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In this segment of HVAC contractor trends and insights Gus Vassilopoulos sits down with Rick Warner, Vice President & General Manager of Ecoer USA, an award winning innovator in the HVAC industry to discuss innovation in the HVAC industry the future of HVAC sales process.
The segment will touch on how HVAC has become part of IoT, what challenges and opportunities this poses, and what effect it will have on the sales process & the homeowner contractor relationship. The segment will also touch upon how extended air conditioner & furnace labor warranties are affecting the contractor’s sales process & the contractor homeowner dynamic.
Rick : IoT, or Internet of Things, is sometimes confused with “Communicating Systems”, which it is not. Communicating Systems simply provide a few data points between the units, such as the thermostat and a cloud that can be accessed by an App. Other than the ability to change thermostat settings, it is a one-way communication. IoT on the other hand is a two-way communication. With IoT, not only do you have the ability to view performance, but you also have the ability to change settings and parameters within the circuitry of the system. This is a substantial difference. With cloud based IoT, detailed performance data is stored from the day a unit was started and can be used to troubleshoot any issues that might arise, and it can be done remotely.
With IoT...you have the ability to change settings and parameters within the circuitry of the system
Homeowners have historically not been experts in how heat transfer devices work. The refrigeration cycle that a technician spends years learning is a mystery to most people. IoT, or at least how we apply it, creates a way for a homeowner to be involved with their system. In the past, if a service tech tells a customer that their compressor failed and they need to buy a new system, the homeowner could either trust that individual, or seek another opinion. Many times, they just went with a new system and hoped they made the right decision. With IoT, they now have the ability to ask the tech to show them the data behind the failure. “Show me the app” changes the dynamics of the conversation. In reverse, a reputable contractor (which most are by the way), welcomes the ability to have data points on performance for the homeowner to see. Imagine having this conversation, “Mrs. Smith, did you start seeing the temperature in your house increase yesterday around 2:17 PM? As you can see here on the app, at 2:17 pm your system detected this problem and shut itself down. Here is the code that it sent out to us.” That homeowner now is involved with what is going on, not just hoping for a dealer they can trust.
homeowners now have the ability to ask the tech to show them the data behind the failure “Show me the app”
Regarding your second part of the question. This is an interesting part of the technology with IoT. The simple fact that a homeowner contracted for maintenance and monitoring tells us that they don’t want to have to worry about their system. They want an expert to take care of it. They’re looking for something more than a filter change agreement. “Peace of Mind” is what they are looking for. Our app is not a homeowner app. It is called “Ecoer Pro” for a reason. While it is great to have the ability to show a homeowner their performance data on a screen, it’s certainly not helpful to the untrained population. It tends to drive more questions than answers. This adds another advantage for a homeowner to contract with a dealer to maintain their equipment. Having the ability to watch and react to issues in a home comfort system enhances the need for the traditional dealer service.
Rick : First and foremost, no one would really care about IoT if it didn’t help the “Kitchen Table” discussion. By Kitchen Table, I mean the sales process between a Comfort Advisor and a homeowner. You can have as fancy a gadget as possible, but if no one will buy it, it doesn’t have value.
If you simply look at features and benefits, IoT can address several challenges. With an ever-increasing lack of qualified service technicians and installers, contractors are always looking for a way to provide quality repairs and installations, that in turn reduce call backs and increase customer satisfaction, which in turn helps with referrals. IoT can help in these areas by allowing a quality check point from a lead technician remotely. At any given time, the real time performance of key components can be accessed through the cloud. If adjustments need to be made, it is a simple process. Also, all of the data is stored from the day the unit is started, so trends can be visualized. We can actually watch a filter load up over time based on the pressures and sub-cooling reported.
allowing a quality check point from a lead technician remotely
Much like the installation challenges of today, proper diagnosis of systems can be a frustration point. I don’t remember the exact number, but a large majority of failed compressors actually have no issues. For some lessor trained service personnel, parts changing until the unit runs is a servicing procedure. By having an IoT App, a lead service tech can be located remotely with access to the actual unit performance data on their phone or computer. They can then guide a local representative through a trouble shooting process. In our App, we actually have a video-driven troubleshooting process that can be followed based on the unit issues.
