Home-Service Calls / HVAC Service Calls

Home-Service Calls / HVAC Service Calls Insert Image on Master March 2016

Table of Contents The Home Services industries are changing, from product offerings, to the services provided Foreword 3 Home Ownership Preview 5 Map Section 11 Who Are You? Who Should You Be? 15 Recent Home Services Review 18 Residential HVAC Introduction 23 Why Aren t We More Successful? 32 2010/2013/2015 HVAC Service Calls 37 Routine Maintenance Service Calls 52 Contractor Selection 59 Contractor Professionalism 62 Contractors And Service Agreements 64 Contractor as a Consultant 73 Service Agreement Strengths 78 2

Foreword March 2016 EGIA Presentation: Key Finding Importance of Relationships, and Service Agreements as a key tool. Added insights include key findings from the following HVAC syndicated studies. The HVAC service sall studies from which this presentation was built were fielded in early July, 2010 and again in late June 2015. A national probability sample of homeowners was contacted to find those with an HVAC service call in the last 12 months. All 2010 questions were asked again in the 2015 study. A total of 1,010 respondents were included: 500 in the 2010 study and 510 in the 2015 study. Added studies used. The 2010 American Home Comfort Study The 2010 HVAC Service Call The 2013 American Home Comfort study among homeowners with recent central HVAC purchases The 2010 AHCS study completed a 10-year encyclopedic look at all homeowner decision makers. In addition to recent buyers of central HVAC equipment, total homeowner responses covering comfort and energy usage in the home were also included. Additional questions were added in 2015 relating to full home -service contractors (including home-performance contractor services). This presentation has been built to deliver actionable information on which attendees to this PG&E meeting may use in their businesses. This study includes reasons contractors were called into the home and contractor in-home activities plus a look at relationships between HVAC contractors in the home versus other home-service contractors 3

Your Homeowner Customer Home services are heavily dependent on a local economy and local homeownership. Over the next few minutes, listen to prospects and customers as they share their recent meeting with home-services professionals. Take extra notes covering their assessment of the company that serviced their HVAC systems. Include the findings to build a competitive edge to include in your business model. 4

Chart From 2010 Study Homeownership 1960-2010 Census Bureau 70 68 66 64 62 60 58 1960 61.9 1980 65.6 2004 69.4 2008 66.9 56 1960 63 66 69 72 75 78 81 84 87 90 93 96 99 2 5 8 Part of 2010 Contractor presentation Forecast dismal Homeownership to drop to 61.5% of living units by 2012 Key MSA/CBSA foreclosures unprecedented USA Today Aug. 26, 2010 One (1) in 10 with a mortgage face foreclosure Greatest losers, those under 45 year olds This was homeownership and forecasts made by experts when we conducted the study in 2010. 5

New Home Buyers - Priced Out Again? How Soon? 6

Average New US Home Prices New Home Price Trends Escalated Rapidly Just Prior To The Recent Recession. of Decision Analyst New Home Prices Have Again Expanded Rapidly. New home pricing trends by market tended to parallel the degree of recession by market. Will they again? February 1, 2016, chart updated to show average annual price. Chart previously used showed year-end price. Year Home Price + Difference 2000 = $207,000 2001 = $213,200 = + $ 6,200 2002 = $228,700 = + $15,500 2003 = $246,300 = + $17,600 2004 = $274,500 = + $28,200 2005 = $297,000 = + $22,500 2006 = $305,900 = + $ 8,900 Year Home Price + Difference 2009 = $270,900 2010 = $272,900 = + $ 2,000 2011 = $267,900 = - $ 5,000 2012 = $292,200 = + $24,300 2013 = $324,500 = + $32,300 2014 = $345,800 = + $21,300 2015 = $355,500 = + $ 9,700 +48% +31% 7

US Census Data New Housing Trends 8

Latest Homeownership Rates US Census This is the residential homeownership universe today. This is the eroding base for home performance contractors. 9

A Few Truths The Home-Performance Industries Include Many Successful Companies At Each Level Of Distribution. All partners must work together for all to succeed Yet 1. Manufacturers work in an international arena. 2. Distributors often work in a regional market. 3. Most contractors work within a small geographic market. 10

Decision Analyst s Global Economic Indices August 2015 The Manufacturer s World 104-1 United Kingdom 94-12 Russian Federation 90-11 103-1 Germany 87 +1 France 97 +7 Italy 106 +2 96 +5 Spain 89-3 122-2 India 104-1 Columbia 109-1 Peru 86-18 Brazil 96-6 Chile 88 +6 Argentina 92-2 Australia Whenever the Decision Analyst Economic Index is greater than 110, it tends to signal an expanding economy. An Index value of 90 to 110 suggests a no-growth or slow-growth economy, and near or below 90 generally indicates economic contraction. These guidelines vary by country, however. World Economy 11

