The residential contracting industry is going through a variety of changes that present both challenges and opportunities to businesses. The future belongs to professionals who adapt to and exploit the unique opportunities of this rapidly changing environment. Some of the biggest areas of transformation we’re seeing include:
So how can you compete and succeed in this evolving landscape? There’s no silver bullet — but focusing on your core competencies and performance contracting will go a long way toward the ultimate success or failure of your business. Let’s explore these two key concepts, how they relate to each other, and how they can help your business.
In business, core competencies are the defining qualities and capabilities that provide a competitive advantage and differentiate a firm in the marketplace. The concept of core competencies was introduced by C. K. Prahalad and Gary Hamel in their 1990 Harvard Business Review article, The Core Competence of the Corporation. To identify core competencies in a company, the authors suggest applying three criteria. In general, core competencies should:
As a company committed to building and supporting a network of elite contractors, Pearl is always on the lookout for businesses with strong core competencies. In fact, all Pearl Contractors must meet specific qualifications that evaluate core competencies in the following areas:
Network Contractors also provide ongoing transparency and accountability for the work they submit for Pearl Certification. This third-party verification helps reassure homeowners that hiring a Pearl Contractor is a smart choice they can feel confident about—and that’s a huge benefit that most competitors simply can’t match.
Once you’ve identified your core competencies, how do you market and leverage them for sales and success? One of the most effective ways is to implement performance contracting, or performance testing, in your business operations. Performance testing is a data-driven approach to diagnosing and solving customer problems. The specific types of testing will vary by trade. For example:
A high-quality HVAC contractor understands that system performance should also be measured, documented, and validated as meeting acceptable manufacturer specifications and industry standards. Measuring static pressure drops, total external static pressure, amp draw, airflow in the distribution system, and other metrics are critical during maintenance visits and when installing new systems. Performing those tests and documenting the results offers measurable proof that the job was done to meet standards and specifications.
Companies performance test to validate assumptions. These are quality companies that don’t take shortcuts to move more products. Instead, they focus on offering the best, most appropriate solution for each individual customer. The specifics of a performance-based approach will vary depending on the type of contractor and company, but here are a few examples of what it might look like:
Now let’s look at how performance testing relates to the three key aspects of core competencies listed above.
Consumers are beginning to expect more from their homes than ever before. They’re fed up with excessively hot or cold rooms, high energy bills, and the effects of poor indoor air quality. They know what’s possible, and they’re no longer willing to settle for less than the comfortable, efficient, smart, and healthy home they deserve. And they’re looking for high-quality contractors who can deliver the technologies, products, and services they need to create and maintain the high-performing home of their dreams.
The good news is it’s likely your company already has the foundational skills necessary to use performance testing to diagnose, design, and deliver these kinds of solutions. But providing value to consumers isn’t just about the quality of your installs. You also have an opportunity to add value by engaging with homeowners and educating them about the underlying causes of their home’s comfort and efficiency problems. This is where performance testing can really shine. When used effectively, test results can expand a homeowner’s understanding of the problem, making it much easier for them to buy into your solution.
A core competency must be difficult for a competitor to imitate. Not surprisingly, this is also the most difficult condition to meet. After all, if it was easy for you to adopt, then it probably wouldn’t be difficult for your competition.
Incorporating performance testing into a business can be a double-edged sword and certainly isn’t for the faint of heart. It takes time to develop the hard skills to know what to test and how to test it. And it takes even more time to learn the soft skills that allow you to translate the technical data into clear and compelling solutions for your customers.
Process efficiency is also critical. Your customers’ homes are not science experiments, and collecting too much data is not only costly but can be a distraction from the core solution. Carefully listening, asking questions, and focusing on the concerns of your customer will help you develop good judgment.
The takeaway is that you are separating yourself from your competition. Ask yourself: Who are your competitors? Can they listen, educate, and design appropriate solutions for your customers? Can they stand behind the quality of their installation by offering measurable proof that the job was done to meet specifications? In other words, is it easy for them to imitate the level of service you provide to your customers? Or will they struggle to compete in the space you now occupy?
Performance testing is the gateway drug to virtually any other home services your company wants to pursue. This is especially true for contractors that specialize in heating, cooling, ventilation, and building shell improvements (like air sealing and insulating). The real question is not whether you can leverage performance testing to expand into other products and services, but whether you should. For many contractors, the answer will be “no” more often than “yes.” Companies must keep their eye on the ball and focus on their existing core competencies if they want to be successful.
That said, performance contracting does afford the opportunity to selectively offer new products and services as competition, technologies, and consumer preferences change. So it's important to keep this in mind, continuously and carefully evaluate potential new revenue streams, and take advantage of the opportunities that are right for your business.
Establishing, maintaining, and growing core competencies are key to your business’s survival. When you deliver great service and results to your customers, the tyranny of low expectations is threatened. By focusing on performance-based contracting, you inherently build and demonstrate your value to customers in a powerful way that your competition will struggle to match.
We know this works from our years of experience working with some of the top solar, HVAC, and home performance contractors across the country. Pearl Contractors have core competencies that differentiate them from the pack—including a data-driven, solutions-based approach to solving customers’ problems coupled with a rarely matched level of quality, transparency, and accountability in their work. As a result, our contractors are easily differentiating themselves in their markets, and many are seeing a 5-15% increase in leads thanks to Pearl.
But don't just take our word for it — check out the testimonial from Parker & Sons to hear how Pearl has consistently helped their business:
Only Pearl Network Contractors are authorized to offer Pearl Certification — and only contractors who have demonstrated exceptional quality and service are accepted into the network. Call 1.844.PEARLØØ or complete the form to learn how joining the Pearl Network can drive leads, close more opportunities, and set you apart from the competition.
Pearl Certification is transforming the housing market. We’re making a visible difference nationwide for homeowners and the businesses that serve them.
