A Nudge in the HVACR Business
TRC News

A Nudge in the HVACR Business

Posted Oct 15, 2018 by Ryan Kiscaden

What makes things change? More specifically, what is the final push, shove, jerk, bump, prod or jolt that must occur to see a customer decide to hire you for a changeout project? What about your employee who goes through the motions doing his job but never shows enthusiasm for learning new technologies or improving his upsell successes?  The quick answer for the former is better sales training and for the latter, well, by now, you’ve decided that’s Jeremy’s style, and nothing you can do will make him change. Yet the difference in fostering a shift in these two industry-related individuals might be nothing more than a nudge that effects some behavioral change.

The nudge idea fascinates me because the complexity of decision making and creating behavioral changes can be seemingly difficult, and in business, expensive. That explains why the nudge concept is popular with behavioral economists.

Richard Thaler (a University of Chicago professor and Nobel Prize Economics winner) launched the idea with co-writer Cass R. Sunstein, a Harvard law professor. His book, Nudge, gained steam during the economic crisis of 2008 when our banking and mortgage industry began to slope southward. I liked the notion that a nudge rests on easy choice, rejection (you might disagree with it) and a free market approach. Thaler says that a nudge “is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting the fruit at eye level counts as a nudge. Banning junk food does not.” You might disagree with Thaler, but the 2008 book is still in print, which would suggest its publishing (and idea-producing) durability.

But how does a nudge work in the contracting world? Is a nudge possible with a customer, when he must decide what kind of unit best fits his needs? Is there a way to nudge him toward a more expensive unit (that he really needs) when compared with a less expensive model? If you can find the fear factor and address it head-on, you’re halfway home. Ask the customer what is the most important feature and benefit that they want as they consider this new, major purchase. Is it brand name, reliability, cost concerns? Here’s a nudge. Carry two cellphones. Tell the customer that one phone is a private number that you only give out to customers who buy the premier brand. They can call you any time until 10 p.m., for five years, if they have a question, problem or a complaint. Tell him that if you don’t answer the phone, you promise to return the call within one hour. Tell them that you provide customers with the private number because you believe in your product. The nudge is offering a direct line to someone in authority who is an HVACR expert and will act on their behalf. The nudge is removing the fear factor of making a bad choice. It also says that if a problem develops, they won’t sit on the phone for an hour waiting for help, because they have you.

Jeremy is another issue. Solid, steady, but no lighting rod when it comes to enthusiasm. He doesn’t bother to upsell (or does so ineffectively), and forget about updating him on a new line. He shows as much enthusiasm for that effort as we do for eating snails.

Take off a workday afternoon when things are slow. Take him out for an early dinner and keep the drinks to a minimum. Tell Jeremy how you assess his performance and then take the blame. Say that you’ve failed him and you’re not sure why. Ask what you can do to improve his performance. The nudge? Tell him that you’ve ordered a subscription to a trade magazine in the HVACR industry (Can we say, The News?), in his name so that he can stay on his A-game. Mention that it will be sent to his home. Suggest that he might find nuggets of worthwhile ideas about his industry, and even glean a few suggestions for the future.

Remember, all of us need a nudge. Everyone, and I repeat, everyone falls prey to the predictable. For the sake of becoming more productive and creative, it says that some solutions, not all, but some, are solvable by a simple nudge and not a complex engineering of a solution. Don’t think complex, think simple.

Second, the beautiful part of a nudge is that even if it doesn’t work, you won’t have spent half of your budget on the effort. The best nudges are usually low cost, and the results are trackable. It won’t take long to see whether the nudges I suggested take hold and make a difference in your HVACR business. Can there be anything better?

###

Ryan L. Kiscaden is the executive director of the Thermostat Recycling Corp. Contact him at ryan.kiscaden@thermostat-recycle.org, 267.513.1727 or visit www.thermost-recycle.org.