People want control over every aspect of their lives, and they want to be able to do it through their smart phones. Home automation has come into its own, and the growth opportunity for HVAC contractors is boundless. We can either grab our share of it now, or lose it to the phone company or the cable guy.
One of the leaders in home automation is Florida-based Air & Energy, who installs home automation in every replacement job and starts a conversation about it on nearly every service and maintenance call.
Home automation has come into its own, and the growth opportunity for HVAC contractors is boundless. We can either grab our share of it now, or lose it to the phone company or the cable guy.
Company president, Stewart Moon, Jr., was gracious enough to share his insights and experiences with us.
Why Did You Go Into Home Automation?
Home automation is an additional product, and consequently, a profit center, in itself.
"We got involved in it in 2010, before home automation was really a 'thing,'" says Moon. "I knew it's just a matter of time before consumers would want to be connected and control every aspect of their life. Everyone's got a smart phone now, and the convenience of having that connected lifestyle is something everyone's going to want.
"We're already in their house. They trust us. They know my service techs, and it's really in our wheelhouse. We do plumbing, air, and electrical. All these devices are pretty much plumbing, air, and electrical.
"It's a competitive advantage. Most of my competitors aren't doing it, and when they do it, they don't do it well. They aren't equipping their techs, they don't train their techs. I have guys that have been doing it for seven years now. They know it inside and out."
What Products Do You Carry?
Air & Energy tried a few of the earlier entries into home automation that centered on the thermostat, and they didn't turn out to be worthwhile. For one thing, there was no upsell beyond the thermostat.
They were doing product testing for Schlage LiNK Wireless Keypad Entry Lever Lock System, knowing that, at some point in the future, this was what the market is going to demand. Schlage is owned by Ingersoll Rand. So is Trane. With rare exception, Air & Energy sells Trane exclusively, so it was only a natural for Air & Energy to experiment with Trane's Nexia when they were looking to get more into home automation. Now, Nexia is the only home automation they carry. In fact, Air & Energy is one of eight Nexia "Flagship Dealers" in the U.S.
They chose Nexia because it has an ecosystem of products and services that all work together to solve any number of problems that customers could have. With every other product they looked at, you had to open a different app to control it. Nexia is the only line of home automation products they found that work inside a single app.
Another reason they focused on Nexia was affordability.
"This is a new style of home automation," says Moon. "Home automation has been around for years, but typically it was exclusive to people that wanted to spend $50,000-$100,000. The new ones are accessible. For $1,000 you can automate the important things in your house. So, all of a sudden, I could talk about it with customers, and they'd buy it."
"It used to be that you'd program your thermostat based on the fact that you usually come home from work at a certain hour. My phone knows where I am all the time, and when I'm a mile from my home, my system turns the thermostat down, turns on the lights, and opens the garage door."
Air & Energy sells a lot of door locks. Customers no longer need to carry keys to unlock their doors, can remotely change the door lock codes, or add temporary door lock codes to allow service people to enter their homes when they're not there via an app on their smart phone or computer.
"Nexia Dealer Diagnostics allow me to see in real time what is going on with customer's equipment, if they allow me to," says Moon. "I can see errors codes, run times, set points, indoor temperatures, pressures, history. What's amazing, is that if there are alerts, we get an email. So, we know about it before they do."
Nexia makes it easy to keep inventory down with a single device that turns on the heat or air conditioning when certain parameters are met, and turns indoor and outdoor lighting up or down in response to motion and/or parameters set to ambient light.
Also available are:
- Water valves
- Garage door openers
- Fan controllers
- Light switches
- Light bulbs
- Door locks
- Smoke detectors
- Glass-break detectors
- Water sensors
- Doorbell sensors.
These are all controlled with a single app on a smart phone or through a website on a computer. They're easy for his techs to install and easy for his customers to use.
Technician truck stock includes the Trane XL824 thermostats, a light module, and a motion sensor.
