HVAC Turns 13!: A Market Adapts to 13 SEER Changes in 2006

June 26, 2006
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The new efficiency standard mandate for HVAC equipment is in full swing, and you may be wondering just how much your own business will change. More efficient units are bigger, and contractors must now account for expanded space requirements in their dealerships or warehouses. New coils and ductwork must accommodate the new, more efficient units.

As the first year under the 13 SEER mandate works its way through the summer months, many contractors have established new goals for their businesses. Selling has become even more competitive. Since everyone is selling 13 SEER-plus units, dealers have to differentiate themselves with other possible selling strategies - such as IAQ accessories and quiet operation.

A review of the Lennox Industries dealer organization found that the dealers are busy finding ways to differentiate themselves in the new 13 SEER world.

Contractors should take time to discuss the various options available on the new equipment.

CHANGING THE BUILDER MINDSET

A particular challenge some contractors are facing is in the residential new construction market (RNC). Lennox dealer Welsch Heating and Cooling in St. Louis kept its homebuilder customers informed every step of the way. With 105 employees and 64 trucks, Welsch's new construction segment comprises about 60 percent of its business. Owner and president Butch Welsch took a very proactive approach in his efforts to get his customers ready. He sent a letter out to homebuilders in May 2005 to inform them of the impending 13 SEER mandate.

"We wanted our homebuilders to know this significant change was coming," said Welsch. "My hope was they would start offering 13 SEER units to their homebuyers fairly quickly. I didn't want homeowners buying a house right before the end of the year to wonder why they hadn't been offered a more efficient 13 SEER unit."

Follow-up letters were sent once a month reminding the homebuilders of the change, and Welsch set a cutoff date in October 2005. After this date, all homebuilders had to buy 13 SEER for their customers.

"Making this change with our homebuilder customers was a bit more difficult because HVAC is not as glamorous as granite countertops or high-end flooring and fixtures," said Welsch. "I think we did an excellent job communicating the change to our customers so they could adjust their pricing and communicate the high-efficiency, energy-saving benefits to the homebuyers."

Welsch differentiated the dealership by emphasizing its longevity - it's been in business 110 years and has been a Lennox dealership for the majority of that time. Welsch also offers a wide variety of variable-speed equipment for reduced sound. If a homeowner needs IAQ products, Welsch is able to offer a number of options.

"One of my main goals for this year is to find out how our Website can better serve us and communicate our value," said Welsch. "Even though we're a century old, we have to be a modern business."

CANADIAN RNC LEARNING CURVE

Canadian customers expect the same products to be used in their country as are used in the United States, even though 13 SEER was not mandated in Canada as it was in the United States. For Canadian contractors, the need to effectively communicate the changes to their RNC homebuilder customer base was equally important. Most home neighborhoods are built in phases, and an HVAC contractor wants all homes in each phase to have the same SEER-rated units as much as the builder does, noted a prominent Lennox dealer in Ontario.

"We didn't want homeowners to wonder why their neighbors got a higher or lower SEER unit."

Even in such extreme Northern markets, the transition from 10 to 13 SEER started early for some. One Lennox dealer offered 10 SEER units for new construction through the summer of 2005 and then required homes built in the newer phases in October-November 2005 be built with 13 SEER units.

Homebuilders have been accepting of the higher efficiency units in Canada. Customers are sometimes offered a three-tiered HVAC package - the highest tier being the best furnace, air conditioner, and IAQ product on the market. The new 13 SEER unit is just one more offering that provides homeowners with energy-savings dollars.

CHANGES IN FLORIDA

One of the biggest problems faced by Florida contractors is the resizing and refitting of ductwork to help airflow problems and prevent mold. Condominium retrofits have presented a big challenge. Some applications have required a refit of the copper refrigerant lines to be run on outside walls in the condo buildings.

Convincing owners that they need to refit the ductwork isn't always easy. Having NATE-certified technicians in the field who are proficient in the Manual J and Manual D program calculations has helped one contractor in the area.

