Home Performance Program Design -- Part 1, Engaging Contractors

IF YOU WANT TO SAVE A LOT OFENERGY IN A LOT OF HOMES, YOU NEED A LOT OF QUALIFIEDCONTRACTORS WILLING TO HELP!

It turns out home performanceprograms don’t exist in a vacuumThe market – the consumer/contractor interface – is where ENERGY is saved

UNFORTUNATELY: CONTRACTORS ARE OFTEN VERY HESISTANT TO PARTICIPATETO SCALE HOME PERFORMANCE: WE NEED TO UNDERSTAND WHY THEY’RE RELUCTANT, AND CHANGE THAT.

recipe n: A set of instructions, including a list of the ingredients required

LIKE THIS… Eye of newt, and toe of frog, Wool of bat, and tongue of dog, Adders fork, and blind-worms sting, Lizards leg, and howlets wing,-- For a charm of powerful trouble, Like a hell-broth boil and bubble. William Shakespeare Macbeth, Act 4, Scene 1 …ONLY DIFFERENT

KNOW THIS:HOME PERFORMANCE WORKS If the program disappeared tomorrow, we would keep doing it. Home performance makes sense for our business. -Jerry Unruh ABC Cooling

SO HOW DO WE GET MORECONTRACTORS TO SAY: If the program disappeared tomorrow, we would keep doing it. Home performance makes sense for our business. This should be a program focus!

THE PROGRAM MUST MAKE SENSEFROM A BUSINESS PERSPECTIVE!

WE KNOW, THAT DONE PROPERLY: “Home performance makes sense for our business.”WE NEED TO ALSO ENSURE: “The Home Performance Program makes sense for our business.”

KEY INVOLVE CONTRACTORSINGRE- REWARD WHAT YOU WANT TO SEEDIENTS TAP INTO CONSUMER MOTIVATORS DON’T KEEP MOVING THE CHEESE STRIVE FOR CONSISTENCY WORK CLOSELY WITH CONTRACTORS

KEY INVOLVE CONTRACTORSINGRE- REWARD WHAT YOU WANT TO SEEDIENTS

KEY INVOLVE CONTRACTORSINGRE- REWARD WHAT YOU WANT TO SEEDIENTS LEARN THE BUSINESS

KEY INVOLVE CONTRACTORSINGRE- REWARD WHAT YOU WANT TO SEEDIENTS LEARN THE BUSINESS TAP INTO REAL CUSTOMER MOTIVATORS

KEY INVOLVE CONTRACTORSINGRE- REWARD WHAT YOU WANT TO SEEDIENTS LEARN THE BUSINESS TAP INTO REAL CONSUMER MOTIVATORS DON’T KEEP MOVING THE CHEESE

KEY INVOLVE CONTRACTORSINGRE- REWARD WHAT YOU WANT TO SEEDIENTS LEARN THE BUSINESS TAP INTO REAL CONSUMER MOTIVATORS DON’T KEEP MOVING THE CHEESE STRIVE FOR CONSISTENCY

KEY INVOLVE CONTRACTORSINGRE- REWARD WHAT YOU WANT TO SEEDIENTS LEARN THE BUSINESS TAP INTO REAL CONSUMER MOTIVATORS DON’T KEEP MOVING THE CHEESE STRIVE FOR CONSISTENCY WORK CLOSELY WITH CONTRACTORS

KEY INVOLVE CONTRACTORSINGRE- REWARD WHAT YOU WANT TO SEEDIENTS LEARN THE BUSINESS TAP INTO REAL Nice list, but what does it MOTIVATORS CONSUMER mean? DON’T KEEP MOVING THE CHEESE STRIVE FOR CONSISTENCY WORK CLOSELY WITH CONTRACTORS

KNOW“It’s probably better to have him inside the THIS:HOME tent peeing out, than outside peeing in” PERFORMANCE WORKS -LBJ

KNOW“It’s probably better to have him inside the THIS:HOME tent peeing out, than outside peeing in” PERFORMANCE WORKS -LBJ THAT MAY BE TRUE. BUT WORRYING ABOUT PEE MISSES THE POINT. IT’S A GOOD IDEA TO HAVE CONTRACTORS WORKING WITH YOU TO GET IT RIGHT. IT’S NOT HELPFUL TO KEEP THEM AT A DISTANCE COMPLAINING, OR WORSE, IGNORING EVERYTHING YOU DO.

