Offering good service at a fair price means big numbers in a small town for Gibson’s Heating and Plumbing.

Cliché though it may be, everyone really does know everyone else’s business when you live in a small, rural community.

Now, if you’re currently up to no good, that’s sure to be the talk of the diner at breakfast. On the other hand, if you’re in the business of providing quality plumbing and heating installation and service, then that old cliché turns out to be profitable word-of-mouth marketing to a contractor like Mark Gibson, Gibson’s Heating and Plumbing, Waterloo, Ind., pop. 2,200.

“In a larger area, you could mess up pretty badly until you ran out of customers to service,” Gibson explains.

He’s made a point of staying on the good side of the gossip in his little corner of Indiana. For example, Gibson believes his 24-hour service pledge is the only one in his area that truly means service around the clock.

Gibson takes pride in announcing that virtually 100 percent of his emergency service calls are run that same day. Call most other local competitors after hours and you’ll likely get voice mail and a call back the next morning. (You hope.) Gibson goes the extra mile by employing an answering service. That’s right. Call at 2 a.m. and you’ll actually get a real human being talking back. The answering service then can get in touch with whichever tech may be on duty at that time.

“We offer good service at a fair price,” Gibson says. “We do some marketing, too, but people just know us.”

Over the years, Gibson’s service radius has grown to encompass more than a couple of thousand potential customers. By his own account, 13,000 people have done business with him in one way or another over the past three years.

However, those numbers still don’t quite add up to the measure of his small-town success. How does $5 million in business sound? That’s not half bad. But then again, consider that more than 27 percent of his annual business is driven by service agreements. Gibson figures that most any house within 40 miles of his office represents $100 in annual business to his company.

That’s not to say that he gets it from each home. Or at least not just yet, but we were impressed that this small-town contractor has regularly scheduled meetings to chart the course of the company in the years ahead.

Humble Start

Unlike many contractors we meet, Gibson did not come with a family-owned plumbing or heating business pedigree. No, he started the business from scratch with the help of his wife, Christine, in 1983, when they had been married only one year and three other service businesses were located in Waterloo.

But both he and his wife had grown up here, and Mark gained experience and contacts working for a local propane company that also had an HVAC division.

“I had a bit of a base with the propane experience,” Gibson adds, “and people are going to give the business to whomever they know.”

True, but people knew those other three companies, too - yet only one of those three is still around.

Here are a few ways Gibson separated himself from the pack:

Service Agreements

Like we said, almost a third of all Gibson’s service calls are based off service agreements. That’s an extraordinary number, considering the size of his market, and shows how much local dominance he commands.

To Gibson’s mind, service agreements add up to three quick advantages: First, a Gibson crew is regularly scheduling service calls to maintain plumbing and heating products in a home.

“The great thing about service agreements is that they take the seasonality out of service,” he adds.

Second, Gibson thinks that prompt service, more than discounted service rates, helps retain customers.

“Service agreements offer customers the convenience of not thinking about any of this type of work that is needed for running their homes,” Gibson explains.

Finally, a service agreement call is bound to turn up something else. “When we’re in that house, we want to discover all the wants and needs of the customer,” he notes.

Truth be told, Gibson started out doing more furnace work than plumbing - with his old stint at a propane company offering about the only viable fuel in this area for home heating. As a result, he built up his early success by selling service agreements for the furnace and another for the air-conditioning equipment.

But in the past few years, he’s followed suit by expanding into plumbing service. Plumbing now represents 30 percent of the company’s revenue, with its share of the pie expected to grow in the years ahead.

Gibson hired Dave Baker three years ago to create the company’s plumbing department and essentially duplicate the company’s long-term heating success.

“There is so much plumbing in our area that needs to be replaced,” Baker says, who worked at his own plumbing company in Ft. Wayne, Ind. Baker felt so strongly about this proposition that he told Gibson to just put him in a truck as an HVAC tech and let him prove it.