Behind the Scenes
There are currently no additional distributor or manufacturer incentives to sell Nexia home automation.
There are no extra financial incentives to salespeople or service technicians, other than what they'd normally earn on any other accessory sale, which isn't much. "I pay my technicians well enough that their income isn't dependent on spiffs," states Moon.
Most of Air & Energy's service technicians and salespeople have Nexia automation in their own homes, provided free of charge, and soon they all will. The thought process being that if they have the product and use it themselves, they'll be more familiar with it and more likely to talk about it.
Trane has provided a lot of product, technical, and sales training. They do a fair amount of in-house role-playing, which they video record.
There are no manufacturer or utility rebates.
The Sales Process
They ran a few print ads for home automation with no success. It's rare that someone calls in and says they want to own a home automation system.
The entire marketing program is based on service technicians and salespeople starting the conversation. Technicians are trained to say, "Mrs. Jones, would you like to be able to control your thermostat, your lights, and your door locks from your smart phone?"
Air & Energy sells hundreds of Trane thermostats per year for $398 as a stand-alone item on service and maintenance calls, and they're bundled in as part of every replacement sale.
Technicians are trained to say, "Mrs. Jones, would you like to be able to control your thermostat, your lights, and your door locks from your smart phone?"
"You don't make a ton of money in sales volume. It's a conversation piece, an add-on sale, and most importantly, a way to tie that customer to you," states Moon.
Once someone owns a Nexia thermostat, his techs sell door locks, water sensors, and automatic light switches while they're doing routine maintenance.
It's not a sales process as much as it is a conversation. "Homeowners already know about these products. They want them. When you walk into Lowe's, there's a home automation aisle. So when our techs are talking about them, it's not an education process, it's a 'Hey, I'm here. Would you like to be able to do this, and it costs this much.'"
Customers in Air & Energy's market area are very concerned about humidity, and a lot of them are part-time residents. They like the fact that, if they're out-of-town, they get an alert on their smart phone if the temperature or the humidity in their home rises.
Normally, once a customer agrees to having the thermostat installed, while that's happening, they'll look through the brochure, and order additional home automation devices. That's when a professional salesperson makes a follow-up visit and helps the customer fully automate their home.
Once a customer starts using the system and sees how easy it is to use, they start thinking about where they want things like cameras, and how they can use the system to do things like:
- Monitor when their children are home (and whether or not they're alone)
- Turn their television on so it looks like they're home
- Turn on their coffee maker
- Watch their pets.
Look into adding home automation to your product line and you'll make more money with a new profit center, set yourself apart from the competition, and tie customers to your business.
Charlie Greer is a member of the Contracting Business Editorial Board, has twice been named the HVAC Consultant of the Year, and is the author of the long-running Contracting Business column, "A Superior Level of Service." Contact Charlie at 1-800-963-HVAC (4822) or [email protected]
About Air & Energy
The company's owners of record are Stewart Sr. and Trudy Moon, who retired to Bradenton, Florida, in 1991, from careers in real estate in Toronto. By 1992, they were looking for a business to purchase in Bradenton when the previous owner of Air & Energy came to their home and repaired their air conditioner. They got to talking, and decided to buy the business from him, not knowing anything about air conditioning at the time. The company had three or four employees at the time, and two of them still work there!
28-year old Stewart Jr., is company president. Stewart holds a Bachelor of Science degree in Entrepreneurship from the University of Tampa, is single, never been married, and has no children. He says he's been in HVAC his entire life. "I was sweeping the floors and filing before I knew the alphabet."
Air & Energy has enjoyed an average growth rate of 18% over the past few years. They work exclusively in Manatee County, Florida, because their growth strategy is based on saturation, as opposed to expansion.
Air & Energy provides services in electrical, plumbing, HVAC, and home automation with three salespeople, 10 HVAC technicians, three plumbers, and three electricians.
Nearly all of their work is residential service and replacements.