There’s a new trend in the Internet of Things (IoT) for the HVAC industry — fringe items or items HVAC contractors can offer on top of traditional HVAC products and services. Home automation is the future, and people want to be as connected to their homes as they are to everything else. So, should HVAC contractors sell these items or should they pass that responsibility on to the big-box stores and cable conglomerates?

NEW OFFERINGS

According to a new market research report by marketsandmarkets.com, the home automation system market was valued at $39.93 billion in 2016 and is expected to reach $79.57 billion by 2022 at a compound annual growth rate (CAGR) of 11.3 percent during the forecast period.

Manufacturers are quickly developing fringe items that allow customers to connect multiple aspects of their homes together. Considering door locks, IAQ components, security systems, lighting, sprinkler systems, sensors, and more, there are multiple options for HVAC contractors to upsell customers on.

“Fringe items are likely the next step in heating and cooling,” said Chad Baumann, sales and marketing manager, Baumann and DeGroot Heating and Cooling, Holland, Michigan. “Our ‘tin knocking’ reputation is quickly going out the window. For years, our industry has comfortably lagged behind the technology curve. As new technologies were thoroughly vetted and costs came down, we’re now seeing them being implemented into the simple mechanical systems of the home. Now, with the dawn of the IoT and home automation, we’re getting thrust onto the forefront of technologies. We feel you have to embrace the wave or risk being left in the dust.”

The first step is knowing your clientele and what to look for when entering their home.

“I have had my best luck [selling fringe items] by really training the guys on the HVAC stuff and IAQ, so they believe it is a great product, really works, and will help clients,” said Steve Moon, president, Moon Services Inc., Elkton, Maryland. “Then, you see your techs go into action. By interviewing clients to find out their wants and needs, it’s very easy to determine what their interests are. Then, technicians can look into their arsenal of products and let them know what products they believe in and let the customer choose what is best for them.”

Then, it’s narrowing down exactly what manufacturers and products you want to team up with. You want your technicians to be experts, so offering too much could end up doing your company a disservice in the end.

“We are working on how to best market fringe items and how to train our team on this,” said Matt Bergstrom, president, Thornton and Grooms Heating and Air Conditioning, Farmington Hills, Michigan. “Also, we’re determining what pony to jump on as far as manufacturers. There are so many, and to sell them all leaves your team having to service them all without having the knowledge of them all.”

SUCCESSFUL OR NOT

Selling fringe items is something HVAC companies are either all in on or not at all. Some are recognizing the value of selling them while others are skeptical of straying from their original offerings.

“I believe we have an advantage over the big-box stores and even the big name alarm companies,” said Chris Hunter, president and owner, Hunter Heat & Air LLC, Ardmore, Oklahoma. “We are the ones with relationships with homeowners. We’re in their homes multiple times a year. We’re the ones they trust, and they are already paying a monthly fee for maintenance club memberships. So, when we are the ones who show them how we can improve their lifestyles, we will be the ones who can add residual income to our businesses. If we don’t, someone else will. It’s go-time for the Hunter super techs. We are moving full speed ahead with it.”

Those who offer Trane products, for example, have the opportunity to offer the Nexia system exclusively to homeowners, said Ian McTeer, retired field service representative, Ingersoll Rand, HVAC, Ontario, Canada.

“Nexia goes well beyond smart thermostats, and, once installed, the potential for add-on device sales by dealers or other companies’ upgrades is expanding almost every month. Ideally, contractors should sell smart thermostats that collect data, fault codes, allow remote operation, and are capable of emailing dealers when service is needed.”

OPPORTUNITIES IN IAQ

Contractors must not balk at the opportunity to upsell IAQ products, Moon said.

“The average HVAC company is letting these IAQ opportunities slip away,” he said. “Our industry is blowing it. Our clients want better filtration, UV, humidifiers, dehumidifiers, and on and on. We are the front line. Techs in the field are missing a harvest of cash because they don’t want to be salesmen. And most of the time, they don’t even mention upgrades and actually send customers to big-box stores.”

“We made a decision years ago to grow our company vertically with products and services that complemented HVAC,” said Rich Morgan, president, Magic Touch Mechanical, Mesa, Arizona. “The results have been fantastic, as the margins are higher than in HVAC, and there is less competition in our market. One of the most desired products that came as a surprise was solar shade screens. We initially added shade screens in an effort to have more whole-home solutions. Some of our other best sellers are Wi-Fi thermostats, Wi-Fi smoke detectors, insulation, envelope and duct sealing, and energy management systems. We’ve had a lot of success selling this product even as a send-alone offering.

“There’s no doubt in my mind that HVAC companies need to be in the ‘whole home’ and ‘smart home’ space and even have an edge over other industries who lack the HVAC expertise to offer a complete solution,” Morgan continued. “I don’t think it’s the next big thing, I think it’s the now big thing.”

While some are happy to jump onboard with this trend, not everyone is so sure it’s a wise idea, or they’re having difficulty doing so.

“This trend shouldn’t be the next big thing,” said Rob Minnick, CEO and president, Minnick’s Inc., Laurel, Maryland. “There are many other items contractors already need to focus on. These new items won’t solve the health, comfort, and safety issues that should be addressed first.”

Moon agreed, stating, “We are having a tough time upselling anything outside the realm of HVAC. The pushback is that techs don’t want to be a salesman.”   

Publication date: 7/31/2017

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