a higher rate. And then contractors are rolling trucks all around the country to places that they have no idea if there's ever going to be a ticket associated with it. Right. That's just not a great way to, to, to build efficiency in your business. And so we just, you know, we took the approach that if you can add data visibility, what's actually happening, and you connect it to an experienced homeowner once, then all of a sudden you start to get all those metrics change. Right. Where they do actually sign up for a plan that provides more value. And there's a bunch of the reasons why and what we do, but. And then they stick around because you don't bother them unless there's a reason to go out there. And homeowners like that, right. Tremendously, in fact, with what we see with our retention numbers and then they're wasting truck goals at a much, much less of a clip. So what that does is that that basically untethers the contractor's ability to grow from the number of technicians they have right before. It was kind of like one for one. More membership growth means more technicians, more truck rolls. That's not necessarily the case anymore. So yeah, it's been pretty exciting. What we've, what we've been able to help unlock in the industry the last couple of years.

Yeah, that's great. And that's, that's what drew me to Smart AC was the unnecessary truck rolls. We didn't have a terrible job getting memberships. We did bundle them with all of our installs and we bundled them with a lot of service. But once we did it an installation, our sales guys were really good. They talked about all the iq, all the upgrades and then we did the install and six months later we would come back. And the reason that I wanted to come back was to make, to give the customer a nice peace of mind to know the system was working well. But at the same time I looked at that and I was like, we never make any money when we go back after that initial visit. And not only that, my technicians really hate it because they don't make the commission they normally would make running a regular maintenance or service calls. And then if they do try to do that, customers would be like, you know what, your sales guy was just out here, he just talked about all this iq, I'm not interested. And now we could leave a bad taste in the customer's mouth. And I said guys, we gotta, just gotta stop going to these customers houses. But I also want to make sure these systems are operating correctly. And we put some thermostats in. You know, we, back in the day we had ecobee and it used to have a customer portal that we could look at. Ecobee got rid of that after some security issue. We started using daikin's thermostats that had something similar but the portal wasn't ready yet. And I said guys, we need something we can put put on every system that's going to give us that data that's going to give me an alert if something, if at least if it wasn't working properly. And searched the Internet, looked for a bunch of different solutions and came across Smart ac. So that was the primary driver of why we were, we signed up was to reduce truck rolls. We didn't really know that there were all these other parts to it as far as retention went. We found that out after we signed up. So that's kind of just the story of what, of why my company decided to Use you guys. So, you know, we have this, you know, so a lot of contractors know smart ACs, smart AC from the sensors only. What do you guys do other than just that sensor product?

This is where we start when we talk to somebody engaged. The first time we, you know, we let them know that's only a part of our platform is the actual technology itself. Right. We definitely created the sensors, we made them low cost and easy to install so that we could gather the data. That's the origin of everything. The foundation is the actual science. But then it's so much more about working with the companies to look at how they approach memberships. So it's actually the strategy around your entire membership program. We spend a lot of time going through that and sharing best practices. What we see across the industry, that's really a huge, huge part of it. Adopting the technology is actually fairly easy. Right? Centrals go in the house, they gather data, we do all the crunching, and then it flows into, into your automated workflows. If you're in service titan, you don't even look at our dashboard. Most of the time it's just automated. How you, you know, you run your business. But how you approach memberships is highly important. Things like, you know, creating a membership champion and having somebody who's actually responsible for looking at the metrics associated with membership program that could be a huge driver of revenue with no marketing costs associated. And that's one of the toughest things out there is how do you grow your business without spending more on marketing. Right. And so that membership program approach is a big part. And then we have an entire team that after the fact, while you're up and running and doing business with us, that looks at metrics and analytics about how everyone involved in your membership program is doing, from CSR pitching to technicians to how their quality of installs, the adoption rate of your customers. So we're really looking at rethinking the way to memberships like slot in as a complete part of your business and that these really are loyalty programs and loyalty programs of tremendous value. Most people don't realize that airlines, even the entire value of an airline is, is nothing to do with the actual airline itself. I think, I think I saw some the other day. American airlines makes about $3 per customer per year on the actual ticket prices. But the loyalty programs associated with airlines is what makes them billions and billions and billions of dollars.

I wouldn't have known that that's the.

Opportunity inside the contracting industry that we have today is to, is to grow that loyalty aspect so that that value is created all over again and they're already making good money. Right. So if you can put both of those things together, then that's really us. Right. We're much more than just a technology, though. It's. It's vital and foundational to everything we do.

Sure. Well, let's dig into those metrics when it comes to memberships. So what kind of conversion do you guys see as far as, let's say someone is not. Has no existing relationship, has never been a member of any program with your business, and these companies adopt your product, what kind of conversion they see on the. On the front end, and then what kind of retention rate do they usually see as well?

