WHAT'S YOUR STRATEGY?
by Dominick Guarino
The HVAC industry has roughly 18 months to get ready for the increase in minimum efficiency standards from 10 to 13 SEER effective January 23, 2006.
To some, this may seem like a nonevent. Many already sell 13 SEER or higher. So what's the big deal? Let's look at the potential effects of this change on different parts of the delivery chain.
Manufacturers: Manufacturers have resigned to the fact that 13 SEER is here to stay. Despite most companies' valiant effort to get it knocked down to 12 SEER, special interests prevailed and the battle is over.
Some are starting to recognize that 13 SEER levels the playing field, making equipment even more of a commodity.
With a level playing field, how will a manufacturer compete? It will be harder to sell the value of, say, 15 versus 13 SEER, as the additional savings don't provide enough payback to justify the added first cost.
Another issue with higher SEER is it's being achieved under perfect laboratory conditions on equipment that may not work as well under real field conditions — particularly from a humidity removal standpoint. This will amplify poor performance from bad duct systems.
Manufacturers will need to rely more on contractors to sell the value of the installed system versus just the box. This means training their dealers on delivering measured performance.
This approach will take a lot of “ outside the box” rethinking of everything, ranging from a different marketing message, to revamped sales and technical training programs.
Distributors: When a product category becomes commoditized, distributors are usually among the first casualties, as their value in the chain diminishes significantly. How does a distributor stay in the game? By providing his contractor customers with the tools they need to present a better offer to the customer beyond the equipment SEER rating. This ranges from good sales training to helping the contractor provide a system that truly delivers the comfort and efficiency the equipment was designed to provide.
Contractors: If contractors are to survive becoming a commodity, they'll also have to think outside the box. They must figure out how to deliver a product that costs less to operate and provides better comfort than the 13 SEER unit sold by the low-baller down the street.
How? By teaching customers that it's the end performance of their installed system that counts. You can sell and deliver better comfort and lower energy consumption than your counterparts by measuring system performance before and after the work is done and documenting the results.
Contractors must also deliver outstanding service in all other areas, from the moment the phone rings, to how they protect a customer's property by wearing booties, to how well they follow up on customer service problems.
The 13 SEER rating will create an even bigger gap between box sellers and those who deliver true performance.
Expect the emergence of a new breed of contractors who deliver measured performance outclassing those who give it lip service and still basically sell boxes.
Government and Utilities: Many government employees and utility rebate program managers will find themselves out of work as the deadline looms. The efficiency programs and rebates based on equipment SEER will be over — last one out turn off the lights!
Having said that, there could be some opportunities for administrators in both sectors with new programs focused on installed system efficiency. These programs would be tougher to administer and track, but the results could be amazing.
Consumers: Consumers stand to be the biggest losers in this latest blunder from Washington. First, many will pay more for a piece of equipment that may or may not save them money.
Some consumers won't be able to afford the more expensive equipment and will put off replacement as long as possible. Many will end up with the same bills and less comfort, since many 13 SEER units are less forgiving when placed in real field conditions.
So much more can be said about the effects of the new efficiency standards on each of these walks of life, but the bottom line is we all have a new challenge ahead.
Whatever you believe will happen, however you plan to position your company, the key is to get started now. Develop a strategy, and begin implementing it as soon as possible. Eighteen months will blow by very fast. Where there's change, there's opportunity.
Those who start preparing now will not just weather the storm, they will be able to capitalize on the changes, finding the silver lining, and maybe even a pot of gold at the end of the rainbow.