In six weeks, Baker the HVAC guy sold plenty of plumbing services ranging from new faucets and water heaters to re-piping and sewer line replacement.

Gibson says that for his clientele, “plumbing” may be less “remodeling” and more “modernizing.” Baker has since grown the department to running six dedicated plumbers.

“I think Dave is good at understanding people’s wants and needs,” Gibson says. “He’s giving people what they really want anyway.”

Flat Rate

While he started out on time and materials, Gibson switched to flat rate 15 years ago.

“It seemed obvious that techs all work at a different pace,” he says. “One tech might need an hour to do something that another tech could finish in half the time. So time and materials can almost be unfair to the customer.”

Yes, of course, the customer might just say, send me the faster tech all the time. But as conscientious as he is to training his crew, Gibson knows that the industry doesn’t just automatically have faster techs.

Going to flat rate was an easier transition than you might think, he adds, even for a small area. “I think people will argue more over the price based on time and materials.”

Over the course of time, however, Gibson had to develop his own flat rate system - one that took into consideration the small-town pressures of pricing. There is a certain degree of increased self-reliance in doing something yourself than you might find in a larger city. So Gibson couldn’t just turn to the page of a prepared flat rate manual for a price. Rather, he had to take into account common DIY products that many of his customers know the price of all too well.

“We did have to make adjustments for different tasks based on the perceived value of that task,” Gibson explains. “Some work we may not make that much money on, but other jobs we certainly can.”

As for his techs, Gibson admits that the change to flat rate isn’t meant for all. “I think some techs do understand the fairness of flat rate,” he explains. “As a result, the techs that made the transition had to take a more analytical approach to their service calls than they had with time and materials.”

He currently has 12 techs and four HVAC installers. (Techs are cross-trained for plumbing and heating, although Gibson adds that some certainly are more specialized in a particular type of troubleshooting.)

Small-Town Hiring

No matter where we travel, no matter the size of the company, all business owners lament the sorry state of hiring for our industry. One way Gibson attempts to find talent is through a job fair. By “job fair,” we don’t mean renting booth space at some local community college’s event. Gibson holds his own right at his company’s office after hours.

The trade fair isn’t an annual event so much as a recruiting event organized when the company does, in fact, need to hire.

For example, he recently held one Aug. 7. At around 6:30 p.m., more than 80 people showed up to fill out applications. Earlier, the company had advertised the opportunity through local newspaper and radio ads. The attendees split up into groups of five jobseekers and a couple of Gibson employees to talk shop right in the shop.

Afterward, Gibson said there were about 20 potential candidates from the original group. The company recently hired five for installation and tech positions. Kids fresh out of high school? Hardly. Many people attracted to the event ranged in age from 30 to 45 - Waterloo, after all, isn’t all that far from Michigan and Ohio, two states affected by the automotive slump. The youngest people there had just left military service.

Rural Advertising

Advertising on the side of a barn isn’t the usual place a contractor puts up an advertisement. Then again, buying the prize steer isn’t necessarily the average marketing expense either for many of our readers.

Mark and Christine Gibson aren’t posing in front of just any old barn for this month’s cover.

That barn is on property that the Gibson family used to call home. Gibson put his company name on it years ago. And don’t think that just because it’s a barn, it’s located in some distant pasture down some country lane. No, this barn gets noticed. It’s located along Route 69, the main interstate that cuts through Gibson’s trading area.

When he sold the place a few years ago, Gibson was wise enough to make his permanent signage a part of the deal. When we visited him, the new owners were considering siding or painting the barn. But one way or another, Gibson’s signage will be on it for many years to come with hundreds of drivers seeing the name every day. (The new owners also may install a light on the side of the barn, giving the advertisement some illumination at night.)

When we met Gibson last summer, he was planning to take part in the annual DeKalb Country Fair. For years, he’s sponsored a tent at the fair, which includes a booth to showcase the company’s services. More than 100,000 people attend the fair.

Gibson also is an avid supporter of the local 4-H Clubs, and buying the prize steer always comes with additional marketing exposure.