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If we step away from the HVAC industry for a minute, we see that retail purchases - and selling to homeowners is a retail purchase - typically follow the Standard Deviation Curve and result in 80 percent of purchases falling right in the middle. This would apply to clothes, autos, or even appliances (keep in mind that HVAC products are considered as appliances by many).
Let’s face it. There are those people who always buy at the low end as financially they can afford little else. Also, there are those who always buy at the upper end, those people who are financially affluent. You might find the low-end buyer drives to thrift stores in their Kia and the high-end buyers drive to needless mark-ups in their Rolls Royce. However, the bulk of buyers shop and buy at Sears and J. C. Penneys or basically someplace in between.
So, back to HVAC. Statistically speaking, 80 percent of all HVAC purchases should be at 16 SEER, not 13 SEER. Apparently our industry “bucks” the normal trend and sells 80 percent of their homeowners at the low end of the efficiency scale (13 SEER). Yet the ARI article clearly states that homeowners are looking beyond 13 SEER. Why does this happen with our products?
Perhaps one of the reasons is our view as contractors that 13 SEER is high efficiency. However, 13 SEER is the minimum efficiency standard as mandated by the federal government so it is really “bottom of the line.”
Do you buy bottom of the line products 80 percent of the time?
So maybe we need to change our perception?
Remember, as famous salesperson-orator Zig Ziglar said, “If you are driving Chevys and selling Cadillacs, you are not going to be as successful.” If you believe 13 SEER is high efficiency, then you will sell more 13 SEER.
IT IS ALL IN THE PRESENTATIONWhen talking to contractors, I consistently hear them say that they always offer a higher-efficient product when giving a homeowner a price. And I believe them. But maybe they should offer a third price as well for an even higher-efficient product and more homeowners might purchase the offer that is right in the middle. Remember, more homeowners are looking beyond 13 SEER and statistically speaking they should purchase right in the middle or a 16 SEER system. This is one of the philosophies and techniques practiced by my clients.
So what might you expect to happen if you changed this perception? Well let me share some average selling prices from an actual client of mine when we introduced new selling practices and techniques to his company.
• Average Ticket Year 1: $4,395
• Average Ticket Year 2: $4,887
• Average Ticket Year 3: $6,256
• Average Ticket Year 4: $6,563
Admittedly, there were other techniques introduced to accomplish this change. But at the very core of all of them is the concept of allowing the homeowner to have a choice that allows him to buy in the middle. There were still sales made at the “minimum standard efficiency,” but obviously many more sales were made right in the middle and even some at the extreme high end.
It is also interesting to note that this client did not sell that many more installations, yet his gross margin and net profits increased while his overhead decreased.
Then why not position yourself to increase your average ticket by offering choices that allow the homeowner to buy higher-efficient products that not only reduce their utility costs but provide better comfort. And as more home- owners are looking beyond 13 SEER, why not get your share?
Publication Date: 10/15/2007