Attend just about any industry conference or association meeting these days, and chances are good that one of the keynote speakers will address the challenges associated with the millennial generation. This group, also known as Generation Y, was born between 1980 and 2000 and has a strong reputation for being tech savvy, environmentally aware, and cost conscious.
And they are not known for brand loyalty. As one speaker noted at a recent conference, millennials are prone to switching just about anything on a whim — jobs, brands, cell phone plans — because they do not see a downside to jumping from one thing to another. This is causing some to wonder how this generation will impact the HVAC industry, especially as the oldest millennials start buying homes.
Change Is Coming
There is no question that tech-savvy millennials have already changed the HVAC industry, said Dick Foster, president, Zonefirst Zone Control Systems, as evidenced by the vast number of apps and wireless products being introduced by those inside — and outside — of the industry. And millennials will keep pushing for new and innovative products, which may pose a challenge, he said, because “the HVAC industry has been slow to adopt new technology, whereas millennials seem to be early adopters.”
Another issue, noted Foster, is that HVAC products last so long that they are often taken for granted by consumers. “HVAC systems are not as disposable as many of the electronic gadgets the millennials currently use. They are much more costly to replace. The question becomes, when something fails, will they be as quick to change out a 5-year-old unit? And if so, will they see the value of upgrading to higher efficiency?”
That, in fact, is one of the biggest challenges facing the HVAC industry as a whole today, said Frank Landwehr, vice president of marketing, air conditioning business, Emerson Climate Technologies. “How do we get consumers to pay a little more for an HVAC system that provides superior comfort, improved efficiency, and is better for the environment? Our research suggests that while many consumers would be willing to pay for these features, in reality, they often decide on the lowest-cost minimum-efficiency equipment. This could be due to confusion or not having enough time to do proper research on the tradeoffs of system cost versus value. Clearly, the millennials will be expecting us to clear up this confusion for them soon.”
And this can’t come soon enough, as this generation is moving into homes and starting to purchase HVAC equipment. “As more of our buyers are millennials, there is definitely a need for our industry to adapt, not only in terms of product design, but also the way products are brought to market,” said Steven Hoffins, senior brand manager, unitary products, Johnson Controls. “Beyond the simple use of technologies that make HVAC products Web enabled with greater levels of control and automation, this group is looking for brands that stand for something, are authentic, and engaging. They are concerned with company values, environmental issues, energy performance, and strong value. We need to find ways to create relationships with these buyers and evolve our traditional marketing channels to align with their preferences.”
One advantage of marketing to millennials is that they came of age during the tech revolution, so they do not remember a time without the Internet and are fully accustomed to automation, said John Clements, senior marketing manager, Mitsubishi Electric US Cooling & Heating Division. “Marketers will not need to sell them on the benefits of technological convenience because new technologies are a part of their lives. This generation will intuitively use the solutions that have been created for HVAC systems without training. With the advanced controls systems offered today, HVAC systems are really a tech device in the home instead of just an appliance. We hope that this translates to the millennial generation being more interested in HVAC technology.”
Of course, sophisticated controls combined with environmentally friendly, highly efficient equipment may be difficult to sell to cost-conscious millennials. “These tend to be the most expensive systems available, therefore, educating millennials on the payback of these types of products has to be part of the strategy,” said Carol Baker, vice president of marketing, Nordyne. “It will be equally important that contractors incorporate technology in the sales process – whether it is through the use of a needs-based application in the home or through a professional website.”
Millennials also have a higher expectation of how technology should integrate within their lives, noted Baker, as they expect smart, hassle-free systems and well-designed interfaces. “Having control over their comfort, lighting, security, etc., simply through their smartphone is a likely expectation, and they would likely prefer it to be in one simple application.”
The advent of smartphones has, indeed, led consumers to not only wanting — but expecting — greater accessibility, flexibility, and personalization when it comes to their interests, said David Quam, senior product manager, software solutions, Honeywell. “When you couple this trend with the desire to be comfortable and save money within the home, you have the makings for strong demand for HVAC solutions that are more connected to consumers’ lives. Millennials, as defined, are at the forefront of this demand.”
While they may have more technological demands for their HVAC equipment, establishing a relationship with millennial customers may be more of a challenge for manufacturers and contractors. “Millennials will expect to send and receive most of their communications over the Internet, using mobile phones and social media,” said Landwehr. “So when you are trying to reach younger consumers with messages about your products and services, your communications need to be integrated with both conventional and digital media in mind.”
Another issue, said Landwehr, is that millennials will trust what other people are saying about a company online more than they will trust what the company is saying about itself in more traditional mediums. “Companies will need to deliver on the promises they are making about their brand by helping millennials solve their HVAC problems, making them energized to tell others about their experiences.”
Fostering a two-way dialogue with consumers is one way to encourage millennials to become more excited about HVAC — and to share their positive experiences. “They want an opportunity to speak to brands, and we need to let that happen more freely and open up that line of communication to establish a deeper connection,” said Hoffins. “Millennials are also looking for creativity, and even though we aren’t a creative industry, there is a huge opportunity for the industry as a whole to improve creative execution.”
However, being creative needs to be backed up by proper execution, as is the case regarding HVAC control by smartphone. “This is something everyone is looking at, as it has great consumer appeal,” said Hoffins. “The challenge is ensuring that the reality lives up to the promise. There’s a lot of development that needs to take place on both the application and equipment side to ensure a solid customer experience.”
There is no doubt that millennials expect to be able to use their smartphones to control their HVAC systems, and through the use of wireless thermostats and mobile apps, they can already adjust the temperature on most equipment, noted Baker. However, they are looking for more advanced diagnostics that will, for example, trigger service calls. To fulfill the high-tech desires of millennials, the equipment needs to be ‘intelligent,’ which naturally drives up the cost of the system.
“While an increase in demand for intelligent systems can drive component costs down, they still will cost more than a system that simply allows temperature control via smartphone only,” said Baker. “Just because millennials want to use technology to change the temperature doesn’t mean they also want to know and/or pay extra to access the history of the unit’s performance. Instead, the value created by intelligent products, such as better product quality, reduced warranty expenses, and retaining customers, has to be packaged into a proposition that makes the millennial’s life easier.”
And, the truth is, many current HVAC products already have the characteristics millennials seek, such as energy efficiency, automation, and ease of use — the industry just needs to do a better job of making them aware of that, said Clements. “With an increased focus on individualized comfort and complete control, HVAC products are trending in a way that will appeal to the millennial generation. They are beginning to buy and renovate homes just like their parents, but they expect their homes to have better energy efficiency and sustainability than the homes in which they grew up. This means, as an industry, we need to focus on technologies that save energy and are easy to use.”
“This is a very exciting time for the HVAC industry, as I believe we are at the brink of a major mind shift,” said Quam. “Gone will be the days where home comfort is a utilitarian reactionary event. New homebuyers will seek out home products and services that connect them to these once intimidating ‘leave me alone’ systems. When the simple act of commanding your home comfort from an app is realized, the next generation will seek out the means toward a connected home, and, with the right solutions, the HVAC industry will be poised to meet this need.”
Publication date: 7/29/2013