Ninety-five percent.

That’s the percentage of thermostat sales that are either smart or Wi-Fi thermostats at Samm’s Heating and Air Conditioning in Plano, Texas, according to owner, Paul Sammataro. Sammataro’s sales fit into a growing trend. According to a recent study by Parks Associates, 13 percent of U.S. broadband households owned a smart thermostat by the end of 2017. And while that’s still under a quarter of eligible homes, that number has nearly tripled from just three years prior, influenced by factors like the ubiquity of the smartphone and the rise of in-home AI.

“Just like power windows on a car, more people have Alexa or Google,” said Mike Soucie, senior product marketing manager with the Google Assistant program. “It’s become a much greater expectation that all these things work together. It’s really about making people’s homes work the way they expect them to work. Often, the connected home space is this abyss for tradesmen who’ve been in the field for quite some time. This is really not an opportunity to be scared of. It’s more of an opportunity than there are obstacles.”

SELLING COMFORT

For contractors like Sammataro who are seizing that opportunity, making those sales generally requires a bit of customer education upfront.

Less than 10 percent of his company’s smart thermostat sales come from unsolicited requests.

“It’s not the majority who are asking,” he said. “Usually, we are educating the customer to the product. We’ll demo it right on our phones, in-house, and discuss it.”

After that, he said, the system usually sells itself. And while manufacturers often tout energy savings as a major selling point, Sammataro said more than that, it’s just ease of use that draws people in.

“The ability to control it from anywhere is a big feature,” he said. “Obviously, energy savings is part of it, but in my experience, that’s not the main reason people are buying these thermostats. It’s something where they don’t have to get off the chair or be at the house to access and control the thermostat … I have to say, myself, I very rarely walk over to the thermostat when I’m sitting in a room and it’s hot or cold because your phone’s pretty much glued to you.”

Despite the convenience factor, Sammataro hasn’t seen customers clamoring to upgrade with each of the latest and greatest smart thermostat releases, the way some iPhone aficionados do, unless they were planning to replace their system anyway.

“We’re definitely not there yet, although I think it’s possible,” he said.

Most of the company’s sales remain on a replacement basis, regardless of whether the customer is buying an entry-level smart thermostat or one of the higher-end models that pulls in things like weather data.

“We generally don’t see a big step up on a service call,” Sammataro said. “We’ll see them do a smart thermostat, but not one with the higher features. It’s just cost prohibitive.”

David Jones, residential sales manager at Atlas Butler Heating & Cooling in Columbus, Ohio, reported a similar pattern.

“If people ask about Wi-Fi, they ask about Nest,” he said. “I find we are usually bringing up Wi-Fi as an option more than people are asking for it. They usually are upgrading because we say it’s included with the install, not because they are dying to have a new stat. Most people aren’t willing to pay up for Wi-Fi but are often receptive to change that when it’s included.”

WHO BUYS THAT?

Most people in today’s residential HVAC market want technology, Sammataro asserted.

“Our thermostat sales are super high on smart, very low on digital programmable,” he said. “The only people who buy non-Wi-Fi deliberately are those who are basically looking at a lower-priced, more economical option, and not really interested in features.”

In these situations, it could be for a rental home, or maybe they’re just not interested in technology.

“And, if [a digital programmable thermostat’s] covered in a 10-year warranty, most people are not going to spend extra money to replace it, even if they like the upgrade,” Sammataro said.

The other 95 percent of Sammataro’s thermostat sales are to customers of all ages. When it comes to technology, there’s no age barrier among his clientele, and their reasons for choosing it differ.

“We’ve had seniors who love it, all the way down to younger generations,” he said. “Some like it because the display is clear, and they can read it. Most love that you can control it from anywhere. One in particular, the husband was older and handicapped. If his wife wasn’t home and he was either hot or cold, he could pick up the iPad and adjust his thermostat himself. I had never really thought of the smart thermostat as a benefit to someone who has trouble walking, so that was pretty impressive.”

For Jones, on the other hand, age can sometimes be a sales hurdle.

“Some older folks have a barrier with technology and don’t want to deal with another smart device,” he said. “They want to keep it simple.”

Forty-something and younger is Atlas Butler’s biggest market for upselling Wi-Fi thermostats — although there’s also interest among older “snowbirds” who like the ability to check up on their homes when they head south for the winter.

Greg Crumpton works on the commercial side of HVAC as owner/founder at AirTight Mechanical Inc. in Charlotte, North Carolina, and he hasn’t heard of technology being a barrier: He sees “digital everything” as the new normal.

“Most controls are pretty darn intuitive, and most folks can operate their phone, so I tend to think of that same skill level being required for both appliances,” he said. “I think it’s just where we are as a society. I haven’t heard anybody say ‘I don’t want digital because X, Y, or Z,’ at least not in the last 25 years.”

Crumpton pegged AirTight’s thermostat sales at 45 percent smart, 45 percent Wi-Fi, and 10 percent traditional.

“We’re definitely moving toward smart [or Wi-Fi],” he said. “I think the trend is increasingly slanted toward [customers] coming to us and asking better questions. As they are seeing them in their homes more and more, it is becoming a baseline.”

AJ Smith, vice president and general manager, Global Pro Comfort, Honeywell Homes, advised contractors not to get bogged down in behind-the-scenes details when talking to customers.

“One of the things we need to do is make sure our message is much more consumer oriented versus HVAC technical oriented,” he said. “A lot who don’t purchase, it’s because they were thinking, ‘Oh geez, now there’s a whole HVAC component to this’ and didn’t know what to do next. It’s really not so much of a sales pitch; it’s more of how to get information across in a way that’s very digestible, very understandable, so they can feel like they’re making the right decision … and contractors are a big part of that.”

ENERGY SAVINGS

One of those decisions is energy savings, something Crumpton pinpoints as the biggest selling point in both residential and commercial settings.

“If you’re running a building or running a household, I think that energy costs are on the frontal lobe for most,” he said. “I think it’s playing back and forth between the commercial and residential markets. People are seeking out how to reduce their overall cost, and that’s true at home or at their office: One carries to the other.”

Ed Blittschau, vice president of marketing, White-Rodgers for Emerson’s Commercial and Residential Solutions platform, said saving money is a top motivator for consumers upgrading from traditional thermostats. In a nationwide analysis, customers who use the Sensi thermostat were found to save about 23 percent on HVAC energy usage by using features like scheduling, remote access, and geofencing.

“Simplicity and reliability are huge selling points for us,” Blittschau said. “Additionally, there are often utility rebates available on smart products, which can soften the blow of a higher price point and, in some cases, pay for the entire initial purchase.”

Smart thermostats take the responsibility for energy savings off the end user, and that’s a big draw, according to Crumpton.

“I think that so many people are agitated by old technology,” he said. “It always comes down to they don’t want to be cooling a space down to a comfortable level at 3 a.m. So if you set it at 75°F in the summer, you’re like ‘Shoot, I have to remember to turn that off before I leave for work,’ and then it’s an hour, hour and a half cooling off when you get back … versus the ability to accommodate your schedule. That goes right back into energy savings primary and comfort secondary, in my mind.

“I think it’s expected,” Crumpton continued. “I think if you’re buying a new home or buying a new building, you expect a digital device on the wall, and there’s no reason in the world that it’s not Wi-Fi enabled. If you think about IoT and how it’s affecting smart homes, it’s all moving that direction. In five years, we won’t even be thinking about whether it’s a web-enabled thermostat: It will be.”

Publication date: 10/22/2018

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