NEWSLETTER

Making HVAC a 12-month season

Despite the forward-thinking business plans many HVAC contractors are too dependent on the seasons and the weather. But today, contractors all around the country are starting to figure out how to “De-Seasonalize” their businesses.

It is just common sense as an air conditioner or furnace can only break when a customer is using it. This dependence on weather creates two slow seasons for contractors. They can occur at slightly different times depending on where in the country the contractor is located, but it simply means the weather is not cold or hot enough to use a furnace or air conditioner. The problem for the contractor is while fewer jobs are being done, nothing else has changed in their business. They still have the same amount of employees expecting a 40 hour work week. They still have rent, insurance costs, etc. to pay.

One solution is selling additional products that are not dependent on the weather. For many forward thinking HVAC contractors, this means entering the connected smart home market.

The smart home market can mean different items for different people, but for HVAC contractors it begins with the smart thermostat. Research from a major manufacturer showed that 36 percent of U.S. homeowners are familiar with the smart thermostat category and 28 percent of U.S. homeowners expressed purchase intent within the next 12 months. Industrywide, manufacturers estimate that nearly 40 percent of thermostat sales are smart.

Part of the latest wave of capabilities attracting consumer interest is geofencing, which tracks users and allows the home system to make adjustments automatically based on their proximity to the home. People who are constantly on the go may find geofencing convenient, although every occupant must have a suitably equipped smartphone for it to work properly.

“We’ve got a lot of customers who want to operate their thermostat from their iPhone or iPads so there is definitely a market for it,” Butch Welsch, a contractor in St. Louis said. “Last night we had a service call from somebody who went to a store and bought a smart thermostat and couldn’t figure out how to wire it.”

That brings up another issue for contractors — should they consider doing install only on smart thermostats and if so, what should their margins be?

The good news for the market is more people are looking for professional help on the installation. When the smart thermostat market was first starting off, this was not the case. Early adopters are locked in to new technology and those folks tend to want to do the install themselves. However, now that the technology has hit the general public that has changed. The DIYers already have their smart products up and running and those buying them now would prefer a professional install it in their home.

Gene LaNois, head of pro channel at Nest, says contractors cannot handle the business part of installing a thermostat like they would a furnace.

“If you are expecting the consumer electronics smart home business to give you the same margins as the HVAC business, you are wrong,” LaNois said. “It is a different business. But you can use this to supplement your business. If you focus on one product and the price, you are going to miss the message. Stop expecting consumer electronics to conform to the business you are in and figure out how you can use this industry to help the business you are in.”

Of course, the market does not end with smart thermostats. There are a plethora of other smart products that HVAC contractors can get involved in to help their businesses. In fact, you could call the smart thermostat a “gateway stat.” Many consumers start with a smart thermostat before adding on with lights, locks, cameras, doorbells, etc.

The numbers are impressive. The number of smartphone users in the U.S. is estimated at 257.3 million. A total of 24 percent of American households have a smart speaker. Analysts estimate that 477 million smart home devices will be shipped globally in 2020. Also by 2020, experts are expecting 5.5 smart devices per home.

This does not mean every HVAC contractor needs to be involved with every smart home product. It is important to figure out what your company can do well and what makes sense for your business model. Focus on those that make the most sense to help you turn HVAC into a 12-month season.

“In regards to smart home security, I don’t want to be responsible for when someone breaks in and if the system doesn’t work right,” Welsch said. “That just isn’t our cup of tea. That isn’t what I feel we are supposed to be doing. It is great to get into this work but you still have to know where your sweet spot is.”

The first step for contractors is to identify what aspect of the connected home they feel most comfortable adding to their business. Once that is established, research the products to decide what you want to offer. Train your staff on the products and begin marketing to customers.

“Our app makes it easy for pros to help homeowners connect, monitor, and protect the critical networks for the home. Pros will only grow in importance for the homeowner,” said Resideo chief innovation officer Niccolo de Masi.

Consumer demand for connected smart home products is very high today and is predicted to substantially over the next five years. Every HVAC contractor has an established customer base for service when a repair is needed so they already have a relationship with homeowners who are potential connected products customers. The connected product category is just one way to make HVAC a 12-month season, but HVAC contractors need to be proactive to get there.