Opportunities Are Being Thrown Away
Are contractors doing their own companies any good by not selling replacement media?
The answer from some leading air cleaner and humidifier manufacturers, and a contractor who installs their equipment, is a re-sounding no.
According to Nikki Krueger of Aprilaire, Madison, Wis., "Contractors can make substantial profits by selling replacement media."
While many contractors let these sales opportunities slip away, there are some dealers "who are going above and beyond to secure repeat sales
of media to their customers. Because they are taking these initiatives, they are preventing these customers from buying replacement media at retail."
One such company is Lea Heating in East Dundee, Ill. Residential/Commercial Sales Director Mark Lea has previously stated, "If we can sell a certain amount of [air cleaners and humidifiers] per year, over the course of 20 years, I can actually retire on the repeat media business alone."
One Contractor's ProfitsThe contractor currently sells more than $100,000 in media alone, said Krueger. "Lea says the secret to creating and maintaining repeat media and water panel business is not just a strong focus on selling air cleaners and humidifiers at a fair price, but also using tools to maintain and grow their customer database."
In Mark Lea's part of the country, there isn't a huge difference in cost between an Aprilaire humidifier pad, for instance, and the off-brand replacements sold at retail stores. However, the contractor tries to appeal to cost-conscious customers by offering two-pack specials; it costs $31.70 for a Spaceguard replacement filter, for instance, but he will sell two for $59. "Customers can pick them up or we will ship them UPS."
Why aren't more contractors interested in selling replacement media? "Most contractors look at today's dollars instead of tomorrow's," Lea said. "Over a one-year period we may install 8,000 pieces of equipment. If you try to sell an air cleaner on every job, and don't include a huge markup on it, you might make 6,000 sales, of which 60 percent will buy one replacement media per year - that's 3,600."
The company does $3.2 million a year in its 90-percent residential business. According to Lea, 80 percent of the company's sales include an add-on such as an air cleaner or humidifier.
Lea noted that most homeowners have a poor awareness of IAQ. "I don't sell on health," he said. "With air cleaners, I sell on keeping the coil clean. However, we have a board-certified allergist that gives us a lot of business." The company's Web site also includes an allergy forecast. "It's all about education," said Lea.
Apples And OrangesThe company's postcards subtly point out the difference between OEM media and off-brand replacements. "The box is in the picture on the postcard," Lea said. That way consumers can see that the product they need is not on the shelves of their local store.
It's important for contractors to let customers know that what the contractor offers is an OEM product, Lea said. "At Menards or Home Depot, they sell knockoffs - a lot aren't UL rated." Among other problems, air cleaners with off-brand media "may load more quickly than predicted," Lea said, which would restrict airflow and cause system problems.
Carl Redner, president of General Filters, Novi, Mich., explained, "In both humidifiers and air cleaners, those are UL-listed assemblies. Many replacements are not UL-recognized. The homeowner needs to make sure parts are UL-listed for their particular equipment."
What better way than by purchasing the equipment right from the installing contractor?
The products in a home center need to have a competitive price, he pointed out. Many are redesigned to reduce the cost, not maximize durability.
"It's in the OEM's best interest to maintain the durability of the product," he said. This is also in the contractor's best interest, he pointed out. The use of OEM replacement media helps ensure the equipment's long-term reliability.
To increase sales of such products, "The dealer could position himself as a source of quality replacements," Redner said. "He's also a source of information on the equipment itself.
"I've talked to some dealers who feel they're not equipped for retail sales." They have no showroom, for instance. However, the homeowner is looking for expertise, not glitz, Redner said. All the contractor really needs is a clean front room, a cash box, and maybe a small product display or signage.
"Being able to sell parts out of an office in an industrial park, even though it doesn't have a showroom, can still help with customer relationship building," he said.
A Stronger BondDan Joyce, the Honeywell director of Trade Channel - North America, Morristown, N.J., could not agree more. "It's not so much the dollar volume of the product, it's the missed opportunity of developing a customer relationship for life - i.e., the lifetime value of the customer," he said.
"When you sell a product, developing a plan for servicing the product and retaining that customer relationship is critical," he continued. "If you don't have a plan to communicate regularly with a customer and determine his/her evolving needs on an ongoing basis, there can be a risk to that customer."
Joyce pointed out that one role of the manufacturer is to help nurture the contractor-customer relationship. "It is important to work actively as an industry to promote who installed the system - and to actively target consumers for follow-up.
"As an industry, we have some opportunities. The typical business model of a service-replacement contractor enables them to have a closer relationship with the consumer - who knows they are the people to service their equipment in the long term or sell them a service agreement."
New construction contractors, on the other hand, generally don't have an opportunity via the builder to educate the consumer, he said. "Some new construction dealers have a business model that is focused on the original installation - it may not be focused on servicing the customer for a lifetime."
Joyce called the manufacturer's Contractor Pro program (www.contractorpro.com) a dealer-support plan with business solutions, "all aimed at helping our partners grow their businesses."
The program's E-StorePRO (www.honeywellestorepro.com) is an online resource for dealers to sell replacement parts to customers. This "online store" features Web technology "that makes heavy-duty e-commerce capabilities affordable for the independent dealer," Joyce said.
The homeowner visits the dealer's Web site and orders the product, which automatically generates an order via e-mail or fax. "Then the dealer can process that order and ship it to that homeowner's doorstep. This capability is especially critical in an industry not set up to hand deliver filters," said Joyce.
A dealer can set up the system to send customers e-mail reminders when it's time for routine service, or when there are updates to safety or warranty information. "For example, you can determine with the consumer how often they want to change their filter," said Joyce. The system automatically e-mails the customer at the predetermined intervals; the customer can "click here and buy now" from the dealer.
"Studies show that most consumer purchases are done on nights and weekends," he said, "when our industry is closed. This solution makes it easy and affordable for the dealer to be open 24 hours a day and service consumers."
In addition, Honeywell's Airwatch is a filter-change reminder that ships free with most of the company's filters. "This reminds the consumer when it is time to change their humidifier pad, their professional-grade furnace filter, UV lamps, and other replacement parts," Joyce said.
Publication date: 03/15/2004