Profiting From Replacement Zoning
VanDenElzen has grown his business while having 97 percent of his zoning business come from replacements. The contractor made a conscious decision to change his business from new homes to replacement about five years ago.
"We began marketing more to retrofit and replacement. We were noticing that a lot of builders didn't pay their bills, and we decided to get out of it because we weren't making any money. With the help of AirTime 500, and their proven business model, we transformed from new construction to retrofit and replacement," VanDenElzen said.
"It was time to run the business rather than have the business run us."
Van's Heating and Cooling specializes in designing, engineering, and installing complete comfort systems. VanDenElzen has been doing business in Green Bay for 27 years and has seen many changes over the years.
"There has been a change in direction in the HVAC industry since I started. When I started here in Green Bay, less than 20 percent of the people had central air. Now 50 percent to 60 percent have it and 5 percent to 10 percent have zone systems," VanDenElzen said. "However, whenever we install them, we get one or two more in the area from friends or family."
Finding Xenon SystemsWhile Van's Heating and Cooling have offered zoning for some time, VanDenElzen was introduced to the Xenon System, an AirTime 500 private label product, at one of the association's trade shows.
"They are extremely easy to install. The system is so simple. Xenon will help walk you through the first installation. It is a great product," VanDenElzen said.
"We can provide as many zones as a customer wants - although I recommend larger zones, especially in open areas."
The product fits with VanDenElzen's business model of focusing on replacement business. The contractor said the advantage of Xenon is the flexibility it offers in adding into any running system. Van's Heating and Cooling can install the zoning system using existing ductwork and standard thermostats.
The system utilizes technologically advanced pneumatic controls to pinpoint the delivery of comfort to areas within the home based on individually installed performance control centers.
Xenon explains it by stating, "Just as one light switch doesn't effectively control the lighting needs of the entire home, one thermostat cannot effectively control the comfort of every room in the home."
With the help of the Xenon product, the zoning portion of Van's Heating and Cooling is really growing. While a few years back the company was installing zoning about three to five times a year, they now do three to five systems a month.
"It has grown real fast in our company. Zoning is a real easy sell to more affluent people with larger homes. We also install the system for a lot of people who have a home-based business. They really demand more comfort; a lot of them are getting zoning in their homes," VanDenElzen said.
As with any relatively new product, word-of-mouth is everything. While VanDenElzen receives positive feedback from customers, it is a slow process.
"There is not enough of them [zoning systems] out there yet to have a real big word-of-mouth. It has not become commonplace in the everyday home yet," VanDenElzen said.
Obviously, temperature and energy savings are the key benefits to having a zoning system. The difficult part is getting that information to the cost-conscious consumer. Many individuals are not sure if zoning is for them.
"People in a two-story house, a finished basement, or a long ranch can really control their comfort with this system. Here in Green Bay, houses will have an upstairs that is eight to 12 degrees warmer than downstairs," VanDenElzen said.
With Xenon systems, the consumer receives a 10 percent to 20 percent savings on energy costs.
"With energy rates going up, it really makes a big difference. The biggest misconception about zoning is people getting over what they have to pay. But in this day of high efficiency, a 20 percent savings is a lot," VanDenElzen said.
In order to have consumers buy into the system, VanDenElzen first had to get his service technicians on board. To ensure that his service techs believe in the system, Van's Heating and Cooling made the investment of putting the system into the technicians' homes.
"Everybody sells systems, but service is what people buy. It is all about educating people. The consumers today see that you are interested in the product. When they ask about zoning and you have to call the office, well, they are not going to make the purchase. But if the tech can talk intelligently about the product and what it does for the customer, you have a good chance of them buying," VanDenElzen said. "You get a feeling of confidence from the consumer."
At this point, approximately 5 percent to 10 percent of Van's customers are buying the system. This has translated into more business across the board for Van's Heating and Cooling.
"It is developing the relationship with the customer. People are more willing to buy other products we recommend because they trust us more after we were correct about zoning," VanDenElzen said.
In addition to the great profit margin attributed to Xenon zoning and the extra revenue on additional jobs, zoning allows the business to stay busy all year long. With zoning you can control the workload, rather than needing to do all your work during the peak periods of the year.
It has worked well for Van's Heating and Cooling, which now employs 32 people, and VanDenElzen is grateful he was introduced to the Xenon product.
"It is great to belong to a group like AirTime 500 that provides so much guidance for its contractor members and access to the latest products such as Xenon zoning equipment," VanDenElzen said.
"It was a commitment to quality, training, and to our people, and it has worked out well. It is very satisfying."
Sidebar: Zoning Might Benefit You If...
Information courtesy of the Xenon Web site, www.xenonac.com.
Publication date: 05/16/2005