"They just plug in the right information, and the CAD program outputs a blueprint to show the client which type of ductwork the new unit needs in order to have effective airflow and prevent mold," said the Florida Lennox dealer.

"We've always been experts in indoor air quality. When the whole market is mandated to sell 13 SEER equipment and can tout energy-saving equipment, our IAQ solutions and selling will push us ahead of the competition."

Homeowners who are shopping for new air conditioners or heat pumps will be faced with myriad choices, as manufacturers have introduced many new products this year.

CREATIVE SELLING SOLUTIONS

Some contractors had been offering 13 SEER (or higher) efficiency options for quite some time before the mandate became effective. Selling equipment features against the competition has been one of the most challenging aspects of the changeover. How are some Lennox dealers finding success? By touting low sound levels, other benefits aside from efficiency, and IAQ options.

Lennox dealers have readily adopted the new XC21 air conditioner. The new high-efficiency product was the first of its class to hit the market in advance of the 13 SEER minimum energy efficiency standards that became law on Jan. 23, 2006.

According to responses from Lennox dealers in the Dallas area, homeowners are drawn to the XC21 due to its two-speed compressor operation to reduce energy usage and because of its quiet operation. A Lennox spokesperson said that the new air conditioning product was the highest efficiency available at the time of introduction, and coupled with the lowest sound in the industry, the combination has met with rave reviews from customers.

Not only are consumers looking for efficiency and quiet operation, they are becoming more aware of serious home comfort issues such as humidity, allergies, and extreme hot and cold pockets.

In the Northern region where selling high-end air conditioners is not as common, one of the first XC21 units was sold to a Lennox dealer in Minnesota for a home on Lake Minnetonka. The home also had a G61 furnace, SignatureStatâ„¢ thermostat, and PMAC filter.

The hot season doesn't last long, but temperatures sometimes get into the 90s in central Minnesota. Customers there aren't driven by the efficiency of the XC21 as much as they are the quiet two-speed operation.

When paired with the SignatureStat thermostat, a two-stage air conditioner controls humidity levels independent of the temperature. In Minnesota, though the cooling season doesn't last long, humidity control is a problem. Having an air conditioning unit that can easily handle spikes in summer temperatures and run on low speed to control humidity is important even in Minnesota, the Land of 1,000 Lakes.

IAQ COMES TO THE FOREFRONT

Lennox dealers have been making a noted effort to differentiate themselves by offering IAQ options to homeowners. Spring and early summer home shows are a preferred venue for displaying a lot of new options for potential customers.

If dealers communicate the 13 SEER change properly to their homebuilder customers and other markets, this can be viewed very positively for the consumer.

One enterprising Lennox dealership supplies every technician with a 35-page flipchart to help answer homeowners' many frequently asked questions about air conditioning system operation, including SEER rating. IAQ is also a frequent topic for a company newsletter and is included in television commercials and oversized postcard mailers.

A HIGH-EFFICIENCY GUARANTEE

Of course, no matter the level of efficiency the equipment is intended to be, it's not completely efficient if it's not installed properly. Regardless of the manufacturer's efforts to build the most efficient unit possible, an improper installation is almost a sure guarantee that the system won't meet the efficiency rating.

One Lennox dealer in the humid Southeastern United States takes into consideration not only the unit but the duct leakage, duct sizing, returns, and supplies. "We offer a guarantee of energy savings with our thorough installation of high-efficiency equipment. Homeowners aren't just buying a high-efficiency cooling box, they're buying a 13 SEER system installed."

As the first summer under the 13 SEER minimum requirement winds down, many Lennox dealers will have discovered new ways to differentiate their businesses. Whether promoting the quiet operation of a high-efficiency air conditioner or selling enhanced IAQ systems, many may find the changes of 2006 to be ones that they will remember for a long time to come.

Publication date: 06/26/2006

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