When homeowners think about purchasing a high-efficiency furnace with all the bells and whistles, does a particular brand name come to mind, or do they first think of their contractor? Some contractors are betting on the latter, which is why they have opted to offer high-end equipment under their own private label.

Private labels allow contractors to essentially brand themselves, thus differentiating themselves from the competition. One contracting firm that has successfully built its company into a brand name is Peaden Air Conditioning, Heating, and Plumbing, Panama City, Fla., which offers top-of-the-line furnaces, air conditioners, and heat pumps under the name, Peaden Signature Series.

Offering private label equipment makes a company truly unique, noted Robert Wilkos, business leader, Peaden Air Conditioning. “Pick up any phone book, and you’ll see lots of national brand dealers, but how many Peaden Signature Series dealers do you think there are? Just one.”

While offering private label equipment can be a smart move for some contractors, it is not a business model that fits every company. It takes a lot of time and energy to essentially rebrand a service company, especially one that has primarily advertised itself as a dealer for a particular manufacturer. For those who do not mind investing the time and energy into creating a private label, though, the efforts can definitely pay off.

WRAPPING UP CUSTOMERS

Peaden has offered its Signature Series for 11 years, and according to Wilkos, it’s highly likely that homeowners moving into an existing house in the area will have a Peaden label on their HVAC system. As he noted, even if they’ve never heard of the company, chances are good the homeowners will contact Peaden and continue to have their systems serviced by them.

Peaden also offers a value line - the Peaden Pro Series - and approximately 80 percent of the equipment the company sells is one of its own private labels. “Our Signature Series is the best value to the customer because it comes completely wrapped up with a 10-year parts and labor warranty and a 10-year Quality Pledge. We also include a complimentary one-year maintenance plan on every component and/or system sale no matter what brand we sell,” said Wilkos. “This teaches the homeowner that it is important to have the equipment cleaned every year, and they always come to us for service.”

The lengthy warranty is the main reason why many customers choose to purchase the private label equipment offered by Fire & Ice Heating and Air Conditioning, Columbus, Ohio, noted its president and owner, Scott Merritt. “In this economy, I have found that warranties mean more than a brand name. With my private label equipment, I can offer a 10/10/10 warranty - 10-year parts, 10-year labor, and 10-year replacement. With any other line of equipment, I can only offer 10-year parts and 10-year labor.”

Merritt stated that given the poor economy, most customers are staying in their homes longer, which is why they are interested in high-efficiency equipment that is essentially guaranteed to last. “We are selling a lot of private label two-stage, variable-speed furnaces that are 95 percent AFUE, because people want to take advantage of the tax credits in order to get high efficiency, as well as the best possible warranty.”

IT'S ALL ABOUT CHOICE

In addition to its own private labels, Peaden carries three other brands in order to give the customer as much choice as possible. “I basically look at everything from a consumer perspective. Consumers want options, and they want selection,” said Wilkos. “Think about when you go to buy a TV. If you go to a store that only has one brand, you’re going to want to visit another store that has a wider selection.”

That same philosophy applies to buying HVAC equipment, noted Wilkos. “We listen to the customer’s needs first, and based on that, we offer several different brands - including our private label - with various options. Homeowners aren’t necessarily prepared for that much selection, then they turn to us and ask what we recommend, and it is almost always our private label.”

When discussing furnaces with customers, Merritt basically offers six options: Good, better, best with his private label and good, better, best with a brand name. Once customers decide on the efficiency level, it narrows the choice to two options - either a brand name unit or the private label unit. “Some people only want a brand name piece of equipment, while other people don’t care. I sell both, and they both serve a purpose.”

Merritt has offered equipment under the Fire & Ice name for about a year, and he said most customers have been very receptive to the private label. “Younger homeowners, in particular, are more educated and do a lot more research online, so they often know quite a bit about the equipment. Most of the time, they aren’t as hung up on brand names as their parents’ generation, so they’re very interested in learning about our private label.”

That is good news for Merritt, who started offering private label equipment as a long-term strategy to increase his company’s name recognition. “With the private label, I can put my logo and phone number on each and every unit, and I don’t have to worry about other contractors covering up my sticker with theirs. I plan on being in business for a long time, and the more I can get my logo and name out there, the better off I will be long-term.”

Adopting this long-term strategy is crucial when deciding to venture into the private label business, said Wilkos. “In order to be successful with a private label, you have to have a loyal customer base, and you have to be fully committed. That is really key, because if you’re just lukewarm about the idea, and you don’t see immediate success, then it’s not going to last long.”

That being said, Wilkos added that Peaden has been very successful with its private labels, and he sees continued success going forward. “We are looking at this long-term. We want to sell a very good product that has a great warranty, so we can be the contractor of choice for as long as possible. Getting more of our own private label out in the market is the way we are making this happen.”

Publication date: 11/15/2010