Making Money With Radiant Heat
"I don't think radiant will ever replace baseboard entirely, but I see it growing more and more," said Marty Fein, Ridgewood's senior vice president of sales and marketing. This, even though each year Ridgewood finds more of its competition getting into the market. "Competition in this case could be a positive thing, because that means more contractors are becoming comfortable with it. Homeowners are also becoming sophisticated about radiant and bringing it up more and more."
Nonetheless, you can't realistically define it as anything but a niche within the niche market of hydronic heating. Ridgewood's radiant business comes mainly from custom homes, along with remodeling projects, especially kitchens and baths whose tile floors present an ideal radiant sales opportunity. Cost factors prohibit mass appeal for now. Yet, radiant enthusiasts see this technology continuing to increase its share of hydronics business as word gets around of its supreme advantages in comfort and energy efficiency.
The Internet is giving it a big boost, according to Jim Finan, Ridgewood's Hydronics Division vice president. "Several contractors have Web sites that cater to radiant business," he said. "I was at a home show recently and could hardly get to say hello to a couple of our customers who were exhibiting, they were so busy. Homeowners are asking intelligent questions based on things they learn over the Internet."
Ridgewood sells the packaged radiant systems of both Embassy Industries, which uses PEX tubing, and that of Watts Radiant (formerly Watts Heatway), which bases its system on rubber hose. However, the radiant business is not as much about products as it is intellectual property. Ridgewood sells radiant service and know-how. Contractors who patronize them gain business partners who will give them as much help as required with the sale, design and installation of radiant systems. This assistance is crucial for a technology unfamiliar to most, and a large reason why radiant customers tend to be value-conscious rather than price-obsessed.
TeamworkRidgewood's management is quick to share the credit with Embassy and Watts for their service and training efforts. Frank Oakley of Advanced Hydronics Sales Inc., Embassy's rep in the area and a former Ridgewood employee, also gets singled out as part of the team that bends over backwards to help Ridgewood and its customers.
The biggest obstacle to radiant sales is fear of the unknown. Getting a contractor to install the first system is akin to one's first solo flight or parachute jump. Past that hurdle, many crave the experience, but until then many heating contractors are inclined to discourage customers from buying radiant. "If they're not comfortable with it the first time around, they'll walk away from it forever," said Oakley. "That's why we try to go out and work with them. We'll help them design the job and visit the jobsites to lend a hand."
Ridgewood, with 17 branches throughout New Jersey and New York, is one of the largest independent wholesalers in the region (#98 in last year's Supply House Times Premier 150 list), and capable of extending its own helping hand to customers. Most of the branch managers have been trained in the technology. Finan's right-hand man at the company's Harriman distribution center and corporate headquarters is hydronics technical service advisor Jim Driscoll, who almost always has three or four radiant jobs to work up at any given time.
Ridgewood's staff typically will handle the smaller projects, such as kitchen and bath remodels. Many of their customers are capable of doing it themselves, but most are happy to delegate the task to the wholesaler as a time saver. When things get more complicated, or they get swamped, they'll farm out some of the jobs to their vendors for assistance. "The time is rapidly approaching when both Ridgewood and our vendors will need to increase staff," said Finan. "We're near the limit of what we can handle."
Marketing RadiantAs a niche within a niche, radiant isn't for everyone. Ridgewood's success has come from working closely with four or five contractors in each branch who have taken the ball and run with it.
Marty Fein was pleasantly surprised to find so many taking up the cause. Ridgewood's marketing chief had cut back on contractor dinner meetings due to lack of interest, until Embassy sponsored a series recently to introduce contractors to radiant. Of around 100 contractors who attended, some 70 expressed further interest, and about half of them have since done at least one job, according to Joe Krol, Embassy's vice president of sales and marketing. Krol said these meetings resulted in some $300,000 worth of business for his company.
"One of the good things that came out of these meetings is that the cream came to the top," said Krol. "The guys who weren't really interested went away, while the people we got were very committed to radiant."
Fein added, "Jim (Finan) made sure the invitations went to the right people. We like to have a nucleus of accounts in each branch that focus on radiant heat. They can do what they know, then leave the rest to us. The guys who've been at the meetings know they can call Jim or one of our managers with any problem, and if it's beyond us we can call Frank (Oakley), who will get Joe (Krol) involved if necessary."
Embassy developed what it calls an "Elite Contractor Program," which includes an intensive two-day training program on installing radiant for those who need it. They also provide ECs with a homeowner kit that includes an eight-minute videotape about radiant, as well as a CD-ROM containing a radiant design program and co-op advertising for cable TV commercials and consumer magazines. This year's program also includes a trip promotion to Aruba.
None of this stuff is mysterious to PHCP wholesalers. All of you are familiar with dealer meetings, co-op advertising and vendor training. The key is execution to make it all work, which in turn demands commitment. Ridgewood's management believes in both radiant's elegant technology and its contributions to their bottom line.
Selling ComfortRidgewood president Mickey Weinstein said he put radiant in his own home's bathrooms back in the 1960s. His son grew up around radiant heat, "and every time he'd visit friends, he'd always be asking them, 'Why is your bathroom so cold?'"
Joe Krol told an amusing anecdote about radiant being installed in the gorilla cage at the Bronx Zoo several years ago. The first night they turned the heat on, the gorilla did nothing but lay around the floor. "The zookeepers called in the vet. They thought he was sick!"
"Comfort is the main selling point," said Finan, "along with system efficiency. Builders can be hard to sell because most have the mindset they only want to do what they've been doing forever, but slowly they're coming around. Thanks to the Internet, homeowners are raising the issue with builders, and they'll listen to their customers."
Marty Fein envisions selling builders on the idea of putting radiant in one or two tract models to open up the market beyond higher end custom homes. "I see no reason why our radiant business can't generate growth on the order of 25% a year for the next four or five years."