Selling Sustainability and Saving Energy
Industry professionals offer tips for smarter pitches and proposals
Although sustainability has been a hot topic for several years, it’s still not easy to sell clients on a project based solely on its green attributes.
“There’s a fervor about energy and sustainability,” said Ken Kalicak, project executive for Thermal Mechanics Inc. in Chesterfield, Missouri. “Sustainability is a buzzword, but people don’t understand it. It’s hard to sell a project just on energy.”
One of the reasons sustainability is considered a luxury more than a necessity is that energy costs are not as high in the U.S. as they are in Europe, said Kalicak.
“We’re not being forced on the budget side as hard as other countries are being pushed,” Kalicak said, noting that energy prices are typically three- to six-times higher in Europe. Yet he believes utility prices are bound to rise in the U.S., and he hopes to help customers prepare for that future.
“I tout energy all the time,” he said. “Those who don’t gear up for it today will see they’ve made a grand mistake.”
In today’s market, building owners want proof of the savings that will be achieved through an energy-efficiency project. While Kalicak noted it’s fairly easy to verify the savings achieved through a retrofit, it’s much more difficult to estimate savings for new construction.
“The barriers aren’t always cost-related,” Kalicak continued. “[Decision-makers] in the educational and hospital industries have so many things going on and so many other higher priorities that, in those cases, energy doesn’t help get the ball rolling.”
SAVVY SALES PITCHES
According to Eric Kjelshus, president of Eric Kjelshus Energy Heating and Cooling in Greenwood, Missouri, the biggest barrier to selling sustainability is often the salesman.
“He’s not talking about how the end user is using the building,” Kjelshus said. “You have to talk to customers and figure out what their needs are. You can’t just come with a proposal and slap it on them. You’ve got to work with them.”
After years of working in this sector, Kjelshus has fine-tuned his sales pitch and the proposals he sends to customers. He has established a very successful niche in the light commercial and high-end residential markets.
Kjelshus believes small details add up to huge savings and overall sustainability. When he drafts proposals, he includes a variety of recommendations for clients but is willing to work with them on one portion at a time. For example, he said, he might include 60 line items in a proposal to let clients know they can do everything from upgrading the rooftop unit to putting a flat, white roof on the building to reflect heat.
“We make the facility more efficient, line by line,” Kjelshus said. “Most of the energy saving is based on how the building is used. [For instance, I] look at LED lighting, Wi-Fi thermostats, hot-water usage, duct efficiency, how to tune up a/c and heat, and more.”
He noted that repeat business is crucial to succeeding with sustainable projects. That way, customers can come back next year when they have more money available and check another item off the list.
If he has a good relationship with a business owner, Kjelshus will often work on that owner’s home, as well.
While Kalicak believes energy efficiency is appealing to building owners and operators, everybody’s concerned about how much it’s going to cost to save that energy, he said.
So, when talking with prospective clients, Kalicak says he focuses not just on energy but also comfort.
“Energy efficiency has turned into not just saving money but also about making people comfortable — all the while you’re trying to save money on the energy side,” he explained. “That’s the sales pitch I use. It’s not only about saving money, you have to compare the comfort people experience in the building.”
Kalicak also pitches that he will be a single point of contact for the client throughout the entire project. He knows this will appeal to owners based on his own personal experience.
“I was on the owner side for more than 20 years,” Kalicak explained, noting that he worked in both the education and health care sectors and spent over a decade as a hospital director.
“I’ve seen both sides of the story,” he continued. “I feel the owner’s pain, so I cut out a ton of markup and [I pitch that I] can do it a little less expensively.”
Not everyone is as well-versed in how to communicate with owners, and that can impact whether an energy-efficiency project gets off the ground. Jeff Julia, manager of Energy Project Advisors in Austin, Texas, founded his company earlier this year with the goal of helping both owners and contractors in the market.
Julia said he’s seen a lot of mistakes made in the energy-saving proposals contractors are developing, and he’s seen a lot of owners who are afraid to trust the contractor and accept the project bid.
To help overcome these hurdles, Julia said, “We’re just trying to add transparency and trust on both sides of these proposals to eliminate the long sales cycles.”
As an analogy, Julia compared his service to those offered by home inspectors in residential real estate.
“We’re trying to position ourselves as a third party to increase the buyer’s assurance, since customers often don’t have the expertise or resources to do vetting and due diligence,” he said. “And contractors are presenting proposals that could use polishing and tightening.”
Julia said he’s looked at roughly half a billion dollars of proposals during his career, and he’s seen the same problems crop up again and again. In many energy-efficiency proposals, Julia said contractors overestimate the operations and maintenance savings that can be achieved from upgrading HVAC systems.
“A lot of vague assumptions are made and there’s a lot of fluff [in the O&M estimates],” he said. “It makes the ROI [return on investment] look better, but if a savvy customer sees it and red flags it, it’s leading to bid-out projects and stalled sales cycles.”
Overall, Julia aims to help contractors enhance their proposals based on six aspects: provider, equipment, savings and financial benefits, rebates and incentives, financing options, and alignment to client’s needs.
“Using this framework, we can help proposals move up the chain and get approved faster,” Julia said.
Publication date: 11/14/2016