HPC Sales Come in All Forms
The More the Merrier for HVAC Contractors
Just as no two houses are exactly the same, neither are the homeowners who live there. For example, while one resident may never plan to move, another may want to sell in the next six months. While one may have the resources to make all the energy-efficient improvements to the house at once, another may have to make selective upgrades over time.
And either approach is fine with Hal Smith, co-owner, Halco Energy, Phelps, N.Y., who stated that this situation illustrates the beauty of home-performance contracting (HPC). “It gives you the ability to solve homeowners’ comfort and efficiency issues and really focus on doing what is best for them within their budget.”
List of Priorities
The budget is often the sticking point for homeowners, which is why some contractors are more successful when they offer a staged approach to HPC. In the National Home Performance Council’s white paper, “Bringing on the Boom and Beating the Bust: A Framework for Developing a Roadmap to a Successful Home Performance Industry” authors Robin LeBaron and Kara Saul-Rinaldi argue that a staged approach “encourages homeowners to plan for the long term and implement energy-efficiency improvements over time in such a way that they would eventually achieve a certain level of energy savings.”
The authors added that the staged approach has several significant advantages, such as:
• It reflects the way homeowners typically undertake home improvements;
• It can keep costs low, because energy-efficiency measures can be bundled with other work that would be done anyway;
• It can be incorporated into existing contractor business models;
• It can reduce the need for modeling software; and
• It reduces the need for financing, as improvements are paid for over time.
Jerry Unruh, owner, ABC Cooling and Heating, Fresno, Calif., is a fan of offering the staged approach, noting that it helps build relationships with homeowners over time. “After doing an energy audit on a home, we put together a priority list for the homeowner that details the upgrades that are needed, as well as which ones give the best bang for the buck. We stress that it’s not necessary for homeowners to do everything at once.”
Instead, Unruh encourages homeowners to look through the list and choose what they want to do based on their budgets. “Most people surprise us with how many improvements they want to make. And even if they only want to do the first one or two things on the list, the great thing is that this enhances our relationship with the customer, so we can come back later and do more improvements on the list. This also differentiates us from our competition, because no one else in our area is doing what we do.”
Separating himself from the competition is one of the main reasons why Garrett Cook, general/sales manager, Cook Heating and Air, Crawfordsville, Ind., decided to get into HPC last year. “Customers understand that what I’m offering is completely different from what anyone else is offering. I educate them by having them help me during the energy audit, so they will understand the problems they have, and I can discuss some of the solutions at the same time.”
Once he compiles the energy audit results using Comfort Institute’s Infiltrometer software, Cook creates a prioritized list of improvement opportunities for the homeowner that is ranked in terms of safety, durability, comfort, and energy efficiency. “Safety is always the first priority, because a lot of my customers have gas heat. Duct sealing is usually second on the list, as that has the largest return on investment for homeowners. From there I recommend upgrades in the attic, followed by the crawl space or basement. Once those are done, we can replace their equipment, then address ventilation and/or humidity control in the home.”
Cook finds that about half of his customers opt to make all the improvements at once, while half decide on the staged approach. “Doing everything at once obviously has a higher average ticket, but doing it over time doesn’t bother me. Our job is to make customers happy, and all I can say is that when we make these energy upgrades, our customers are ecstatic. When they’re that happy, it helps us build a huge layer of trust with them.”
While Fred Hutchinson, CEO, Hutchinson Plumbing Heating Cooling LLC, Cherry Hill, N.J., offers homeowners a staged approach to HPC, most of his customers choose to make all the improvements at one time. And he prefers it that way, because he has found that less than 20 percent of customers who say they want to make the improvements over time actually follow through on the plan.
If customers ask for a staged approach, though, Hutchinson ad-
vises that they follow a specific order of air sealing, insulating, replacing the furnace, replacing the water heater, then replacing the air conditioner. If the furnace or air conditioner should fail before all the improvements are made, Hutchinson sizes the equipment to what the future load will be once the shell improvements are finished.
“Home performance isn’t just about energy savings, it’s about comfort as well; therefore, it is rare for us to install anything other than a modulating/variable-speed system. Besides providing better comfort, this type of furnace can adjust to a reduced load when there are future building shell improvements,” said Hutchinson. “Addressing the air conditioner in a similar fashion isn’t as easy unless a two-speed or inverter-style unit is used.”
Most of Bob Wiseman’s customers also choose to make the energy upgrades all at once, but he gives them the option of following a staged approach as well. “I provide a roadmap for our homeowners, which shows how we can make their home as energy efficient as possible,” said Wiseman, president of Canoga Park Heating and Air Conditioning, Canoga Park, Calif. “That includes showing them the Comfort Institute videos on our website, which detail the types of improvements we’re suggesting.”
Wiseman also explains that there is a loading order for HPC and advises customers to start at the beginning and follow the correct order to the end. “For example, if they don’t do the insulation and the shell sealing before replacing their HVAC, their system is going to be oversized. Not everyone is going to fit perfectly into this model, but we always encourage people to do it correctly from the beginning to the end.”
Wiseman has also found that customers who choose the staged approach do not always follow the roadmap to the end. “I like to believe it will happen, because I want to do that work for these people. But we do not get a large response from our follow-ups. We’ve found the real trick to selling HPC is to present it properly to customers in the first place. When it’s presented correctly, HPC is a wonderful differentiator. When it’s not presented correctly, it creates confusion and makes everyone uncomfortable.”
One of the best ways to encourage homeowners to make all the improvements at once is to offer attractive financing options, said Halco’s Smith. “One of the great tools that we can offer customers is long-term, low-interest financing through the New York State Energy Research and Development Authority (NYSERDA), which offers a 3.49 percent financing rate for up to 15 years. If we can show homeowners that our improvements will save them $50 per month on their utility bill, and the payment on the repair will only cost $40 per month, most choose to go forward and make the upgrades.”
And when they make all the improvements at once, they reap the benefit of living in a home that’s much more comfortable, as well as energy efficient, said Smith. “HPC literally changes people’s lives. I can’t tell you how many letters we’ve received from happy customers who tell us that their houses are more comfortable than they’ve ever been. When you just change out a furnace, it doesn’t make that much of a difference in their overall comfort. But if you pair that with smart energy upgrades, it really does make a huge difference.”
Publication date: 12/16/2013