Challenges in the HVAC industry and how to overcome them

The world will always need heating, ventilation, and air conditioning, so it's clear that the HVAC industry will always have its place. With rising temperatures and unpredictable climate conditions, the HVAC industry is increasingly becoming more of a necessity. The U.S. market is projected to expand at a compound annual growth rate (CAGR) of more than 5% during 2020-2025. The industry is expected to see tremendous growth due to the growing number of connected home devices, increased construction, and other factors.

However, there are many challenges facing the HVAC industry. Technology has made heating and cooling units smaller, smarter, and more efficient. The industry may also be facing a shortage of skilled workers.

Challenges Facing HVAC Industry

Keeping on top of these challenges will help you survive in an industry currently in a state of flux. Here's what to look out for and how to run an HVAC business in these challenging times.

Competition in the HVAC Industry

Of course, competition isn't new in the HVAC industry, but it is likely to increase. There are a lot of HVAC companies and service providers out there. This is great if you are a consumer since competition can help lower prices, but not so much for HVAC businesses looking for ways to survive.

According to IBISWorld, no HVAC company has a dominant share of the market, since no single business can claim more than 5% of total industry revenue. Most HVAC companies are small businesses—63% have four employees or less. These smaller companies tend to be regional or specialize in specific kinds of HVAC systems.

With fierce competition between small local companies and national chains, you may be tempted to differentiate your company on price in order to win business. This may not be the most advantageous long-term strategy. Companies that bid too low often end up scrimping on labor and materials and not being able to get the work done right, or not being able to get it done at a profit. They damage their reputation and may lose customers.

A better strategy would be to differentiate your company by providing a high level of service, so you can build a loyal customer base who will not only continue to give you their business but will refer you to their family, friends, and neighbors. This means not just meeting their expectations, but going above and beyond to ensure they have the best customer experience possible.

Communication and Customer Satisfaction

You know how something always seems to go wrong at the worst possible moment? In the HVAC industry, there's never a good moment for your customer's heating or air conditioning system to fail. By the time they make that first phone call, they are already irritated, impatient, and dissatisfied. These days, customers demand immediate action, and in the crowded HVAC field, they will easily turn to someone else if they feel that you can't or won't accommodate them right away.

This means the speed and efficiency of your operations can make or break your business. Using the latest HVAC fleet tracking technology to communicate with your fleet and put your customer at the center of your business will help keep you alive in a competitive market. Just as technology has changed so many things about HVAC products, it has also changed business processes such as dispatching, invoicing, and technical support.

New software and apps do more than make things easy and seamless. They also give you the tools to improve efficiency in ways that lead to greater customer satisfaction. Optimizing your routes and scheduling can make a significant impact on your business. Poor communication, late arrivals, and no-shows due to scheduling snafus can lose you customers. A great way to improve scheduling, routing, and communication is an HVAC telematics software.

You can get accurate information about what is going on in real-time, and review data in reports that you can use to make decisions. You can plan the best, most efficient routes so that your technicians arrive as scheduled. You can also change their routes in real-time, sending the closest technician to an emergency call and quickly rerouting the others to maintain your schedule. If you haven't implanted software that can help you automate scheduling, dispatching, and other tasks, now is the time to consider it.

In addition to quick response times, there is a pressing need to build trust in the HVAC industry. At the end of the day, it may be your ability to communicate honestly and clearly with your customers that sets you apart. This means building trust by offering fair and accurate pricing, being transparent in operations, and making your customers feel valued.

For example, validating advice to replace an aging and inefficient heating system with a record showing how the improvement has saved money on the energy bill builds trust. Creating a company culture that focuses on customer satisfaction as the ultimate objective also helps. Keep in mind that customer satisfaction equals customer retention.

