2018 Summer’s End Insights for HVAC, Insulation & Home Performance Contractors | Energy Circle, LLC

2018 Summer’s End Insights for HVAC, Insulation & Home Performance Contractors

Peter Troast

2018 has been an interesting year — at least so far. Several people have asked me to summarize what I think is most relevant from a marketing and demand generation standpoint. Here you go:

The Rise of Google My Business & Growing Importance of Your Brand Search Page

The Google cluster once known as Google Places and then Google+ is now Google My Business (GMB). And if there’s one thing to say about it, it’s that Google finally has their ducks in a row with this product! GMB is their connection point to small businesses, and they are taking it seriously.

From the perspective of solar, HP and HVAC businesses, this is 100% good news … provided you take advantage of it. New features, like Posts and Questions & Answers, are proving to be worthy channels for getting your message out.

Most importantly, our data is pointing to an increasing amount of customer interaction happening from a company’s brand search page — where your organic, review listings and the Google Knowledge Panel (fed by GMB) all appear. In one example, 49% of calls to a contractor came from people only visiting that brand search page. Yes, folks, that means those calls came without the lead ever visiting the website (the so-called “no click query.”) For that reason, some are saying that your Google brand page is a very close second to being the most important page on the internet.

Instant Gratification Homeowners

Being the conversion rate hawks that we are, we carefully monitor the means by which prospects are contacting contractors. It has always been Energy Circle’s philosophy to offer as much choice as possible — forms, phone, live chat. Give your prospect choice and let them use whatever means they’re comfortable with to get a hold of you.

The stat that we’re noticing most prominently is the growth in “instant gratification” contacts, i.e. people who are using the phone or chat because they want information now. It’s not all that surprising in the hyperspeed world we live in, but the trend line we’re seeing is dramatic: across a broad group of clients, 75% or more of all conversions are by phone or chat.

We’ve been saying it for years: it is time to staff appropriately for this new world order. First touch excellence is no longer optional.

Local Services Ads Here to Stay

Google’s blockbuster new ad product, LSAs, looks like it is no longer an experiment. It has now been extended to 74 cities, and HVAC is the most common service across those locations.

For those not following (you can get up to speed with our Comprehensive Guide to Google Local Services Ads), this is Google’s new ad product affecting all of HVAC, and some insulation, related searches where the model is a per-lead fee. To participate in the program, all employees who will be working in a home must clear a full background check, so the bar to get in to the program is not trivial. $22/lead is the typical HVAC price. While this might seem inexpensive on the surface, we’re finding that the majority of leads are for service, so it’s very important to watch your conversion economics.

At least one contractor we work with who was in the original beta program has dropped out. That said, our view is that HVAC contractors should jump on this as soon as it comes to their market to at least test the results. Google is placing these ads in the most prominent search real estate on the internet, and it has the potential to seriously disrupt how searchers find contractors.

Declining Quality of Home Advisor Leads

Despite Home Advisor’s national advertising campaign and the obvious allure of being able to wake up in the morning and buy a few leads, we’re finding that close rates on leads purchased from HA are in decline.

When you track the full conversion math — from lead to appointment, appointment to quote, and quote to close — the numbers are increasingly atrocious. Low conversion at each of these stages often results in a $25 lead costing more than $1000 by the time you’ve closed the job. Why? HA is selling the lead multiple times (often more than 3), the people using HA tend to be hyper price sensitive and, we’re hearing, many of the leads are not committed buyers.

Not to dump on Home Advisor too much here — every source of purchased leads that we’re aware of, across HVAC, HP and Solar, is also sucking wind.  

Heat Pumps on the Rise

The most recent AHRI data for the US shows air source heat pumps up over 10% YOY (through June) vs 4% for air conditioners only. Amongst our clients, we’re sensing potentially even larger growth, indicating that the U.S. market is finally coming around to what the rest of the world has already figured out. Volume still seems to be summer-oriented, but companies in northern climate zones are seeing growth in this sector for heating as well.

In some states, an entirely new breed of contractor that sells heat pumps only (or solar combined with heat pumps) has emerged, and many are thriving. More and more envelope-oriented “home performance” contractors are adding heat pumps, and this seems like a comparatively easy path towards a full HVAC offering.

Emerging Demand for Home Electrification

Honestly, it’s early to call this a trend, but in some rarified markets across the country (we’re talking about you, CA and MA), we’re seeing growing and very real demand from homeowners wanting to cut all ties with fossil fuels in their homes. This is helped along by some locations with exceptional incentives to make the move (Sacramento Municipal Utility District in CA is offering up to $13,750) and to be clear, is still driven by a very unique and well-informed customer that is motivated by reducing carbon.

Yes, you can dismiss this hardcore climate change oriented audience as narrow, and that would be true; but in certain markets it is a big enough movement that it’s producing meaningful business. What’s great about this trend is that it results in larger, more comprehensive jobs, and we’re hearing that selling envelope fixes along with electrification is an easy pitch.

Tangible Increases in Home Value from Efficiency & Renewables

The decades-long effort to demonstrate increased home value from efficiency and renewables has new momentum, thanks to cities adopting Home Energy Score as a mandate and the aggressive rollout of Pearl Certified Homes. Pearl is an exciting new player on the scene, and early results show boosted home selling prices of as much as 5% for certified homes.

A select group of high performance contractors (including many Energy Circle clients) are rolling out the Pearl Certification offering and finding strong differentiation by certifying 100% of their jobs. Pearl allows for certification of assets — like a high efficiency heating and cooling system — or the house itself.  

Staying on-trend with your digital marketing is key to keeping an edge over your competitors. Contact us to learn more.


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