2015 HVAC Sales Calls US Economy By Region 12

Regional Map References HVAC and Home Performance contractors succeed or fail based on their local economies. A series of maps will be used to display the very different economies that exist in the U.S. today. While useful in the presentation, we have not asked permission to use them in the report. This references the sources of those maps. Trulia Where homeownership is within reach of the middle class Home price changes in the top 100 largest markets Zillow Homes in negative equity today Analysis of applied analysis by local initiatives 2013 Homeowner mortgage payments serious delinquency rates 13

Who Are You? HVAC Contractor? Home Performance Contractor? Home-Services Contractor? Who Should You Be? 14

Home Performance Industry Home performance is a comprehensive whole-house-focused industry. Contractors look toward identifying and fixing all comfort and energy-efficiency problems in a home.gy audits Energy reviews are performed by energy auditors (building analysts or consultants), who are usually certified by the Building Performance Institute (BPI) or the Residential Energy Services Network (RESNET). [ 3][4] The United States Environmental Protection Agency and Department of Energy initiated a national program "Home Performance with ENERGY STAR" to offer the comprehensive, whole-house approach to improving energy efficiency and comfort at home, while helping to protect the environment. [5] There are 40 programs, to date, across the country which are administered by various utilities and state energy offices. [6 ] Home performance applies building science covering the following issues: Efficient energy use Durability Health and Safety Indoor Air Quality Thermal Comfort Indoor moisture locations and solutions Diagnostic equipment includes the following: Blower door Duct-leakage tester Thermal-imaging camera Combustion analyzer Carbon monoxide detector 15

HAVC Residential Industry HVAC (Heating, Ventilating, and Air Conditioning) The three central functions of heating, ventilating and air conditioning are related with one another. Contractors in this industry focus on providing thermal home comfort with effective energy usage and affordable cost. Businesses at the contractor level (approximately 100,000+ in the US) remain entrepreneurial. Home-owned, their success is highly reliant on local weather and the local economy in which they succeed or fail. Expansion to include other home services has been a path chosen by a number of contractors. Most have added services that remain similar to their HVAC roots. They have the technical education and training needed to become a sought after and technically effective HVAC business. HVAC home systems continue to account for a large portion of residential energy use. The industry has become high tech, producing many energy-efficient products as the industry has become more and more regulated. A large segment of contractors have moved from a business that is highly reliant on weather and aging central HVAC systems To one that includes include homeowner consultation. Service agreements as a part of that consultancy have become a number of homeowners trusted service. HVAC-accredited technicians providing annual/semi annual inspections of the home s heating, cooling and ventilation have greatly improved HVAC contractor successes. 16

Home Services Reviewed Chimney Cleaning Landscaping Electric Maid Service Energy Consulting Pest Control Home Automation Plumbing Home Security Pool Maintenance HVAC Remodeling Indoor Air Quality Roofing Insulation Windows/Doors 17

Contractors Providing Residential HVAC Service in 2015 Also Provide Other Services Total Households (n=510) The homeowner does get contractor services marketing. Total 30% 25% 22% 21% Homeowners with HVAC service calls knew their contractors also provided the following services. 14% 7% 7% 6% 6% 5% 5% 5% 5% 4% 3% 2015 Base = 510 homeowner decision makers, Q27. Thinking about the company that performed your most recent service call, what other home services do they also provide homeowners in your city. 18

HVAC + Another Home Service In Your Home Past 12 Months 2015 Total Households (n=510) 33% 33% 30% Total 18% Homeowners who had an HVAC service call also had service calls from these trades in their home in 2015. 13% 12% 12% 11% 10% 10% 7% 7% 7% 6% 5% 2015 Base 510 Total homeowners. 29 Have you had a service company in your home/on the premises performing the following services in the past 12 months? 19

Home Services Trustworthiness by Group 2015 Top Three Box 10 point scale Total Households (n=510) 55% 55% 52% 49% 46% 46% 45% 45% 43% 43% 40% 39% 39% 37% 37% 2015 Base= 510 total homeowners. Q30. Now please think in general about service providers who work in your home, whether or not you have experience with any specific companies or contractors. What is your general perception of the level of trustworthiness of each of these types of in-home service providers? 20

HVAC or Home Performance Contractor Who Are You? Who Should You Be? Everyone in each industry has competition. To succeed each must make hard decisions on short and long term ways to survive and succeed. Manufacturers work in a global market. Many/Most distributors work in multiple markets. Contractors work within a local market/economy. Local markets/economies are far from stable. What long-term and short-term plans do you have? Where are your competition and possible considerations 21