“PRESENTING TO”IS NOT THE SAME AS“DISCUSSING WITH”

in n ing! From the beg V Involve Contractors•  Buy-in is a process—not something you get someone to sign onto after the decisions are made.•  Talking with, and observing, contractors is a great way to understand what happens in the market and what barriers need to be overcome.•  Pulling contractors in before the program launches means they can start preparing ahead of time— and if they see it as a worthwhile program, they will prepare!•  OK, remember the pee/tent thing, if you must.

At the endof the day WHAT DO YOU WANT?

At the endof the day MEETINGS WHAT ATTENDED? DO YOU WANT?

At the endof the day MEETINGS WHAT ATTENDED? AUDITS PERFORMED? DO YOU WANT?

At the endof the day MEETINGS WHAT ATTENDED? AUDITS PERFORMED? DO WIDGETS INSTALLED? YOU WANT?

At the endof the day MEETINGS WHAT ATTENDED? AUDITS PERFORMED? DO WIDGETS INSTALLED? YOU WHOLE-HOUSE ENERGY SAVINGS? WANT?

“In this world, you get what youpay for.” - Kurt Vonnegut in Cat’s Cradle

“The contractors in our program areProgram Admin installing too many windows. That’s not what we’re trying to accomplish.” “Why do you have a $150 per windowMike rebate if you don’t want to see windows being installed?”

1. AUDITS DON’T SAVE ENERGY* 2. WE PAY FOR AUDITS 3. WE DON’T SAVE ENERGY*OK, sometimes audits can save energy—but not at the level we want, and evidencesuggests not with the persistence we want.

AND WE WONDER WHY. WHY?

WAIT!I’M SUPPOSED TO BE TALKINGABOUT ENGAGING CONTRACTORS,RIGHT?

I AM. HERE’S WHAT HAPPENS.The Market aligns with the incentives. uragingThe Program gets upset because it’s not oseeing the results it wants it’s enc results V e Just thThe Program cracks down on those unrulycontractorsContractors get discouraged and quit( Homes don’t get fixed. )

SO WATCH OUT.THE “BRIBES” MIGHT WORK.AND YOU MIGHT NOT GET WHATYOU WANT.

ON THE OTHER HAND, PAY FOR SAVINGSAND YOU MIGHT GET SAVINGS

KNOW THE BASIC BUSINESS MODELS MARKETING TECHNIQUESTHE IN-HOME SALES FINANCIAL METRICSBIZ PRICING COMPLEXITIES GOOD BUSINESS PRACTICES THE GOAL BEING TO ANSWER THE QUESTION: HOW DOES WHAT YOU’RE PROPOSING IMPACT THESE ELEMENTS AND THE BUSINESS?

How our business works Finance Vendor Trade Home/Client Contractor

How we’re asked to changeour business

WOW! THAT’S COMPLICATED!HOW MUCH DOES IT COST TO PARTICIPATE?

$100,000

$100,000A REASONABLE “ALL-IN” COST TOMOVE INTO HOME PERFORMANCE Training (all staff) Salaries (during training!) Certifications? Sweat Equity Equipment Initial Marketing Campaign Vehicles Etcetera, Etcetera

$100,000Can a contractor reasonably hope to recover even that initial investment? At what return? At what risk? y need much r ma osts! Contracto e! just start-up c and receivables ag That $100K is pay ments are slow more, espec ially if program

WHAT DOES EFFECTIVECONTRACTOR MARKETING LOOKLIKE IN YOUR AREA? THIS YOU WANT TO KNOW!

