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How HVAC/R & Plumbing contractors can build their offerings to match consumer behavior
Consumer behavior has changed, what HVAC contractors need to know about how they package their installations.


Consumers today are looking at their large purchases differently. 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. Now more than ever contractors need to understand that consumers are not buying a new HVAC system, they are buying a home comfort solution that they expect to last for at least as long as they will be making payments for it, and most likely longer.

Manufacturers offer a 10 year parts warranty with new systems, whereas contractors typically offer 30 to 360 days of labor. Manufacturers know that if they do not stand behind their products, contractors wonít 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 contractorís commitment to them.

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. Would a contractor ever install an HVAC system that has a 1-year parts warranty? Why should a homeowner buy a home comfort solution that has a 1-year labor warranty? Contractors are starting to understand that homeowners are expecting a home comfort solution from them and not a new A/C, Furnace, etc. Homeowners will typically be paying for that solution in monthly installments for 5 to 10 years and expect the contractor to stand by their solution during that time.

Contractor Value Proposition

Homeowners typically get several bids when looking for a new HVAC system. The question every contractor should ask is why the homeowner should select their bid over others. Letís assume for the moment that the bids come from contractors that are knowledgeable and 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? Here is an example:

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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.

The importance of warranty coverage on consumer demand is evident for new automobiles. A few examples of how expanding a warranty offering affects sales is shown with Hyundai and Dodge. In 1999, Hyundai Motors changed their powertrain warranty from 5 years / 60,000 miles to 10 years / 100,000 miles. Hyundaiís U.S. market share grew from 1.1% to 4% as a result of extending their warranty.

An example of the consequence of reducing the duration of a warranty can also be seen with Volkwagen. In 2002, Volkswagen reduced their powertrain warranty from 10 years / 100,000 to 5 years / 60,000 miles. As a result, U.S. sales of Volkswagen cars declined by 30% in the 3 years to follow.

As consumers find themselves paying for their home comfort with monthly payments they are increasingly looking for companies that have built their home comfort solutions to match. Making sure that contractors build their offerings to match consumer behavior is key to the success of contactors. More and more HVAC contractors are offering labor guarantees with their work. Typically, these guarantees last for at least as long as the duration of the payment plan they offer. Itís not just about making the sale, but a more responsible way to do business. Contractors should be mindful of the warranty guidelines & regulations in their state when deciding to make an extended warranty part of their home comfort offerings.

Trinity Warranty Solutions is a leading HVAC/R/Plumbing extended warranty solutions provider. We help contractors offer a better installation guarantee with 1, 2, 3, 5, and 10 years of coverage available. Part of our support includes educating contractors about state requirements, developing pricing, marketing assistance, and sales training.

For more information email: vassilg@trinitywarranty.com or visit www.trinitywarranty.com/

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