You Won’t Sell Your Way to Success with Modeled Energy Savings

Posted by:

Share Button

We’ve got to be able to prove the accuracy of our energy-savings predictions to be able to sell home performance.

I’ll reject that premise outright. It’s just not necessary. I’ll go further to suggest that if you’re relying on energy-savings alone to drive you’re business, you’re going to struggle. Unless energy prices shoot up, savings won’t make the phone ring. And savings won’t make most sales.

That said, the better you can predict energy savings, the better off you are.

Now, let me try to reconcile this.

First, you don’t need accurate energy-savings numbers for the simple reason that the driving motivator for most home improvement purchases isn’t energy savings. There are a lot of other benefits, from comfort, to reducing ice damming problems, to fixing wet, stinky crawlspaces that people are willing to pay for. Making the daughter’s bedroom livable all winter or the home office usable in the summer are often more important than energy savings. (Corollary: if you rely on the cost-effective energy-savings argument alone, you will have much smaller projects. Energy prices are too low to drive deeper saving projects.)

I’ll also note that accurate (or precise) savings numbers aren’t necessary to establish very robust energy-savings guarantees. Perry Bigelow did this in Chicago back in the late 80s/early 90s on affordably-built new homes.

And note, I do not mean doing this by using any existing modeling tool which can give very precise and wildly inaccurate numbers. Bigelow knew he couldn’t precisely dial in the savings numbers, but he could still offer eye-popping guarantees simply by being very conservative in his assumptions. The key here is “conservative”. I don’t want to hit 95% of my prediction. Or 99%. And 60% won’t fly at all. Nor don’t I want to fall short of the target half the time.  I want to overdeliver 100% of the time—or very close to 100% of the time.

So, on to the second part of the equation. The better you can predict energy savings, the higher you can ratchet up your predictions and the more you can differentiate yourself. The more experience you gain, and the more results you see, the better your internal prediction can before, and the higher your customer-facing guarantee can be.

There are other reasons, outside what is necessary to run your business today, why better savings predictions will be useful. Unlocking financial markets is one of them. But you don’t have to wait for that to be successful fixing people’s homes today. You do, though, need to stop hiding behind models. And stop hiding behind program requirements to use models. If you want the program cheese, follow the program requirements. But you can sell the benefits your customers want, explain what the program mumbo jumbo means (but only if you choose to participate in a program), and be very clear about what you’re going to deliver—and then deliver it–models be damned.

Cheers,
Mike

Share Button
10

About the Author:

Mike Rogers is the President of OmStout Consulting. A nationally recognized expert in residential energy-efficiency, he works with contractors and programs to scale sustainable market approaches to improving homes. More on Google+

Comments

  1. Paul G Taylor  June 20, 2013

    When doing EEM’s. I sell my clients on health, comfort and safety first. I use The Resnet Rem Rate software to get a HERS score. People like the MSRP sticker when shopping for cars. All of my clients are happy to know that their home has a score that is based off of the model energy codes. I agree with being conservative as well. When you are conservative using modeling software your numbers may not be as impressive but they are realistic and attainable as all of my clients have found out.

    Thanks Mike Hope all is well.

    reply
  2. Jeremy Begley  May 27, 2013

    This is a huge topic for discussion in my market. Let me throw another ambiguous term. “cost effectiveness”. The local BB program in our area uses that term as a weapon to control contractor pricing and discount profitability. They dont want to factor in the comfort and health and safety benefits as part of the cost effectiveness of a measure because these things are not represented by numbers that can go into thier quarterly reports. I model everything and provide all the relevant numbers to my customers – payback, SIR, MIRR, energy savings, the works. But I SELL comfort and a healthy home. Along with accountability and guaranteed correct solutions. What we have to offer as home performance professionals is even at the surface so much more valuable than energy savings alone. Our focus in our sales should highlight the benefits of a holistic approach in terms of providing the correct solutions unique to that home presented in a manner (or order) that is tailored to the home owners concerns but at the same time follows sound BS principles. Unfortunately all of the focus in our industry has been put on things like payback and energy savings, largely due to amount of government funding that has gotten thrown at it. In our market this has been a double edged sword. People never got to see the true value of what we do because instead of neighbors tell neighbors about how comfortable their home was now or how they could use that one room they never could before was over shadowed by neighbors telling neighbors about the $4000 they got off the upgrades they did. And how it was going to pay them back in an unrealistic 3 years. Now that that money is gone we have an uphill battle because not only to we still have to sell the real value of HP we have to fight against the perception that it should come with free money and a 3 year payback. Payback, SIR, and even pure energy savings should be sold almost as an after thought. “We we do can do all this for you, we test it out at the end to ensure your safety and the quality of the install and oh yeah you’ll have this much energy savings and these items should pay for themselves over the life time of the upgrade.”

    reply
    • Mike Rogers  May 27, 2013

      Great comment, thanks, Jeremy! “Cost-effectiveness”, especially in the narrow energy-only sense, in the program world is generally misapplied and it’s a red herring in terms of customer motivation.

      -MR

      reply
    • Sandy Michaels  June 6, 2013

      Jeremy,
      I especially like your statements below – HP could use it for national guidelines!

      “What we have to offer as home performance professionals is even at the surface so much more valuable than energy savings alone. Our focus in our sales should highlight the benefits of a holistic approach in terms of providing the correct solutions unique to that home presented in a manner (or order) that is tailored to the home owners concerns but at the same time follows sound BS principles.”

      reply
  3. Ted Kidd  May 24, 2013

    No, selling energy savings as the orimary benefit, when the opportunity is a small slice of the problem is pretty myopic. But are you saying accuracy doesn’t matter because the savings aren’t important? That’s how I’m reading it…

    Energy savings are a measurable slice of the benefits of comprehensive home performance. Ability to deliver on promise for the tangible benefits helps reassure consumers they will see the intangible benefits. Itis a proxy for both ability to tell the truth, and a measure of ability to deliver QUALITY.