a large majority of failed compressors actually have no issues
It has long been known that the value of a contracting business is typically tied to the amount of maintenance agreements they have in place. This not only ties the homeowner (or more importantly, the home) to their company for future sales opportunities, it also provides a way to keep their teams busy in slower seasons. One of the challenges that contractors see is showing the value of these agreements to their customers. What better than to have a conversation about “Peace of Mind” than to talk about how their agreements are not just about changing filters, but instead they are constantly monitoring the units to make sure everything is running at peak performance. Plus, in many cases, notifications are sent to the contractor in regard to problems that are showing themselves in the unit before it actually shuts down. We have seen many times when a contractor sees an issue on the IoT device and calls the homeowner to set a time to come out. Talk about customer service.
Rick : I can’t tell you how many times I have heard industry veterans talk about Ecoer as “The future of HVAC”. At it’s heart, Ecoer is a technology company that happens to manufacture high efficiency home comfort systems. We sometime are equated to the Tesla model. Most people consider Tesla a car manufacturer. In reality, Tesla is a provider of power storage that they happen to put to use to move a car. That’s what makes them different. Our systems are not put together at our factory and then we add the IoT gateway. The entire product starts with sensors and a circuit board that is designed to feed data through the IoT gateway. On a side note, I heard a great analogy awhile back. Some products out there are added to a unit to sense a few points in the system. Compare those with a “Mall Cop”. They can see something happening but can’t do anything about it. When you build the technology from the ground up, you are just like a real cop. Not only can you see an event, you can actually do something about it.
Not only can you see an event, you can actually do something about it
Rick : Changing a service provider is a simple process. The homeowner can just go onto the Ecoer website and look for other dealers, or they can contact a dealer of their choice in the area. Keep in mind that the data that the IoT gateway is transmitting to the cloud is also accessed by Ecoer. We keep all of the data for the lifetime of the system. This allows seamless transition to another dealer. One item that would be helpful is dealer registration with Trinity. Because our systems include a Trinity labor warranty, being registered with Trinity will speed up any new customer acquisition.
Rick : We have found that during our initial conversations with dealers, they try to pigeonhole our products with the rest of the industry. It takes them a while to truly understand the IoT advantage. Like I said before, most just think at the beginning that we are another communicating system to the thermostat, but we use cellular signals instead of a homeowner’s internet connection. It sometimes takes time for a dealer to see the difference and the advantages.
In the beginning, our challenge was typically tied to explaining how IoT can help dealers sell more and provide higher levels of customer satisfaction. We also fully understand that the value of depth in a product line, which is not what we currently have. By that I mean, we don’t have a 24 page catalog of products that cover every conceivable application. In order to address how we have overcome these issues, I would like to go back to the kitchen table conversation that we started with.
Many years ago it became clear that homeowners responded well to the “Good, Better, Best” offerings. It clarified the options, and frankly the sales tended to move upward in that chain. The major manufacturers have created their entire replacement product offering around this strategy. One of the advantages of Ecoer is that we really only have 6 SKUs in the heat pump line. We have a 1.5 to 3.0 ton outdoor unit, a 3.5 ton to 5 ton unit, plus 4 air handlers. You can mix and match these components in some cases - to increase performance, but in reality it is hard for a contractor to offer our line in multiple categories, which can be a disadvantage.
we use cellular signals instead of a homeowner’s internet connection
One of my first tasks when I came to Ecoer was to create some differentiation not only within our line, but also find a way to set us further apart from our competition, which in turn helps the dealer at the kitchen table. We came up with our factory labor warranty as part of our solution. Because of our ability to monitor and document our failure rate, which is lower than most due to the installation automation provided by our APP, we were able to get some great extended labor rates from Trinity. The industry norm on factory provided labor warranty has been typically anywhere from 90 days to one year. With our partnership at Trinity, we have provided multiple levels of offerings. Our “out of the box” labor warranty with a registered product, is three years. Keep in mind that this is tied to the same time frame as our monitoring service, that is three years out of the box. For a very reasonable upsell fee, we offer an additional 7 years of monitoring and labor warranty. This means that a dealer can offer a 10/10/10 program. 10 years of parts, 10 years of monitoring and 10 years of labor. The Trinity pricing structure allowed us to provide good labor rates and additional benefits that we couldn’t find with others.
