Hate it if you want, but beneficial electrification is a gift for HVAC dealers


Ignore the hype, but rake in the products

We spend a lot of time talking with HVAC dealers and have spent decades helping them grow their businesses through all sorts of economic conditions. Along the way, we’ve developed a pretty good understanding of how most think about business and feel about other issues.

When the subject of beneficial electrification — replacing systems fueled directly by fossil fuels with more-efficient systems using electricity — comes up, we see a lot of dealers roll their eyes and sneer. Some think beneficial electrification is just a way of advancing political concepts they disagree with. Others point to the use of electricity largely generated by fossil fuels as a questionable way to reduce fossil fuels used by systems. Still others don’t buy into the claims that climate change is a near-term catastrophe.

Hate it, but embrace it

Any of them could be exactly right, but know what? It doesn’t matter. The politicians, the utility companies, and the news media all love the concept. And, if you want to continue to operate a viable HVAC business for the foreseeable future, not only do you need to accept the fact that it isn’t going away … but you need to embrace it eagerly.

No, we’re not pushing any particular point of view politically or environmentally — we’re just trying to help our clients and dealers like you succeed.

It’s a gift for you

In fact, we believe the concept of beneficial electrification is nothing short of a generous gift to your business. Given that we’re all in the early stages of what looks like it’s going to be the toughest market many HVAC dealers will have ever experienced, it’s a particularly welcome gift. We haven’t seen a market this tough since the nation stumbled into the 2008 “great” recession.

Why would we call it a gift? It’s simple: the government and utility providers are rolling out huge incentives for installing high-efficiency heat pumps and the like. They’re bigger incentives than we’ve ever seen for heat pumps, heat pump water heaters, and all sorts of home equipment designed to do more with less energy.

Your chance to shine

Those incentives will make you and your team heroes in the eyes of the homeowners you serve. Why? You’ll be able to offer HVAC (and plumbing) customers your best products for the cost of less-efficient equipment. That top-of-the-line variable-speed heat pump? With the incentives, it may carry a lower total cost than the budget units most of your customers choose. Your customers immediately begin to enjoy a higher standard of comfort and lower energy costs without having to finance a small fortune. How do you think they’ll react to that?

Best of all, those incentives preserve your margins, so you’ll earn every high-profit dollar on every sale, regardless of what your customer ends up paying. You’ve priced those budget units to deliver a decent profit on each sale, but now you’ll sell units that have thousands in additional margins. Imagine what it would do to your business to bump up every sale you make to the next tier of products. Now imagine what happens when you’re consistently selling your best stuff.

That’s not all

I know what you’re thinking: “Sure, I could sell those products, but most of my customers would need expensive electrical work to use them.” Guess what? There’s incentive money to make that happen. If they need a new electrical panel or have to upgrade their wiring to handle the load, they’re getting a huge break on the cost. If you’re pricing the whole package using these incentives, you can make it remarkably affordable.

Need to rethink some things

Of course, taking advantage of this opportunity is going to require some upfront investment and changes in the way you do business. Your installers might be able to swap out a new furnace in just a day, but the extra work required for a heat pump will probably make those one-day installs a thing of the past. Make sure you plan and price accordingly.

If your techs don’t have the knowledge (or comfort level) to handle more complicated work, the sooner you invest in some training, the better. If the people doing sales for you simply push budget models as a default, they could use some training, too, so they’ll better understand how to handle this opportunity and any customer objections.

Don’t hesitate

This thing called beneficial electrification is going to drive the replacement market for the foreseeable future, so the sooner you’re ready to capitalize on the government’s gift, the more likely your business will continue to thrive despite the inevitable downturn.

Even if you’re still convinced beneficial electrification is just hype, ignoring it is going to cost you higher sales, higher margins, and happier customers. And that’s bad business.

If you’d like to know more about Cornerstone, and how we work as your outsourced marketing department to help grow your business, contact kerryf@cornerstonead.com. Or you can call (317) 804-5640  x108.

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