Cost Challenges in the HVAC Industry

One of the biggest HVAC industry challenges is the cost of doing business. It takes an investment of anywhere from $2K to $10K just to get up and running. Costs include:

• Fleet of vehicles
• Specialized equipment
• Skilled technicians
• Insurance
• Marketing

HVAC fleet telematics solutions can help businesses manage and automate processes such as:

• Vehicle maintenance schedules (and costs)
• Vehicle security and driver safety
• Real-time field technician scheduling (and customer service)
• Fuel consumption and emissions

Telematics data can show you how to reduce your fleet's fuel consumption, reduce aggressive driving, and more. In some instances, insurance companies will give you a discount if you are using telematics, so you not only reduce the amount of accidents, you may also be able to reduce your insurance premiums.

Fuel takes a big chunk out of your budget, but fuel prices are beyond your control. They often rise and fall unpredictably and can kill your projected budget. With a telematics solution, your technicians' fuel consumption can be in your control. You can get insight into your technicians' driving behavior and give them the coaching they need to improve. Better driving often equals lower fuel consumption, which can improve your fuel costs.

HVAC Workforce Shortages

Like many industries, one of the HVAC challenges to overcome is the lack of skilled labor. The underlying reason for this is unclear. Are more high school students pursuing higher education? Is HVAC work less attractive than other trades?

Regardless of the reason for the current workforce shortages, they may only get worse. Fewer young people are pursuing the trades as older technicians are retiring or otherwise leaving the workforce. This is bad news for customer satisfaction. If you don't have enough employees to get to all your customers or answer an emergency call, they'll find someone else who can.

There are a couple of things you can do to combat this challenge in the HVAC industry. There is often a poaching culture in this industry. Reliable, experienced technicians are hard to find, and competitors often snatch valuable employees from each other. Offering incremental pay raises as well as attractive benefits such as sick time, PTO, and health insurance can attract potential employees and incentivize them to stay. Building a sustainable recruiting system for hiring and retaining talented employees and reliable employees will help keep workforce challenges to a minimum.

Fluctuating Busy Periods

Sure, your phone seems to never stop ringing when it's steaming hot or freezing cold. When the weather is at its most extreme, your business will be going like gangbusters. These are the times when your customers' HVAC systems are stressed to their maximum capacity, so they often show their limitations or break down completely. Other times, business may slow to a crawl as you wait hours between calls.

Slow business means low earnings, but a flurry of calls doesn't always mean a huge revenue increase. If you can't manage a deluge of service calls, you may end up losing customers and income due to inefficiency.

A solution is to use telematics software that can optimize your scheduling and dispatching. This can help boost productivity and improve efficiencies during peak times and develop a back-plan for slow times.

If you are not doing this already, start tracking the number of potential client calls you get every day. Track the type of queries you get, such as routine maintenance, and emergencies. Over time, you can see trends and gain valuable insight that you can use to plan for the natural shifts in your work.

Keeping Up with New Technologies

There's so much going on in the HVAC industry it can be hard to keep up. But not keeping up is detrimental for your business.

New HVAC technology will most likely focus on renewable energy and system efficiency. Keeping up with things such as smart thermostats and green technologies will help you remain competitive. Products such as geothermal heat pumps have been growing in popularity. Unless you are familiar with these products and can clearly outline their pros and cons, your customers may decide to find an HVAC company that knows more about these new technologies.

Keep an eye on future developments and political policies that may cause challenges for the HVAC industry. This will give you a reputation as a true professional who knows the latest developments in the industry.

More Benefits of Fleet Management and Tracking for HVAC Industry

Another way to keep up with new technologies is to use the latest fleet management telematics. You can turn HVAC industry challenges into opportunities to stay competitive.

Keep Better Track of Your Fleet

No news isn't always good news when your technicians are out on the road. You hope everything is going smoothly, but you know that isn't always the case. Your techs may run into unexpected road construction, heavy traffic, or even an accident that brings traffic to a standstill. While you may hope for an uneventful day, you have to plan for unexpected delays in your fleet.