Yeah, so great question. And this is definitely where we start because this comes. Comes down to the how are you approaching the homeowner psychology of how they buy. Most of the people out there have a program that has two visits a year. It's priced somewhere between, you know, maybe 15 and $25 a month. And there may be some other bells and whistles associated that. That kind of standard and traditional approach is going to get you anywhere between 15 and 25% conversion rate to a member off of the demand call. And that depends on how good your people are pitching. If you're doing a dual pitch where CSR will warm them up and a technician will close. And there's all sorts of stuff that goes into that and lots of success group training and can help with all that. But that's kind of the bound bookends of 15, 25% is what we see to get the next customer to unlock that. Yes. You've got to have more. Right. It's either got to be more value packed into it, something that they personally feel like is more useful, or we see other people that just drop the price. Right. Ridiculous low prices. They call, they charge $5 a month or $10 a month. So people think, oh, it's just, I might as well sign up. And as a contractor, you're getting more yeses, but you're putting yourself at even bigger hole. So we don't suggest that.

We suggest you really have to sell something on every truck roll.

Absolutely. Yeah. So. So we like to look at how do you add more value into the overall program. So things like, like loyalty rewards or we call them comfort credits, adding, I think things like concierge button to an app where they can talk to somebody when they have a question. So just really, you know, feature loading it. So the homeowner is like, man, this is cool, right? 247 health monitoring. So you're, you know, advanced notification of issues. Like those are the things that get the next wave of customers over the edge. And so we've got very successful people with our platform that are converting in 40 to 50% of every home they go. And that's super exciting. Right? That's tremendously better than industry average. And then there's this whole other sect of customers that are just never gonna say any yes. Right. They're like, right, fix it. I'll call you when I need you again. Right. Those are 911 customers. And for that, that's why we develop our app only solution where it actually no sensors involved at all, no truck visits, nothing. It's just a digitally connected membership to be able to receive that help call the next time so that, that unlocks the next customers because you can basically give that away. You don't have to charge for that.

Sure.

And it's just to get somebody to say, you know what, yeah, I'll download your app and yep, I'll. Next time I need you, I'll hit the help button. Giving again. Just giving yourself the best chance to get back in the home without having to. Without having to repay for that.

That's great. That's great. And what does that help button in the app do for that as far as the user experience?

There's two different help buttons on our, on our, our software only offer, we actually call that our connect offer. One is, is like a. It's kind of like a digital concierge, right. It's like a anything button where they may have a question about your service or their last service or anything. It's just any question that might come up. Right. And that's handled by our team and a series of AI chat bots that help try to, you know, figure out what's going on and then connect the parties. And if looks like it's something that needs service, we can connect them, you know, direct them to book service right through the app and that directly books into service titan. So super cool feature there just to drive more connection interaction and then potentially a direct booking with no CSR interaction. Then we have another button that's. It's like a. It's like a teladoc, right. Where they're like, hey, I want to talk to somebody. I'm going to show them what I'm seeing or hearing, why I think there's an issue. So that service can be be picked up by somebody on the contractor side. Right. And usually this is kind of like done by a round robin where other technicians will have a pro app on their side and they can pick up and they can interact with the homeowner. These are quick interactions. It's like, hey, do you hear this? Should this sound like this? I say, ah, I don't think so. We probably want to get out there. Right. So a couple, couple of those two different styles of help buttons that just lets the customer know I don't have to go searching for somebody the next time I have an issue. I've already got a company.

Okay, awesome. So how many people, I think you get these metrics from Apple or Google, how many people end up keeping the app on their phone versus deleting it?

I couldn't even directly answer exactly that. Right. Because we don't necessarily get notified when people delete an app. We see engagement and we track engagement and the way that we deal with that is we have the idea of like rollover licenses for engagement. So if it's a software only deal and somebody has not engaged in a certain amount of time, you can choose to roll the license off of that person, redeploy it somewhere else with somebody who will. Right. So as a contractor, you're not wasting money towards something that is not going to drive value for you.

Okay, great. So, you know, most of my audience are service titan users and you know, there's a lot of tools and products that connect with service titan. So I'd like to let them know how Smart AC actually connects with it. What does it look like as far as the contractor's workflow? What, what can they expect with that?