WHAT DOES AN EFFECTIVE IN- HOME, CONSULTATIVE SALES PROCESS LOOK LIKE?AND THIS YOU WANT TO KNOW, TOO!

IF YOU’RE GOING TO TALK ABOUT“REASONABLE PRICING” IT PAYS TO HAVE A REASONABLE UNDERSTANDING OF PRICING

A STANDARD MISCONCEPTION PRICING = MATERIALS + LABOR

A STANDARD MISCONCEPTION PRICING = MATERIALS + LABOR This may be a reasonable starting point. But there is much more to it!

PRICING = MATERIALS + LABOR PLUS Office/Warehouse Rent Office Phones Utilities Cell Phones Building Maintenance & Repairs Office Supplies / Coping / Postage Vehicle Lease/Payment Accounting Fees Gas Legal Fees Auto Insurance Financing and Credit Card Expenses Front Office / Back Office Salaries Permits Social Security & Medicare Training Employee Paid Vacation & Holidays Computers / Software Retirement Plan Equipment Purchase / Lease / Deprec. Marketing & Advertising Warranty Reserve Inventory Tax Bad Debt Expenses Dues/Subscriptions & More!

AFTER ALL THAT, IF ALL GOES WELL, AND THE MARKET SUPPORTS IT,THERE’S A LITTLE BIT LEFT OVER FOR PROFIT

BUT YOU SHOULD BE FOCUSING ON SAVINGS, NOT PRICING

DID YOU BUY YOUR iPhone TOLOWER YOUR UTILITY BILLS?

I DIDN’T ASK IF YOU CAN USE IT FOR THAT.IS THAT THE PRIMARY REASON YOU BOUGHT IT, THOUGH?

WHAT IS THE PAYBACK ON A SOFA? U! ASKING YO NO W! I’M IDON’T K

PEOPLE BUY THINGS FOR MANY REASONS

NOT JUST ENERGY-EFFICIENCY OR SIMPLE PAYBACK

“People don’t want heating fuel orcoolant, people want cold beerand hot showers.” - Amory Lovins

MARKET AND SELL THE BENEFITS PEOPLE WANT Comfort Rooms that aren’t too hot Rooms that aren’t too cold Aesthetics Healthy Homes Windows!? Green Badge of Courage

MARKET AND SELL THE BENEFITS PEOPLE WANT Comfort el lyou Rooms that aren’t too hot il l t nt Rooms that aren’t too cold w ey ey waTh th Aesthetics at Healthy Homes wh Windows!? Green Badge of Courage

“MY PROGRAM CAN’T PAY FOR THOSE THINGS” STOP THINKING THAT! START THINKING THIS:“PEOPLE CAN BUY WHAT THEY WANT,AND I’LL INCENTIVIZE THEM BASED ON THE ENERGY SAVINGS THEY GET.”

IGNORE BEHAVIORAL RESEARCH AT YOUR OWN RISKIT’S JUST NOT TRUE THAT: Providing good information alone will drive people to action. The economic argument, even with access to funding, will lead people to buy efficiency.

THOSE INTERESTING HUMAN ANIMALS we’re full of biasesLoss often scares us more We’re susceptible to peerthan small gains excite us pressureThe Lake Wobegon We do try to keep up withsyndrome means we all the Jonesesthink we’re above average Apparently we believe inWe’re creatures of habit the miracle cure—we have a it ree audand tend toward the status “single action bias” V f audits, ive mequo g s creenin d steps g m e why mplicate So ask s, and coWe get overloaded bychoice program the willies!

