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WaterFurnace 2016 ASM: State of the geothermal industry

April 13, 2016
Attendees - most of them WaterFurnace dealers - learned about the state of the geothermal heat pump industry. Regarding what's on the horizon in 2016, WaterFurnace has quite a few initiatives. WaterFurnace will run three national campaigns that will hit all 210 U.S. TV markets for multiple weeks. Doug Dougherty gave a Geothermal Exchange Organization (GEO) update. John Turley gave an International Ground Source Heat Pump Association (IGSHPA) update.
Michael Albertson, Sr. VP of WaterFurnace.

NASHVILLE, TENN. — At WaterFurnace’s 2016 Annual Sales Meeting (ASM), March 29-30, in Nashville, Tenn., approximately 340 attendees — most of them WaterFurnace dealers — convened to learn about the state of the geothermal heat pump industry, the future of geothermal, the prosperity mindset, and to participate in sessions regarding finding and keeping qualified employees, troubleshooting tips for techs, radiant and geothermal applications and how to increase sales via financing.

The event started with opening remarks about WaterFurnace and the state of the industry from Michael Albertson, Sr. VP of WaterFurnace, and Sean Dillon, director of Dealer Sales at WaterFurnace.

According to Albertson, the geothermal heat pump industry has labeled itself as a premium niche market.  

“We tend to think the technology is for mid- to high-income consumers,” said Albertson. “We often pre-judge prospects based on demographics, new construction and retrofit. But the reality is that geo is a mainstream technology.

“Over the years, as an industry we have gone out of our way to be a niche market in an effort to distance our technology and its benefits from conventional products, added Albertson. “The WaterFurnace system is to provide a maximum comfort to the family, and have the longest system life while maximizing efficiency, reducing maintenance costs and stabilizing household budgets by minimizing utility bills, too. We, as an industry, have gotten in our own way of getting the message out there to the masses that a geothermal system is only for a small percentage of consumers with higher levels of income. We are half of one percent of the HVAC market. We need to remember what the consumer wants — a 24/7 dependable system with the lowest operating cost and the maximum comfort level in a home.”

We, as an industry, have gotten in our own way of getting the message out there to the masses that a geothermal system is only for a small percentage of consumers with higher levels of income,

— Michael Albertson

Sean Dillon, director of Dealer Sales at WaterFurnace.

In 2015 the core of WaterFurnace business was in the Midwest, according to Dillon, and the company has been very successful with promotions for the 7 Series and 5 Series — online ordering is up. Plus, 3 Series adoption is growing.

“As we see more new construction we will see more of 3 Series promotions,” said Dillon. “There are more and more requests for D2D (Dealer to Dealer) units sold. We are also seeing the adoption of Symphony web enabled controls.”

Regarding what’s on the horizon in 2016, WaterFurnace has quite a few initiatives.

“WaterFurnace is coast to coast, border to border and direct to dealer,” said Dillon. “We will be marketing more and more geo-to-geo change outs; creating programs to increase ground source heat pump relevance; fostering and increasing utility/coop synergies; cultivating state level programs; and continuing financing awareness based on cash flow with our customers.”

Increasing consumer awareness

Tim Litton, director of Marketing Communications at WaterFurnace.

Regarding marketing, Tim Litton, director of Marketing Communications, discussed WaterFurnace’s national advertising campaign to increase consumer awareness. This year WaterFurnace will run three national campaigns that will hit all 210 U.S. TV markets for multiple weeks. WaterFurnace’s primary networks are Fox News, MSNBC, CNN, the Golf Channel and HGTV.

“At WaterFurnace, we believe that our dealers are the biggest component of our success and we need to support them,” said Litton. “We also believe that, as the leader in residential geothermal, we have a responsibility to help grow the market. Nearly everyone agrees that one of the major obstacles to mainstream geothermal adoption is lack of awareness. It’s a tough proposition to up-sell a homeowner on a technology they’re unfamiliar with, from a brand they’ve never heard of, at two to three times the cost of traditional systems. And because most HVAC replacements are due to unexpected failures, the decision timeframe is compressed to just a few days since the homeowner is probably sweating or freezing.”  