Yeah, I mean, this was feedback we got early and often, which is, I don't want another screen to look at. Right. I think somebody has said that if you're a successful contractor using all the available technology to drive efficiency, your people probably have anywhere between five and eight tabs they have to navigate through already. Right. And we didn't want to be another one. They had to. So. So we worked with the contractors to find out exactly what their workflows are today. Right. How do, how do you want to receive information such that it drives a booking and doesn't mess things up? So the way we did that, a couple different ways inbound. Right. If you're a contractor, you got your CSRs that are handling these outbound workflows. When they get a signal or a prompt, how do they receive that? So with our server side integration, it shows up in the booking area and it's one of two things. It's either a customer who's tried to schedule service and it actually shows that they reached out. If you're not using that adaptive capacity planning that automatically books, then it shows up as a request for service from a homeowner. The other thing is, it can be the intelligence on our side. The system actually flags it and says something needs to be serviced and that will go into the booking area. CSR sees that, they just transfer it into a job, and then, you know, it's often the normal workflow. They don't even interact with our site. If you do have that adaptive planning, then it literally flows in directly as a booking. When customer says, I want you to come out this time, they're actually looking at the availabilities of, you know, real time, days and times of it. So super easy there. Most of how it works from a daily standpoint. There's some other deeper level integrations we've got. So, like the loyalty thing I mentioned, if you're using loyalty rewards and you're giving those to people for buying the membership, or you're giving monthly credits for staying on the membership, those balances show up in Service Titan and then they can be redeemed by the customer for future purchases. And then there's a balance reconciliation. So there's. There's a bunch of things that go on behind the scenes to try to make it very, very streamlined so that you don't really have to use our system on our side other than initial admin setup. And then most of it pretty, pretty much runs itself.

Okay, cool. I just paused a little bit there. I'm gonna. What I'm gonna do when I edit this podcast is I'm gonna put. I'm gonna put the screenshots of what we're talking about in the app and in service site and overlaid on it.

Right.

Because describing it's nice, but when we add that screenshot in, it'll be really helpful.

Yeah, I set up the same thing that's.

I'll just have them, like, pop up in a. Oh, mine's logged out. But anyway. All right, cool. So talking a little bit more about the homeowner experience and those loyalty rewards, we called them comfort credits. I think you guys still call them that. They're available in the app. There's a running balance. How does that work? How do contractors utilize that for customer retention?

Yeah, well, so what we found is a. A huge motivator for a lot of people who end up signing up for these memberships. It's. It's the day one discount. Right. A lot of people offer 10% off service today if you sign up for my membership and they do the math and they say, okay, well that's going to save me 200 bucks and the membership's 200 bucks, so why not? Right. And so that's good. Right. It's a good motivator. But once they're on the plan, they've received that benefit day one, their motivation to stay on the planet is not much. Right. So, so what we've been doing is working with contractors to rethink how that initial dollar exchange goes. So instead of maybe, you know, we have, I see people offer up as much as 20% off. Right. Of that ticket for conversion.

Yeah.

What if you lower that dollar amount a little bit? Right. Maybe take, take it from 20 or 15 down to 10 or from 10 to 5 and instead of getting, giving them the dollars back day one, put that into comfort credits. That's a balance that they, they keep. Right. So a lot of contractors will offer anywhere from 150 to $250 day one discount that goes in their comfort credit balance for signing up for the plan. And then let's say they're paying 20 bucks a month to stay on the plan, they'll offer half of that. So $10 every month accrues back into the balance. So as a customer, the psychology of seeing your balance go up every month and know that you are saving dollars towards something you're eventually going to have to, you know, pay for that you're not excited about, probably paying for.

Definitely not.

Yeah, is, is really, really good. I mean we've seen awesome, awesome retention around that. But also just the use of them, like some contractors will let people redeem them for, you know, anything over $500, which, you know, you know, let's be honest, any, anytime you're rolling a truck for anything, it's, it can't be less than 500.

So they can buy one single capacitor.

Yeah, exactly. Yeah. And then a lot of, a lot of them say that it's got to be at least an equipment change out.

Right.

So call it 35 water change something. But man, it means a lot. Right? Like that just as a customer, be like, hey, I don't want to be buying this, but you know what, I'm going to go ahead and do it. I'm going to change the water heater instead of ask you to fix, fix it because I've got, you know, 500 or 750 here towards that big ticket. Do it right. So we see that work really well. Redemption's great. Customer satisfaction is great around it. Yeah, that's probably one of the features that we most excited about since we rolled it out last year. That's been working really well.

One thing I want to add real quickly on the comfort credits or whatever the contracts or contractors are calling it on their end is when you think about the, the mindset of the homeowner, they're being told they have something very costly that they need to get fixed. There's a reason why contractors offer financing just to start now. You layer in something that even makes it a little bit more sticky from the long run. On top of that even you're talking about serious conversion rate and loyalty. Like, which is the end goal of, of what Smart AC is doing and why we partner with so many H Vac dealers.

And we couldn't even do anything like that before Smart AC. I remember our membership included $500 off of a system replacement, but there wasn't anywhere the customer could really see that when system replacement time came, because it could have been a couple years ago that we sold the membership. And they might not have that, that visibility of exactly what they're going to get, but if they have an app on their phone, they can see that. And I really like how it accrues almost like loyalty points that you would get at an airline. Right. Except for customers probably, probably wouldn't let them exchange it straight for cash.

