Oftentimes an HVACR contractor may decide to offer an expanded service because they find themselves referring business elsewhere. In other words, they see an opportunity. But deciding whether or not to offer expanded services can be a tricky one. It’s a decision that requires a lot of thought. It’s a process.

Before deciding to add another service, HVACR contractors need to look at a few things: the why, the how, and the potential benefits — like long-term relationships with customers, brand recognition, and more revenue.

Making the Call

In 1986, Peterman Brothers, an HVAC, plumbing, excavation, and electrical company in Greenwood, Indiana, started off with just HVAC. In 2013, they decided to take advantage of opportunities presenting themselves in the market and added plumbing and excavation.

“We found ourselves referring a lot of plumbing work to a local plumbing contractor, so we partnered with them,” said Chad Peterman, CEO of Peterman Brothers.

In 2021, Peterman then added an electrical division, this time not only for the same reason as before but also to better serve the needs of their customers.

It’s a common reason cited by many HVACR contractors who decide to expand their services. One such firm is Harts Services in Tacoma, Washington, a full-service company offering plumbing, sewers, electrical, trenchless underground replacements, and more. When the company began, it was solely plumbing, but over time, company leadership decided to work toward becoming the company that customers turned to for all of their needs.

“For us, it’s about creating those long-term relationships with our customers and taking care of them — not just today, but anytime in the future,” said Richard Hart, owner of Harts Services.

Storer Services in Shreveport, Louisiana, is another contractor offering a full array of services. In addition to HVAC, Storer Services boasts rental services, plumbing, building automation and controls, product offerings (within select or comprehensive agreements), parts and distribution, and facility services, which in the past has resulted in Storer Services providing a landscaping service.

At one point, Shreveport was sort of a hub for movie making. And those who were making the movies didn’t know who to call to rent the necessary air conditioning units. Somehow they found out about Storer Services, asked them if they could do rental equipment, and rather than saying no, the company said yes.

Landscaping provided a similar opportunity to the company. A customer who was pleased with the service they were providing asked if they’d want to do the landscaping for the building they were working on as well, which led to a contract for landscaping and janitorial services.

“We used a subcontractor for those — it wasn't something that our company was doing internally,” explained Aaron Storer, executive vice president of Storer Services. “We wrote a contract around it, and subcontracted out the services, but [the customer] rolled it all into our contract.”

Landscaping ended up proving to be a bit of a distraction to the core of Storer Services business, so they eventually dropped that service. Plumbing, however, was a service they offered by request that they continue to offer today, due in large part to its close ties to HVAC.

“Once you get in a relationship with somebody, it's just a hop, skip, and a jump to say, ‘Hey, can I handle this for you, can I handle that for you?’” Storer said. “Hiring a plumber works really well because they can help out the installation side, so you can move the labor between the two different areas. When it comes to landscaping and having an HVAC guy go cut grass, that’s less likely to happen. They're not going to do it. But if you needed a plumber to move over and help with an HVAC install, it's not too big of a stretch. A lot of them want that experience.”

How to Implement

A few things need to happen when adding a new service. First is getting the word out that this once purely HVAC company is now servicing a field that’s a little different.

“Getting your name out there and letting customers know that you actually do those services is critical,” Peterman said. “So we added it to all our marketing and different things like that. And as people gain familiarity with the fact that you offer those extra services now, the calls start coming, and it builds on itself pretty quickly.”

Usually, not much changes for employees when an HVAC company starts to expand its services, if it’s done at the right time. However, any new implementation within a company can affect the culture, if even only a little.

“Each trade has their own unique culture, and that's the one thing that we had difficulty navigating at first, because we thought that plumbing would be like HVAC,” Peterman said. “But by the time we added electrical, we knew that it would be different. I think [our culture] has been good simply because our technicians, regardless of what trade they're in, can offer multiple solutions, or at least get the right person out there to address another issue that a customer may have within another trade.”

Storer said implementing an expanded service starts with making an executive decision. The leadership team needs to look at the opportunities presented to them and evaluate whether or not they really want to pursue it.

“From there, you’d sit down with relevant managers and decide what implementing this service would look like,” Storer said. “Ask those necessary questions, like ‘What’s the time and monetary investment going to be?’ ‘How much money am I going to have to dedicate to it?’ ‘Am I going to need any licensing?’ And then, ‘What’s the benefit?’ … You also really have to train your people on what the expanded service is and what it’s not, not to overpromise, what we can do and what we can’t, and also to stay focused on your company’s core mission.”

To Expand or Not To Expand

Deciding whether or not to start to add services comes down to knowledge, commitment to relationships with customers, and the staff or time necessary to begin to meet new demands.

“You want to get really good at the trade that you're currently offering first,” Peterman said. “We didn’t do that with plumbing. We did it more so with electrical. We felt like we had our arms around both plumbing and HVAC, and that we were in a position to add electrical. So it was a little bit smoother. When you're trying to fight fires in multiple trades, it can be challenging.”

However, if an HVAC company doesn’t possess the knowledge within their current staff, the expansion can still work.

“Find somebody you trust to help you get it done,” Hart said. “Give them some kind of stake to do well for you, and to help them have a brighter future, because everybody's goal in life is to be better than they were yesterday. … Find somebody you trust, and that wants more and is willing to put the work in.”

Hart said if an HVAC contractor isn’t already buried in what they are doing, and they have the capacity to lead more people, that’s a good sign to start thinking about expanding their services.

“I found myself playing a little more golf and doing a little bit more things like that,” Hart said. “It's fun for a minute. But at some point, I needed more, just like everybody does.”

Right now, Harts Services doesn’t service HVAC, but they plan to. One of the company’s goals is to purchase an already-existing HVAC company.

“That way, we kind of buy into some knowledge on the [HVAC] level, so that we're not shooting ourselves in the foot, because we want to maintain our five star high quality service,” Hart said. “Finding the right people to help grow the business is the key to everything.”

Before adding a service, HVAC contractors will also need to familiarize themselves with licensing requirements in their area.

“And then start networking and finding some professionals who can lead the charge of lifting up that new trade, because that's probably not your specialty if you're in another trade,” said Peterman. “Finding that champion is critical.”

Results

Offering expanded services can strengthen a company’s bond with customers, build revenue, increase brand recognition, and more.

Storer Services has been able to monetize their expanded services through preventive maintenance contracts.

“So if I've got a contract to maintain chillers for a client, but they know that I do plumbing, and they end up needing to get a line jetted, we’ve got a jetting machine,” Storer said. “So they'll call us, and that’s some additional workouts of the contract that we get to do. So our pull through, what we often say is $1 contract is worth $3 of revenue, on average. And that's pretty industry standard. But now that dollar contract may be worth, say, $4 in revenue, because I'm able to get that additional filter with the supplemental services.

“We have a pretty large sales force, but for people in the HVAC business that maybe don’t have a huge sales force and rather just a few customers they are really focused on, it's a great way to grow your revenue stream without necessarily having to go through the cost expense of going to acquire a new customer,” he continued. “Retaining existing customers is about three to 10 times cheaper than trying to go find a new one,”

Hart said they have always been known as the company that really cares about the systems in their customer’s homes.

“When we added electrical, our customers were really excited,” he said. “People were calling for [our electrical service] even before we even launched it. Electricians are way harder to find than plumbers are. And they trusted us. They've become members with us. They've worked with us for years.”

Peterman said offering expanded services has also strengthened the bond Peterman Brothers has with its customers.

“They just have to remember our name,” he said, “and know that we can take care of everything.”