It doesn’t take a scientist to recognize the quickest way to reduce one’s energy bill is to use less energy. Though, during extreme seasonal temperature swings, saving energy likely ranks very low on homeowners’ priority lists.

So, how does one efficiently, effectively, and affordably improve a structure’s long-term comfort integrity. Simple: home-performance contracting.

HOME-PERFORMANCE CONCEPTS

When the comfort equipment stops working, it’s time to call the heating and cooling guy. Most homeowners are not interested in SEER, EER, AFUE, or other industry acronyms; they’re concerned how quickly and affordably their issue can be resolved.

As a contractor, it’s your job to educate customers on the roots of their problems and inform them how a whole-house approach is most beneficial.

Erik Bryan, owner, Precision Air & Heating, Chandler, Arizona, got into performance contracting in 2012 because “it’s the single most effective thing homeowners can do to maximize the effectiveness of their air conditioners and gain true savings on their electric bills.”

Bryan is confident home performance will continue to gain traction in the future.

“As energy prices continue to rise, people will be more and more interested in ways to improve their living efficiencies,” he explained. “Home-performance improvements will pay for themselves even faster as energy prices keep increasing.

“People are more environmentally conscious than ever before,” continued Bryan. “One of the best ways to reduce your environmental impact is to reduce your energy use. The majority of residential energy use is attributed to cooling and heating, so this is an area where homeowners can make a significant impact on their overall energy use.”

Additionally, as homes age, they become less efficient due to settling attic insulation and damaged seals on windows and doors, creating more opportunities for home-performance contractors to thrive.

EDUCATION IS KEY

Because the majority of customers are unaware of home performance and its many aspects, educating consumers is an essential part of the sales process. Steve Schmidt, president, Frederick Air Inc., Frederick, Maryland, said it’s entirely up to contractors to educate their customers.

“Customers have problems they don’t think are associated in any way with heating and air conditioning,” he said. “They just don’t have a clue what could be causing these problems. So, we start asking if they have dust all over their house, high energy bills, areas of the home that are uncomfortable, or deal with high or low humidity, and it never occurred to them that these are problems that can be fixed. So, we’re there to tell them they can be fixed and that we have the solutions.”

It’s important to keep asking questions, Schmidt said, because the customers won’t bring up issues because they don’t know they should. During every service or sales call, Frederick Air employees are always looking for symptoms and asking questions, which almost always leads to a conversation about home performance, Schmidt noted.

“Most homeowners know there are ways to improve their homes’ efficiencies, but they aren’t always aware of the many different options available and how impactful they can be,” Bryan added. “We take the time to thoroughly explain how home-performance improvements work and how they’ll directly impact the homeowner. Attic temperatures can reach 180°F when it’s only 100° in Phoenix. Proper ventilation, insulation, and a radiant barrier can greatly reduce an attic’s temperature along with the load on air conditioners.

“You have to explain the ins and outs of home performance in a way the homeowner can understand,” continued Bryan. “Make sure they completely understand what they’re purchasing. This will most always lead to a successful sale. Visual aids and documentation demonstrating a customer’s ROI [return on investment] will also help improve your closing percentage.”

Rob Minnick, CEO and president, Minnick’s Inc., Laurel, Maryland, has been doing performance contracting for the past 10 years, and he still has to explain to most of his customers what that means. “The good thing about it is, in our area, the utility companies have been promoting energy audits for five years now,” Minnick said. “So, more people are becoming familiar with the terms and the language, but they still don’t understand what it is. It’s much easier to talk about it now than it was when we first got into it. The first five years were really difficult — people would look at me like I had three heads.

“It’s a challenge with customers, even to this day — there’s still a learning curve,” he continued. “There are so many different questions and approaches — every customer is motivated differently, and you have to figure that out. It comes down to knowing what questions to ask the customer and finding out their wants, needs, and pains, and really targeting that pain to get them to want to proceed. Educating the customer in all of this is really the biggest part of all.”

HOME-PERFORMANCE DRIVERS

Selling home performance is tricky, and selling testing is even more difficult, according to John Boylan, general manager, Lakeside Service Co. Inc., Brighton, Michigan.

“You can sell the concept of problem solving by saying this is a roadmap to being more comfortable and efficient. By making the test affordable, you find a way to provide a solution that benefits your company financially and solves the customer’s problem; that’s where the win is,” Boylan said.

Identifying what motivates customers is the hard part. In Schmidt’s service area, it happens to be energy efficiency.

“Energy efficiency is the main concern people think they can solve,” he said. “Then, they’re further intrigued when they find out it can also take care of a myriad of comfort problems. Energy, comfort, and dust are the main motivations in our area.”

But, about 50 miles southeast of Frederick, Maryland, Minnick said motivations vary with each customer in his service area. However, he often points out certain health risks and uses to motivate customers.

“I start out by asking if they have any allergies or asthma, cold rooms, and so forth. Then, I walk around and take photos, and I show them evidence of things like pink insulation that’s now black and back it with the market data I have. Health concerns are a major factor.”

Health drives about 60 percent of Northridge, California-based So Cal Air Dynamics’ business, according to owner John Ellis. So Cal Air Dynamics has been in business for six years, although Ellis has been in the HVAC trade for more than 35 years and operates in both the residential and commercial markets.

