Guest Blog

HudRoom: How to Sell the Tax Credits, Starting Now

June 15, 2009

My fearless editor, Mike Murphy, who shall remain nameless, wrote an editorial about the tax credit stimulus package for energy savings. He felt that the ARRA program was fairly difficult to obtain compliance for the credits, and basically concluded the program was created by bureaucratic nitwits with the IQ of cantaloupes. This is, I feel, an insult to cantaloupes everywhere, and someone should be sued.

But then again…

You’re contractors and are used to complicated. You thrive on exploded diagrams - long as they can be unexploded - and understand sequential diagnostics toward a solution. This problem may be less complicated than we’re thinking.

The dollar amounts for the credits are of course three times more than the previous credits, and those were sold in rather significant numbers. The way they’re sold to homeowners is not necessarily on entry or acquisition cost.  That’s a good way to frighten someone, or have them knee-jerk themselves to the next cheaper option.

You sell them on ROI, showing and proving to a homeowner that this credited Cadillac system they formerly might not have considered can actually be less expensive to own than the uncredited Chevy they were looking at.

Let’s say you’re quoting a “good” system at $5,000 and a “best” system is $7,000. (You’d better be doing tiered pricing or you’re losing lots of sales.) The good system is guaranteed to save a homeowner 10 percent on energy a year, amounting to $360.

Remarkably, that’s a 7.2 percent return on investment. You may as well tell them that their new green system really is, since it’s spitting out cash like an ATM but happens to keep their house comfortable and raises their property value. As they’re getting their hydrocarbons in a wad over this revelation, you drop the bomb…

“And I’ve just figured that the other system, which we guarantee an energy savings of 25 percent, using your same energy figures, will save you $900 a year… which is a staggering 12.8 percent ROI! And Mr. Homeowner, I don’t know how your 401K is doing, or if you’ve got an oil well in the backyard, but 12.8 percent is beyond anything guaranteed on the planet right now.” He salivates. Spit is bubbling on his stingy broccoli eating lips…

“Uh oh” you say. His demeanor drops. He knows your calculator is messed up, and that you’re a blooming idiot with a decimal problem. “This can’t be right” you say…

“I forgot about the tax credit. This system that pays you $900 a year in energy savings also comes with another $1,500 in pure tax credit, taken right off your bill when you pay your taxes. This means…. that…. your actual return is… are you ready?  Nearly 14 percent.”

Mr. Homeowner, now you know why this program will not last. The government gives slowly, tends to take rather quickly. So which rate of return do you want… the 7.2 percent or the 14 percent?” Let him pick.

I’ve got a few dozen contractors doing this now, and the marketing that gets the leads to go with it. They are selling their little patooteys off using this marketing and sales method. They, bluntly, don’t mind that their competition continues to think this is hard.

I plan to have a Teleseminar on this very topic June 24 with two of these contractors. Each has sold hundreds of thousands in equipment using a pretty simple method. What would you like me to ask them for you? 

Check it out here,
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