Residential HVAC Industry Introduction 22

Home Comfort System Satisfaction 2004 Vs. 2010 Source, 2010 American Home Comfort (Encyclopedic) study Respondents = Homeowner Decision Maker Very Much Satisfied 54% Somewhat Satisfied 39% Very Much Satisfied 50% Somewhat Satisfied 43% 2004 Not At All Satisfied 7% 2010 Not At All Satisfied 7% Most homeowners who will do something about their dissatisfaction and proactively call a contractor are those who are not satisfied (7%). Building a relationship with members of the somewhat satisfied group and the satisfied group you will allow you to help to many more. % of Homeowners 2010 Base = 34,738 Homeowners Who Rated System Satisfaction; 2004 Base = 18,549 S15. How satisfied are you with the central heating and/or air conditioning system in your primary residence? Table 128-1.1 for 2010, 2008 and 2006 and Table 70-1.1 for 2004 23

The Homeowner Market Many HVAC Contractors Fight Only For The 7% Of Those Who Know They Need Help. Very Satisfied Somewhat Satisfied 50% 43% Not At All Satisfied 7% 24

2010 Most Desired Improvements: System Satisfaction Most Desired Improvements: Home Comfort System Satisfaction (2010) Source, 2010 American Home Comfort (Encyclopedic) Study Respondents = Homeowner Decision Maker More even temperature in each room Very Much Satisfied Somewhat Satisfied Not At All Satisfied Greater energy efficiency Better air purification Better temperature control Improved air flow Reduced noise level Better humidity control Faster heating or cooling None of the above 2% 4% 12% 10% 13% 17% 15% 22% 20% 23% 27% 33% 26% 30% 32% 34% 32% 34% 41% 41% 48% 54% 52% 59% 68% 66% 77% 0% 20% 40% 60% 80% % of Homeowners Base = 35,676 Homeowners: 17,246 Very Much Satisfied,14,991 Somewhat Satisfied and 2,591 Not At All Satisfied S16. What would you like to see improved about the central heating and/or air conditioning system in your primary residence? Table 129-1.4 to 129-2.4 With so many interested Who talks to the very much satisfied? Who talks to the somewhat satisfied? Those with a relationship! 25

Very Satisfied Homeowners Want To Know Very satisfied homeowners are 50% of all homeowners. 41% Greater Energy Efficiency 30% More Even Temperatures 22% Better Air Purification 26

Somewhat Satisfied Homeowners Want To Know Much, Much More What a huge opportunity, yet so few contractors and homeowners take advantage 68% 54% 32% 34% 32% 27% Greater Efficiency More Even Temp. Better Air Purification Better Temp Control Improved Air Control Reduced Noise A major study including 35,676 homeowners was conducted in 2010. This information has been taken from that study. 27

Concerns With Air Quality Homeowners With Concerns 85% HOMEOWNERS WITH NO AIR QUAIITY ISSUES 15% 28

Respiratory Irritants And Allergens In Primary Residence Presence of Respiratory Irritants and Allergens In Primary Residence 2006 vs. 2008 vs. 2010 Source, 2010 American Home Comfort (Encyclopedic) Study Respondents = Homeowner Decision Maker Pets Household members with allergies High dust levels Smokers in household Household members with asthma Mold Recent construction Household members with other respiratory conditions None of the above 24% 24% 22% 24% 21% 18% 17% 17% 16% 9% 8% 8% 8% 7% 5% 7% 6% 6% 15% 15% 15% 65% 66% 67% 44% 44% 43% Even when HVAC systems are working Well, there are reasons to talk with most homeowner customers: 100-15 = 85%. 2006 2008 2010 0% 25% 50% 75% % of Homeowners 2010 Base = 35,676 Homeowners; 2008 Base = 30,060; 2006 Base = 27,278 S48. Do you have any of the following in your current primary residence? Table 432-1.1 to 432-2.1 29

Homeowners who believe better air purification in their home is very important = 27% of all homeowners. Importance to Better Air Purification Seekers Very Important Factors 2006 vs. 2008 vs. 2010 Importance to Better Air Purification Seekers Source, 2010 American Home Comfort (Encyclopedic) study Reduce airborne allergens Help family member with allergies Reduce volatile organic compounds Exchange air with filtered outside air Help family member with asthma Respondents = Homeowner Decision Maker Reduce dust Reduce viruses/bacteria Reduce mold/mildew Clean whole house air Reduce pet dander Reduce cooking odors Reduce smoke 48% 48% 48% 45% 46% 44% 47% 46% 44% 42% 41% 39% 39% 38% 36% 31% 29% 25% Base = 9,795 Homeowners Who Desire Better Air Purification As A System Improvement; 2008 Base = 8,740; S16c. Please rate the importance of each of the following improvements that could be made to the air purification of the central heating and/or cooling system in your primary residence. (Table 169-1.1 to 169-2.1) 75% 75% 76% 71% 71% 70% 68% 68% 66% 65% 65% 65% 66% 65% 64% 61% 60% 59% 0% 20% 40% 60% 80% % of Homeowners 2006 2008 2010 30

