Service agreements. Planned maintenance. Preferred customer plans. Whatever they were called, during the early 1980s you began to see contracting companies promote programs that leveled the peaks and valleys of a sometimes weather-driven business.

Who am I kidding? It's still a weather-driven business in many circles. Nonetheless, these special customers provide protection for your business during the spring and fall shoulder seasons. One thing that won't be protecting your business to the extent that it has in the past is high-efficiency sales.

At a recent Lennox dealer meeting in Cleveland, the company introduced the new XC21 condensing unit that will achieve up to 20.5 SEER. Company representatives touted the new design as an outstanding value in sound and efficiency.

However, they also cautioned their customers to watch out for eroding profit margins in the future. Why? The most ultra, super-duper, whiz-bang product won't be enough to compensate for the fact that 13 SEER minimums are going to lump a lot of HVAC contractors into a pile. It's already difficult enough for residential consumers to understand the difference in services that good contractors provide.

It's not going to get any easier once the supply of 10-, 11-, and 12-SEER products are finally worked out of inventories. So, what is going to be the next service agreement? What is going to provide protection for your business?

Margin protection will likely come in the form of selling comfort rather than efficiency. Depending upon your point of view, comfort might be enhanced by high-efficiency particulate air (HEPA) filtration, indoor air quality (IAQ) monitoring, ultraviolet (UV) lighting, zoning solutions, duct sealing, heat or energy recovery ventilation, or air balancing and testing. Better indoor air quality can be served by any one of these add-ons - add-ons for which a customer will pay a premium.

According to the Environmental Protection Agency Indoor Environments Division, indoor air pollution consistently ranks among the top five environmental risks to public health. You need not look far to witness the growth of the IAQ market. Sharper Image advertises portable air cleaners in USA Today, The Wall Street Journal, and perhaps even your hometown newspaper.

Indoor air quality is big business and getting bigger. It's projected to account for about $12 billion by 2010. How much of that will be generated from within the HVAC industry?

In a 2004 study of 10,254 homes by AirAdvice, Portland, Ore., almost 96 percent of homes showed IAQ problems in at least one of six areas: particulates, volatile organic compounds (VOCs), humidity, temperature, carbon dioxide, and carbon monoxide. In four out of five homes, IAQ levels exceeded recommended ranges in at least two categories.

The Right Questions

Good salespeople at heating and cooling contracting companies have long known that asking the right questions during a sales call results in better informed customers who then make better buying decisions.

Do you have any hot or cold spots in your home? Are there any family members with allergies? Does anyone have upper respiratory problems, particularly in the winter months?

These good salespeople often are able to add accessory items to the basic equipment sale because they have uncovered customer needs that otherwise might have gone unnoticed. Your company has at its disposal a variety of high-quality IAQ products to help prepare for a very different business environment that won't rely on only high-efficiency products. That's old news.

Good HVAC businesspeople are asking themselves questions as they head toward the change in energy efficiency standards.

Should we start selling high efficiency now, or wait until Jan. 23, 2006, when the 13 SEER residential minimum takes effect? What else could we be doing to be different in the market?

Unfortunately, there are those contractors who may not notice until sometime late next year that the train has rolled out of the station. Estimates are that perhaps 20 percent of all HVAC contractors are not aware of the efficiency standard changes. Let us hope that the 80 percent who know of the impending change are also thinking about ways to protect their margins by addressing their customers' IAQ concerns.

Mike Murphy is editor-in-chief. He can be reached at 248-244-6446, 248-244-2905 (fax), or

Publication date: 03/21/2005