Right, Right. Yeah, exactly.

There's a reason why every industry seems like they are doing something with loyalty. Whether it's like restaurants with points that you're saving up to airline miles, you name it. Like there's no reason why H Vac shouldn't be part of that equation and to help their retention.

Right. This is not something new as far as consumer behavior. It's just something new to our industry. Right?

Yeah.

You know, every time I go through a drive through now, they, they're like, what's your phone number? Because you want to sign up for our points. And if you use the app, you get certain amount off and, and everything. And they really make it easy as far as other industries go. And I think that even though we're lagging behind, we are catching up and offering those things.

It's a really awesome opportunity to move the industry forward. I mean, we're, you know, we're not doing anything revolutionary in terms of the, the psychology. Right. The psychology of this homeowner stickiness and homeowner engagement. You know, this has been around for 50 years. Like these Studies of how you know. And then different industries have evolved faster all the way up into the social media or today where they, you know, the algorithms are designed to keep you looking at your screen for as long as possible over this stuff. Right. Like the psychology is there. We're just trying to take that same thing and adapt it into the services industry. And you need a digital interaction to be able to do that. You couldn't do it just with old school, like sales skills, you know, like you could be an excellent closer over the phone. You can have great technicians. But if you have digital and you have remote value opportunity, then you can really start to tap into some of that psychology, behavior and research and proof that's out there and utilize our platform for that. Right. And that's effectively what we become in many ways is the extension of the contractor for providing digital remote value.

You guys also have something in your app that lets customers know when it's time to change their air filters. And do you still have the option for them to order replacements right through the app? We always had so much trouble managing that. Where we would try to, we went through this cycle of let's try to jot down all the filter information and bring one out during the maintenance. And that was just a disaster. And eventually we got to the point where we just would give a customer a link to Amazon and say, here's where to buy your filter. But with that, we would show up to homes that didn't have any filters. And I really, really despise going to do a maintenance on someone's system and they had a dirty filter and there were no replacements. We didn't have it and we did the maintenance and we left with a dirty filter. It just seemed unprofessional to me. So you guys are able to kind of help the contractors and the customers together out with that?

Yeah, yeah, 100%. And honestly, this is where you can see the evolution of our platform over the last several years in dealing with contractors like yourself and listening. Right, so we just started with, let's be able to tell them that the filter is down to zero. So we've got, we got a pressure sensor that goes in the duct. As the particulates build up on the outside of the filter, static pressure changes. We've got, we've got these safety limits associated and we can give you a, hey, it's time to change your filter. But what we didn't know was what a pain it was for you guys to deal with that. Right. So us just saying a filter's empty didn't solve the real problem. So to do that, we needed to become our own filter supplier. So that's what we did. So we integrated multiple large suppliers around the US So that, yeah, when it gets to zero, someone just says, send me more. Because during onboarding, your technicians are entering those sizes in there. So everything's recorded and ready to go. So in two taps, it's send me more and buy, right? Yeah. And check out filters delivered to their door in three to five days less than the cost of Amazon. Right. And that was another lesson learned.

That's great.

We first started trying to. But, like, let's make a little money on filter. What if we charge, you know, what if we charge 30% profit and we pass that on the contractor? And what we found is customers didn't do it. And when we started polling them, why, they're like, because I can get it cheaper on Amazon. You told me it's zero. Thank you. Now I'm going to go buy it on Amazon. Well, we're like, well, that doesn't really work. But the platform is only delivering part of the value. So we started, you know, getting our volumes up and negotiating and driving prices down. So now we're cheaper than Amazon. So now the homeowners, the whole mentality is different. You tell me it's zero, you give me an easy button to get them, and I know I'm getting them cheaper than Amazon. This contractor, I can trust them. They're not trying to rip me off. They're trying to actually deliver a good value with the membership that I'm paying for. And that, that, that, that mindset shift is so meaningful to the homeowner when, when they put all those dots together and they're like, I can trust these people. So when you show up and tell them it's going to be 15 or $20,000 for a system, they're like, that's. I, I can trust these guys, right? Because they've been delivering value all along.

And as a homeowner, I've, I've always tried to think from the homeowner standpoint, which is difficult to do when you're a contractor. But if I were to, I would want to get filters from the contract from a contractor rather than go to the depot and get them. But you're right. And I, I always had this issue with it as well. Trying to put margin on a filter. And you go, I'm a contractor. I get all these things at great prices. Now here's a Honeywell filter. It's $80 for one of them. And you can get the same thing on Amazon or at the, at big box store for 50. It makes you, it makes the customer think that you're that much more expensive in everything that you sell than what they could get somewhere else. And there's, there is a lot of sensitivity around filter prices less than there is around a service call. Right. So we tried that for a while where we would put some margin on it and nobody ever bought it and we would get objections. And I'm like, I don't need objections on something I'm making $15 on. I just, I just want my customers to be able to get the right filter. And I really liked how you guys incorporated that in your platform.