Why aren t we more successful? Lack of homeowner knowledge Lack of customer interaction Incorrect business focus Lack of control Lack of trust These reasons are just a few, but a few that can be corrected to make a real difference. 31

The Residential HVAC Industry Relies On A Local Robust Homeownership Market Recent Homeownership Review 32

The HVAC Hunter- Gatherers, A Market- By-Market Industry Coming Of Age? Home Services Industries, Hunter Gatherers Or Market-By-Market Industries Coming Of Age? HVAC 33

Building Services Contractors Are Here Marketing Their Full Home Services! An Example Of A Multiple-Services Contractor From Internet Business Pages Many now include HVAC Target customers based on multiple home improvement services Plumbing Electrical Insulation Windows/doors Security Landscaping Solar Energy consulting Home automation Roofing/add-ons Indoor air quality Remodeling HVAC Siding Etc. Home Performance, HVAC, And Added Contractor Services 34

Many/Most Homeowners are misinformed, uninformed, or not interested in their home heating and cooling systems until something happens which requires their focus. More homeowners are interested in windows/doors and other home products that are easier to show. 2010/2015 HVAC Service Calls All services/offerings are meaningless to your strategic development without a consultative relationship with homeowners. 35

HVAC Service Calls - 2013/2015 Service Agreements 2013 New HVAC Purchase Including a Service Agreement Versus 2015 Service Calls Households With and Without Service Agreements *2013 AHCS Purchased New HVAC Equipment Don t Know 9% Got Service Agreement 2015 Homeowners With Service Agreement No Service Agreement 0 Service Agreement 48% 48% 42%* 63% 63% 37% Did not get a Service Agreement *2013 Service Agreements One-fourth of homeowners buying new central HVAC equipment also paid separately for their service agreement. Three-fourths of the service agreements included in new HVAC equipment purchases were included in the price of the equipment. 2015 Base = 510 Q S3 Have you had either repairs or routine maintenance performed by a contractor on your Central heating and/or cooling equipment in the past 12 months in your primary residence? Table 7-1 36

The Homeowner An Often Misinformed, Uninformed HVAC Expert Homeowners are important information resources. In some industries, like HVAC, highly specific instructions and definitions must often be used. Within the HVAC industry, homeowners often do not fully understand the products and/or services they receive. The questionnaires used in 2010 and 2015 included the following definitions: Service or maintenance agreement definition: A service or maintenance agreement with an HVAC contractor provides seasonal cleaning and system checks once or twice a year. Homeowner s warranty: The definition used within this study states that A homeowner s warranty covers major home appliances and systems, including central heating and/or cooling systems. 37

Past 12 Months HVAC Service Calls Routine maintenance now accounts for more than half of all service calls. 2010 2015 Routine Maintenance 0 Emergency Routine 0 Maintenance Emergency 31% 28% 48% An increase of four points In five years 52% 21% 20% Non- Emergency Non- Emergency 2010 Base = 500 Homeowner decision makers. 2015 Base = 510 QS3. Have you had either repairs or routine maintenance performed by a contractor on your central heating and/or cooling equipment in the past 12 months in your primary residence? 38

Customers Responding To The Service Call Study 2015 Service Calls 47% Women Men 53% Base = 510, Q23 Are you male or female t.147,b1 39

Homeowner Decision-Makers Should new equipment come under advisement, this interaction takes place. Source: 2010 American Home Comfort (Encyclopedic) Study Respondents = Homeowner Decision Maker The HVAC purchase (a complete system or part of a system) is made in a number of ways. Joint decision by both heads Male head, with input from female head 31% 34% 29% 28% Male head only 21% 20% Female head only 13% 12% Female head, with input from male head Other person/don't know 1% 1% 5% 5% 2008 2010 87% 79% The decision process takes a number of scenarios. Those empowered should understand who makes the decisions and the best ways to help them understand the choices and their ramifications. 40

Service Calls - 2015 2015 Total Households versus Service Agreement Households Total Households (n= 510) Service Agreement Households (n= 190) Non-Service Agreement Households Mean (n= 320) Routine Maintenance Emergency Service Non-Emergency Service 76% 52% 38% 28% 13% 37% 20% 11% 25% Total Service Agreement No Service Agreement Total Service Agreement No Service Agreement Total Service Agreement No Service Agreement Q1. How would you describe the most recent service call on your central heating and /or cooling equipment? 41

