Well, not quite.
If you’re an hvacr contractor with a sales pitch touting the one-two punch of high efficiency and energy savings, you already know that now is an opportune time to sell high-end furnaces and add-ons. But don’t take The News’ word for it; listen to what some contractors have to say.
“Our high-end business has continued to grow percentage-wise, especially with the higher utility rates and the stronger economic times,” said Phil Favret of Favret Heating & Cooling, Col-umbus, OH. “I will be curious to see what effect the recent economy has on high-end sales this winter.
“We sell the Carrier Infinity furnace. Our salesmen are now convinced that if you sell a high-end product, the customer will be happier with the lowest possible utility bills and the most comfort possible. This leads to more referrals and the opportunity for larger dollar sale amounts.”
Favret said there are other issues, not related to efficiency, which should motivate contractors.
“The other issue has been the tight labor market. With our labor being our finite resource, it makes the most sense to maximize the gross dollars per labor hour,” he said. “The salesmen realize they can make more money and have a happier customer. Anyone can compete on price, but if you can offer comfort and value, it is a lot more fun.”
“Our top of the line furnace is our Trane XV-90 gas furnace,” said Scott Robinson of Apple Heating, Inc., Ashtabula, OH. “We sell this product by communicating the benefits to the customer of owning this product over others.
“First benefit is safety for the family. Safety is provided by using a sealed combustion furnace that is not affected by indoor pressure differentials for safe operation. There is next to no chance that this product will hurt the family.
“The next benefit is comfort. This furnace provides enhanced comfort in the heating season with two-stage operation and the variable-speed blower. The two-stage operation uses low fire for longer cycles, evening out heating and reducing burner off time that allows ducts and some rooms to become uncomfortably cool.”
Another Ohio contractor voiced his approval of the Trane products his company sells — but says that SEER ratings are as important as anything else.
“In 1986, Trane introduced the XL1200 air conditioner and heat pump to the Toledo market,” said Duane Horst of Overcashier & Horst Heating and Air Condi-tioning, Sylvania, OH. “We immediately sold and installed the first unit and were so impressed by the results, we made it standard procedure to bid the XL1200 on all jobs.
“The results were surprising. Our competitors told us we couldn’t sell 12-SEER units in a northern market, but our customers bought the features of the unit, not just energy efficiency. Some of our customers bought the XL1200’s to be better or different from all of their neighbors. Every year we’ve sold more and more up-sell systems at higher profits than our competitors.
“I am happy to report that the first XL1200 unit celebrated its 15th birthday this year without a failure. Up-selling is so routine in our company that it’s not even celebrated anymore.
“Today’s up-sell system is 90%, variable-speed, 18-SEER dual compressor with zoning. (The 12 SEER 90% is our standard.) Prices are much higher, but the results are the same — a more satisfied customer, fewer callbacks and repairs, quieter operation, and better comfort.
“Our competitors have jumped on the bandwagon and now up-sell also. But by waiting so long, they have missed impressing their customers with the benefits of the up-sell. For 15 years now my up-sell customers have been telling their friends and neighbors about how much more efficient an Overcashier & Horst system is compared to the competitor’s.”
“We do sell quite a bit of high- efficiency gas furnaces; some have the two-stage gas valves and variable speed also,” said Larry Taylor of Air-Rite Air Conditioning, Inc., Fort Worth, TX. Taylor is also ACCA’s current president. “We try to start out the sales survey discussing energy cost and comfort with the customer to see what they are expecting.
“After we run a Manual J load to verify or change the capacities, we then select the high efficiency and the next line down to calculate the investment in installation to the customer. We also are using the infiltormeter for thermal bypass checking and duct system leakage as a simple show-and-tell of where their energy is going or being lost.
“We also run savings estimates from the customer’s bill, if we can get a copy, and show them the annual savings in both heating and cooling. We then talk about return on additional investment between the lower efficiency units and the one we are recommending.”
Taylor compared two possible installations for a 3-ton system:
80% with 12 SEER = $6,000
90% plus with 14-plus SEER = $9,000
The job could be supplemented by an additional $2,000 to $4,000 with duct and bypass sealing, duct cleaning, an ERV, and/or filtration.
“An additional investment of $3,000 with an additional energy savings of $300 per year equals a return of 10% per year with no tax consequence,” said Taylor. “It might be up to 13% to 15% or more, depending on their tax brackets.
“We then ask where are they getting that type of return now on their investments.”
Jim Hussey of Marina Mech-anical, San Leandro, CA, is ACCA president-elect. He is a commercial contractor who seldom has the chance to up-sell equipment — but he does have an opinion.
“With the exception of classrooms in private schools, we seldom encounter opportunities to sell furnaces or split system cooling,” Hussey said. “When we do, our engineers always recommend installing high-efficiency furnaces.