You know, 100. Yeah. If you create a friction experience on a thing they think they know the value of. Right. Imagine what you've just done when now you're telling them a big ticket price on something, they're like, if this guy's trying to make extra money on me on a filter and I know that costs less. Like, you know, how much can I really trust when he says it's a twelve hundred dollar fix for, for whatever he's telling me is wrong? Right. Do I trust that or not?

Right. For sure. And yeah, I love that. So there are a lot of tools out there right now. You know, there's, you guys have the sensors, which are standalone. There's a million different thermostats and different apps you can download. You know what's different about the way you guys do it that you feel is actually delivering results for contractors over those other solutions?

Yeah, yeah. I mean, I think a lot. Wes, why don't you. You chose to join our team fairly recently. You've been around the industry a while. What, what do you see?

So I think just the holistic approach that we're taking with not only the sensors but the homeowner experience is really the difference. Like I, I think there's OEMs that are trying monitoring to some extent, but there's a reason why they haven't really taken off with them because A, it's tied to the equipment itself and B, there's not really much there for the contractor homeowner loyalty piece. So the way Smart AC is approaching it I think is in my opinion pretty game changing for the industry just because it is not just the sensor. Like we are truly facilitating a better relationship between the homeowner and the contractor. And that's the end goal. Like I always tell people, I don't think we want the homeowners to know who smart AC is. We want them to know who the contractor is. And tying it to sensors that fit on any piece of equipment while also looping back to the loyalty piece is a huge differentiator. And when you're looking at like monitoring through a thermostat or something, that's a pretty hefty install, probably a bit more expensive. So I think that the install time is key benefit. But again it's just the loyalty and how we're looking at it and redoing the membership programs and the this stories in the data like 90 plus percent retention, 40 to 50% conversion on new sales. As we talked about earlier, it's, it's.

There in the bread and butter adding on to what Wes said. You know, we've, I mean look, we've been at this for a long time, right? We were doing this for three years before people even knew we existed. Gathering data from the field, doing with homeowner surveys, over a thousand people taking really good, successful contractors saying what could help your business. Like all of that has been put into what we are and we've learned so much that we didn't really even think, right? We were worried that visible exterior sensors might be a negative to a homeowner. We knew it was the absolute fastest and best way to capture the data, right? It's you set on a grill, it's magnetic, it takes no time. But we didn't know how the perception was. The, the funny thing is that visible sensor is what the homeowners think where all the intelligence is. They will literally point, right? They'll point to the sensor and be like the sensor said my system is having issues, can you please come out? Right. They don't realize the massive amounts of data being crunched and all the intelligence because there's a physical symbol of intelligence and like a fear like you know, they think of it's a smoke detector or it's a, it's a ring doorbell camera. It's a thing telling us what needs to happen. And so, so that's a, that's a big benefit in just psychology to have in a film versus behind the scenes hidden built in intelligence like, like OEMs have, there's no physical symbol of, of intelligence there. Even though they said oh this is a smart connected system, right? It's. And so that, or, or just you know, smart thermostats been around forever. So people understand, sure, it can tell me some stuff. But it's very different when you, when they see that sensor and they See the sensor going in where the filter is? And that sensor says the filter is in, you know, down to zero. Right. So there's some, some really cool intangibles that exist, you know, beyond what Wes was describing, which I think, you know, he's totally, totally spot on. We're wrapped in loyalty over time. Contractors should spend tremendously less on marketing and get the same amount of revenue growth it's just captured. Right. And that's a, that's a key value that we're driving for every day.

I was just going to say one more thing to add that I don't think we've talked about is that just like one of the things that's really appealing to me about what we're doing is from a mindset standpoint, you have traditional approach to these memberships, which we talked about earlier, being multiple times a year, you're kind of saying the same thing. You need a new this, this and this. But now when the contractor is able to go into the home with data equipped at their back, it's a much different story that they're telling. And it provides a lot more of a push for people to either upgrade, if necessary, their system, get something replaced. It's actual data that they can bring equip to the home. And it gives them kind of the homer, more of a, oh, this person knows what they're talking about. It's not just them trying to sell me something else, which is what they're doing every time they're in my home. And so that's another thing, I think that is really, really important to what we're doing. It's creating actual data behind what our partners are saying.

