Bullying furore helped HRV push new sales strategy.

It's the stuff of nightmares - staring down the lens of a camera and apologising on prime time television.

That's where Bruce Gordon, head of home ventilation firm HRV, found himself three years ago.

He was fronting up on Campbell Live to say sorry for dodgy sales tactics which had seen elderly people bullied and parents who turned down the product told they were killing their children.

It was embarrassing for the company but came at a time when change was already afoot.


Gordon had come on board at HRV in 2010, when Australian private equity firm Equity Partners bought a majority stake from its founders.

He has a background in financial services and for the previous decade had worked mainly for Eric Watson's investment firm, Cullen Investments.

Gordon signed on as a director of failed finance company Hanover in late 2007, putting his name to the company's final prospectus.

That saga wrapped up last month, when he and five other directors and promoters settled an $18 million claim with the Financial Markets Authority.

When he joined HRV five years ago, it was selling a single product through a network of franchises.

The plan was to rapidly transition the brand from a start-up that relied on cold calling to generate leads, to more sustainable business growth built around market leadership and repeat business.

What came as a surprise to Gordon were "pockets" of aggressive sales techniques among some contractors and franchisees, and the resulting backlash, which spilled over into the media.

He says some of the behaviour was identified after acquisition and was being addressed with new processes, systems and training, but the media coverage was a watershed in that it validated the changes the new management was making.


Not everyone was keen on the new direction, and some in the firm and its associated franchises actively rejected the business repositioning, says Gordon.

However, he says the media intensity allowed him to push through the compliance programme that had been established but "had not been fully engaged with in some regions.

"The end result of that is a number of people made a shift.

"Some individual salespeople left because they couldn't adapt and that transpired to be a huge positive.

"Some franchisees found they couldn't make the transition in terms of governance, in terms of accountability, in terms of adapting the operating model for both the lead generation and coming to grips with a broader diversity of products."

When Equity Partners took over the brand and franchisor, it had control of three out of 20 regions. That now stands at 10.

Brand spokesman Marc Ellis was also ditched in 2012 as the company recognised that with 90,000 customers and $16 million in revenue, it was a substantial organisation by New Zealand standards and needed to move beyond a cheeky start-up style positioning, Gordon says.

Three years, on the company, which now turns over $70m, is pushing its business on three different fronts.

The first is to continue to acquire new customers, with ventilation systems as the cornerstone but a line-up that now includes heating, cooling, water filtration and double glazing.

The change in marketing tactics has seen inbound inquiries - customers contacting the firm, mainly through the website - jump from 5 per cent before the acquisition to 55 per cent today.

The second strategy is to cross-sell the product range to the 150,000 homeowners who have already bought from HRV.

The final piece is to snap up any firms or products that fit nicely alongside the existing HRV suite.

And there's an additional "part time strategy" to crack international markets, including China and North America, says Gordon.

HRV already has a presence in Australia, which it will look to grow, but in June Gordon travelled to Los Angeles with an Auckland council and business delegation, yielding some leads out of the Chinese market.

"It's quite a full dance card," he says.

While Equity Partners will inevitably look to exit its stake through a trade sale or listing, there are no immediate plans to sell down, Gordon says. "It's the old story - if somebody were to come with the right price, of course private equity will consider it, but we have no specific exit plan at this time."

On the personal front, Gordon says the biggest challenge he has faced at HRV has been navigating the diversity of people within the organisation, each with different levels of commercial experience and interpretations of culture.

I think this is what people don't talk about a great deal at acquisition, so you won't see a checklist around cultural adaptability in due diligence. My hard-fought lesson now is perhaps there should be, and something that I now look out for when we're on the acquisition trail, is 'are they of like mind?'