Customers Warm Up to High-End Furnaces

November 20, 2006
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Winter heating bills are expected to be slightly lower for most families across the nation, with the highest reductions for those who use natural gas, the Energy Information Administration announced recently. Nationwide, 58 percent of all households depend on natural gas as their primary heating fuel. Despite increased natural gas consumption this winter, households in all regions will pay significantly less for natural gas this winter due to lower prices.

Projected changes in heating expenditures relative to last winter reflect both price and weather changes, but lower expected prices for natural gas should result in lower heating bills for most American households. Those homeowners who have opted to install high-efficiency, 95 percent plus AFUE furnaces will see even bigger reductions in their heating bills than the rest of the population.

Not only will their utility bills be smaller, but chances are their homes will be more comfortable, thanks to the variable-speed options available on most high-end furnaces. The superior level of comfort and lower energy costs associated with the highest-efficiency furnaces will also make dealers happy, as they know they have installed the best possible equipment that will keep their customers satisfied.

CUSTOMERS INTERESTED

Selling the 95 percent-plus furnace has not been difficult for Tom Stritecky, president of Waterbury Heating and Cooling Inc., Sioux Falls, S.D. He estimated that 80 percent of his customers choose a 95 percent AFUE furnace. "That's the very top end and includes two-stage, variable-speed operation. Our salespeople are trained well to move everybody up to that level, and when you show the benefits and features, it's really a no-brainer," said Stritecky.

That's an impressive number of high-end furnaces, considering that only 10 years ago, 80 percent of Stritecky's sales were 80 percent AFUE furnaces. Last year only 1 percent were 80 percent. "At the very high end, we know we've sold somebody the best product on the market, so we don't have to make excuses as far as noise or inefficiency," noted Stritecky. "We want to please our customers, which is why we try to sell the best; then we don't have to make excuses for an inadequate piece of equipment."

While it may seem that home-owners in colder climates would be most interested in purchasing high-efficiency furnaces, that's not necessarily the case. Ken Justo, vice president of sales and marketing; ASI Hastings, El Cajon, Calif., said that although there isn't a huge demand for top-end furnaces in his area - the heating season only lasts about three months - "It's amazing how many people will buy the high-end furnaces if you offer them. With the rising costs of every type of fuel, people are very conscientious of it, and it's surprising how many people ask for it. We also have customers who just want to flat-out buy the best."

Justo noted that his company advertises frequently. Recently the ads have been including information about the federal tax credit that is available on 95 percent-plus furnaces. "Advertising the tax credits is a good way to generate conversation and heighten awareness," Justo said. "When we find out that a person called us because they saw our newspaper ad, we know that customer will be interested in Federal tax credits and rebates, and we tell them about the high-end furnaces."

SELLING OTHER FEATURES

Sioux Falls can be a chilly place to live, so you'd think Stritecky's customers would be most interested in the 95 percent plus furnaces because of their energy-saving capabilities. You'd be wrong.

Stritecky said that saving energy is the main incentive for homeowners calling him in the first place, but the reason they buy the high-efficiency furnace is comfort. "When we visit with them, home comfort is the No. 1 issue, and our salespeople say that comfort is the primary selling point."

Many contractors, including Stritecky, offer customers good, better, and best options that start with a high-efficiency furnace. Often the initial level is a 90 percent, single-stage furnace. In the better group is the 90 percent two-stage furnace, which is a little more energy efficient due to its low-fire, high-fire operation. The best offering is the 95 percent variable-speed, two-stage furnace. These are much quieter, he said, because they run on a DC motor, and they consume less energy than other furnaces.

"Tie all those things together and show the customer a simple payback, and they'll see that in about three to four years, their machine will be paid for," said Stritecky.

For Justo, it makes more sense to sell on comfort and other issues than it is to focus on energy efficiency. That's because in sunny Southern California, the return on investment for a high-efficiency furnace is probably going to be 25-30 years. "We very seldom have that conversation," said Justo. "There are many people here who are concerned about the environment; they're concerned about saving energy. We almost never sit down with them with an energy calculator and say, ‘Here's what you're going to save.' "

Offering different types of financing programs is another way to encourage homeowners to upgrade to a 95 percent furnace. If a customer spends $5,000 on a furnace and air conditioning with Justo's company, the minimum monthly payment would be 2 percent, or $100. If the homeowner spends $7,500 the interest rate decreases, so the monthly payment is still $100. "Many people aren't concerned about the ultimate price as much as they're concerned about what it's going to cost each month. Using creative financing and strong finance programs helps you sell high-end products as well."

Justo also sells a lot of high-end furnaces because of the noise factor. In the San Diego market, many furnaces are located in closets that are often close to the master bedroom. Homeowners who are replacing their furnaces are interested in quiet equipment, and a high-end furnace fits the bill. As Justo noted, "We sell more premium furnaces because of noise than energy savings."

Just to make sure a customer won't have any noise issues relating to the furnace, Stritecky insulates the transitions, puts in isolation connectors, and sets the furnaces on rubber pads to absorb vibration. "People often tell us that their existing furnace sounds like a truck's running through the house, so we add these little things to make sure noise isn't an issue."

While energy savings may be the primary reason why homeowners purchase a high-end furnace, it doesn't have to be the only reason. Contractors who stress other features, including comfort and lower noise levels, will usually find that upselling to a high-end furnace isn't that difficult.

Publication date: 11/20/2006

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