Yeah, that's great. I mean, you have the recency bias of a homeowner. If you go in and perform a maintenance when it's mild out. Right. You ask them, how's the system been working? Oh, it's been working perfect. Well, yeah, I mean, but how did it work this past summer? I mean, how are they going to remember that? But if you have that data, that makes sense. Yeah, I like that. And, you know, similar to the filters for us, I couldn't put margin on a smart thermostat. Now, if I'm selling it with a system, then we can move some things around and we could just include it. But on a regular service call, we'd buy a, say, an Ecobee thermostat for maybe $200. I couldn't really sell those for 400 because similar to the filter, the customer would look at that and go, hmm, this thermostat's $200. And sometimes I paid the same as what somebody could buy buy and from best buy for. Right. And then that same psychological approach comes in where like, wow, he's doubling this for the third, for the thermostat price. What's everything else going to cost? And then I also, the thermostats are a source of callbacks, right? You know, a customer has their thermostat that they've had forever. And yeah, it isn't a smart thermostat, but it works. They understand how to work it. It's programmed. You put in a new thermostat, they don't know how to use it. And you'll get some, you could get some callbacks. So I always tried to do things that would minimize the amount of callbacks. And that's why we wouldn't always change thermostats when we replace systems if they had one that they knew and liked and would work fine. So that's why I like the add on sensors, personally.

Yeah, that was our goal, Right. We don't want anybody to have to change anything, you know? Yeah. The homeowner. You don't have to make a choice, right? You just, you're getting a repair, you're getting a membership, and it comes with sensors. Great. You don't have to change anything. You don't change thermostat, you don't change anything with the system itself. And, and if your choice is to get a new, you know, a new system and it's going to be 12 grand or it's going to be 14 with all the new intelligence, like, that's a choice. You're making a choice. We tried to make it to where it just folded into the natural course of business and customer behavior change was zero. You know, it bolts on any central air system, any oem, any thermostat, doesn't matter.

Right. I have the sensor right here in my office and I'm looking at it and it's got a strong enough magnet. I have ceiling ducts and they have a nice magnetic register on them. And so it's still hanging on there. It does have a really, really strong magnet.

It's shockingly strong. It surprises people.

Near earth magnets, right? They're real small, but they're really powerful.

Yeah, no, for sure.

So, you know when a contractor has a legacy maintenance program and they're switching over to smart ac, do you guys have recommendations of best practices? I mean, would that be a good time to switch your program Structure. So what you charge, what it's called, how often you come out, everything. Is there some templates that you can share with contractors so that they can utilize best practices and what's working for other shops?

Absolutely. The strategy and how you build your program, you know, we've gotten to be very, very good about not only what's working, but sharing those things and creating these best practices. So for sure, that's a huge part about when you, when you choose to do business with us. That's what we, we bring that to the table. So, so you get the value of all of our research anonymized. Right. We don't share proprietary data because we just share what's working. Right? Yeah, but yes, completely. That's, that's a big part of the very first part of, yeah, hey, I want to do business with you. Now what we say, well, now it's time to talk about how your program is going to look differently, to be able to take advantage of, of the benefits of getting higher. Higher acquisition on the front side, higher retention. Not only that, we oftentimes what ends up happening is it's the CSRs and technicians that are the happiest because these programs might be in place for a long time and it's stale. There's no excitement around selling it. The commission structure hasn't changed a lot. And so when we're doing this, we're showing them how much value is in these membership programs and saying you need to increase the commission associated because it's worth it if the energy is higher on the CSR side and the technicians are motivated to sell it and put it in like you're going to be the beneficiary. So, you know, don't, don't penny pinch a $5 here, $10 here, like an eight kit worthwhile. So a lot of times the, you know, they become our biggest fans after we roll out is they're like, this was great. We hadn't had a commission change in, you know, five years. And after this new program, now we're making more money and we're excited to, you know, to roll out this new program. So that's a, that's a side benefit. Nothing that, you know, we expected going in.

Yeah, well, I mean, as an operator, you know, technician buy in and CSR and office staff buy in is going to be the difference of anything being successful or not. You can never just say, well, I'm the owner and I just said so that's why it's going to work.

Right.

And you're Right. More money for everyone, including them does get you buy in pretty strong. But yeah, I love that. I love that. So what does the onboarding process look like? If, if a contractor were to book a demo with you guys, what's that look like? If they were to go down that path?

