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Making Your Case: The Smartest Path to Selling Planned Replacement

Succeeding in the $15 billion planned replacement industry* requires convincing customers to invest in new HVAC equipment when their existing units are still operational. To do so, it’s necessary to make a compelling business case – one that addresses the customer’s needs and is presented in the customer’s language.

Doing so means creating a value proposition that clearly states the tangible benefits the customer will receive by purchasing these products and services. These propositions must be specific, results-oriented statements that are targeted directly to the customer, i.e. “Reduce energy costs each month by X amount,” rather than, “Own the most technologically advanced product on the market.”

Step 1: Selecting the Right Equipment

Developing a value proposition comes after questioning the customer on their business needs and surveying their existing building and equipment. This makes it possible to select the HVAC package that provides the best solution, whether that’s an ultra-efficient rooftop unit rated to 17.0 SEER to reduce monthly utility bills, a centralized controls system that controls zoning, building operations and HVAC units from a single point of contact, or a dehumidification system that removes moisture based on humidity levels rather than temperature.

The equipment chosen must reflect the customer’s most important needs, such as choosing the highest-efficiency units to maximize a reduction in energy consumption. Options should be chosen to improve performance, increase efficiency and reduce total cost of ownership. These include:

  • Economizers that bring in outdoor air to take advantage of “free cooling”
  • CO2 sensors that ventilate the area based on actual occupancy rather than maximum occupancy
  • Unit controllers that record when service and maintenance are performed and verify the system is operating the way it should

The building and roof structure must also be kept in mind when determining the choice of equipment. Will there be any problems removing or installing units? Any structural or sight-line issues?

Finally, there should be guarantees for both the work and the equipment. These include manufacturer warranties, as well as extended warranties that cover labor during the manufacturer’s warranty period, or that include labor and parts for an extended period.

Step 2: Pricing the Job

Successful pricing must take into account both the contractor’s minimum price to ensure a profit, as well as the customer’s maximum price that provides value from their purchase.

Many contractors arrive at their minimum price by summing up all their costs and adding an expected profit margin. While this is the simplest method, there are some inherent problems:

  • Omitting some of the contractor’s costs such as overhead, rent, marketing and rental equipment
  • Setting the profit margin on all products and services the same
  • Ignoring the “going market price” for a product or service

If you are truly addressing customers’ needs – and have a unique value proposition – you should be able to earn more from each project.

Step 3: Financing the Project

One of the main issues with any purchase is the upfront cost. Most customers don’t plan to replace their HVAC system as long as it is running, regardless of whether the equipment is operating inefficiently enough to cost them more money over time than purchasing new equipment. It’s a much easier sale when you offer customers a finance option that allows them to pay a set amount each month, which is usually preferable to an immediate capital outlay for new equipment. Lease terms are usually between two and seven years, can also offer lower application and filing fees, and may require only a short credit application depending on the size of the transaction, rather than the full financial disclosure that bank loans require.

When selecting finance solutions for a customer, choose a program that offers flexible monthly payments and total project financing with:

  • Customizable options that make it possible to match the financing plan to the customer’s needs
  • An online quoting tool that’s quick and easy to use
  • Approval in as little as 24 hours (dependent on the size of the purchase)
  • A program that pays the contractor within 24 hours of completion of the financing

All of the above information should be presented to the customer in a cohesive and compelling manner. A professional sales presentation will answer all of the customer’s questions about why they should buy from a certain contractor, and differentiates a contractor from the competition.

*Based on ARI industry shipment of all three-phase packaged rooftop units between 1990 and 1995.

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