Two fundamentals for a record 2022

It’s notoriously hard to grow market share in the HVAC industry. It’s no secret: dealers are loyal to their distributors! 89% of HVAC dealers stick with the same supplier each year, according to HARDI. But a rare opportunity awaits.

With only 11% of dealers switch suppliers annually, what makes them pull the rip cord after 10-plus years with the same distributor?

“These two fundamentals ... can form the entire basis of your retention and dealer acquisition strategy”

HARDI’s study says it’s simple. Of the 11%…

• 2% switch for a better solution (product, price, programs, better branch coffee…)

• 9% switch due to a supplier failure. Usually that means lack of supply, or persistent, unaddressed quality issues.

This catalyst for switching is known as a “critical selling event,” or “CSE”.

This reality cuts both ways. Your competitors are bleeding 1 in 10 of their dealers each year, and so are you… unless you’re exceptionally good at avoiding CSEs and capitalizing on the CSEs of your competition. In fact, those two fundamentals are so important they can form the entire basis of your retention and dealer acquisition strategy.

That 11% churn rate is for a normal year, and 2020 and 2021 were anything but normal.

We are experiencing an industry-wide critical selling event right now.

Every single dealer, distributor, and manufacturer has fallen short of expectations, often for reasons outside our control. None escaped unscathed. That means everything’s in the mix. It’s all at risk. And there’s opportunity everywhere.

How much business is up for grabs in your market? 15%? 30% 50? More? I challenge you to build a 2022 growth game plan to translate this universal CSE into your largest retention and growth initiative in the past decade. Let’s go back to our two fundamentals:

• Avoid CSEs: Scripture says “First remove the plank from your own eye, and then you will see clearly to remove the speck from your brother's eye.” So let’s start by looking in the mirror. Has your team faced the fact that your customers experienced significant pain in 2020 and 2021? Have you addressed those root causes? And most importantly, have you let your dealers know?

  It’s easier said than done. And with global supply chains in flux well into 2022, we must begin from a place of candor and honesty: you can’t guarantee a lack of impact. You can ensure you’ll handle it better than any of the other alternatives.

• Capitalize on your competitors’ CSEs: Every ounce of pain your dealers felt was felt equally or greater by the competition. They’re smarting from fresh supplier failure, and more ready than ever to talk to someone with the cure – that’s you.

  Build a small coalition within your company to identify these dealers and approach them with guarantees of better days. Again, candor and honesty win the day: under-promise and over-deliver.

“2022’s winners are being decided now. Shift your focus and plan ahead for when this passes.”

It’s tough to change your focus to dealer acquisition when you’re battling stockouts, shortages, and more. 2022’s winners are being decided now. Shift your focus and plan ahead for when this passes.

I encourage you to set an audacious goal for 2022: become the “market making distributor” who achieves profitable growth by avoiding CSEs with an existing customers, addressing them exceptionally well when they do happen, and becoming exceptionally adept at intercepting the CSEs of other distributors when they occur.