Service Calls - 2015 2015 Total Households versus Service-Agreement Households Service Agreement Households (n= 190) Routine Maintenance Emergency Service Non-Emergency Service 76% Control 13% 11% Service Agreement Service Agreement Service Agreement Contractors who build a robust service agreement component inside their business models become more in control of their businesses. They are much more apt to take advantage of and succeed within local-market economic conditions regardless of what those conditions are; feast or famine. Homeowners with Service Agreements are also more in control of their home s energy use and home comfort. Q1. How would you describe the most recent service call on your central heating and /or cooling equipment? 42

Think of the success you might achieve should you control 76% of your business through routine service calls. Then think of the service agreements you could employ to move your business into a consultative one. Service Agreement Households (n= 190) Routine Maintenance Emergency Service Non-Emergency Service Contractor 76% Control 13% 11% Service Agreement Service Agreement Service Agreement Study name 43

Service Agreement Contractors Can Control Your Businesses Better Trust Consulting With Contractors Through Service Agreements Works More than half of the homeowners getting routine maintenance have a service agreement. 1 2 3 4 HVAC contractors who have a viable service and maintenance agreement program are viable consultants. Contractors know the homeowner and home and can make recommendations based on that knowledge. Homeowners who get to know the contractor trust the contractor and go to them for recommendations. Service and maintenance agreement homeowners are rewarded for the process. Among Consumers Who Had Routine-Maintenance Service Calls (2015 Service Calls) 44

Control Trust Success 45

The Cost Of Service Calls - 2015 Service-agreement contract costs are often not included in homeowners thoughts or payment schedules. Total Households Mean ($310) Service-Agreement Households Mean ($242) Non-Service-Agreement Households Mean ($351) 42% 52% * Up To $100 36% 20% 19% 21% $101-$200 Total Service Agreement No Service Agreement $201-$500 Total Service Agreement No Service Agreement $501 + 22% 16% 25% 16% 13% 18% Total Service Agreement No Service Agreement Total Service Agreement No Service Agreement * Service calls the homeowner feels they paid nothing for (Total = 15% - Service Agreement = 28% - No Service Agreements = 8%) 2015 Base = 510 homeowners with recent service calls; 190 Service agreement homeowners.; 320 Homeowners without a service agreement. Q18. What was the final cost of your most recent service call? 46

Service Calls 2015 Service Agreement Contract costs are often not included in homeowner thoughts or payment schedules Total Households (Mean $310) Service Agreement Households (Mean $242) Non-Service Agreement Households Mean ($351) * Up To $100 42% 52% 36% Total Service Agreement No Service Agreement * Service calls the homeowner feels they paid nothing for (Total = 15%, Service Agreement = 28%,; No Service Agreements = 8%) 2015 Base = 510 homeowners with recent service calls: 190 Service agreement homeowners. 320 Homeowners without a service agreement. Q18. What was the final cost of your most recent service call? 47

Service Agreements Why Do Service-Agreement (SA) Contractors Make So Little Per Call? They don t. It is only the homeowner s perception! Service calls the homeowner feels they paid nothing for : (Total = 15% - Service Agreement = 28% - Non-Service Agreements = 8%) 1. Give away service agreements (not shown as a line item) with new central HVAC: $250 per pop was often paid to the contractor? 2. SA payment is in the HH annual budget and forgotten. $250 per call was paid to the contractor? 3. Many homeowners also own a home warranty service. Contractors were paid $4,000+, not $0. Service agreements are a customer-paid Relationship tool provided for the service contractor customers! 48

Service Call (2015) Remember Contractor s Name After The Service Call Total Households (n=510) Service Agreement Households (n=190) Non-Service Agreement Households (n=320) Total Service Agreement No Service Agreement 36% 23% 44% 64% 77% 56% Yes Yes Yes While long a Hunter Gatherer industry, this home-service business is changing, and service agreement contractors are leading the way. Relationships are developing. A full three-fourths of service agreement homeowners, know their contractors names. Q22. Do you recall the name of the company that dispatched the contractor or technician to perform your most recent service call? 49

Average Household Income Total Households (n=510) Service Agreement Households (n=190) No Service Agreement Households (n=320) $79,700 $85,500 $76,700 $517 $525 $558 Less Monthly $73,500 $79,200 $70,000 2010 2015 On average, homeowners with a service call this year had $500+ fewer dollars per month than those in 2010. 2010 Base = 500; 2015 Base = 510 total homeowners; Q24. what is your household's approximate annual income before taxes? 50

52% Routine-Maintenance Service Calls 51

Household Income 2015 Among Consumers Who Had Routine-Maintenance Service Calls Total Households (Mean $73,600) Service Agreement Households (Mean $79,300) Non- Service Agreement Households (Mean $66,700) Under $50,000 $50,000 To $99,999 $100,000 + 38% 31% 44% 39% 39% 40% 24% 30% 17% Total Service Agreement No Service Agreement Total Service Agreement No Service Agreement Total Service Agreement No Service Agreement Service agreement contractors have better recruited the more affluent homeowner. Less affluent homeowners have more often used seasonal clean and check promotions. 2015 Base = 266; Service agreement =145; No service agreement = 121; homeowners who had a recent routine maintenance service call. Q24. What is your household s approximate annual income before taxes? 52

