Profits, not Products, Close the Sale
If you’re selling in the commercial hvac arena you’re competing against everyone from landscapers to roofers and dozens of vendors in between. The companies you want to do business with have more projects to fund than money to fund them, and when it comes to HVAC, if it’s not broken they’re not inclined to deal with it right away. However, smart selling will get them thinking of replacing their current system.
The Secret to Selling
The secret to selling smart commercial accessories, components, and equipment is …
Don’t sell products; sell the profits the products produce
- The purpose of doing business is to create profits for its owners.
- Everything a business buys impacts profits at some level.
- Capital follows the most profitable investments.
The best investment almost every business could make today is to invest in lowering their energy bills and reducing comfort-related problems. A good thing about selling smart hvac products is the significant energy savings many provide. The more energy saved, the greater the return on investment and the more likely the sale.
Investments are evaluated by Return-on-Investment
85% of companies calculate Return-on-Investment before making major buying decisions. ROI is the most-used management performance tool in business today. Unlike “profit” which is an accounting term meaning different things to different people, everyone gets the same message with ROI. Here’s how it works.
- If a product you sell costs $1,000 and reduces the client’s electric bill $250 per year, the ROI is 25%.
$250 (energy savings)/ $1,000 (investment) = 25% (ROI) - In addition, pay-back period is considered. With $250 annual energy savings, within four years this product will pay for itself.
$1,000 (investment)/$250 (energy savings) = 4 Year Pay-Back Period
Pay-back period is often used as a “go/no-go” evaluation tool. If a certain project doesn’t pay for itself quickly enough, it won’t get funded.
Lifetime profits
After your smart solution is paid for, the money it makes becomes pure profit for the life of the product. Most experts believe the cost of electricity will increase 50% to over 100% in the next 20 years. Let’s say the useful life of the product in the above example is 20 years. Your client has agreed that an electric rate increase averaging 4% per year seemed realistic. With that information you can determine that the client will save $260 the first year, $1,419 the fifth year, $3,213 the tenth year, and $7,753 the 20th year.
Turn soft benefits into hard profits
Soft benefits become hard profits when buyers say, “That sounds reasonable.”
Hard benefits are easy to measure and readily accepted. For example, energy dollars saved going from a 12 SEER to a 14 SEER unit is a hard benefit. Soft benefits, though, can be more important to the buyer but harder for the consultant to quantify. Soft benefits include:
- Quality equipment
- Accurate installation
- Proper maintenance
- Increased productivity
- Improved production
- Decreased downtime
The secret is to define the soft benefits in terms of hard benefits: Dollars made, or dollars saved. The more you define benefits in terms of money, the more money you both make.
For example:
- The buyer’s 20-year-old hvac system failed three times last year.
- The buyer agrees it’s “reasonable to expect” a new system should be much more reliable, which would reduce downtime.
- Use this information to turn reduced downtime into profit dollars.
In this example, each time the old unit failed, the building got so hot that the occupants were unable to work for an entire day. With 10 people, all being paid $20/hour times 8 hours, that’s a $1,600 cost every time the system breaks down. Conversely, it’s $1,600 in profits the company owner can use.
Every decision is a financial decision
The bigger your project the more financial scrutiny it receives
Unlike residential buyers who make emotional decisions then justify them with logic, commercial buyers make logical decisions and justify them with numbers. No matter how much the person you’re working with loves your proposal, there is always someone in the accounting department with the ability to stop it. What’s frustrating is that you’ll probably never meet these potential “decision breakers.”
Give financial decision makers the tools they need to say “Yes”
Design every proposal with the folks from the accounting department in mind. Speak their language. Break everything possible situation down into dollars. Document how the solutions you offer provide more profits than anything else they can buy with the same money. In the unlikely event someone else has a better ROI, it won’t matter if the financial decision-makers don’t know it. So remember, the #1 way to boost your profits is by documenting how much your clients can boost theirs.
