RESIDENTIAL: How Zipf-Air Boosted Profits by Going Residential

We’re more profitable than we used to be, because we went from doing 85% commercial and 15% residential to doing 15% commercial and 85% residential,” says John Zipf, President of Zipf-Air Inc. in St. Louis, Missouri. “The margins are better in residential, you get paid quicker, and it's a happier place to work.” 

Residential work is about customer service and offering financing options more than it is about just fixing the air conditioner, according to Zipf-Air Inc.

Changing his business model from commercial to residential required learning a new skill set. “You have to master soft skills first,” Zipf says. “It's not about fixing the air conditioner. It's about customer service and offering financing. You need to be more of a retailer and less of a contractor. You have to be attentive. People don't care how much you know until they know how much you care. They have to know that you care about them and their family and their house.” 

One way to show concern for customers is by improving their Indoor Air Quality. “People are in tune with indoor air quality (IAQ) for their house because they spend half their life inside their house, and they want to be healthy,” Zipf says. “We sell air scrubbers, which are ionizing units that generate hydrogen peroxide molecules. They put a steady strip of peroxide down the duct work, which kills things that are growing in there. We offer HEPA filters, which are important to good filtration.” IAQ options improve Zipf’s bottom line. “By the time you put the filtration on, and the humidifier and the air scrubber, you're looking at 20% of the job. So contractors who aren't looking at IAQ are dropping the ball. They're leaving 20% on the table, plus they're not allowing the customer to make up their own mind about whether they want to buy it. If you don't offer it to them, they can't buy it.”

As Zipf grew in the residential market, his biggest shift was learning not to worry about having the lowest prices. “The typical commercial industrial contractor is used to doing construction work, where the lowest price gets the order,” Zipf says. “If a commercial contractor is going into the residential market, he has to lose that mentality. Would you want the lowest price guy in your house? If it's replacing the air conditioner at my manufacturing plant, maybe choose the lowest guy there, but not when they're coming to somebody's home. Most of the time in the residential market, the winner is the guy who shows the best value.”

Zipf’s customers are very sensitive to the difference in brands. “A guy that owns an office building has probably never been on his roof before and never looked at his air conditioners,” Zipf says. “But a guy who lives in an affluent area not only looks at his air conditioner, he also probably polishes it. Even people who are not affluent are brand specific.”

Customers who demand higher-value equipment can find Zipf because he uses search engine optimization (SEO) services to let them know that he carries the brands they prefer. “For every furnace I sell, 2% of the price goes into an ad fund,” Zipf says. “If you choose to be part of the ad fund, they'll hook you up with a national search engine.” He also uses a local advertising company. Between them, the two SEO services ensure that his business appears in the results every time someone searches the web for the brand Zipf carries or pulls out their phone to google ‘Air conditioning repairs near me.’ 

Financing options are essential for Zipf’s success. When a customer is surprised by the final price of a new HVAC system, he explains financing options. “It’s one way to overcome an objection,” Zipf says. Fewer than 2% of his customers use financing, but it’s available for every job. “Even in an affluent neighborhood, there might be a young couple getting started that doesn't have that kind of money laying around, so you offer them an affordable way to pay.”