“Up until the winter of 2000, few clients purchased the upgrade. However, after last year’s monstrous increase in natural gas prices and this summer’s electricity crisis here in California, the situation has changed. Proposing a system without the highest efficiency is viewed as a lack of professionalism.”
Said Taylor, “If we can get [customers] talking about comfort systems vs. changing out boxes, we normally can discuss the greatly increased comfort and efficiency levels in their homes and make the sales.
“The easiest sales are the home enthusiast or folks getting ready for retirement and have more expendable income — basically the top 30% of the market. The next best market is people who have allergies or other health-related problems. They really are concerned about the air and cost of providing comfort.”
“The first thing I have to believe is that everyone can afford a high-efficiency system if they want one, and my job is to convince them that they do,” said Greg McAfee of McAfee Heating & A/C, Kettering, OH. “The quietness, warranty, and payback are all byproducts of the high-end systems, but if I didn’t have one in my home or office, and if I am not confident in selling them, then I would have to convert to the norm of selling the lower-priced item to get the sale.
“We have been a Bryant dealer for 12 years now and we have confidence in the product. The problems we have had with high-efficiency systems are few and far between. Needless to say, the profit margin is much higher selling the high-end systems.”
“With rising costs of energy bills these days, the high-efficiency furnaces sell themselves to most consumers,” said Don Bowen of Bowen Refrigeration, Heating and Cooling, Muskegon, MI. “If the furnace is equipped with stainless steel heat exchangers that carry a lifetime warranty and a 10-year parts and labor warranty, which are available with our Rheem product, it becomes a no-brainer for the wise furnace purchaser.
“Even though the owners of the smaller homes can benefit from high-efficient furnaces, the majority of the purchases come from the 1,500-sq-ft-and-above homeowners.”
One contractor said that outside appearances or smaller homes can mask a truly discretionary buyer.
“I’ve sold to people with 3,000-sq-ft-homes and to those with 600-sq-ft-homes,” said Gary Eberts of Eberts Energy Center, Mansfield, OH. “It has to be offered.
“You can’t judge a person’s spending habits by their home. I’ve been amazed. I promote as ‘good,’ ‘better,” and ‘best.’ This seems to work well when they look at savings, comfort, and quietness. Some people simply can’t afford the best, although some have fooled me.”
“We have had great success selling high-end furnaces,” said Joe Kruger of Issac Heating & Cooling, Rochester, NY. “Offering high-end products has differentiated us in the marketplace. The extra time that we spend educating our customer is appreciated and usually results in a high-end purchase.”
“We do not do much residential,” said J. Greg Crumpton of AirTight Mechanical, Charlotte, NC. “However, when we do, which is mostly for commercial customers’ homes, we do not have any problem explaining the benefits of high efficiency.
“Maybe it’s a captive audience, but they sure believe in lower monthly fuel bills. We sell Lennox 90% if they do not have a preference.
“Most customers do not care about brand,” concludes Crump-ton, who says that service and warranty have the most impact on homeowners.
“Our company is geared more to the commercial and industrial market,” said Ken Armer of Fry Mechanical, Adrian, MI. “How-ever, we have installed the high-end efficiency furnaces on a few jobs. We use Trane equipment almost exclusively.
“The vice president of our company and the director of our sheet metal department have both recently installed top-of-the-line Trane furnaces in their homes. They are more than satisfied with their choice.
“Selling high-end equipment is not an obstacle from a performance standpoint. Price is the biggest obstacle we face. All the testimonials and guarantees offered by the manufacturers about high-end equipment won’t overcome a customer’s lack of finances. People will buy it without question if they can afford it.”
Favret agrees. “We market the idea of increased comfort and the lowest possible heating costs, plus the fact of a longer warranty on the high-end equipment.”
One California contractor uses simple logic. “We sell them by offering them!” said Kevin Nunn of Aire Serv of Ventura County, Camarillo, CA. “ We found by simply letting our clients make the choice, they usually choose high efficiency — variable-speed, two- stage, and/or 90-plus.
“The sealed combustion chambers are an added advantage when noise is a concern. Most people are already aware of the advantages and added comfort they will achieve with a higher-efficiency system. So we simply offer them. Of course, higher efficiency equals more profit for us, too.”
“Our method emphasizes three parts: safety, comfort, and savings,” added Robinson. “We find that the informed and better-educated consumer is more likely to invest in these products.”
Kruger said it is up to the salesperson to spend the time to educate the customer and justify the purchase.
“It has been my experience that the homeowner is very open to this discussion, and is often surprised that no one else has spent the time to explain other options. This process not only benefits the client, it also positions us very favorably in the competitive bidding process.”
Publication date: 11/26/2001