Connected Homes: Your Key to More Profits
Originally published: 07.01.19 by Pete Grasso
Many manufacturers now offer smart thermostats that integrate with various connected homes platforms, and smart contractors are cashing in on this consumer-driven demand.
It’s an on-demand world and your customers want to be able to control just about everything with a touchscreen or even their voice — including their comfort.
According to findings released from connected home studies that were fielded by Kelton Global and Research Now in the U.S., 81 percent of Americans either own or are interested in purchasing a connected home product in the next year.
This — the rise of connected homes — could be a big business opportunity for you, the HVACR contractor. Consumers want this technology and these products and they’re going to buy them, no matter what.
It’s up to you to ensure your customer base knows they can purchase a smart, Internet of Things (IoT) thermostat and, more importantly, have it installed properly by you, rather than purchasing from Amazon or a big box store and doing it themselves.
And therein lies your challenge. You may already offer smart thermostats and other connected home products, but so does everyone else (both inside the industry and out). The burden is on you to educate your customers on why your company is the best option for these purchases.
I recently interviewed a panel of top contractors from around the country to get their thoughts on smart thermostats and the contractor’s role in connected home services.
The panel includes Tim Cropp, president of CroppMetcalfe Services in Fairfax, Va.; Ken Goodrich, CEO of Goettl Air Conditioning in Las Vegas; Greg Mericle, president of Hurlburt Heating, Cooling & Plumbing in Durand, Wisc.; Michael Rosenberg, president of Rosenberg Indoor Comfort in San Antonio; Konrad Rybak, owner of Air Blue Heating and Cooling in Wheeling, Ill.; and Brian Stack, president of Stack Heating & Cooling in Avon, Ohio.
Here’s what they had to say.
What kind of smart thermostat do you offer customers?
Cropp: Sensi by Emerson, Aprilaire, Carrier Infinity and Rheem Econet. We chose these based on our existing relationships with these manufacturers.
Goodrich: We offer the Emerson Sensi Touch smart thermostat to our customers. We align with the leaders of technology in our industry, Emerson clearly fits that role. The Sensi Touch is the most user friendly and intuitive programming of all the smart thermostats. It looks good too.
Mericle: Two of our offerings are Honeywell and the other two are Lennox. As a Lennox dealer, the Lennox thermostats are a way for us to stay in the family and differentiate from offerings by our competitors. The Honeywell thermostats are easy to program and extremely versatile for many different situations.
Rosenberg: We have always sold both the Honeywell and Emerson brand thermostats, even before they became Wi-Fi enabled. They have always been reliable, so we trust those brands. We just started selling the Ecobee brand because of the extra features it offers.
Rybak: Ecobee, Nest and Carrier line. We wanted to have multiple options that are eligible for utility discounts and they have a nice, sleek design.
Stack: We use Nest, Honeywell and Lennox. We are a Lennox dealer so that is why we use that one. Honeywell also has a nice Wi-Fi/smart thermostat on the market with a trusted name. We did not start using Nest until last year. The newest generation is much more reliable and the amount of complimentary products to the Nest thermostat make it a great choice.
How do you sell smart thermostats?
Cropp: We sell them as part of a new system, and as technicians notice old thermostats they simply offer a state-of-the-art thermostat.
Goodrich: We present smart thermostats as one of our product offerings in our mass media marketing. We describe the features and benefits of the product and refer to it as a smart phone thermostat. Our technicians are trained regularly on the benefits of upgrading to a smart thermostat and present them on every service call. We also include smart thermostats as part of the package of our top two highest quality system replacements.
Mericle: We offer smart thermostats on every equipment sales call and do our best to offer them on service calls as well.
Rosenberg: We talk about the following benefits: The thermostat can be accessed away from the home or office and changes to settings can be made; The status of your system can be looked at very easily from your iPhone or computer; You can set up vacation and holidays that you do not want the system to run. This helps energy savings — you can easily change the program on a bunch of thermostats with the press of a button.
Rybak: We use ServiceTitan software with pictures to present multiple pricing options or have technicians bring the thermostats to show the quality and design.
Stack: We offer them with all replacement equipment quotes. Our service technicians also mention the thermostats, along with doorbells, smoke/CO detectors and cameras.
Who helps your customer set up the smart thermostat?
Cropp: Our installers, technicians and sales representatives are all able to help set them up.
Goodrich: All of our technicians and installation teams are trained on the Emerson Sensi Touch thermostat and set them up while at customers’ homes.
Mericle: While we would rather not have our technicians become IT support staff, we understand it’s important to be sure the equipment we sell is properly setup and functions to meet the expectations of our customers. For this reason, our technicians ensure that everything is set up on the customer’s phone/tablet and the customer understands how to use it.
Rosenberg: We set it up when we install the thermostat and we show them how to use the thermostat. We also give them a support line for the manufacturer if they need future help.
Rybak: Service technicians do all initial set up, then ask the client for their comfort levels and schedule. Once the technician leaves, it is all programmed and ready to go.
Stack: Our technicians walk through the complete setup of the thermostat with the customer. Once in a while you will find a homeowner who likes to do the setup portions themselves.
What kind of training do you provide technicians on selling/setting up smart thermostats?
