Reflecting on Integrity, Opportunity, and Process in Home Performance

The past several years have been a crazy journey for me. Today is my 37th birthday, and I feel rather contemplative. I’m beginning to see the Home Performance industry look to me for leadership, and in a way it’s funny – I’m just some guy from Cleveland who ran a little insulation business and confessed about it.

On the other hand, shutting down my contracting company and finding a new path has provided me with opportunities to explore that I would never have been able to try if I still had employees. I also have had the opportunity to try and push the path of integrity further than I have before. I’m not trying to get up on a high horse here, just tell it like I see it.

Without the pressure of trying to keep employees paid well enough they can pay their rent and living expenses, I’ve been afforded a tremendous opportunity to experiment with a business model that allows me to stay out of moral hazard much more than I did before. I’m trying to find a way to improve client homes in a way that puts them and their needs truly first.

Honing the Process

This business model is frankly shocking the heck out of me. Clients are happily signing up for large and complex Comprehensive Home Performance jobs. I feel like Indiana Jones in The Holy Grail when Marian asks him what’s next and he replies, ‘I don’t know honey, I’m just making this up as I go along.’ Here is some of the story of what has happened.

The sales process keeps getting tweaked, but now qualified leads willing to pay $200-$300 for someone from Energy Smart to show up at their door are coming in – no effort at all on my part aside from creating the web site content. Clients are filling out a nearly 20 question questionnaire in great detail to get a discount on initial consults and committing to paying Energy Smart to show up at their door.

Pinch me. This shouldn’t be real.

Because I charge to show up for an initial consultation, I no longer feel desperate to sell people something. I truly am a consultant, not a salesman. If they don’t buy the next step, no skin off my back, I got paid $200-300 to run a blower door test and for 4-5 hours of my time. My integrity stays intact, and it’s largely because of process, not because I’m some amazing guy who should be on a pedestal.

I bumped the price from $50 to $200 a few months back, that additional charge came when I got mad at a client for asking for my professional opinion, he knew about how often I had been published,  then he ignored my opinion completely. I did almost 2 hours of driving plus spent 4 hours at his house while paying a babysitter for my daughter. I lost a whole day and after expenses didn’t get paid anything but frustration.

I jacked up the price and figured it would cool things down for a while, I was behind in my work (who would pay that much?) Two days later a lead came in for $200.

Presto! My initial visits now cost about what some charge for full audits. I could do two a day if I had the leads and make a living at it on initial consults alone. I could speed up the leads by making the sales process on my website more clear, right now it’s too much of a maze. I’ll be doing that in the near future.

Clients See the Value

I make it a habit to ask every client if they thought they got their value. Every one but one has said yes so strongly that I was stunned. The one who didn’t skipped my process and didn’t read my preparation email, so his expectations weren’t aligned. It was my fault for not confirming that he’d read the email, but he was the first to not do it.

Client Acquisition Costs Are Almost Nothing

The questionnaire form and the initial consultation have lowered my client acquisition costs to effectively nothing. I actually get paid to show up at their house, not the other way around.

It’s not a ‘please, please, buy something so I can feed my family’ kind of feeling, which would happen in slow times before, pushing me to make compromises that would make me feel like a sell out. No more. I get paid enough to feel just fine if I never talk to the client again.

High Quality Audits Require Showing Value

The Home Performance industry often talks about ‘science project’ audits. Much of this pejorative term, in my opinion, is because they haven’t shown enough value to their clients to get paid for the diagnostics and thinking that they really need to do in order to have some degree of certainty that the results they are promising clients will actually show up.

(Side Note: Don’t make hard promises you might not be able to keep. Doctors don’t give guarantees of results, they give odds. We are house doctors. Give odds and additional measures that may be required.)

We are charging $750-$1000 for what we call our Comprehensive Planning Process. It begins with an audit, but it also includes a high quality energy model with 3 separate plans and work scopes of increasing depth that give clients a range of options to choose from. These plans allow further steps to be taken in the future without needing to redo much of the work, if any. Once again, I ask if they feel they got their value and every client has said yes. You may be wondering why.

Stop Dropping MRI Reports In Clients’ Laps

These audits may border on what some would call science projects, but they do what few energy audits do: they connect the dots from diagnosis to what they need to do, and then offer help actually doing the work right.

Many audit reports are akin to a doctor walking into the exam room, dropping an MRI report in your lap, wishing you good luck, and walking out. Which items need to be done to solve problems? How much will it cost? Who do I use? Is it any wonder that clients often do nothing?

Home Performance projects are complex and multidisciplinary. Clients need someone to walk them from initial diagnosis through recommendations and finally through project execution. Audit prices are high enough that we can do miniature science projects. These science projects are selling though.