a dealer can offer a 10/10/10 program 10 years of parts, 10 years of monitoring and 10 years of labor
It’s certainly not easy being the new kid on the block. Especially when you’re not tied to a major existing brand. But, because of our technology and unique offering, we are gaining support from dealers. The successful dealers are passionate about what we are doing with the industry. We affectionately call them Ecoertecs.
Gus : Trinity is excited to be working with Ecoer. A big part of what we do involves understanding risk within HVAC & related industries and working with an innovative company like Ecoer gives us a peek into the future of where risk in the HVAC industry is headed.
I want to touch on a few points you mentioned that are key to the success of contractors today. Homeowners are coming to the “kitchen table” with growing expectations from their contractors as the majority of homeowners are now financing their home comfort purchase. When homeowners are considering what they can afford, it is no longer a question of whether they can come up with $10,000 for a new HVAC system, but rather if they can afford an additional $135 a month. That monthly payment stays with them for several years. There is this inherent expectation from the homeowner that the contractor will be there for them during that time. Manufacturers offer a 10 year parts warranty with new systems, whereas contractors typically offer 30 to 90 days of labor. Manufacturers know that if they do not stand behind their products, contractors won’t buy from them. The same can be said about homeowners buying from contractors. Homeowners are looking for contractors they can depend on for at least the duration of their payment plan. In other words, homeowners expect their financial commitment to the contractor to be matched by the contractor’s commitment to them.
One way to think about it is this, contractors are a manufacturer of sorts - they “manufacture” home comfort solutions. Manufacturers research, develop, buy materials, and assemble/ manufacture an HVAC system, while contractors take HVAC systems, thermostats, accessories, & qualified technicians to assemble a home comfort solution for their customers.
Contractors are a manufacturer of sorts - they “manufacture” home comfort solutions
The question contractors have to ask themselves is whether they would ever install an HVAC system that has a 1-year parts warranty? I think you would hard-pressed to find a contractor that would.The irony is that many contractors expect homeowners to buy a home comfort solution that only has a 1-year labor warranty. Contractors are beginning to understand that homeowners are expecting a home comfort solution and not a new A/C, Furnace, heat pump, etc. More and more contractors are expanding their install guarantees inclusive of parts and labor past the traditional 30 days – 1 year. Many of them are offering a 10 year home comfort solution that includes labor coverage.
The reason contractors are offering this goes back to what we talked about earlier, the contractor’s “kitchen table” discussion with the homeowner, and the attempt to answer the question of “why should I pick you.” It’s no secret that Homeowners get an average of 3 bids when looking for a new HVAC system. Generally, the contractors providing estimates are knowledgeable, professional, with good reviews, and several years in the HVAC industry. What will set a contractor apart when the homeowner is looking through the 3 proposals?
Which do you think the homeowner would choose? It will come down to which contractor they feel they can trust, and who provides the best value. Contractors that offer a 10-year labor guarantee signal to the homeowner that they have a more reliable solution and are willing to guarantee it. They also position themselves as a contractor who considers the long term well-being of the homeowner, and not the short term profit of the install. Contractors that make better commitments to their customers and are prepared to make good on their commitments have a better value proposition.
Contractors that offer a 10-year labor guarantee signal to the homeowner that they have a more reliable solution and are willing to guarantee it
At Trinity we offer a variety of solutions for contractors when it comes to offering extended coverage with their installs, and we listen to what the contractor’s needs are as it relates to years of coverage they want to provide, reimbursement rate, and program needs. The goal is to provide a solution that fits a contractor’s specific business needs and their market.
For contractors that would like to work with Eceor, please reach out to them.
For HVAC contractors that are looking to add up to 10 years labor coverage, please reach out to us