“We also believe that, as the leader in residential geothermal, we have a responsibility to help grow the market,

— Tim Litton

By increasing consumer awareness of geothermal, it will make it easier for dealers to talk with homeowners about its benefits and why they should consider such a system for heating and cooling.

“For almost 40 years, the geothermal industry has primarily relied on word-of-mouth and education initiatives to raise awareness for our technology, and as a result, geothermal has languished with a low, single-digit share of the overall market,” said Litton.

Because word-of-mouth alone is not enough, WaterFurnace developed a national advertising strategy, focusing on television ads and online advertising.

According to Litton, technology is enhancing television, not replacing it, and there is a direct correlation between television ads and Google searches — smartphones and TVs are being used together more and more in a concept known as “second screen.”

“When TV ads are run there is a Google search spike,” said Litton. “It’s the synergy between screens that has led to a situation where 90% of all media interactions are screen-based while only 10% are with non-screen based media. The divide between TV programming and online content continues to merge — stealing time from traditional media. It’s for all of these reasons that TV and online will continue to be our primary focus for consumer advertising over the next 5 years.”

New products

Bob Brown, VP of engineering, reviewed some of WaterFurnace’s newest products, including the 5 Series 504W11 with OptiHeat, which is the first vapor injected GSHP heat pump in North America and the 5 Series Air Handler. Brown also gave an update on the Aurora Controls.

"The New Series with Optiheat Technology represents innovation and efficiency," said Brown.
Bob Brown, VP of engineering at WaterFurnace.

The New Series comes in three model sizes and features OptiHeatVapor Injection; the Copeland EVI Scroll (Single Speed); NSW Cabinet; EEV control for VI circuit; Aurora Base & Expansion Board Control; an Energy Star rating; and GLHP Heating COP 3.2-3.4.

What is Vapor Injection? Vapor injection (VI) or economized vapor injection (EVI), adds a third heat exchanger to sub-cool refrigerant prior to entering evaporator, but after a second expansion device. EVI line taps off a fraction of the liquid line flow, and it requires a special EVI compressor, allowing injection of vapor inside scrolls using a special VI port.

An upgrade to WaterFurnace’s previous NAH model, the 5 Series Air Handler features “Clean Sheet” Approach; three cabinet sizes 2-, 3-, and 4-5 ton; a four position one piece design –upflow, downflow, horizontal (left and right); all aluminum A-Coils; both composite drain pans; small footprint 21.5” x 24.5” (large); 1” foil faced insulation; and is low leakage designed and tested. The service features are all aluminum air coil: composite drain pans; condensate overflow sensor; two location AID tool access; and Symphony compatible. With this air handler there are two control options: base control (traditional 24VAC controls and ECM tap board) and Aurora Controls.

"Aurora Controls will now be integrated allowing all of the Aurora benefits of advanced controls and troubleshooting, communicating color touch screen thermostats, IntelliZone2 Zoning and Symphony web enabled Wifi comfort system in a geothermal split configuration," said Brown.

Aurora Control Options feature 24VAC control with aquastat; setpointcontrol with 24VAC HydroZone; a set point with new communicating HydroStat; and Symphony Optional. Aurora Advanced Control Options feature 24VAC control with aquastat; set point control with 24VAC HydroZone; set point with new communicating HydroStat; Sensor Kit options; Energy Monitoring (Std), refrigeration, and performance; and Symphony optional (AXB expanded sensor capability).

Other new WaterFurnace products include the HydroStat thermostat, 5 Series 500W11 Hydronic Heat Pump, and the 5 Series Rezpack Geothermal Outdoor Packaged Unit.

Legislative update

Also during the meeting, Doug Dougherty gave a Geothermal Exchange Organization (GEO) update and John Turley gave an International Ground Source Heat Pump Association (IGSHPA) update. 

The geothermal Exchange Organization (GEO) is the primary national advocacy group for the geothermal heat pump (GHP) industry. Dougherty discussed federal legislative issues, including the five-year tax credit extension, and how he wants to obtain parity with solar and wind, which were originally part of the same tax credit as geothermal.   

