There is a bit of a boogeyman out there for HVAC contractors. It is people selling equipment online to homeowners and the customers who are purchasing them. Contractors are taking up sides on the subject of online equipment purchasing by homeowners, but, intellectually, we know the internet is not going away.
Online sales are everywhere you look in a plethora of industries. The holiday season just ended, and for the first time, online sales outpaced in-store sales. But at the moment, the simple fact is: Online sales of heating and air conditioning equipment is not as big of a problem in the HVAC industry as some folks would lead you to believe.
Just how big is the problem then? I recently talked with a manufacturer that had research in this area. They stated their most recent data showed 43 websites selling HVAC equipment direct to consumers, and those websites got more than 40 million hits. Holy cannoli, that sounds like a big problem! But let’s dig into the numbers a little deeper. The closing rate for those internet resellers was only around 3 percent at best. So, that means 97 percent of people going online are then going back to an HVAC contractor and getting the equipment purchased and installed through them. Feel better?
However, just because the issue is not as prevalent as some might believe does not give contractors the right to bury their collective heads in the sand. They need to be proactive and come up with a solid business plan, so they can successfully navigate these waters.
The first issue is addressing the fact that consumers are now equipped with a lot more information — specifically about pricing — before they ever contact a contractor.
Contractors need to change the way they do business. For a long time, HVAC contractors have been doing what the industry advised them to do. This was to bundle their proposals to the homeowner and not be transparent on the cost breakdown of labor, overhead, and equipment. However, in today’s world, consumers don’t want to hear it. They want to know exactly what they are paying for. Contractors need to show them. The operative word in this discussion is transparency. The internet is not going to replace the skills and expertise contractors. But it does change how contractors should present their pricing and the value of their professional expertise.
That brings us to the second issue — should contractors install products they do not sell? Let’s not kid ourselves, online purchasing of HVAC equipment is only going to grow as younger people get into the market. These are the people who have grown up buying products and services on their mobile devices. HVAC is not going to be the unicorn… it is going to be like everything else.
I recently talked with Laurence Scharff, the director of e-commerce for Goodman Mfg. In addition to being a sheriff to find people misrepresenting their product online, he is also responsible for developing strategic tools for HVAC contractors to be successful in the e-commerce market.
“Online sales are causing contractors to take a transitional approach across HVAC,” Scharff said. “What never changes in the HVAC industry is the value of a contractor’s service. The contractor’s technical expertise and professional service are what sets them apart — always has been and always will be. Contractors are selling services to homeowners. Product is included sometimes, but sometimes it’s not. Homeowners have all the information they need, right or wrong, and Amazon has set it up where you can buy anything on the internet. Instead of dealers being afraid of this process, we should make sure they know how to compete and succeed in this evolutionary process.”
This is a very important point to remember. The most valuable asset you are selling to your customer is not the 15-SEER air conditioner — it’s the technician installing that product. The fact is so much more evident these days with the lack of good workers entering the industry. It is Economics 101, right? Labor is high in demand and short in supply, so the price should go up.
The internet is not going to change the sales channel for HVAC, but it is going to be an important part of it going forward. Contractors have a decision to make. Not necessarily in the middle of one of the coldest winters I can remember, but maybe in the shoulder season. Think about it. Your crew is idle, and the phone rings. It’s a homeowner asking you to do a direct- purchase install. Are you going to say no because it is against your core values? Maybe you don’t even know yet.
The one thing we can be sure of, though, is those calls are going to increase, not decrease. What is your strategy?
Publication date: 1/22/2018