Rebuilding With Premium Equipment
June 25, 2007
Hurricane Katrina, which struck the Gulf Coast on Aug. 29, 2005, was the most destructive and costly natural disaster in U.S. history. Numerous areas in and around New Orleans were devastated by the hurricane and subsequent storm surge, and almost two years later, many are still trying to put their lives - and homes - back together.
Rebuilding the New Orleans area has been a formidable task. The Federal Emergency Management Agency (FEMA) estimates that it has removed more than 99 million cubic yards of debris from the Gulf Coast region and handed out more than $4.8 billion in “mission assignments” to repair roads, bridges, public utilities, and other public infrastructure. Even so, there are many residents who haven’t returned to the area and whole neighborhoods that are still uninhabited.
For homeowners who had in-surance and/or the financial ability to rebuild, life is getting back to normal. Many houses had to be gutted down to the studs before they could be rebuilt to the way they were before the storm. When it came to the heating and cooling systems specified for these rebuilt homes, residents weren’t necessarily content to accept the insurance companies’ offers of standard equipment; instead, many decided to upgrade their systems, paying the difference out of pocket in order to achieve better comfort and energy efficiency.
BETTER THAN STANDARDHurricane Katrina happened during an interesting time in the HVAC industry. It was right before the 13 SEER mandate of 2006, and as a result, some insurance companies told customers that they would only pay for comparable equipment - 10 and 12 SEER - rather than the 13 SEER that became the minimum after January.
“We were finally able to convince insurance companies that there was not a comparable product at this point, because 10 and 12 SEER were not available anymore,” said Mark Albrecht, comfort consultant manager, Keefe’s Air Conditioning and Heating, New Orleans. “Many customers, realizing that 13 SEER was the bottom, didn’t want to be at the bottom again. We were able to show them the value of 14 to 19 SEER systems, and many ended up taking the insurance money, adding to that, and buying a better system.”
Customers didn’t automatically sign up for better systems - the comfort consultants at Keefe’s spent countless hours educating homeowners about higher SEER equipment. They continue to stress education to all their customers, which is probably why the company sells more high-end Trane equipment than almost anyone else in the area.
We spend two hours at a house,” said Keefe Ditta, owner, Keefe’s Air Conditioning and Heating. “We do a complete heat load on a house to determine what size unit is needed. I don’t care if you’ve had a 3-ton unit for 30 years, that doesn’t mean it’s right. That’s the problem with new construction. A builder finds out that one house will take a 4-ton unit, so he wants to put a 4-ton unit in every house he builds like that. That’s the wrong way to do things, which is why we don’t do any new construction.”
Another reason why the company stays away from new construction is the fact that many builders won’t let Ditta and his comfort consultants talk to homeowners. “To me, builders are not looking out for the homeowners’ best interests. They want to get the cheapest possible unit that they can put in a house. They’re not going to let me talk to the homeowner about features and options because they’re worried an extra $10,000 in better equipment will not allow people to get approved for a loan.”
PROPER TRAINING IS KEYDitta is adamant that a well-trained, dedicated sales force is the key to selling high-end equipment. He makes sure that all his comfort consultants attend the training classes conducted by their local distributor, Butcher Distributors Inc., on behalf of The Trane Co. He also has a well-staffed sales department that includes four comfort consultants, a comfort consultant manager, and a comfort consultant coordinator. The company also makes sure the customer has information in hand before the comfort consultant comes to call.
When an appointment is scheduled, the company sends out an informational brochure about products, as well as a small bio-graphy about the comfort consultant who will be conducting the call. “This gives the consultant an advantage when he goes in because now the customer knows him a little bit better,” said Albrecht. “In addition, it makes it an easier sale because the customer has had time to gather information, so when we go down our list of 10 questions, they can answer them a little better. That has helped us a lot in selling high-end equipment.”
Ditta insisted the reason why they are so successful in selling high-end equipment is the fact that their comfort consultants take the time to ask the right questions and listen to customers’ concerns. “After the hurricane, insurance companies might have said they’d pay $6,000 to replace a system, but maybe it would be $2,500 to upgrade it to something better. Because of our presentation to homeowners, and the time we spent talking with them, most of them put up the difference to get something better.”
Because of the increased demand for equipment last year, as well as Ditta’s well-trained sales force, the company had a banner year: It went from $3.8 million in sales the prior year to $5.7 million last year. Some may wonder how the company could increase its sales so drastically given the labor shortage after the hurricane. The answer lies in Ditta’s determination to not only retain his employees, but to attract more workers to meet the increased demand.
Right after the hurricane, Ditta bought two 32-foot trailers and parked them next to his building. Then he posted ads on all the free Hurricane Katrina Websites, stating: Free housing, free lights, just come and work. He had people from nine states come and live in the trailers and work for him. Many found permanent housing and ended up relocating to New Orleans in order to work for Keefe’s.
As for the existing employees, Ditta looked out for them, too. As soon as he arrived in Florida to wait out the hurricane, he wired money to all his employees to help them through the tough time. The end result was that all his employees came back, he had an influx of new help, and sales went through the roof.
While the demand isn’t as great this year as it was last, the company is still on track to reach $4.8 million in sales. And Ditta is very proud of the fact that the company’s average ticket is $8,200. “The reason why our average ticket is $4,000 higher than it was four years ago is the fact that we’re selling high-end equipment,” said Ditta. “We may be selling fewer boxes, but we’re selling more expensive units, which means a higher ticket price.”
Other contractors may not be as successful selling high-end equipment because they don’t obtain proper training, and they tend to judge their customers before they even knock on the door, said Ditta.
“Contractors often judge the customer by the kind of cars in front of it. We don’t do that. We’ve put in some high-end equipment that probably cost as much as the house did,” said Ditta. “But these people want to breathe good air, and they’re going to be very comfortable. We’re looking out for their best interests.”
Publication Date: 06/25/2007