TO FAIL: TO SUCCEED:Provide good information Add good information to aand stop longer conversationFocus on the energy- Use energy/money savingseconomic argument as a rationalizationLimit the sale to the Give customers what theymeasures YOU want want, and energy-savings.Insist on a lot of small Make it easy forsteps that provide the homeowners to jump tochance to off ramp the finish line“It’s about a score” “It’s about the customer”

MAKING IT EASIER TO DELIVERWHAT THE CUSTOMER WANTSMAKES IT EASIER FOR THECONTRACTORS TO WANT TO PLAY

SOME PROGRAMS LAST 3 YEARS. SOME TWO YEARS.SOME GET FUNDED ANNUALLY. MAYBE.

SOMETIMES, BY THE TIME DETAILS GETSORTED OUT THE PROGRAM PERIOD IS WELL UNDER WAY.

SOMETIMES, PROGRAM IMPLEMENTERS PANIC AFTER THE PROGRAM ISUNDERWAY, AND START CHANGING THE RULES DURING THE GAME. (and sometimes this is becausecontractors weren’t engaged early enough in the design/implementation process)

CONTRACTORS KNOW THIS. THEY’VE SEEN IT. THEY’VE SUFFERED THROUGH IT. AND THEY’RE VERY LEERY ABOUT MAKING INVESTMENTS IN ETHEREALPROGRAMS WITH AN UNCERTAIN FUTURE V $100,000? e Rem ember that on whether th t that much ? Want to be y ou’re whole a nges before program ch

GOING BACK TO AN EARLIER QUESTIONSO HOW DO WE GET MORE CONTRACTORSTO SAY: HOME PERFORMANCE MAKESSENSE FOR OUR BUSINESS WHEN WE CAN’T GIVE A CONSISTENT ANSWER ON WHAT HOME PERFORMANCE MEANS?

WHICH PROGRAM IS IT?

BEWARE, NOT JUST OF A BRANDING NIGHTMAREOTHER INCONSISTENTREQUIREMENTS SCARECONTRACTORS

OR HELP THEM FAIL t ing tha a bit em ber, los re than Aga in, rem ent is mo estm tractors 00 inv for most con $100,0 fortable uncom

WHAT DO I MEAN? ASK YOURSELF SOME GOOD DESIGN QUESTIONS

AS WE CROSS TOWN LINES, STATES LINES, ANDUTILTY SERVICE TERRITORIES, DO WE NEED: DIFFERENT, AND OVERLAPPING, CERTIFICATIONS THAT ADD COST TO THE CONTRACTORS? GOOD CONTRACTORS DON’T MIND CERTIFICATIONS…BUT MULTIPLE CERTIFICATIONS FOR THE SAME JOB CLASS?

AS WE CROSS TOWN LINES, STATES LINES, ANDUTILTY SERVICE TERRITORIES, DO WE NEED: DIFFERENT “SCORES”, SAYING DIFFERENT THINGS, AND USING DIFFERENT MODELS TO GENERATE THE SCORES? IS IT A SCORE, A LABEL, A RATING, A CERTIFICATE, OR SOMETHING ELSE?

AS WE CROSS TOWN LINES, STATES LINES, ANDUTILTY SERVICE TERRITORIES, DO WE NEED: DIFFERENT MODELING TOOLS, THAT CAN’T TALK WITH EACH OTHER, CREATE DIFFERENT RESULTS, AND DON’T WORK WITH THE CONTRACTORS’ BUSINESS SYSTEMS? WOULD A SMART BUSINESS INVEST THE TIME & MONEY TO TRAIN STAFF IN THESE TOOLS?

AS WE CROSS TOWN LINES, STATES LINES, ANDUTILTY SERVICE TERRITORIES, DO WE NEED: DIFFERENT STANDARDS FOR AUDITS, INSTALLATIONS, QA, SO WE START FROM SCRATCH EACH TIME? OR CAN WE AGREE ON AUDIT STANDARDS, INSTALLATION STANDARDS, QUALITY ASSURANCE STANDARDS, MODELING STANDARDS, DATA EXCHANGE STANDARDS?