HVAC fleet management tracking can help you keep better track of your fleet. You can let them know when there is trouble and send them an alternate route or send a different technician to the job. With two-way messaging and GPS tracking data, you can overcome challenges and provide a better customer experience.

Track Driving Habits and Improve Safety

While aggressive driving behavior can use excess fuel and cost you money, it is also dangerous. Most crashes and accidents are caused by driver errors. If your drivers exhibit aggressive driving behavior, it can cost you money in excess fuel use, raised insurance premiums, traffic fines, and damage to your vehicles. It is also bad for your business since it puts other people at risk and can affect your reputation.

These risks and expenses can be avoided with real-time alerts from a telematics system. A visual or audio alert can let your technicians know when they are speeding, for instance, and give them the opportunity to change their behavior. You can also get all your driver information in a report that you can use to develop a safety incentive program the helps them learn better driving behaviors.

You can assign scores and rank your drivers based on tracked events such as speeding, harsh braking and acceleration, and excessive idling. You can implement a gamification system that, with the help of a driver-focused app, lets technicians see their scores and how they rank compared to their fellow technicians. This system can incent drivers to do better. And when they can see their results on a leaderboard, it puts their actions into context and makes the consequences feel more real.

Schedule Vehicles for Preventive Maintenance

There's nothing worse than having a vehicle breakdown unexpectedly. It costs you time, money, and maybe even the customer in the long-run. Scheduling preventive maintenance can help reduce unexpected breakdowns that affect your business.

With regularly scheduled, proactive maintenance, you get benefits such as:

• Save money—it costs less to keep your vehicles running well than it does to repair them after they breakdown. They'll use less fuel, and you won't have additional damage caused by excess wear and tear on parts.
• Reduces risks—they will be less likely to breakdown and cause accidents that put your technicians' and others' lives at risk.
• Decrease downtime—scheduling preventive maintenance doesn't affect your technician's performance because you can schedule it when it is convenient for your business or plan around the scheduled downtime.
• Gives vehicles a professional look—as a visual representation of your business, your vehicles need to look neat and work well to make a professional impression with your customers.
• Prevents future issues—with regular maintenance, you can discover minor problems before becoming bigger issues.

A telematics solution lets you set up mileage or time-based maintenance alerts so you can schedule maintenance at times when it doesn't affect the operation of your HVAC business. And with a telematics device hooked up to your fleet vehicles' engines, you can get notifications about emerging problems and address them promptly.

Keep Track of Driver Hours and Payroll

Telematics solutions can help you monitor and manage your driver's hours and their logs. Managing and monitoring your driver's hours with telematics helps you better manage overtime, payroll, and utilization of your resources.

Reduce Overtime

You can reduce overtime significantly with a telematics system by monitoring their driver logs electronically and allocating your resources based on data-driven insights. For instance, if you have a customer who needs a last-minute service towards the end of the day, you can choose who to send based on the hours they have worked and their location. This keeps you from sending someone who is too far away from the customer's location or too close to working their maximum hours. You prevent fuel wastage, overtime hours, and your driver will get to your customer on time.

Improve Payroll Accuracy

Unfortunately, timesheet fraud happens, and technicians may get paid for work they haven't done, or for time spent on activities that are not work-related. This occurs when drivers record more hours than they worked, retroactive editing of driving hours, and logging regular hours as overtime. Not only does this cost you money, but it can also end up with customers being incorrectly billed. This can be avoided by replacing paper logs with a telematics solution that generates reports on start and finish times, average hours, hours and days worked, and more.

Better Asset Utilization

You can also use information about driving hours to improve the efficiency of your business operations. By reviewing arrival and departure times, travel time to jobs, stop duration, and the time a technician is inactive.

This data let you know whether jobs are being completed in a reasonable amount of time, if there are delays on the way to jobs, whether detours were taken for personal reasons or because the technician was lost, and if drivers are not being utilized when they have hours available.

If you are looking for ways to overcome current and future challenges in the HVAC industry, telematics is a practical option.