DENVER — WaterFurnace Intl. Inc. recently held its 2017 annual sales meeting in Denver, and as you can imagine, the 30 percent residential and 10 percent commercial federal tax credits for geothermal heat pump systems that expired Dec. 31, 2016, were on everybody’s minds.

“If you take what you learned in the old school — prior to the tax rebates — you guys have some secret sauce that you can use to continue to be very successful selling geothermal, whether the tax credits are extended or not,” said Michael Albertson, senior vice president, WaterFurnace Intl. Inc. “We look forward to the challenge.”

WaterFurnace’s 2016 sales numbers reflected the expiring tax credits’ impact on its business as 39 percent of its sales occurred in the fourth quarter of 2016 as contractors accelerated their sales pitches before the turn of the calendar. Furthermore, 17 percent of the company’s sales materialized in December.


New WaterFurnace president and CEO, John Thomas, who joined the company in December, introduced himself to attendees and laid out what the industry is up against.

He mentioned how some individuals are unsure of exactly how to sell geothermal equipment in lieu of the 30 percent tax credit. Thomas also stated that natural gas is the home heating source for more than 50 percent of the homes in North America and that natural gas prices are at a 20-year low.

“Are we going to use this challenge as an opportunity or as an excuse to be pessimistic?” Thomas asked. “I say we choose the opportunity side. We are committed to innovation. The concept of green comfort is not a trend or a fad; it will be sustainable going into the future without question.”

And while that might be a strong headwind the industry is flying into, Thomas was quick to point out that contractors have the tools to grow the geothermal market.

His first order of business: change how contractors sell geothermal to homeowners.

“Every sales call is like an interview,” Thomas said. “Unless you treat that sales call as an interview and do your homework prior on what you think will influence the buyer’s decision on hiring your solutions, you will not land as many jobs.”

The CEO broke geothermal buyers into three different categories — comfort, purpose, and financial — and said it is up to contractors to decide which buyers they are sitting across from.

Comfort buyers like both the comfort the technology brings to its home and the acoustics. They like the fact that they won’t have a condenser humming during a family barbecue. Purpose buyers are motivated by the technology’s environmental impact. They like the efficiency and the energy consumption part of geothermal.

Finally, financial buyers are all about the money. These are the customers that can be the most challenging to sales people. They’ll force contractors to redefine the economic model on payback and have a compelling story to get consumers to purchase the geothermal solution, Thomas said.

“Do your sales people know what your fundamental purpose is on how you want to market it? Do they know how to recognize a consumer’s primary buying motivation within 10 minutes of the sales call? If you try to sell a money person the other categories or vice versa, you won’t get the hit rate you want,” Thomas said. “If you’re selling on the economic part of it, you’re in the energy business, not the comfort business.”

Thomas also tackled the natural gas issue head on.

“Natural gas is in a boom-bust cycle that we have not seen in 30 years,” he said. “It all has to do with fracking, which has driven price levels low. A lot of market information says there is no way natural gas prices, as they exist today, will last. How do we find a way to change the discussion with consumers to take a longer view about energy costs instead of what we are experiencing right now?”


With much of the talk centering on sales and the geothermal market, there was also time for products. WaterFurnace highlighted its new SAH Air Handler, which comes in three new cabinet sizes, is available in 2- to 6-ton capacities, and utilizes R-410A refrigerant. When paired with the 5 Series split system, the product can be a solution for replacing an air conditioner or heat pump in homes with limited utility space.

WaterFurnace also discussed its 7 Series variable capacity product, which has seen great growth in the last five years and now makes up 20 percent of the company’s unit sales.

“The 7 Series is one of our cornerstones,” said Sean Dillon, vice president of residential sales, WaterFurnace. “In addition, our advanced zoning system is very important. Large custom homes with one unit and four to six zones create a much more cost-effective and comfortable home.”

Publication date: 5/10/2017

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