Cropp: We teach soft skills during technician meetings and ride-alongs.
Goodrich: Training technicians on using and installing the Emerson Sensi Touch smart thermostat is part of our ongoing weekly training routine. The Emerson representative also comes to our operations at least once per month and provides training.
The smart phone thermostat is also included as a SPIFF to our technicians so they can use them in their home to understand them better.
Mericle: Many of our technicians and installers have a smart thermostat in their own home so this certainly helps them sell. We use Lennox training for their thermostats and generally provide in-house for the Honeywell devices.
Rosenberg: We provide both technical and sales training to our technicians. We do this in-house. Ecobee provides a sales training class, where they go over the benefits of the thermostat for our sales team and technicians.
Rybak: We power up all thermostat in the training room and have training on them individually. When necessary, we send technicians to an all day class at a local vendor.
Stack: We have done some hands-on training and video training with some of the technicians, however quite a few of them figured the installation out on their own without a problem.
We continue to work with them to find ways to better communicate with the customer about the advantages to having a smart thermostat.
Do you offer any other connected home devices?
Cropp: Yes, the Sensi-Predict system monitoring.
Goodrich: Yes, we offer connected carbon monoxide detectors.
Mericle: We have looked very closely on multiple occasions at the Honeywell connected offerings. I’m hesitant to jump into this arena and compete with the likes of Amazon and Google who are severally ramping up their offerings and lowering fees.
Rosenberg: At this time, we do not but we are looking into others that might make sense to sell. We have not jumped into it fully due to the licensing requirements in Texas for certain smart home devices, such as alarm systems that require a security license or a water main shutoff device which requires a plumbing license.
I have been told that smart camera installs require a security license as well.
Rybak: We offer COR which is a Carrier line for home security and automation that comes with a module that can handle a lot of items such as automatic blinds, thermostat, cameras and door security.
Stack: We also offer cameras, doorbells, Nest Protect and water sensors.
Do you believe the smart/connected home category will continue to grow?
Goodrich: Yes, we believe it will grow and other businesses will emerge in the market to sell and install products.
Mericle: No doubt about it! Those who don’t have it, want it; those who have some, want more!
Rosenberg: I do believe it will grow, but many customers will continue to go to big box stores like Home Depot and Best Buy to purchase them and then do it themselves.
Rybak: I do believe it will grow to make things easier to operate. We have to get familiar with it all to stay in the game.
Stack: Yes, and we need to be able to offer all of the devices that go with it, not simply the thermostat.
If contractors are only offering one part, the homeowner will find someone else who is able to offer the complete package.
Do you see this as an opportunity for HVACR contractors?
Cropp: Yes … within limits, not as a prime line of business. We do electrical and I can see us installing smart switches and plugs. Price point for many of the products is too low for us to install. Additionally, most of the products have become simple enough to install so that most homeowners can do it themselves.
Goodrich: We don’t recommend other HVACR companies focus on this until they are in the top three in their market. They should focus on their core competency before adding additional products.
Mericle: I personally haven’t found a long-term sustainable opportunity. I feel as though Google and Amazon, not to mention Apple, Ring and numerous other companies, are making a huge push in this space and I’m not seeing a way to compete and make money at it in the long term.
If there is an HVACR company who is killing it in the connected home space, please show me how. I hope we’re not missing the boat.
Rosenberg: I believe there is some opportunity for contractors to sell these products to loyal customers that don’t mind paying a little bit more to a contractor to have it professionally installed.
Rybak: Customers who want to add automation to their house don’t necessarily think of HVACR contractors to get this done. It’s all about mentioning and informing the clients that we could potentially get this done for them.
I think it could develop into another section of our business that will bring revenue to our bottom line. We should maximize our opportunities we have while we are already in customers’ homes and have set relationships.
Has the availability of smart thermostats and connected home devices at big box stores and online helped or hurt your ability to provide these as an upsell or add-on item?
Cropp: It has created more awareness of the products and made it easier to sell them, however, we also need to explain retail pricing vs. installed pricing.
Goodrich: Neither. Our view is there is no smart thermostat market, we create the market with every customer interaction and service we do. We educate the customer about the product and the solution it provides to them.
Mericle: Without a doubt, these other channels negatively affect the sales of these devices to some degree, however, most folks are willing to pay for the expertise offered by a professional to not only make the correct thermostat choice but also correctly wire and install it. When it comes to many smart home devices, they’re largely plug and play. Amazon devices generally show up to your door already registered to your account. Amazon is a 10,000lb Gorilla and I’m just a monkey.
Rosenberg: It hurts because consumers know how much these products cost and when you add a fair mark-up, some consumers question what you charge. This makes it very challenging.
Rybak: It helped our line. Some clients that are handy get it done and that’s fine, they have that option. On the other hand, we do constantly go out and fix the wiring or furnaces due to bad installation. Many times we end up selling a different thermostat at that time.
Stack: Unfortunately, connected home devices are very easy to install by most people. As technology continues to improve, these systems become easier and easier to install.
Just a few years ago you needed all kinds of wires to connect cameras around your home. Now, battery powered Wi-Fi cameras can be placed anywhere with ease! The thermostat is the one device that will keep us connected to the smart home.