As the Portland, Ore. housing market headed toward all-time lows in 2007, Sky Heating & Air Conditioning had to make major changes to survive. The end result, a total transformation into a growing company focused almost entirely on selling high-end, high-efficiency products like 16 SEER heat pump and geothermal heat pump systems. They also owe some of that success to an experiment they conducted via YouTube.

Abandoning New Construction

Sky Heating & Air Conditioning has greatly benefited from the addition of geothermal technology.

Sky Heating & Air Conditioning was founded in 1980 by Bill Smith and is also owned by Ken Cutright and Travis Smith. The company focused mainly on the residential new-construction market until the entire real estate industry began its slump in 2007. In the boom times the company was installing 30 systems each week. By the end of 2009, they were lucky to complete 30 new-construction jobs a year.

Like many other HVAC contractors, the company had to switch gears to survive. At first they approached the repair and retrofit market like the housing market, with basic products and competitive pricing.

“I was conditioned to believe that homeowners were more interested in granite countertops than they were the efficiency and comfort of their heating and air conditioning system,” said Travis Smith, general manager.

Then, the company’s customers started asking about high-efficiency products and ways they could improve their indoor environment.

The real commitment to change came when Travis Smith and others at the company decided to have high-efficiency systems installed inside their own homes. Smith had a Trane XL15i heat pump and a Trane XV95 variable-speed furnace installed with a tankless water heater and heat-recovery ventilator (HRV) system.

“Once I had the equipment in my house I realized how much of a benefit it was and why somebody would spend $2,000 or more to upgrade to a similar system,” he said. “It was so quiet, I didn’t even hear it. It was more than just savings and I realized that comfort is a big part of it.”

High-End Installs Lead to High-End Referrals

The installation of high-end, high-efficiency equipment has greatly benefited the company because the highly satisfied customers are quick to recommended Sky Heating & Air Conditioning to friends, relatives, and neighbors. These referrals also commonly inquire about products that hold a higher price tag, and thus a higher profit margin, because it’s what their friends bought. Sticker shock was no longer part of the selling equation in many cases.

Smith said, “Our absolute best customers are the ones that put in the highest-efficiency units and they have the quietest systems. They have the most comfortable homes, the lowest energy bills, and the least amount of breakdowns. Of course they are going to refer you to more people.” Smith estimates that at least 50 percent of their business is 15 SEER-plus equipment, and it also includes almost exclusively two-stage or multistage furnaces.

A Natural Next Step

After making a commitment to marketing and selling high-efficiency products, it was a natural next step for the company to tackle the geothermal market. But, unlike many contractors, they did not just jump in and learn through trial and error. A methodical training and education process began in 2009 and the first installation did not take place until January 2011. The training program included courses from the International Ground Source Heat Pump Association (IGSHPA), and several training programs from WaterFurnace Intl. Inc.

“We wanted to educate ourselves before jumping in and doing something wrong and giving the industry a bad name like many of our competitors did,” said Travis Smith. “We decided to take it slow and go to every class that was available.”

After viewing a geothermal installation, the company also decided it needed to partner with an existing company to learn the business from top to bottom. Thus began a handshake agreement with a local geothermal company, Perfect Climate Inc. The company also relied on the continued support of WaterFurnace and their local territory manager.

Comfort and Energy Monitoring

Sky Heating & Air Conditioning has parlayed their geothermal learning experience into a successful enterprise, completing approximately 30 geothermal installations in the last year. Following constant promotion of energy and cost savings, as well as showcasing the technology’s ability to monitor energy use, the business continues to grow.

Homeowners that can afford an upgrade to geothermal heat pump systems are typically concerned about the environment and being able to see the reduction in energy consumption is a definite selling point.

And while energy savings are nice, Travis Smith also emphasizes the comfort benefits of geothermal systems. “Homeowners are buying these systems for comfort reasons first,” he said, which has enabled the company to not only upsell to geothermal, but to sell WaterFurnace’s exquisite 7 Series systems.

Reaping the Benefits

One of the company’s first 7 Series installations was a replacement of an existing 20-year-old geothermal system. Travis Smith pointed out the equipment’s quiet operation as a key selling feature. According to literature from WaterFurnace, the system’s communicating controls work in unison with a variable-capacity compressor, variable-speed loop pump, and variable-speed blower motors to maximize energy savings and minimize noise levels.

Travis Smith also lauded the system’s ability to control temperatures using the Intellizone 2 zoning system, which features up to six remote thermostats to zone-condition the home. This not only provides precise temperature control, but also enables technicians to install the smallest possible unit for the load in each zone, based on ACCA Manual J calculations. The system self-modulates based on the heating and cooling called for in each of the zones.

“We also do this because, with a geothermal system, if you are off in your calculations by a ton we could be off $5,000 or $6,000 on the price. So, we want to be as precise as possible so the system we put in is the most efficient and cost effective for the customer.”

The 7 Series also has a communicating color touch-screen thermostat that can provide instantaneous and 13-month energy-monitoring history, allowing homeowners to see energy consumption in real time.

A YouTube Sensation

When Sky Heating & Air Conditioning made a total transformation to the high end of the market, the company also discovered a unique way to market and sell on the Internet. Travis Smith attended a marketing class and was intrigued by a presenter who used YouTube to sell his products, so he experimented with his iPad video camera and utilized a relatively inexpensive application from Apple called Quicktime 7 Pro.

The experiment was so successful, the company now boasts four dozen videos showcasing installations of high-efficiency and geothermal systems. Travis Smith continues to use his iPad to shoot and edit the videos, and, to date, the company eclipsed 32,000 views. Not only do the videos graphically show the variety of installations, but they also serve as high-impact testimonials because the homeowners are asked to comment about the installation and service provided by the company.

Travis Smith and other comfort consultants encourage prospective buyers to view the videos while they are conducting load calculations. Often times the homeowners ask for the high-end products without any additional prompting, after watching the videos. Technicians also use the video testimonials on service calls, resulting in numerous system upgrades. Travis Smith called this his “360-degree approach.”

“The videos generate leads of people looking for comfort solutions, then, during the in-home visit, the YouTube videos help us keep the homeowner entertained while we are sizing the job,” he said. “The videos also help us push toward a high-end sale by showing off our best equipment, as well as customer testimonials. Once the sale is made, the new customers can send their friends to YouTube to see them talk about their system and we start the process all over again.”

To view the company’s YouTube collection, visit www.youtube.com/user/skyheating1.

Publication date: 2/25/2013