Age Of HVAC Equipment (2015) Among Consumers Who Had Routine-Maintenance Service Calls Total Households (n=266) Service Agreement Households (n=145) Non- Service Agreement Households (n=121) Added service agreement outreach is still needed here. Contractor inclusion of service agreements within the sale of central equipment is reflected here. 41% 41% 40% 40% 45% 34% 16% 13% 19% 4% 1% 7% Older Equipment - replace soon Mid-life equipment Relatively New Don't Know 2015 Base = 266 homeowners who had a recent routine maintenance service call. Q21. Would you describe the equipment that was serviced, repaired, or replaced during your recent service call as? 53

Service Or Maintenance Agreement Among Consumers Who Had Routine Maintenance Service Calls Has A Service Or Maintenance Agreement With An HVAC Contractor 2010 2015 50% 55% Service/Maintenance agreements continue to grow among homeowners wishing to check and clean their central HVAC systems prior to seasonal use. 2010 Base = 239: 2015 Base = 266 homeowners who had a recent routine service call. Q2 Do you have a service or maintenance agreement with a heating or cooling systems contractor? 54

Service Call With Same Contractor 2015 Among Consumers Who Had Routine-Maintenance Service Calls Service Call With Same Contractor Holding The Service Agreement No 3% Most contractors complete their service agreement calls with their homeowner customers. 97% Yes 2015 Base = 145 homeowners who had a recent routine -maintenance service call and have a service agreement. Q3. Was your most recent service call conducted by the same contractor with whom you have a service agreement? 55

Has A Homeowner s Warranty Among Consumers Who Had Routine-Maintenance Service Calls Total Households (n=266) Service Agreement Households (n=145) Non-Service Agreement Households (n=121) 2010 2015 Y e s 16% 28% 40% Homeowners Security need 16% 24% 32% SA homeowner often has a need for added security N o 60% 72% 84% 68% 76% 84% 2015 Base = 266 homeowners who had a recent routine maintenance service call. Q2. Do you have a warranty that covers major home appliances and systems including HVAC? 2010 Base = 239 homeowners who had a recent routine maintenance service call. Q2 Do you have any of the following A warranty that covers major home appliances and systems including HVAC? 56

Homeowner s Warranty 2015 Among Consumers who had Routine Maintenance Service Calls Service Call Claimed Under The Homeowner s Warranty Note: 94% of those claims were approved. 49% 51% Yes 53% 47% Yes Yes Total 48% 52% No Service Agreement Yes Service Agreement 2015 Base=266 homeowners who had a recent routine maintenance service call and have a homeowner s warranty. Q5. Did you claim the service or repair under your homeowner s warranty? 57

Contactor-Selection Criteria 58

First Reason for Selecting Contractor (2015) Among Consumers Who Had Routine-Maintenance Service Calls Most Important Reason for Selecting Contactor Selected Service Agreement (n=145) rvice Agreem No Service Agreement (n=121) Service Agreem Have Service Agreement 38% Has done good w ork for me in the39% Had done w ork from me in the pas 15% Made me feel confident in their qu 9% Made me feel confident in their qu 10% Seemed most competent 7% Offered 100% Satisfaction 5% Is a friend/fam ily m em ber 7% 2015 Base = 266 Homeowners who had a recent routine maintenance service call. Q10. What was the one most important reason why you selected the contractor who conducted your most recent service call? 59

All Contributing Reasons For Selecting Contractor (2015) Among Consumers Who Had Routine Maintenance Service Calls First + Remaining Activities/Reasons That Homeowners Said Led Them To Service Contractor Service Agreement No Service Agreement Have done good work for me in the past 54% 58% Made me feel confident about their work quality 33% 45% Was helpful and informative 22% 29% Had a service/maintenance agreement 57% 4% Appointment best fit my schedule 22% 24% Seemed most competent 13% 24% Offered a service guarantee 26% 17% Offered lowest price for service 16% 17% Offered 100% satisfaction or money back 18% 12% 2015 Base = 266 homeowners who had a recent routine maintenance service call. Service agreement = 145. no service agreement = 121. Q10. What was the one most important reason why you selected the contractor who conducted your most recent service call? 60

