Home Performance Market Innovations and Solutions

Posted by Tom White on December 29, 2015
Home Performance Market Innovations and Solutions
Home Performance Coalition's Nate Natale, VP of Education and Events, and Bethany Dittmar, Director of Conference Education, welcoming attendees to the Market Innovation Forum.

How can data and partnerships grow both the market and the home performance businesses that will meet that demand? These were some of the top industry issues for 2016 at the Market Innovation Forum, convened in December by the Home Performance Coalition. The goals of the Forum were to identify challenges faced by the home performance industry, share ideas, and generate action steps to enhance the value proposition and expand the market for home performance services and products.

Market Disruptions and Gaps

The Forum started off by acknowledging the disrupting trends that have changed the market for home performance products and services: gas and oil prices are down, weather patterns are changing drastically, home dwellers have an incredible range of information on building upgrades in general, and their own home energy performance in particular, using data interfaces such as smart meters, smart thermostats and their own smartphones. As a result, consumers also have higher expectations for quick and easy solutions for improving their indoor environment.

At the same time that connected home energy technologies are coming online, there is also a growing labor shortage in skilled tradespeoples, such as HVAC techs and installers, who will be called on to diagnose and upgrade home performance.

All 50 attendees, representing a range of government, NGOs, service providers, and manufacturers, agreed on the lack of awareness of the benefits of home performance, among both consumers and contractors. “People don’t recognize the value we provide”, “we need to get people to directly experience the difference of a house that performs well”, “customers don’t know to expect comfort—they are used to living in broken houses!” These were common complaints that show home dwellers don’t know what they’re missing when it comes to comfort, indoor air quality, and other ways to improve the physical and financial performance of their homes.

Motivating Home Energy Markets with Useful Data and Practical Stories

So how do we bring about consumer awareness of the potential for improved comfort, health, and energy savings? Better data, useful analyses, motivational stories, and a nationwide ad campaign. One of the attendees, a major manufacturer of a smart home energy management system, said the key to their sales is to deliver comfort and an exceptional customer experience: informing home dwellers about the real-time performance of their homes, and more importantly, giving them the power to control that performance to better meet their needs.

From the contractor’s point of view, new sensors provide them with the metrics that show measured improvement of air quality and performance. HVAC sensors and smart thermostats can help define the home dwellers' comfort and pain points in ways that they never could before. “How do we get contractors and homeowners to understand what good work looks like? We need data that proves which methods, housing stock, and contractors give the best results!” To make home performance easy, we must simplify these feedback loops for contractors, so that they can help their customers understand the benefits of home performance installations and retrofits. An improved value proposition for homeowners will mean more profits for contractors.

Defining Home Performance Data and Value

Data can also document the value of homes that have been retrofitted and audited. “Market innovation means I can find a database that shows which homes have been retrofitted.” The RESO (Real Estate Standards Organization) Data Dictionary and Green MLS Guide have 44 home performance (HP) ratings that could be used in HPXML and the US Dept. of Energy's Building Performance Database. “Let’s partner with realtors, and adopt the RESO data definitions. We need data that can be relevant, that's designed for realtors.”

Assuming homeowners and utilities are willing to share it, data on home energy usage and IAQ metrics can help reveal the triggers (aka pain points) that cause homeowners (and energy aggregators) to invest in home performance improvements.

Profiting in Home Performance Contracting

One method that can be quickly implemented to help contractors profitably grow their home performance business is peer-to-peer contractor exchanges. Some contractors have also invited their local competitors to these peer exchanges to help them understand new building standards and raise the performance bar for an entire region. But most participants are in non-competing markets from different parts of the country. Small groups of five to ten participants are self-led and managed, occasionally bringing in leadership coaches, sales, or building science trainers. Look for news in early 2016 from Efficiency First, Home Performance Coalition, and Home Energy magazine about starting and joining a contractor peer exchange.

Data on business performance can show how home performance contracting can be profitable, with improved customer satisfaction, fewer call-backs and seasonal revenue swings, and increased wages. Home performance is an attractive green career option for millennial jobseekers who are looking for ways to lessen climate change and decrease carbon emissions. As one participant said, “Who knew that squirting goopy stuff in an attic would be a way to save the world?”

When we show that home performance is a viable and profitable business, it will attract both established contractors, as well as jobseekers coming into the industry. To increase awareness in the contractor market, participants agreed to promote home performance messages to contractors in their networks. Some of the promotional concepts (which you are free to use) include:

  • Building Deeper Customer Satisfaction with Deeper Home Performance Solutions
  • Demystify Your house with Building Science
  • Be a Home Performance Hero
  • Grow a Greener, Better Business with Home Performance

In addition to Forum attendees who represent large networks of professionals, other targets for this informational campaign include voc-tech schools, college environmental programs, and anyone interested in job and business opportunities in clean/green tech.

As one contractor stated: “There’s so much value to sell to homeowners. That gives our contractors a great advantage. What are the key pieces of doing this type of work? A bedrock of good work and performance improvements, and being financially successful!”

Steps for Market Innovation:

  1. Gain deeper understanding of consumer behavior, wants and needs;
  2. Develop and use new technologies to improve data measurement and control of the residential built environment;
  3. Socialize consumer awareness of their unmet needs, showing comfort, health and energy saving benefits of home performance improvements;
  4. Work with partners in government, codes and standards, community-based organizations, renewable energy, and others to help develop a unified value proposition message, improved service delivery and diversity of providers; and
  5. Promote tools for growing profitable home performance businesses.

Creating New Markets

In creating new markets for home energy savings (aka pay-for-performance), there are still many unanswered questions. Will negawatt aggregators and multi-system operators (Amazon, Verizon) deliver home performance consumer leads to energy efficiency program implementors or some other intermediary between the consumer and the MSO? Are there other partners we should reach out to at the grassroots level to increase diversity in the workforce and client base? Many of the contractors who attended the Forum were concerned about national franchisees coming into their local markets. “Will we get swallowed up by a larger company that will make our company values irrelevant?”, said one business owner from rural New England.

Funding Innovation

Who will fund the new innovations, many of which are still in the concept testing phase, that will close these market gaps? The Home Performance Coalition and E4TheFuture recently announced that the Home Performance Coalition (HPC) has received policy and research funding from E4TheFuture. E4TheFuture is a nonprofit organization advancing clean, efficient energy solutions for residential consumers. The organization’s endowment and senior staff come from Conservation Services Group (CSG), whose operating programs were acquired in 2015 by CLEAResult. The award to HPC is focused on projects and advocacy related to the Clean Power Plan and promoting best practices for cost-effectiveness testing, data standards, weatherization, and home performance, among other initiatives. The Building Performance Institute and Home Energy magazine also received funding. As a partner on this HPC grant from E4TheFuture, Home Energy will upgrade our website for use on mobile devices, launch a podcast series, and work with HPC to develop the home performance market.

Meeting the Challenges in 2016

I was inspired by the practical visionaries who I met at the Market Innovation Forum and look forward to working with them to meet the challenges and opportunities that we identified. By convening the Forum, the Home Performance Coalition is helping to define and unify the value proposition message to consumers, contractors, and the goods and service providers who help them grow the home performance market.

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