“There needs to be an equal playing field because solar and wind received the extended tax credits last year while geo was left out,

— Doug Dougherty

“Geothermal heat pumps need parity,” said Dougherty. “I’m confident we will get this done. There needs to be an equal playing field because solar and wind received the extended tax credits last year while geo was left out.”

Turley discussed what IGSHPA is doing to level the playing field with new geothermal training courses, plus how the organization is now working with other organizations. 

Weldon Long talks about consistency.

“We are also working with other organizations, such as Geo because the geothermal industry needs one unified voice,” said Turley.

Prosperity mindset, the sales process

Weldon Long, New York Times Bestselling Author of The Power of Consistency and one of the nation’s leading experts on building profitable contracting companies, began his WaterFurnace keynote with a quote by Steve Jobs, “That's been one of my mantras —  focus and simplicity. Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple.”

“Focus and simplicity is not so simple,” said Long. “What does it take to create transformational success and prosperity? Focusing on the little things has a huge impact on business and life.”

When discussing the Prosperity Mindset, Long mentioned it is geared and programmed to thrive in the face of challenges. Successful people have learned to thrive during challenges, and we will all face challenges in these three areas during life:

“You have to decide to have a mindset that will not be held back,

— Weldon Long

1.         Money problems

2.         Relationship challenges

3.         Health – we will all face health challenges and eventually death.

Even though you can bet on challenges during your life, Long ensures that anything external, such as the economy, does not affect what is in your heart and soul. It does not decide if you are successful or not.  

“You have to decide to have a mindset that will not be held back,” said Long. You need to decide there is no way an external situation will stop you; you need to understand this is outside of you, so it won’t bring you down.”

So how does one create a clear and focused mindset?

“You need to start with thoughts first and you need to elevate thinking,” said Long. “You need to have focus and clarity of where you will end up, a definite purpose. You need to have a burning desire to achieve a goal. Figure out what you want in business, relationships and your life.”

It’s important to understand that your thoughts become reality.

“Thoughts trigger emotion, and emotion triggers action,” said Long. “Emotion is a reflection of the thought you are having, and action is consistent with emotion.

“In order to have a clear and focused mind, it’s important to think about what you think about,” said Long. “How often do you stop before you starting thinking and think about what you think about?”

Becoming aware of what you think about is the first step when starting the process of creating a clear and focused mindset.  

“We are always right 100% of the time,” said Long. “Emotions are based on what you believe, even if it isn’t true. Before you start thinking, ask yourself what you will believe today. You need to decide that.”

Once you have the prosperity mindset for your business, then you can focus on the sales process. The sales process is where the rubber meets the road. According to Long, a sales system is a “consistent process.”  

“Consistent results can only come from consistent activities,” said Weldon. “Random results can only come from random activities. If you do correct things you get correct results. The law of consistency is to have a process/system.”

Long advised WaterFurnace dealers that when selling you do not want to put yourself in a corner, so you need to put things in perspective for the customer.

“Some customers are great and they actually listen to you,” said Long. “Sometimes they go towards value instead of price.”

Long wrapped up his keynote with the most powerful words in sales: “Will you trust me?”

“Trust is a combination of high competency and character,” said Long. “You need to teach customers why you can be trusted. Competency is very important because you cannot trust solely on character.”

According to Travis Smith, owner of Sky Heating & Air Conditioning Inc., Long’s keynote reminds him to be consistent.

“As heating and A/C contractors we thrive a few months of the year and get by the rest of the year so we often forget to do things right,” said Smith. “When the A/C sales calls are coming in, it’s easier to just give a bid and not perform a load calculation, but even at the busiest time of the year we can sell a better system and gain more long term customers by performing a load calculation and explaining the differences.”

Smith also added that he thought this was the best sales meeting WaterFurnace has had.

“This year really hit on all cylinders between new products, an amazing keynote, varied breakouts and just a positive outlook — tax credits or not,” said Smith.

About the Author

Candace Roulo

Candace Roulo, senior editor of CONTRACTOR and graduate of Michigan State University’s College of Communication Arts & Sciences, has 15 years of industry experience in the media and construction industries. She covers a variety of mechanical contracting topics, from sustainable construction practices and policy issues affecting contractors to continuing education for industry professionals and the best business practices that contractors can implement to run successful businesses.      

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