What we typically see, and I'll reserve this, this is for most, the largest, biggest enterprises that have PE influence and multiple levels of, you know, decision making. All that stuff can take a little longer. But we find that with most contractors it's, it's kind of a, you know, it's a two or three call process just, just to get to where they say yes, right. I want to do business with you because it's not always with the owner or sometimes it's with the owner and he wants to bring the management team in. And so we typically have a couple discovery calls, tell them what we do, talk about why and then once they say yes, we've got a whole account management team, right. We call it our partner success team. They get ramped up and it is handheld curated onboarding training and in startup, right. And so we spend a lot of time doing that. We walk it through. We develop an individual project plan with every single company we work for. We say, okay, let's talk about your organization. What functions do you have in place? Who are the leaders there? We're going to build training programs and do that with, with each of them. Most of the time we can accomplish all that remotely and a lot of times we show up on site and do it as well. Technician training is super simple. This, there's no tools, no wiring. So that part of the training, it's mostly getting the technicians excited about selling a new plan that's most of the training and rolling out winning incentives and stuff like that associated with it. The actual technical training part's super simple. So we have training that will can be as fast as a single day, right? Where from start to stop, where we're just doing different groups all throughout the day. And that happens on a Friday and they're launching on a Monday. And then we have other groups that they, they want to space it out. They want, for a variety of reasons, they want to do one per day. And so it may take a week or so, but it's, it's extremely straightforward and very simple. I mean if you have gone through the pain of putting in service Titan, that is a 10 compared to, compared to R1 of difficulty in onboarding and launch.

You know, Service Titan hacks community is so popular. There's 9,000 people on it because ServiceTitan is so comprehensive and difficult for contractors to start up and start seeing traction on it that all the, the add ons and any of the other third party things just seem so basic as far as onboarding goes compared to what, what people have to do with Service Titan and I experienced that myself too.

It was, it's not, yeah, definitely not a negative on service. They, they can't, they can't make it super simple because it touches so much of the business in such depth. Right. We, we just don't have to have that interaction so we can be, we can be much more surface level and a lot faster for sure.

So for the contractor who's listening, who might feel overwhelmed, what would you say to them? Where should they go? Book a demo as well?

I mean the, the easiest place to start is our website. There's a place you can go to the website, you can enter in your information and you can schedule a demo directly right there it is a no effort 30 minute call to walk you through, through exactly what we do, how we do it, why we do it and what we hope to build with you and your business. This is not a save your business. If you, if you have a business that's going down like we're not, we're not. That's, you don't want to call us for the Hail Mary. Where we end up being best is businesses that are already successful and they're looking for that, you know, that next level, that performance enhancing drug to, to take them from, you know, fifth place to gold medal, like that's us. Because you're probably already using Service Titan. You're using all sorts of technology and tools, you're doing all the right things. You just haven't looked at your membership program. That's unfound treasures. Right. And that's what we help, right help do is to accelerate you into that last level of efficiency and something that just wasn't possible before.

Yeah. I mean if you're successful with a 25% close rate on memberships, I mean 35, 45, 50% is going to be massive difference.

It's huge. I get, I get so much excitement out of showing people what, you know, that level of compounding growth is right when you're, when you're building on success every single year of a higher take rate and higher retention, it's unreal how quickly your membership plan grows. You hold everybody and you convert that many more, the math really, really takes off and you're, when you're more profitable on your program from reduced truck rolls and better efficiency. It's just, I mean it's a, it's a massive boost to, to the bottom line. Right? That's, that's what we get most excited about is the tools we're developing now to literally show contractors how much more money their membership program is making for them just by the use of our platform and the features associated. Like, we, yeah, we have a thing called virtual visits. Instead of going to the home, a contractor can record a visit of them looking at the system remotely for the homeowner, talking about the details that can be in a video that's sent to the homeowner. So the homeowner's like, yeah, you're doing, you're doing what you were going to do when you came up, came out here. But I didn't have to take any time. I found out the same information in 90 seconds. And this is what I'm paying for. Right. Like, so it just, it's really, really cool the stuff that we've got. And, and again, this is, it's just us listening to, you know, guys like yourself and to the industry and saying, what helps? What can we do? What's the next thing you can create in the roadmap to make, make your business, you know, more valuable?

When the contractor goes through the demo with you, are you able to show him some of those metrics that you can like plug into a calculator that says, as for your specific business, here's where you at, where you're at on the memberships, here's where you'd like to be. And this is the kind of top line growth and bottom line growth you're going to get out of.

Yeah, absolutely. Yeah. We built an entire economic analysis tool. So we, we want to make it as personal to your business and where you are today and where you want to go and then set those growth goals together. So, so we, we both know what we're chasing.

Is there anything else that you guys want to go over and want to share with the, with the listeners today?

One other thing we may want to cover is, you know, I think a lot of our focus is obviously H Vac, but the way the sensors are built, because there is the water sensor, a lot of our contractors can now like leverage the sensors to get into the door for other trades too. So I think that might be like worth mentioning in some.

This normal kit comes with a supply sensor, a return sensor and a water leak detecting sensor, right?

Yep.

So what I did is in Ohio when We had them in the basements. We would, I would put the water leak sensor, you know, downstream that if the, if the coil were to back up or if the condensing furnace were to leak, it would run in and hit that sensor. So it, it stayed just a, oh man. Very, you know, maybe an eighth inch off the floor or something like that.

