In this down economy, many HVAC contractors are finding it a challenge to find new customers and hold on to employees. In response to the economic downturn, some of those contractors are finding innovative ways to grow their businesses.
Princeton Air Conditioning, Princeton, NJ is an example of just such a company. To combat a decline in sales and employee reductions, this 39-year-old company added residential home performance contracting (HPC) to its slate of services. President Scott Needham and CEO Joe Needham tell ContractingBusinss.com that HPC helped them transform their business, create new jobs, and grow significantly in a poor economy. In the first year of offering HPC, Princeton Air generated nearly $1.5M in new home performance sales.
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“After the summer 2008 cooling season generated fewer sales than expected and we had to lay workers off, we knew we had to do something different and find new sources of revenue,” explains Scott Needham. “We had been hearing about a new industry called Home Performance Contracting, and knew it was what we needed. We analyzed the market, found a leading provider to help, and then took a leap of faith and jumped in.” Princeton Air established its residential HPC division in December 2008, with help from national HPC provider and franchisor GreenHomes America®, Irvine, CA. GreenHomes had a complete business model to help Princeton Air get up and running with HPC quickly. Within a few months, the new division proved to be a substantial revenue source for the company. HPC services also began driving more business to Princeton Air's existing residential and commercial HVAC businesses.
How HPC Works
Home Performance Contracting is built on the principles of building science. It treats a house as a completely integrated system. Instead of focusing on a single home component to solve the most common comfort and energy issues, HPC considers how all components work together more efficiently to provide an optimal in-home environment. HPC starts with a comprehensive home energy audit performed by a certified building analyst.
Using advanced technology tools — including an infrared camera, blower door, manometer, and computerized modeling —the building analyst is able to accurately pinpoint the root sources of a home’s problems. The audit determines air leakage rates; measures the efficiency of cooling and heating systems; and determines the effectiveness of insulation, ducts, windows, doors, and more. In addition, all combustion equipment is tested for carbon monoxide levels and gas leaks. The audit also provides a complete energy usage footprint for the home.
Then, a building analyst evaluates the results of the energy audit, and recommends a customized solution that typically includes a combination of air and duct sealing, added wall and attic insulation, heating and cooling system tune-up or replacement, window and door replacement, and new lighting or appliances. Once the recommended solution is chosen by the customer, installation crews retrofit the home. When complete, the home energy audit is performed again to ensure all issues are fixed and the project is successful. Typically, homeowners feel more comfortable right away and the house is guaranteed to use 25% less energy.
Princeton began running home energy audits early in 2009. The demand was high, and the Needhams found they had to hire a second advisor within a few months. Today, they have three full-time advisors quoting more than 15 jobs per week, and three full-time installation crews. And, they're looking to hire their fourth advisor and fourth installation crew to meet the growing demand.
“It’s amazing to me to see how many homes have major problems with their building envelopes. Most of our jobs include air sealing and insulating attics, walls, crawlspaces, and basements, replacing air conditioners and furnaces, and sealing or replacing ducts,” says CEO Joe Needham.. “Our average HPC ticket is above $15,000, and our installation crews are booked six to eight weeks out. In this economic downturn, that's truly remarkable.”
A New Division
As the opportunity pipeline grew, the Needhams knew they had made the right decision. Not only was the HPC division generating new revenue and allowing them create new jobs, it was driving sales activity and revitalizing its existing residential HVAC division as well. “As HPC became more talked about and promoted, our existing customers started asking us how they could take advantage of it,” says Scott. “We fully expect to double our entire business within the next few years because of home performance products and services.”
Reaching 'Green' Oriented Consumers
In addition to creating an exciting new revenue source and reviving the residential HVAC department, there have been other benefits to Princeton Air as well. “We’re reaching a group of homeowners we hadn’t tapped into before -- the “green” consumer. They want to reduce their carbon footprint and save energy, so they call us for a home energy audit. We're able to help them do their part for the environment, make them more comfortable, and save them money and they become customers for life,” says Scott, who recently appeared on CNN and FOX NEWS programs to explain his business transformation and the company’s home performance division.
Also according to Joe and Scott, their success with HPC has raised morale among employees, and they're excited to be part of something that uses state-of-the art technology and is helping clients to “go green.”
Encouragement for Other Contractors
The Needhams recommend that other HVAC contractors add HPC as soon as possible, to get ahead of the curve. They feel they have a “first-mover” advantage in an innovative new industry that promises to be lucrative for HVAC contractors for decades to come.
“Our advice is, start educating yourself now, leverage a national partner like GreenHomes America, and establish yourself as an industry expert,” says Scott. “HPC has really helped us differentiate Princeton Air from our competition and helped us grow our business in this tough economy,” adds Joe. “Home performance is a perfect fit for any HVAC contactor and is the next evolution for the HVAC industry.”
GreenHomes America is the largest industry-accredited, single-source provider of home performance contracting (HPC) in the U.S. GreenHomes America delivers a full line of services including comprehensive home assessments, windows and doors, furnaces, boilers and air conditioning systems, on-demand hot water heating, insulation and air sealing, indoor air quality, and solar systems. The company launched a franchise offering in January, 2010. For more information call 315/474-6549, or visit www.greenhomesamerica.com.