Unfortunately most buyers have less money. The minimum monthly payment for Americans who carry credit card debt has doubled. This has created a pothole in buyers' budgets and contractors' sales. Less money and rising interest rates keep millions of homeowners from tapping their homes' equity to fund projects like better comfort.
Another roadblock is the rising cost of basic equipment. The price of HVAC equipment materials and components has skyrocketed. The copper in a penny is worth nearly twice its face value. Steel, aluminum, and transportation costs aren't at a peak, they're at an all-new average. This fact has inspired orange barrel slow downs in business and strained contractors' budgets.
To this witches' brew of challenges stir in the fact that everyone sells high efficiency. Once a high-margin component, 13 SEER is now an entry-level commodity. The business fast lane has just been closed due to construction.
These are the ingredients necessary for one of the most mind-numbing changes in the history of the HVAC industry. Change, however, always creates a crossroad of risks and opportunities. One new road is the path of least resistance and it is often the major reason small business failure rates are so outrageously high. Another path requires good planning and the right process, but with enough passion and persistence, anyone can follow it to the prize at the end - financial freedom.
Premium products also contain the unique benefits needed to produce premium comfort. As the level of comfort rises, so does value. Value is what determines price and allows profits. About 80 percent of buyers are willing to pay more money to be more comfortable, however at the premium end of the comfort scale, only about 50 percent can afford it. The groups most likely to buy premium comfort are wealthy buyers, high-income buyers, and lifestyle buyers.
Most wealthy buyers made their money by investing, not spending. Contractors must be ready to show how premium comfort is a wise investment. Reviewing how energy savings keeps putting money in their pocket, and detailing how precise indoor air quality and humidity will protect their investment in antiques, art work, and fabrics can be most beneficial.
High-income buyers do pre-purchase Internet research. Most contractors are unknowingly disqualified because their Website is clunky, boring, or doesn't answer some of their basic questions. Contractors without a Website most likely don't stand a chance with this group.
Boomers grew up with great expectations and any business that can exceed these is on its way to making a premium sale. They need a lot of questions answered before spending their hard earned money. Why should I buy it? Why is it worth that kind of money? Why should I buy from you? They also demand customization. Without designing around their requirements it's impossible for them to get exactly what they want.
A contractor would be hard pressed to find a lifestyle buyer who enjoys being manipulated. If asked to choose one of three package deals, savvy buyers know they're being maneuvered toward the one in the middle. With this approach they know they probably won't get everything they want and will most likely pay for things they don't want. It is impossible to consistently sell premium comfort using a logical-based good, better, best approach. Premium buyers use emotion, not logic, to make their most important buying decisions.
Publication date: 05/15/2006