Yep.

But then in Florida where I'm at, there's a pan underneath the air handler that we, that I drop the sensor in, which makes it easier. So if you're a plumber, you could put the sensors in a water heater pan. You could put them, you know, maybe by a washing machine. Pretty much, pretty much anywhere. Is that where you usually see guys apply these things?

Yeah, we've got multiple contractors in regions where, you know, they've got rooftop units or places where there's just no drain pan.

Right.

So they'll repurpose it into, into water heaters or, or even ask the customer, you know, where would you like this? Where it's your most leak prone thing and put in by a, you know, master basin, toilet or something, you know. And then I think to, to Wes point what ends up happening is H vac technicians are putting these things in. But 30 to 40% of the leads that are actually generated often end up being from the water related things, either the drain pan or from water heater or from toilet sinks. Lots and lots of water issues that drive cross sell opportunities with plumbing. Really, really powerful to do that. And so much so that a lot of our customers will put an extra water sensor on the plan for free just to try and pick up more water based leads.

So I mean even if you're not yet doing plumbing and you're an H Vac contractor, in the future you get these retention program going and you decide to add that vertical, then there's your leads from it.

I like built in, built in leads. Right. We got a ready made plumbing group. Right. You know, ready to go.

Yeah, that's great.

And then if you are currently doing multiple trades and let's say you have someone only for an H Vac membership, you can always book and run promotions targeted on your members in the app too. Like hey, we, we also do plumbing electrical, you can book us through the app, maybe we'll give you like few comfort credits, you name it. So I think there's a lot of flexibility leveraging what we're doing to, to get in with your already customer for other trades.

Okay. Now we just have to figure out a sensor for electricians to use Right. So I have Emporia energy monitor in my house, which I got off Amazon. I have one for my full panel and one from my main panel. And it. It's. It was a mess to install, though, man. If you see a photo of this, because there's an amp clamp on on every single circuit. So if you open up the box, it's. It's a mess, but it does tell me how much energy is used on every single circuit in real time. That way I know why I have a $400 electric bill now. Can I do anything about it? Absolutely not. I've tried, but that's just the way it is, man. So, yeah, we figure out how to do electrical ones, but plumbing those. Water leaks are the. That's so necessary and vital, especially for ones where homeowners are not home. You know, an AC goes out, that's. That could be damaging, but water leaks will kill you.

Can I add a little plug about the partnership program?

Oh, yeah.

100% amongst your audience, whether they're Service Titan users or vendors that listen to this podcast or see your channels, we are actively building out our partnership program. So a, we're looking for things that our customers care about that makes their lives better, values that we can provide through our product, connecting to their product, but also like facilitating good relationships there. We have, as an example, a recent partnership that we brought on with a Service Titan consultant, and we're bringing them into our onboarding phase to making.

To.

To make sure that people's service titans are set up adequately enough for membership. So they're coming in through the onboarding, just doing like a quick pulse check, and that's like, the type of value that we're trying to really bring to the partnership program. There's a lot of reasons why we have a partnership program, but ultimately, the best programs out there can provide good value to the mutual customers that we both have. So if you have users, vendors that are listening, please reach out, let us know what we should be doing. I am more than happy to try to build some of these partnerships.

Setting up the memberships in ServiceTitan is surprisingly tricky, but once you get it right, it works great. It's just not super intuitive to set it up. Servicetitan hit or miss if they can help you, but I know the partner that you're talking about, and they'll do a great job and get your Service Titan rocking.

Yeah.

And then they can do other things for you as well. Yeah.

And the reality is, I feel like people's Service Titan is all set up also completely differently from each other at times. So it really. Having a pulse check in there through the process, it helps us launch the program with our customers a lot better too. So, yeah, I think it's. We are just looking from a partnership standpoint at value we can add there for our customers.

Well, Wes and Andrew, thanks for joining me today. Really appreciate it.

No, this is great. Yeah, thanks, Bill. I appreciate you having on. Thanks for what you do. You know, you built a great community here, and that's one of the things that I've really admired about the H Vac and the trades community is. And it's very supportive. Like guys like yourself who are successful then exit out and stay in it, you know, like, that's. That's it. It's kind of rare, you know, like most people, they dream about the day they get to walk away and. And leave it all behind. And so many people turn right around and get right back involved doing things like you're doing. So. So thanks for what you're doing, man, and appreciate the opportunity to talk about us a little bit.

All right, thanks, guys.

Thanks for having us.

Thanks for listening to the Home Service Hacks podcast. Be sure to subscribe on your favorite podcasting platform so you never miss a future episode. For more information or to connect with Bill, you can check us out on Facebook @ServiceTitanHacks or visit our website at ServiceTitanHacks.com we'll see you next time, Sam.