Who can forget Clark Griswold in the movie National Lampoon’s Christmas Vacation as he triumphantly plugged in his spectacle of holiday lights that quickly flickered on and disappointingly flashed off just as his family emerged from their home to witness his despair and the ensuing darkness? It took Griswold some time, but after great diligence and a little help from his wife, the entire display lit the neighborhood — success. North American Technician Excellence (NATE) certification offers much the same results but without the flickering and despair. It is a dependable benefit to each participant that competitors will notice. Be it contractor or technician, NATE certification supplies dependability and increased profitability to those involved with the program. It is the gift to contractors and technicians that keeps on giving.

CASHING IN

Business owners worry about the bottom line, especially during the holiday season. As the end of the year approaches, issues such as bonuses and profitability come under close scrutiny. Even in a season of giving and charity it can be difficult for contractors to resist the spirit of Scrooge. NATE certified technicians help solve this problem.

According to a recent survey conducted by Service Roundtable, Flower Mound, Texas, contractors maintaining NATE certified technicians, stand to increase their profitability by approximately $10,000 per technician, per year.

Looking closely at the surveyed information, Matt Michel, president and CEO of Service Roundtable, made some observations that result in a bottom line miracle. Using conservative figures, the observations were based on the assumption of 800 calls per technician, per year; callbacks totaling 2 percent of calls; average revenue per call totaling $230; gross margin totaling 45 percent; direct labor burden totaling 25 percent; and the company averaging 2,000 paid hours per year. Warranty expenses were also taken into consideration when calculating this $10,000 savings. The study assumes that the direct cost equaled 2 percent of sales, indirect cost equaled the direct cost, and the opportunity cost equaled half of the direct cost.

With a solid statistical base to support him, Michel reported that the average amount of callbacks for an uncertified technician were greater than those of a certified technician. The NATE technician saved the contractor $261 with fewer callbacks which practically paid for the cost of technician certification. Warranty costs were also affected. The uncertified technician’s direct warranty costs were $3,680 and the certified technician’s were $2,635. Once again the contractor saved money — $1,045 to be exact. The indirect warranty cost along with opportunity cost totaled out much the same as the direct warranty cost, saving the contractor another $1,568. Considering just these three items, the contractor has already increased bottom line profitability by $2,874 per technician, per year. But the return on investment really starts to add up when contractors examine their billing efficiency. According to Michel’s extrapolations, uncertified contractors average 78.7 percent billing efficiency as compared to certified technicians, who average 84 percent efficiency. This 5.3 percent difference totals $12,391 per year, per technician. Add each line item together and the contractor’s gross savings total $15,265 per technician, per year.

Now of course, the contractor needs to pay the certified technician at a higher rate than an uncertified technician. The contractor’s labor burden will also be slightly elevated, approximately $0.52 over the uncertified technician. Subtracting these expenditures, however, places the contractor’s net savings at $10,040 per technician, per year.

CERTIFICATIONS NECESSARY

It has been said before, but it bears repeating; NATE certified technicians make more money. In fact, according to the Service Roundtable survey, they make approximately $4,180 more per year with just one certification, than an uncertified technician. When the technician is more competent and successful, the contractor is more profitable, and when the contractor is more profitable, the technician is more profitable. Imagine pursuing multiple certifications and the increased benefit to the technician’s bottom line.

According to a contractor study conducted by The NEWS earlier this year, of the 251 contractor respondents, 90 percent of their certified technicians hold an a/c service/installation classification; 80 percent hold a gas heating service/installation classification; and 70 percent hold an air-to-air heat pump service/installation classification. Unfortunately, only 40 percent of the respondents’ technicians hold two certifications. Twenty-two percent hold one and 28 percent hold three. The numbers drop significantly after that showing that 7 percent hold four, and a mere 3 percent hold five or more.

As the HVAC industry expands and diversifies, one certification is proving to be a good foundation but not a stopping point of completion. Successful technicians strive for betterment, not just for the increased cash flow to theirs’ and their contractors’ bottom line, but also as a sign of professionalism and industry pride.

Recertification is a must. It is imperative that technicians do not allow their certifications to expire. It is also beneficial and cost effective to make NATE recertification a constant in a technician’s way of thinking.

“Continued training helps to increase self-image, it keeps technicians thinking and learning,” said one respondent. “It also keeps technicians trained properly and makes them familiar with current and new techniques.”

TIS THE SEASON

The bottom line is profitability. NATE certified technicians produce fewer callbacks, lower warranty expenses, and higher billing efficiency rates — and these three factors produce profit. When making New Year’s resolutions this year, contractors should resolve themselves to require certification and make more money. Technicians should resolve themselves to recertify, earn another certification, and make more money. Each group should guard their early certification success from flickering resolve, and commit themselves to participate fully in the NATE advantage. Happy Holidays and Happy New Year.