    Consumers are rightfully distrustful of home repair contractors, so metrics that show alignment of consumer and contractor interest can accellerate smart trust, bridging the gap from “slimy salesman” to “trusted consultant”. I believe market transformation requires moving from one night stand type quick product sales to building long term consultative relationships.

    If selling is about telling the most convincing lies, being the best liar, then the idea of accountability, accuracy and truth certainly may look threatening.

    If used car sales approach to selling “products” that promise to be “solutions” is the path some want to take forward, best of luck. Tracking results and ability to deliver on promise are coming. Ability to deliver on measurable promises are reliable proxy for delivery of less measurable solutions.

    Certainly sales skills are always going to be important. But I think ability to tell the truth and accountability are going to be equally important in a future dominated by big data.

    reply
    • Mike Rogers  May 24, 2013

      Thanks for the comment, Ted.

      No, I’m not saying accuracy isn’t important. I am saying that delivering on what you promise is more important. You can increase you accuracy over time be making predictions and refining them based on results. That can be part of a good quality assurance program. I am saying though that whatever you think you’ll save a customer, you are better off being more conservative so that you can deliver on your promise of savings 100% of the time.

      Let’s say you think you’re going to save 28% (you define what you mean by 28%, space conditioning, total energy, weather normalized…you decide and spell it out) +/-8%, and you’re confident you’ll do think 95% of the time based of your prior experience. That’s way too complicated of a consumer message. In this case you might consider GUARANTEEING 20% savings (again, defining what you mean) and knowing the almost all of the time you’ll beat that, sometimes by quite a bit. Back it up with a real payout is for some reason you don’t quite hit your promise–and payout quickly. Again, Perry Bigelow was doing this more than 20 years ago with more simpler tools.

      In this example, assuming you’ve defined 20%, that 20% guarantee is entirely measurable. Done conservatively, the error should almost always be on the upside, you overdeliver on your measurable promise, and maintain the long term relationship.

      I’ll also point out that there are many other very measurable elements, elements which many in the residential contracting industry fail miserably on. Showing up on time. Following up on time. Sticking to the production schedule. Not making a mess. Or higher order elements such as guaranteeing that the daughter’s bedroom will stay within 2 degrees of the set point.

      You’ve never heard me suggest that telling the truth or being accountable to your customer aren’t important. They are critical. But they are not tied to energy modeling unless you choose to tie your promise to a model.

      More on the importance of sales skills at a later date…

      Thanks,
      Mike

      reply
      • Ted Kidd  May 24, 2013

        I like that explanation MUCH better, thanks Mike.

        But I’m not sure under promising on energy savings is something homeowners care much about either. I don’t think reasonable people who save $450 are upset you projected $500. I think they’re upset when projections say $500 and they save $190. This is what NY State’s “Home Performance” program seems to deliver: http://bit.ly/2007NYSERDAhpwesresults -The first report I found has program realization at .38 (see appendix page 13)

        I completely agree these Customer Sat items are also HUGE:

        “…elements which many in the residential contracting industry fail miserably on. Showing up on time. Following up on time. Sticking to the production schedule. Not making a mess. Or higher order elements such as guaranteeing that the daughter’s bedroom will stay within 2 degrees of the set point.”

        Are these the things you teach contractors how to be better at?

        reply
        • Mike Rogers  May 25, 2013

          Ted, a few points.

          • You wanted something measurable. Performance against a guaranteed savings amount is absolutely measurable. There are also many other ways to deliver measurable performance that have nothing to do with energy modeling or programs.
          • Don’t confuse running your business well and serving your customers well with participating in a program. And BTW, in many programs it’s quite possible to hand the customer the program required nonsense (see Energy Pro in CA, and the required assumptions contractors must bake into the model for a definition of nonsense) but still make very reasonable promises and deliver on those promises.
          • I don’t spend a lot of time teaching contractors to return phone calls and show up at time. I’ve found it much more fruitful to work with contractors who have already figured out the absolute fundamentals and help them tackle the higher order elements. Of course, this limits the contractor population I focus on to some extent, but I can have a bigger impact this way. I do talk about the fundamentals here quite a bit because the more contractors that crack that nut, the more we talk talk about the fun stuff.

          Thanks,
          Mike

          reply
  4. Nate Adams  May 24, 2013

    This is one I struggle with. I have a good closing ratio, 50% or so, down from 65% last year (still trying to figure that one out, I think it’s seeing the wrong people and poor qualification, mixed with higher pricing.)

    I don’t do any modeling right now, but I want to. I agree if we lean completely on models, we’re dumb. Right now with natural gas prices in the toilet, it’s like selling a Prius when gas is $.80/gallon. The numbers do still work, but not very well. The pain points are key – solving problems is key.

    As part of improving my process/close rate, I just asked a bunch of qualification questions this morning of a prospect and found her pain while playing a bit of hard to get. She’s now expecting at least double the cost of the job she thought was too much because I focused on her pain of the AC not keeping up and her new granddaughter having a room that is way too hot. Fingers crossed, I’ll only be seeing much better qualified prospects from here on out!

    I think if used well modeling is a big part of what we do, but not the only thing by any stretch. Does that make sense? I’d love to hear more details from your Chicago example, such as how he came up with his numbers. Thanks for your thoughts, Mike!

    reply

Add a Comment