Invest additional time and resources to inform customers and prospects about the expiring replacement tax credit.

Normally, your fall planning includes setting a service agreement contest, establishing replacement goals, and refreshing your technicians’ memories on heating procedures. I’ve written about these activities in past columns. This year there’s an additional opportunity to prepare for what could make this fall one of your most profitable.

With the $1,500 tax credit on replacement systems set to expire Dec. 31, 2010, you should be planning ways to educate your customers about the urgency of taking advantage of this tax break. Here’s why:

Assumptions:

• In a normal fall you sell 100 systems from Sept. 1 through Dec. 31.
• This fall you sell 150 systems in the same period.
• Average system price: $6,000
• Average system net profit: $600 (The dollars you net after paying for direct costs and indirect costs.)
• Normal fall: net profit = $60,000
• Fall 2010: net profit = $90,000 Even if you invest $5,000 in additional advertising, you could still net an additional $25,000 that goes directly to your bottom line. How do you get the additional sales?

Make a plan to do at least one of the following:

1. Contact every customer in your customer base whose AC or heating system is close to or older than the manufacturer’s suggested lifetime for your geographic area. A $1,500 tax credit will be an incentive to many of them to purchase now.
2. Contact homeowners in neighborhoods with older homes that are prime candidates for equipment replacement. Your closure rate probably will not be as great as for those customers who have done business with you. However, if these are neighborhoods where you already have customers, potential customers probably have seen your trucks at their neighbors’ homes. If so, there is some familiarity with your company.
3. Contact high-net worth individuals who could use the tax credit.

Here are some ideas on how to find and communicate with these customers and potential customers:

Contact your customer base. This one is easy. Since they already know about your company, a direct mail postcard, letter, or combination of the two will likely be read.

Be proactive. Make follow-up telephone calls to schedule appointments. And, if you, as the owner of your company, make phone calls, your customers will be pleasantly surprised and more likely to set an appointment. Also, send more than one letter or postcard. Send the same message (not the same direct mail piece) at least three times for maximum results.

Get referrals from your existing customers. Your existing customers can help you get appointments with their friends, neighbors, and associates. If you plan to mail to homeowners in older neighborhoods, these referrals will increase your closing rate. First, call to ensure that your customer’s system is working well and she is pleased. Then ask whether you can put her name on your list of satisfied customers. Assuming the customer says yes, you can use her name in your letters to neighbors who are not your customers.

Contact your professional advisers. Make sure that your own CPA, attorney, banker, insurance agent, etc., know about the tax credits. If not, these professionals could be your first new replacement customers. In addition, these professionals usually know high net worth individuals who could use the tax credits. Ask them to make introductions for you.

Newsletters. Your own newsletter and those of others. Make sure you have a paragraph in your fall newsletter about the expiration of the tax credits. In addition, most professionals have newsletters. Some are delivered by the post office, and some electronically. Everyone is always looking for information to include in their newsletters. Write a short paragraph about the tax credits and how they can help lower taxes as well as utility bills.

Presentations. Yes, this is public speaking. If you aren’t comfortable doing it, get someone in your business to make the presentation. Most local associations are looking for speakers. If a speaker is already booked, then ask to make a quick, five-minute announcement about the tax credits. Accounting, legal, insurance, and civic organizations are good places to present this information. You are helping them as well as their members’ customers.

This fall you have a unique opportunity to make more sales and gain new customers. Don’t let it slip by. Make the effort to take advantage of the final months for the replacement tax rebate.

Ruth King has over 25 years of experience in the hvacr industry and has worked with contractors, distributors, and manufacturers to help grow their companies and become more profitable. She is president of HVAC Channel TV and holds a Class II (unrestricted) contractors license in Georgia. Ruth has written two books: The Ugly Truth About Small Business and The Ugly Truth About Managing People. Contact Ruth at ruthking@hvacchannel.tv or 770.729.0258.