Contractor Professionalism 61

Contractor/Technician Assessment 2015 Among Consumers Who Had Routine Maintenance Service Calls Total Households (n=266) Service Agreement Households (n=145) No Service Agreement Households (n=121) Top-Two Box Courteous and Professional Manner 95% 95% 94% Was Knowledgeable and Competent 94% 94% 95% Total Service Agreement No Service Agreement Total Service Agreement No Service Agreement Would Consult and Hire Again 92% 90% 94% Someone I Trusted in my Home 91% 91% 92% Total Service Agreement No Service Agreement Total Service Agreement No Service Agreement 2015 Base = Homeowners who had a recent routine maintenance service call. Q14. Which statement best describes when the contractor or technician? 62

Processes Case Study Service Agreements 63

Standard Dispatch Business Calls Relationships Monday s Dispatch Office Two Trucks Making four calls per truck can be a heroic effort. 64

Service Agreement Calls When Building an HVAC service agreement business, the contractor chooses the market he/she wants to serve. A home-performance agreement can expand the contractors hold on geographic markets important to them. Service-agreement contractors own a tool that is almost recession-proof, valuable to a home in any economy. 65

Who Conducts The Service Call & When? Who conducts the call? Service Technicians The Newbie The Veteran The Nearly Retired The Sales Rep technician The Owner e Service Agreement Timing Pre-Season Once a year Twice a year Quarterly When ever there is time to fit in a call. 66

Who Owns The Relationship With The Homeowner? Manager or Owner? Manager or Owner Technician? Salesperson? Technician Home Sales In any large home-services company, who has the relationship? 67

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Revenue & Service Agreements Revenue (m) est. 9/16/2009 11,679 Number of Energy Savings Plans 8 7 6 5 4 3 2 1 0 12000 10000 8000 6000 4000 2000 0 Revenue Service Agreements What A Comparison! Since 1969, we ve created customers for life by enhancing their lives, comfort, knowledge, and safety with our commitment to excellence in service. 68 68

In 2009 A Contractor Friend And I Presented My Research And His Results 1. He told me he had heard a presentation I had made in 1997. 2. Back then the market place was tumbling and he sought an answer. 3. He went home and began changing his company from HVAC to Home Services. 4. The rest is his history, his vision, and his hard work. 5. While the US economy, homeownership, and companies were in trouble, his company grew! 6. His technicians were trained to sell and service home service agreements. 7. His staff developed programs and processes that allowed the company to make money on each of them. 8. His vision included getting to know the homeowners in his market. and Working with them through service agreements. 69

In 2009 A Contractor Friend And I Presented My Research And His Results 9. During this unstable time, included in his daily routine were his part of the service agreement work: phone calls, many of them. 10. Every morning his desk top included a review of every service call from the day before and the important information found in the call. 11. He would call every home. 12. Whether he received a real person or voice mail, he would begin his message in this way: 13. Good Morning this is Robert. My technician was in your home yesterday.then he might say: 14.Here is what he found while there 70

In 2009 A Contractor Friend And I Presented My Research And His Results 9. Regardless of who made the call, Robert built the relationship with the homeowner, which would be as valuable to them as their business was to him. 10. His service to his customers was followed with major local community charities and events. 11. His work with others including other trades, and local utilities helped all involved. 12. His monthly customer news letters included special sections on the events, charities, and his employees. Often the letters also focused on a homeowner and something they did. 13. His marketing changed from HVAC to Home Services, including a company mascot. 14. In this way Robert was able to consult with each homeowner personally, guiding them into the decisions they needed to make, when they needed to make them, without emergencies. When we spoke last week he said he had done it again. The company had 170 service agreement plans in 2011 with $ 1 million in revenue. By the end of 2015 he now has 1,300 agreements and his revenue was $ 2.5 million. His plan this year is 1,750 agreements with $3.25 million in revenue! 71

Contractor Consultation 72

Energy Efficiency Recommendations Made (2015) Among Consumers Who Had Routine-Maintenance Service Calls Selected Contractor s Energy-Efficiency Recommendations Total Households (n=266) Service Agreement Households (n=145) Non- Service Agreement Households (n=121) Explained Energy Star equipment benefits 15% 17% 18% Recommended system replacement with more efficient one 12% 14% 15% Asked about my average heating and/or cooling bills 10% 12% 14% Explained avaliable rebates 8% 11% 13% Explained tax credits available 5% 10% 14% Serviced existing system for another season though high efficient replacement was best 8% 10% 11% 2015 Base = Homeowners who had a recent routine maintenance service call and took action regarding energy efficiency. Q19. Which of the following actions, if any, did the contractor or technician take regarding the energy efficiency? 73

Homeowners Plan To Take Action Based On Recommendations Among Consumers Who Had Routine Maintenance Service Calls Total Households (266) Service Agreement Households (145) Non-Service Agreement Households (121) 2010 2015 83% 79% 79% 67% Yes Yes 17% 21% 21% 33% No No 2010 Base = 112: 2015 Base = 195 homeowners who had a recent emergency and non-emergency service call. Q20. Based on the recommendations of your contractor, or technician, which of the following actions, if any, do you plan to take. 74

