Wheeler on HVACR: Let's get home builders to sell up
How would you like to improve profits and sales this year without the need of adding salespeople or dealers or anything else? The task is to get your customers to start selling higher-end HVAC equipment, which is pretty easy in the replacement market - if you have some well-qualified dealers. The fact is, some supply houses average 80% upgrade sales in the replacement market. Their secret? By taking on the challenge of convincing their dealer base that most equipment-replacement customers are more interested in quality than they are in a rock-bottom price. I've sold HVAC units for years and know this is true. When given a clear choice of two units, most homeowners will select the better value. However, some do want the lowest price regardless of value, and you have to be ready for that too.
I could go on and on about why many HVAC contractors refuse to sell up; I'll cover that in a future article. For now, let's talk for a minute about the new-home market and see what we can do to make some changes there. Home builders are so set in their ways that we refer to down-and-dirty, bottom-of-the-line equipment as "builder models." And no matter how nice a home or what the price, builder-model HVAC systems are almost always what are used. Believe it or not, I've seen $1 million homes with bottom-of-the-line equipment.
The problem with a lot of our industry is that we are lousy marketers. Yes, we are to blame for the junk that home builders buy. We've never convinced home builders that there is any difference in HVAC equipment, we've never shown them how to sell it and we've never provided them the right tools. The fact is, most home builders think their customers just want to spend their upgrade money on better carpets, cabinets, whirlpool baths and trim. Yet, the same buyers will usually opt for the better HVAC equipment when they have a replacement decision. Were they just ignorant when they bought their home or is it that they were never asked what they wanted?
If you're a homeowner, is the extra cost of better, more-efficient HVAC equipment worth it to you? If not, please stop reading this article now and pass the magazine along to someone else in your company. If it is, then recognize that regardless of what most people in this - and the home-building - industry think, you and most other home buyers have a lot more savvy than you're given credit for. Almost everyone understands the value of and is willing to pay the extra cost for having a return-air vent in the bedroom. Yet, the home builder seldom offers this option. The same is true of better-built, energy-saving HVAC equipment. Most homeowners would rather pay a little more each month on their mortgage for a better HVAC system than a lot more each month for utility bills.
The story I always get from home builders is that most people upgrade on other options before they get to the HVAC systems, and by that time they're already at the top edge of their qualifying limit. Not true. Fannie Mae, a government-chartered organization that packages Federal Housing Authority mortgages, passed a little-remembered ruling some 10 years ago that allows homeowners to use energy upgrades to help them qualify for even better houses. The thinking of that lending institution is that if you can lower a potential homeowner's utility bill, he can qualify for higher monthly payments. So why aren't our industry and the home-building industry making more use of this provision to assist home buyers, and earning a little extra money for themselves in the process? I could also include high-efficiency water heaters in this discussion.
Don't get me wrong; home builders aren't avoiding selling upgraded HVAC systems because they'd rather sell something else. We just haven't been able to package our goods as attractively for them to sell as, say the carpet or pool people. Why do people buy other upgrades instead of better HVAC systems? Because the other upgrades are what they look at in the model homes. And even if we put better systems in the models, nobody would know it unless we put signs on everything so customers can tell the difference. Unfortunately, that's not allowed in models. So what can we do?
First of all, do a little research and jaw-boning. Talk to mortgage companies that do a lot of business with targeted home builders. Find out what they think about raising the qualifying limits for potential homeowners when they buy energy upgrades. Yes, that's a lot of trouble. But what would it be worth to you if you found out there's a story to tell here? If you find mortgage companies are interested, then hold a dinner meeting at some fancy place for local home builders and your new-construction dealers, and put on a dog-and-pony show. But don't stop there; your salespeople have to make a concerted effort to continue to call on the builders and dealers to keep the idea alive. They also have to make sure that your dealers understand why they have to endorse selling upgrades in new homes (more profit, remember?). Unfortunately, that isn't always an easy task.
Finally, someone has to go through the trouble of making up and updating sales brochures and price lists for home-builder salespeople to use. Initial training for existing salespeople and continuing programs for those who continue to hire on will be required. But believe me, once you have some of these people on your side, they will always be in the forefront of offering upgrade HVAC equipment, no matter where they go. Will it be worth all the effort? Would increasing your sales dollars by another 30% interest you? Probably! And to top it all off, everybody wins. Your company, your HVAC dealers, the home builders, the mortgage companies, the utilities and, most of all, the customers will come out ahead. But like any good idea, this one requires some effort to get started.