ACHRNEWS

The Marriage Of Two Household Names

October 3, 2002
INDIANAPOLIS, IN — “Sears had already been in business for 16 years when Willis Carrier invented modern air conditioning in 1902 — 100 years ago this summer.” Those were the opening remarks from Frank Hartman, vice president, Carrier Residential Sales and Marketing, during last week’s teleconference announcing the three-year agreement between Carrier and Sears to have Sears sell Carrier 1-1/2 - to 5-ton residential ducted systems, as well as Carrier system products and accessories.

“Today, Sears and Carrier are two of the best known and respected brand names in the industry,” he added. “This is a historic agreement, combining the high-quality, industry-leading Carrier systems with the strength and power of the Sears sales and service network.”

Hartman himself asked the question that he anticipated his audience would ask: “What made Carrier decide to do this?

“We’ve been studying the retail channel for some time and its emergence as a growing market for the heating and cooling industry. In addition to the traditional heating and cooling dealers, consumers also look to the strong reliable retailers to fulfill all of their home improvement needs.

“We had to consider things differently, size up the opportunities, and make a commitment to enter new markets while continuing to sustain and build our traditional markets.

“An overwhelming number of Carrier dealers commented that they saw advantages and opportunities, yet while they rarely competed directly against Sears in the marketplace. We don’t expect this agreement to take sales away from the traditional Carrier dealers. We believe the Carrier brand and Carrier dealers stand to benefit from a huge increase in exposure — approximately 1.3 billion impressions per year are achieved through Sears [promotions].”

Hartman said that Sears sales professionals will pay visits to customer’s homes to assess comfort solutions and financing. “Next, a certified Sears contractor will install the system with expert service provided by Sears nationwide service network for the life of the product.”

Hartman added that Carrier will work with Sears on technician certification — particularly through NATE. “We feel this is a wonderful avenue for our industry to move forward with qualifications for certified service techs and installers.”

SEARS’ PERSPECTIVE

“This relationship will continue to strengthen our position in the HVAC business,” stated Kevin Callahan, vice president of Sales and Business Development for Sears Product Repair Services. “We are excited in going forward with Carrier in an exclusive marketing alliance.

“Carrier is a world-class manufacturing and engineering business. And we know Carrier is committed to our business model and the 550-plus sales professionals in the field.

“Sears’ intent with these strategic alliances is to position our HVAC business for dramatic growth in market and revenue share by offering products and services to solve customers’ indoor environmental needs.

“We are continuing to develop our sales projections for 2003, but we are not prepared to share that information right now.”

When asked by The News about its decision to drop the Trane brand and partner with Carrier, Callahan said, “We are the exclusive retail channel distributor for the Carrier product. Trane was a very professional and great partner for the last three years, but to grow this business in the direction we want to go in the future, it made sense to align ourselves with Carrier.”

Callahan also responded to the question of technician training and development. “We are very interested in continuing the development and growth of our HVAC technician force. We will definitely work with Carrier to recruit and develop the best HVAC technicians that we can find.”

Callahan added that Sears is “very much interested in pursuing light commercial growth and commercial opportunities, specifically related to the property management industry, where we have focused some of our national accounts people and commercial sales representatives.”

Sidebar: Before Sears, There Was Lowe’s

A recent pilot program in certain U.S. markets involved one of the most recognizable names in the HVACR industry — Carrier — and one of the leading home improvement stores — Lowe’s.

In the program, Lowe’s agreed to display residential equipment in its stores for the purpose of generating sales leads from walk-in customers. Selected Carrier dealers from the area were asked to join the program. Each dealer was given an equal number of sales leads from the Lowe’s store in their geographic area. It was then up to the dealer to contact the lead and negotiate the sale and installation.

Lowe’s encouraged the dealers to have their own salespeople on hand to talk with the walk-in customers. If that was not possible, a telephone hotline number was set up for walk-ins to call Lowe’s for more information, which was relayed to Carrier. For this exposure, Lowe’s received a predetermined percentage of each sale as a finder’s fee. If no sale was made, no fee was collected.

The Lowe’s/Carrier program was test marketed from June 2001 until July 2002 and has been suspended. The News recently spoke to one Carrier dealer who was part of the pilot program.

BAY AREA A/C AND LOWE’S
Dave Hutchins owns Bay Area Air Conditioning in Crystal River, FL, a Carrier dealer. He was approached by the manufacturer to participate in a program with his local Lowe’s store.

“A lot of the top Carrier dealers were approached at first, with the intention of keeping the number of dealers [affiliated with] each store to two or three,” he said. “I believe there were about 20 Carrier dealers involved in the Florida test case.

“The idea of the program is to generate leads from a place where you normally wouldn’t be,” said Hutchins. “We were told that 8,000 people a week walk through a store and give [our products] good exposure.”

Hutchins said his company did not have to keep any people in the store and the leads came in through a hotline to Lowe’s and then to Carrier.

“At first the leads were coming in late and when we’d call the customer, they had already made the purchase,” he said. “But they got that worked out and everything became more timely.”

Over a one-year period, Bay Area was given 61 leads. Hutchins said that although the numbers weren’t high, the closing rates toward the end of the program in July were good. “We were closing six out of 10 sales,” he said. “And half of the leads came in the last month.”

Hutchins added that the “unknown factor” was the number of Lowe’s customers who saw the Carrier name and decided to call a dealer in the area. “Since the program ended, we made one sale from a Lowe’s lead from last year who just called us back,” he said.

Hutchins also said that a customer could hypothetically get a better price by calling the Carrier dealer, but the actual cost of the lead (3%) was not great enough to make a big difference in the price.

“Dealers were not encouraged to add the cost of the lead to the price,” he said. “You couldn’t give the customer a price that was different from the Lowe’s price you’d already given them.”

Speaking of customers, Hutchins was pretty convinced who “owned” the customer list. “I think Lowe’s owned the customer because [the customer] was encouraged to call a Lowe’s hotline and because the lead-closing rate was pretty low,” he said. “I definitely don’t believe they were Carrier customers, because many of them wouldn’t have even thought about a Carrier purchase unless they had seen the store display.”

Hutchins added that Lowe’s would not finance any extended warranties, but he could never get a concrete answer why. “I assume that Lowe’s may have gotten burned in the past by selling some extended warranties that a company didn’t honor,” he said, referring to businesses in fields other than HVACR.

In summary, Hutchins felt that Lowe’s didn’t have a “unified effort” and displays were moved from good locations in a store because of a manager’s whim and store employees didn’t have “basic knowledge” of HVACR. He felt that some employees didn’t even know the store had a Carrier display. Customers had to go into the Lowe’s store to fill out a credit application and couldn’t do it during the sales presentation.

Yet, Hutchins still applauded the effort.

“Overall, it was a positive experience and we were disappointed that it was discontinued, because we were getting a lot of sales toward the end. And name recognition helped us because people were seeing the Carrier name over and over again in the store.”

Although the program ended in July, it was not deemed unsuccessful by Carrier. “Carrier’s pilot program with Lowe’s was a positive venture for both organizations and our dealers,” said Herman Kling, Carrier vice president of sales. “Unfortunately, a lack of uniform licensing regulations from state to state made it difficult to create a scaleable model, resulting in a joint agreement to end the pilot.”

— John R. Hall

Publication date: 10/07/2002