This article was originally published in the November/December 1996 issue of Home Energy Magazine. Some formatting inconsistencies may be evident in older archive content.

Home Energy Magazine Online November/December 1996

FIELD NOTES

Contracting for Comfort

by Karen Walker and Royce Lewis

Karen Walker and Royce Lewis are energy consultants and contractors in central Arkansas.

Ready for energy emergencies, Comfort Diagnostics' refurbished ambulance and equipment truck are integral to the whole house inspections that are the core of their business.

Comfort Diagnostics used to just be a whole-house diagnostics inspection company. We would identify problems and recommend solutions. Using the whole-house approach, and custom equipment like blower doors, we diagnosed indoor air quality problems that had eluded typical contractors. However, we found it was nearly impossible to control the quality of other contractors' work well enough to make older homes work efficiently. The recommendations we were making could not be completed as we prescribed, because there were no contractors in the area who were as concerned about quality installation as we were. So we took matters into our own hands and became contractors ourselves.

Since then, daily implementation of building performance contracting has become our company's mainstay. We still use state-of-the-art diagnostics tools and procedures. Meanwhile, we please homeowners who have otherwise been unable to lower their utility bills, or even to live comfortably in their homes.

The Transition Our business began with three employees: office manager, chief auditor, and blower door guided air sealing specialist. Our only service vehicle was a 1980 box truck that spent most of its time in the shop, and the only contracting work we did was air sealing. Now, just 18 short months later, we have added three trucks and eight employees. The transition that started with air sealing and duct sealing quickly moved to combustion safety, humidity control, HVAC equipment replacements, roof and crawlspace venting, and installation of insulation and vapor barriers. Once we were HVAC contractors, Comfort Diagnostics became licensed Bryant dealers, and the Bryant distributor provided us with invaluable technical assistance and training. If it has to do with energy, safety, comfort, health, or durability of the structure, we have found a way to incorporate it into a whole-house package and increase our overall sales and profit margin.

The core of our business is the Whole House Diagnostics Inspection. We look at a house from top to bottom. We run a blower door test, check insulation levels, test combustion appliances for safety and efficiency, analyze the windows and their orientation to the sun, test for duct leaks, and run Manual J to determine loads. This four-hour inspection results in a personalized report, including the load calculation, which we use to size HVAC equipment properly. Our price for this basic service was originally $250, but that limited our customer base to the totally desperate, who would pay anything to solve their chronic problems, and the curious few who could afford $250 just for the information. For example, there was the heart surgeon in his million-dollar, brand new house who simply wanted to know why his utility bills were so high. He took our report and went on paying hundreds of extra dollars per month for climate control.

As we transformed ourselves into an improvement company, more and more of our income came from installing improvements. As a result, we can now charge under $100 for the inspection-a nominal fee to separate the serious customers from the merely curious. This initial fee is below our actual costs, but the package we deliver-four hours of diagnostics with customer participation and a very detailed report-is so convincing that our closing rate is between 80% and 90%, an astonishing rate in any industry. Our commitment to quality places our competence beyond doubt, so we can price our improvements much higher than anyone in our area. The cost of the initial inspection and report is thereby fully absorbed.

Bring on the HVAC One of the last services we incorporated into our package was HVAC. Although our audits revealed that the installation of our customers' heat and air systems was consistently the most serious problem encountered, we shied away from the expense and training we would need to undertake to become HVAC contractors. What we didn't realize was that heat and air companies are making a killing with high margins and low quality. When asked about their high margins, they cite a need to cover the future costs of callbacks.

Our testing has shown us that callbacks are due to faulty installation and sizing. We have concentrated on being experts in those fields, and now we install equipment on a regular basis at even higher margins without the expensive callbacks. Our customers are more satisfied and comfortable, pushing the cost of the improvements far from their minds. They are so relieved that someone finally fixed the problem that they not only pay us well for our improvements, they also pay us to fix the last guy's mistakes. We are often paid to repair errors, even though customers could have the original contractor back for free.

A final test further sets us apart from the typical contracting approach, and assures homeowners that our goals have been reached. Health and safety, building durability, comfort, and affordable energy use are the cornerstones of each job, demanding specialized care that the typical contracting community cannot or will not deliver.

Market Transformation While the typical HVAC contractor or insulator may end up with a $2,000-$3,000 contract, our average whole-house package is $4,000-$6,000. And while they leave dissatisfied customers whose problems remain unsolved, our customers get benefits they didn't even bargain for. They end up so happy that they have their friends and family calling us to fix their sick, expensive homes. By marketing the whole-house concept rather than simply pushing one particular product or service, we gain access to potential customers who may not know exactly what they need.

Comfort Diagnostics' customers report 50% reductions in utility bills and even bigger increases in the comfort of their homes. Invariably, our customers express their surprise and increased satisfaction because not only have we solved all the problems they contracted for, but they also received side benefits they didn't expect. Most report a great reduction in household dust. Others are amazed at how quiet their systems have become or how cozy the uncomfortable areas have become. This goes a long way in customer referrals. Even with a $50 bonus we give to customers who refer their friends, we've been able to cut our marketing budget dramatically. We have found that you truly can't beat word-of-mouth advertising.

We have also used talk radio, in a campaign to reach our consumers in a way they could understand and that they would listen to. Advertising during a local home improvement show has since led to our own call-in radio show. We call it House Calls, and listeners who call in can talk with House Doctors Joe and Royce.

To provide financing opportunities for our customers, Comfort Diagnostics teamed up with the three main utilities serving the central Arkansas area-Entergy, the Arkansas and Louisiana Gas Company, and First Electric Cooperative. These alliances bring financing possibilities for customers, and technical support, customer credibility, and customer leads for us.

We are proving that consumers, given a choice, will purchase quality, care, and attention to detail, even without government or utility subsidies. This response is beginning to turn the heads of progressive companies in the same area, who are seeing a new market emerge. This is true market transformation-as better-informed consumers demand better performance, contractors will either perform or be forced out of the market.

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