“Residential clients are more emotionally attached to what their decisions are, especially when kids and health are involved, as opposed to most commercial businesses that typically do not own their buildings,” Ellis said. “There’s a different motivation there.”

Ellis said his company’s niche is creating clean, healthy environments for people with respiratory compromises. “I have about four prominent doctors here in California that actually prescribe — and that’s a bold word — our services to their patients. My associate is a respiratory pharmacist who trained in building science. We go into sick peoples’ homes with acute respiratory compromises, such as chronic obstructive pulmonary disease [COPD], cystic fibrosis, or immune compromises. We have clients who’ve had lung transplants and children with severe allergies and asthma.

“We go in, look at their homes, and fix their residences by addressing the specific needs for what their ailments are and monitor the success,” Ellis continued. “We have people going off medications, taking fewer trips to the doctors, and improving their overall wellbeing. We’re just showing great, great success, and this is all from performance contracting.”

The solution for each client and home is different, which most people don’t understand, Ellis explained. “We have a culture in this industry that everything is cookie-cutter, and it’s not. We’re talking about identified medical conditions, and we have to address each house. I don’t care if it’s not the same block and they’re next-door neighbors, because of building science and structures of different phenomenon, each one is unique to itself, and we have to approach it that way.

“For example, we had a couple of wildfires run through here about four years ago; one was called a station fire, and it was in the foothills,” he continued. “It was really bad, and this one house that backed up to the foothills had slightly negative pressure, through no fault of their own, and the house was inundated with ash. Ash is high in carbon, very acidic, and the homeowner was getting very sick from it and couldn’t figure out why. They were making trips to the emergency room in full respiratory arrest and spent $60,000 in medical bills the year after the fire. I went in and, after thorough testing, was able to determine the house was going into negative pressure and had a lot of infiltration. They spent about $60,000 to take down drywall, remove insulation, seal the house, vacuum, change the pressures, relocate the HVAC system, and put in some filters. I also put in some of my own proprietary things, and she got better through building science, home performance, testing, and knowledge and education. That’s just one success story.”

PRIORITIZING SOLUTIONS

In the case Ellis mentioned, the homeowner wanted to get well, so they completed the entire project at once. But that’s not always the case.

“You have to understand you’re going to get a whole gauntlet of different people with different motivators at different walks of life in different financial situations,” Ellis explained. “So as not to overwhelm them, we address issues one at a time. We put together a scope of work and lay it all out for the homeowner. Few and far between say, ‘Let’s do it all.’ So, we prioritize, and I try to let them lead the conversation. I’m just the moderator.”

Schmidt also prioritizes with his customers.

“We outline a plan, A to Z — here’s everything you need to do,” he said. “Then we say, ‘Here are the things that are probably causing the most pain, so you might want to address those first.’ It doesn’t all have to be done the same day, as the work often is completed based upon what the customer can afford.”

And, if the homeowner doesn’t choose to make all of the improvements at once, following up with them is a must. “What we do is say, ‘Okay, we’ll do A, B, and C; when would you like us to get back to you about D, E, and F?’” Schmidt explained. “And, it’s usually within six months to a year. So, we put it in the file and give them a call then. Sometimes, they will call us.”

Lakeside Service Co. paints a roadmap for its customers, prioritizing based on the results of the tests and where the greatest opportunities are, Boylan said. “We identify the low-hanging fruit. We give them the map and describe it as all the possible things they can do. We try to quantify through energy modeling software what the approximate savings would be or what kind of expectations they can have for afterwards. Then, we let the customer customize the plan.”

MISTAKES NOT TO MAKE

It would be a mistake to try to sell home performance as a product, Schmidt noted. “For example, saying, ‘Hey, we’ve got a special on sealing your attic,’ would be a waste of time, because you’re not talking about what their problem is. You’d have to say, ‘Hey, we want to help you save on your energy bill.’ That’s something people can understand. The mistake is pushing products as opposed to selling solutions.”

According to Ellis, the biggest mistake contractors make is failing to educate their own employees.

“You can get trained, go in and do a blower door test, and get a number, but do you understand what the data mean that you just collected? Do you know what to do with it? Do you know how to fix what the data are showing you? And they don’t. I get calls about it all the time. The biggest mistake they can make is to go through training looking for a silver bullet or a way to generate sales and not fully understanding the science behind performance contracting.”

Boylan added contractors should set realistic expectations and avoid making promises they can’t keep.

“I’ve never met anybody who’s figured out the perfect business model for doing this,” Boylan said. “There’s a lot of risk involved, and we’ve been very fortunate. It’s a difficult industry, and I’m an advocate; I believe in it. A lot of us have benefited greatly in this surge in home-performance education, so to speak, because those of us who went through the training gained something. And, anybody who took that training and applied it in the field learned something, too. You can’t do this and not grow from it.”

“I think this is our future, hands down,” Schmidt said. “Anybody who thinks home performance is not our future is the same person who thought Puron was something that may or may not catch on. There are still guys clinging to R-22. Those same guys are still clinging to the idea that they can avoid doing home-performance work.”

Publication date: 10/12/2015

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