Selling Against a Headwind

It’s important to note that we’re doing this in a marketplace where this just shouldn’t work:

• Low Housing Costs – $150,000 will buy you a nice house in much of Cleveland, 1800-2200 sf with a yard if you don’t mind a slightly older home.
• Low Utility Costs – Natural gas is $.60-$1.00 per therm, electricity is $.09-.12/kwh.
• No Rebates – There is one rebate program left in town and I can’t use them because I do my own audits, plus my jobs don’t fit their model anyways, so no rebates.
• Poor Financing Options – There is cheap financing from Ohio called Ecolink, but the term is only 5 or 7 years. Only clients who have enough cash are interested. There are a few other programs but their requirements are stiff and most clients are turned down.

Despite these headwinds, projects are still happening. If Energy Smart is pulling this off in Cleveland, it will work anywhere. It is truly market based.

Delivering Results

I’ve never delivered jobs like this before, the learning curve has been very steep, but it’s working. Clients are happy with results and are even quoting the metrics and energy savings from their jobs.

In the next several jobs I think I’ll finally feel out of the pilot phase as the processes mature enough that I can drop the Indiana Jones feeling somewhat.

I still can’t believe that these projects are selling, and I’m the one doing it! Essentially, I’m selling people a car they never knew they needed. These projects are in the $15,000 – $30,000 range.

Because it solves a problem and offers real value, they’re doing it. These are not all high income clients, either.

No Selling Out

The best part, for me, is that the sales process leaves my integrity intact. Before, when I was really hungry for work to keep my guys busy, I would often do things I didn’t want to – accept clients I could see were a nightmare or drop my prices and break even. Both ways I got to work my butt off for no pay. That stunk. I still manage to work my butt off for no pay sometimes, but I enjoy it a lot more!

These past few years have allowed me to step back, take stock, and experiment with new and untested ways to sell Comprehensive Home Performance. I’m happy to report that it looks like it’s working.

Energy Smart, One Knob, and Scalability

Another key thing is that this sales process is exactly what a performance driven program needs. It fits precisely into the One Knob program design.

Looking back, this makes sense, but I can’t really claim intentionality about it. I just wanted to truly fix people’s problems, no caveats. This whole crazy journey has come out of that goal.

Best yet, this process is scalable. For a long time I couldn’t see it working, the math was still wrong. Today, I can see the numbers working in a bigger company, not just a one man boutique operation like Energy Smart currently is (although I’m getting people in place to share the load.)

The process also works pretty well with solo practitioners like myself, though, which is critical for scaling Home Performance. It takes a lot of jobs to support a full service Home Performance contracting company with HVAC, blown insulation and foam insulation crews. Guys and gals like me can cobble jobs together if they have a path. I think we have it now.

This process may seriously be what finally allows Home Performance to both scale and live up to the second word, performance.

In fact, I truly believe that Comprehensive Home Performance is one of the critical pieces in the consumer solution to climate change. Like I said, I feel contemplative.

Thanks to My Wife, Rachel

This grand experiment Energy Smart is trying is only possible because of my lovely and extremely talented wife Rachel. The last two years have been financially challenging as Energy Smart transitions to a new and untested model. Her support and design help have been invaluable. Her income has also been a huge piece of what has kept us afloat.

Keep an Eye Out Here – Plus Why You Care About Program Design

One Knob Consulting is primarily aimed at the public utility commissions, utilities, and efficiency programs, but some posts will be aimed at the Home Performance industry instead. This is one of them.

Many of you may be wondering why I have taken such an interest in efficiency program design. It’s simple. The system is broken, the Home Performance market has been perverted in so many ways that almost no one makes a decent living at it. Until we make a decent living, we’re not going to grow. Until we grow, we won’t help large numbers of people. Until we help large numbers of people, we won’t reduce our dependence on fossil fuels. Until we reduce our dependence on fossil fuels, we’re not being good stewards for future generations.

To do all that, we have to change the system. There is no other way. The good news is, it’s possible. It’s just ideas. Ideas are what change the world. Home Performance is an idea whose time has come, and now we have the delivery mechanisms.

This is my attempt to change the world. If you truly care about both Home Performance and being a part of the solution to climate change, we need to think big. Really big. Hence One Knob.

I’m just one guy in Cleveland trying to make a difference. Will you join me?

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Further Reading

An Efficiency Manifesto: Energy and Home Performance Programs Need Serious Reform – Green Tech Media – How One Knob came to be and the basics of what it is.

Confessions of an Insulation Contractor

Why On Earth Should You Hire Energy Smart – A rather ham fisted first attempt at explaining the pitfalls of not following a Comprehensive Home Performance path and what our process looks like. This video has been enough to move people into our process. It may not be great, but it’s good enough until the next iteration.

Image Credit: mioplanet.org