WHEN PROGRAMS DON’T AGREE ON“WHAT” OR “HOW” OR “WHO”IT’S HARD FOR A CONTRACTOR TO STAKEHIS OR HER LIVELIHOOD ON MISH-MASHMUSH SOUL SEARCHING PUBLIC POLICY QUESTION: WHAT IF WE FOCUSED MORE ON SUCCESS AND LESS ON WHO GETS CREDIT FOR IT?

cooperation n: The process of working together to the same end

cooperation n: The process of working together to the same end AN ONGOING PROCESS. BRING THE CONTRACTORS IN AT THE BEGINNING. AND KEEP WORKING WITH THEM.

WAYS OFFER CO-OP MARKETING COORDINATE MARKETINGTO USE QUALITY AS A PROCESS CELEBRATE SUCCESSWORK WEED OUT THE BAD SOLICIT FEEDBACKTOGETHER GIVE FEEDBACK LOOP BACK TO THE BEGINNING—INVOLVE CONTRACTORS IN SOLVING PROBLEMS AND DESIGNING CHANGES

“Many a good hanging prevents abad marriage.” ― William Shakespeare Twelfth Night: Act 1, Scene 5

IT’S GOOD TO ENFORCE THE RULES. KICK OUT THE BAD ACTORS.GOOD CONTRACTORS ACTUALLY WANTYOU TO SET CLEAR, APPROPRIATE,CONSISTENT STANDARDS, AND ENFORCE t”,THEM FAIRLY. , and “consisten lear”, “ appropriate” enforce” The “c rtant as the “ impo are just as

COOKING THIS AT HOMEOK, I dragged you in with talk of a RECIPE, but I really onlygave you some ingredients and a few techniques.When we bake bread, the water/flour ratio varies withconditions of flour and humidity. And the specific recipe foryou is going to vary depending on the quality of youringredients and the local “weather”. That is more than a15 minute conversation.Nonetheless having a fundamental understanding of the keyingredients and how to prepare them positions you tosucceed. This is a prerequisite—you’ve still got to do thework!

We struggle with the complexities and avoid the simplicities. ― Norman Vincent Peale “The problem is not that there are problems. The problem is expecting otherwise and thinking that having problems is a problem.”FOOD ― Theodore RubinFOR “The significant problems we have cannot be solved at the same level of thinkingTHOUGHT with which we created them.” ― Albert Einstein

Thank you for making it this far.We must make homes more efficient.Together. Mike Rogers

CAN I HELP?WANT TO KNOW MORE? Michael Rogers, President, OmStout Consulting Mike Rogers is a nationally recognized expert in home performance contracting. Previously, he was Senior Vice President at GreenHomes America. a leading home performance contractor and franchisor. For GreenHomes, Mike led the creation of the systems across all aspects of the business. He guided the operations at the incubator location in Syracuse, NY, and led the transition to home performance at franchise locations. Prior to joining GreenHomes, Mike had an 11-year affiliation with the U.S. EPA as an employee and twitter consultant, holding various positions. In particular, he was a lead developer and primary supporter of @EnerGMatters the Home Performance with ENERGY STAR (HPwES) program jointly run by the U.S. EPA and U.S DOE. Coming from a family contracting background, he has extensive experience to home performance contracting, from individual homes to the state and federal level. For 15 years he has been a frequent email presenter at national conferences and meetings in the energy-efficiency, green building, and indoor airmike.rogers@omstout.com quality industries. Mike has a B.S. in engineering from the University of Illinois and an MBA from the Kelley School of Business, Indiana University. When not working on broader energy issues, Mike works on improving the energy efficiency of his website own home, He likes to kayak, bike in the Champlain Valley and hike in the Northeast, Grand Canyon, or anywhere else he can. http://omstout.com

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Home Performance Program Design -- Part 1, Engaging Contractors

by Mike Rogers on Jun 19, 2012

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Home Performance Program Design -- Part 1, Engaging Contractors Presentation Transcript