Contractors Lead the Charge in High-end Air Conditioning Market
While HVAC manufacturers claim the market for high-end air conditioners is growing, the reality is the market is determined by consumers and those with boots on the ground — the contractors. It’s up to contractors to explain the numerous benefits of such systems and how those benefits address consumers’ wants and needs. And, depending on the contract, the strategies and approaches used to close the sale vary greatly.
Jason Hanson, president and CEO of Sierra Pacific Home & Comfort Inc., Rancho Cordova, California, said his target audience for high-end air conditioning systems is typically homeowners who plan to be living in their home for at least another 10 years — the longer, the better.
“We also look for larger homes, especially homes with zoning [when selling these systems],” he said. “We introduce it to homeowners by showing them older technology of single-stage versus two-stage cooling or variable capacity. Then we show them the impact that the variable capacity has on their comfort and energy consumption.”
Hanson’s main strategy is to show homeowners how these systems can solve comfort problems and save energy at the same time.
“We find the higher prices are usually the main objection,” he said. “But we use financing to make the purchase obtainable.”
One thing Hanson has found over the years is Wi-Fi thermostats and smart zoning require a more careful initial setup, and his team needs to be prepared to make return trips to make adjustments to fine tune the system to the homeowners’ expectations.
ALL IN THE DEMOGRAPHICS
According to Jaime DiDomenico, president, CoolToday/PlumbingToday, Sarasota, Florida, the obvious target for high-end air conditioning would be single-family homes that fall into the upper quartile value-wise.
“That does not mean it is the only target or that the definition of high-end is the highest prices,” he explained. “Manufacturers have been trying to find ways to introduce variable-speed technology at more affordable prices and reduce their two-speed systems to more modest pricing. In the end, we introduce high-end [equipment] to all spectrums of demographics and leave it up to the consumer to weigh the value, benefits, and cost formula.”
Cool Today employees introduce high-end equipment during routine maintenance visits, service visits, and sales visits.
“We educate our maintenance team on high-end systems, so they can educate the customers,” DiDomenico said. “Some of my comfort advisors, honestly, would like to leave the option off at their discretion, but I push to always include it because it only has positive benefits, and it allows consumers to make their own choice. Additionally, the price conditions them on how much a complete system replacement can be.”
Selling points haven’t changed much since variable-speed air handlers were introduced in the 1990s, DiDomenico noted.
“The biggest ones are efficiency, comfort, and technology,” he said. “Even SEER ratings or AFUE can be understating because of variable-speed technology and how they rate them at AHRI [Air-Conditiong, Heating, and Refrigeration Institute]. If the weather is moderate and fluctuating temperature-wise, these systems will dial in the right amount of energy consumption needed by the homeowner — even more so if smart zoning is included in the solution. For comfort, humidity removal is optimized the more advanced these systems become. With the proper IAQ add-on, the system will not only cool but remove moisture and particulates from the home.
“However, the biggest difference between now and then as far as high-end systems is the monitoring and self-diagnostic capabilities packaged with the top -tier systems today,” DiDomenico continued. “They will alert the customer and service provider of specific faults when recognized, beyond just allowing the homeowner to manage the system with a smartphone or tablet.”
While the benefits of these systems are great, the price is still the biggest hurdle for homeowners, DiDomenico added.
“These systems are 50 to 100 percent more expensive to the contractors than a mid-range or lower-end system with slightly lower SEER or AFUE ratings,” he said. “So the total investment is almost always the biggest hurdle. However, that hurdle — in sports terms — can be a very low hurdle (like a 2-foot hurdle) or a very high, or impossible, hurdle (like an 8-foot hurdle) based on the training, education, and value points they place on these systems throughout their organization and how they translate them to the homeowner. When a contractor really believes in the value proposition of a 97 percent efficient furnace/21 SEER condenser combination with zoning for $17,000 to $22,000 and has a great approach to presenting this value to the prospective buyer, their chances increase by a factor of 10 over the contractor who is less educated or does not invest in educating their team regarding the value points of these products.”
Above all, DiDomenico advises contractors to get educated on high-end air conditioning systems because unfamiliarity could be the reason they’re not selling.
“Educate your team — drive the knowledge of the systems and, more importantly, how to translate the value of these systems to prospects and customers,” he said. “Use all the tools the manufacturers and distributors give you to assist in selling these — rebates, special long-term financing, etc.”
Somebody purchasing a high-end air conditioning system is typically a little bit older and somewhat conscious of their utility bills and equipment costs, according to Cody Mauzy, sales, Mauzy Heating, Air & Solar, El Cajon, California. They also are usually interested in air filtration and IAQ products.
“What I have found is there are a lot more people interested in high-end systems than contractors think, because most contractors seem to be nervous about the high upfront cost and don’t really explain the benefits well,” Mauzy said. “So a lot of contractors don’t even offer it. Our target audience for these systems is broad because a lot of people do want something nice. If they’re going to be living in the home and enjoying the home, they don’t want to put something in that’s going to cost them a lot to run, be noisy, or not have options for air quality.”
Mauzy sells a lot of 25 SEER, variable-speed equipment, usually with some sort of air filtration. The reason for his success, he claims, is simply because other contractors are not even giving homeowners the option.
“I interview homeowners, sitting down with them to find out what their goals are, what they hope to achieve with a new system, and get them talking about what they’re looking for,” Mauzy said. “A lot of times, they don’t really know what they’re looking for; they’re just saying what the other guy told them or what friends or family told them. I break into it and explain it with analogies. If someone tells me they’re moving in a year, they just need a/c for the summer, or they’re selling the place, then high-efficiency systems probably are not right for them. But if they’re investing in their home and plan to be there long term, I can start explaining to them all the features that come with the higher-end equipment.”
Energy efficiency, lower noise levels, and even rebates are the biggest selling points, Mauzy added.
“The 25 SEER equipment from Lennox is eligible for the federal tax credit, being that it’s solar ready,” he explained. “But really, it’s energy efficiency, noise, and customization of the system with the Wi-Fi thermostats that draws homeowners to it.”
Again, price is the only hurdle in Mauzy’s experience.
“However, I can make the compelling argument that while this will cost you more on the front end, it is the system that is the cheapest to operate,” he added.
Unfortunately, the biggest mistake contractors make in the field is assuming homeowners don’t want high-end systems, Mauzy noted.
“A lot of contractors don’t have their guys trained on how to install variable-speed equipment,” he said. “They are just used to the 14 SEER, single- speed, and that’s their bread and butter — they don’t want to branch out and learn anything new. And because they don’t know it, they don’t offer it.
“You’ve got to be well-versed in the technology and its benefits and be able to explain it to a homeowner in layman’s terms,” Mauzy continued. “If you’re just telling them the features without explaining the benefits, they’re going to have sticker shock. And if you can’t explain why that makes sense for them, they’re never going to go for it. You need to learn about what it is you’re actually selling. For me, personally, it’s easy because I have that stuff in my own house. I installed it myself, I know what this stuff is capable of. So contractors really just need to take the initiative to learn the equipment themselves to be able to explain it to homeowners in an easier way. Show them the value of a better system, and that’s what they will want.”
Publication date: 6/25/2018