Homeowner Responses - 2015 Among Consumers Who Had Routine Maintenance Service Calls Selected Homeowner Responses To Contractor Recommendations Total Households (n=266) Service Agreement Households (n=145) Non-Service Agreement Households (n=121) Get another clean and check 56% 57% 55% Program my thermostat Replace all or part of my system within 12 months Order a home energy audit Add to my existing central system within 12 months Supplement central system with portable equipment 1% 15% 14% 17% 11% 12% 9% 9% 10% 8% 5% 8% 5% 5% 4% 2015 Base = Homeowners who had a recent routine maintenance service call and took action regarding energy efficiency. Q20. Based on the recommendations from your contractor/s or technicians(s), which of the following do you plan to do with your central heating and/or cooling system? 75

Service Agreements Whether you are an HP or HVAC contractor, service agreements are an exceptional business tool. There are still too many contractors who do not conduct service agreement calls perfectly, but the tool has been unbelievably successful in spite of contractors who use the tool poorly. The relationship extends beyond a specific trade. The tool is almost recession-proof. The shift in business model helps build a sustainable business. The contractor can choose your clientele. The service agreement you forge is one that will be specific to your personal business. The contractor does not have to call on clients that you do not want. The following series of charts display the extremely positive influence service agreements have on homeowner/trade professional business relationships. 76

Contractors are better remembered More contractor services are used Relationships influencing trust are established Homeowners wish their HVAC contractors to provide more services Service Agreement Influences 77

Does Your HVAC Contractor Provide Other Services? (2015) Non-Service Agreement Households (n=320) Service Agreement Households (n=190) 40% 36% Homeowners believe service-agreement contractors to be more established local businesses. 24% 18% 18% 28% 17% 27% 22% Many homeowners know their service-agreement companies include added home services in support of their HVAC service agreement homeowners. 10% 9% 6% 4% 12% 9% 9% 9% 5% 4% 2% 3% 7% 1% 10% 7% 6% 3% 3% 4% 2% 2015 Base = 510 homeowner decision makers: Base =190 homeowners with service agreement who had a recent routine maintenance service call. Q27 Thinking about the company that performed your most recent service call, what other home services do they also provide homeowners in your city. 78

Another Home Service In Your Home Past 12 Months (2015) Total Versus Service Agreement Customers Non-Service Agreement Households (n=510) Service Agreement Households (n=190) 39% 38% 29% 31% 35% 25% HVAC service agreement homeowners tend to spend more time and effort on caring for their home. They had more home service contractors in their home in 2015. 18% 18% 14% 14% 12% 11% 17% 9% 9% 15% 8% 14% 7% 15% 11% 5% 5% 10% 8% 6% 10% 3% 3% 9% 2015 Base 510 Total homeowners, Base 190 homeowners with service agreements. Q. 29 Have you had a service company in your home/on the premises performing the following services in the past 12 months? 79

Home Services Trustworthiness by Group (2015) Top Three Box 10 point scale Non-SA Households (n=320) Service Agreement Households (n=190) Relationships help build trust. Service agreements help build relationships! 65% 62% 65% 49% 51% 56% 55% 56% 53% 54% 53% 51% 45% 45% 41% 40% 40% 39% 38% 38% 48% 48% 48% 42% 45% 34% 34% 33% 35% 33% 2015 Base = 510 total homeowners, Base = 190 service agreement homeowners performed by a contractor on your central heating and air conditioning equipment in the past 12 months. Q30. Now please think in general about service providers who work in your home, whether or not you have experience with any specific companies or contractors. What is your general perception of the level of trustworthiness of each of these types of in-home service providers? 80

What Added Services Would You Want HVAC Companies to Provide? (2015) Total Households (n=510) Service Agreement Households (n=190) 46% 43% 43% 40% 29% 27% 24% 28% 22% 26% Many homeowners would like for their HVAC contractor to offer them more home services. 18% 15% 15% 12% 14% 11% 13% 9% 10% 9% 7% 7% 11% 6% 9% 9% 7% 5% 5% 5% 2015 Base = 510 Total homeowners: 190 Service agreement homeowners who had a recent routine maintenance service call. Q28. If you were to select a different heating and/or air conditioning company to work with, which, if any of the following services would you want this company to also provide? 81

Home Performance & HVAC Contractors Whether Home Service Contractors Include Other Home Services As A Part Of Their Offering or Not, Affordable Consulting/Service Contracts Can Make the Difference Between Success And Failure Control Trust Homeowners Will Remain Ignorant Or Informed In Very Uninformed Ways Without a Service Consultant They Can Grow To Trust In Their Lives! Success 82