“Once involved, a contractor looks at everything differently.”
These are the words of Domenic DeLeo, manager of the Isaac Home Energy Performance (IHEP) division as well as the residential installation division of Isaac Heating and Air in Rochester, New York. He was speaking in regard to home-performance contracting and the different business paths on which it leads HVAC contractors.
Where DeLeo works, pushing the envelope of HVAC contracting is the way of business. He is currently working with a group of HVAC, electrical, plumbing, and construction employees in an effort to advance the home services division of the company.
“We have added these three trades groups over the last five years, and now we are starting to really take off in this division,” said DeLeo. “For our customers, it gives them the one-stop shop — someone they can trust. For the contractor, these are new revenue streams, and that’s important. It keeps the competition out of our customers’ homes.”
In the midst of the company’s success, a new revenue stream has presented itself to the home-performance contracting sector of the business: home automation.
“With the price of home automation equipment coming down, we are starting to see more of an uptick in that market sector,” DeLeo explained. “It is having a positive effect on our performance contracting, too. Home automation gives contractors the ability to sell more products that people want, and a lot of it has to do with the smartphone.”
Smartphone adoption has continued to grow exponentially in the U.S., and its connection to the IoT has further pushed application integration and control of components in the home. The smart home, coupled with home automation, is evolving into a new space for home-performance contractors to find increased energy efficiency, customer comfort, and control.
The North American and Western European home automation markets are considered the primary drivers in this market sector, according to the Home Automation Market Analysis, Opportunities and Forecast to 2021, created by Market Research Engine in Deerfield Beach, Florida.
The company’s research expects the home automation market in these two regions alone to be a multimillion-dollar sector.
The global home automation market stood at $4.41 billion in 2013 and will rise to $25 billion by 2021, growing at a compound annual growth rate (CAGR) of 25.9 percent in the forecast period, the report stated.
The report credits the growth to drivers such as individual people’s growing purchase power, increased investment in building infrastructure, and a growing dependence on technology.
DeLeo has seen this growing dependence on technology happen firsthand. Based not on age, but on need and opportunity, some of Isaac Heating and Air’s home automation customers are snowbirds (northerners who move to the South during the winter) wanting to know what’s going on in their houses for four months while they are gone. With that request, the company started installing cameras for its customers.
“If you can take your phone out and watch four different rooms in your house, people are more apt to do that,” DeLeo said. “We find the right customer for this technology — one that is a bit more tech savvy, regardless of age — and install it to solve their problem. We have a reputation and have been around a long time, and customers know what they are going to get and the quality we provide, as well as the peace of mind that we are not going anywhere. We stand behind what we do.”
Besides controlling the garage or cameras mounted in a home, the worlds of smart homes and home automation are colliding into energy management. According to Market Forecast for Smart Home Worldwide Through 2022, a report produced by Statista Inc., revenue in the smart home market is expected to show a CAGR of 14.9 percent, resulting in a market volume of $3.46 billion by 2022. Looking specifically at the U.S. energy management sector — items like automated heating controls and timers as well as temperature, sunlight, and precipitation sensors — the report showed there were 15 million integrated smart homes in 2016 and 3.9 million stand-alone smart homes that same year. Those numbers are estimated by the report to increase to 28.7 million and 6 million in 2018, and to 83.2 million and 11.7 million in 2022, respectively.
Energy management in the smart home market is going to grow, and contractors can not only use smart thermostats to enhance their home-performance position, but they can also look to other technologies and applications to help customers save money.
“Many people know they can control their thermostats with their smartphones, and there are multiple manufacturers creating these devices,” said DeLeo. “Taking that a step further, customers can build on this technology using geofencing. Instead of programming your thermostat, it will realize everyone in the house is gone and revert the system to a predetermined temperature. When the people of the house get close again, the thermostat will turn the equipment back on.”
Between the IHEP and home services divisions of Isaac Heating and Air, this contracting company is well down the road of home-performance contracting and home automation. According to DeLeo, getting involved in these market sectors wasn’t as difficult as contractors may think.
“Taking home automation on is not like purchasing a whole platform of new products and then telling your staff to go ahead and use them,” he said. “There is a pace here that often allows a contractor to take one home automation product, absorb it, utilize it, and when the next one comes, it is pretty easy to add onto the business or understand what’s going on with the technology.”
This time of adoption grace is passing though, and contractors deciding against using these products may find that the learning curve will be steeper in the near future, according to DeLeo. He cautioned other contractors that they can no longer just replace the furnace and not understand how that’s going to affect everything else in the customers home.
“Those days have passed,” DeLeo said.
Publication date: 9/17/2018