Key Elements of an Energy Services Offering

This is the second article in a three-part series on energy services for commercial HVAC contractors. In the first article (See Energy Services for Commercial HVAC Contractors, Nov. 2009, or http://bit.ly/44NWc7), we explored the business opportunity of expanding your service offering to include energy services. We identified why commercial HVAC contractors are uniquely positioned to succeed, and introduced the concept of an Energy Service Agreement™ as the mechanism by which you can most effectively take this offering to market.

Creating a successful energy services program is not difficult, but it requires a few key skills and a clear definition of what constitutes your service offering. This article will detail the steps that need to be taken to quickly begin realizing the financial benefits to your business.

Creating an Energy-Savvy Salesforce

The process of implementing an energy services offering needs to be treated like a sales initiative. As such, the first step in the process is to make sure your sales team has a command of basic energy skills and knowledge. They must become energy-savvy, including the ability to confidently engage customers in discussions about energy and operating costs. They need to understand how buildings use energy, to start conversations.

Here are some examples of building owner-relevant facts that can get the discussion rolling:

• Energy costs are the single largest controllable operating cost in a building
• HVAC and lighting typically accounts for 75% of a building's total energy use
• According to the Building Owners and Managers Association (BOMA), simple low- and no-cost energy conservation measures can generate up to a 27% reduction in energy costs
• A 10% decrease in energy use will generate savings that usually exceed the entire cost of a typical maintenance service agreement
• ENERGY STAR^® certified buildings have, on average, 3.6% higher occupancy, $2.40 per sq. ft. higher rent, and $61 per sq. ft. higher sales values than standard buildings, according to CoStar, a Bethesda, MD-based commercial real estate information company.

This is the one technical skill that every energy services salesperson must (and can) master. Knowing how much a customer spends on energy, and how that compares to their peers is critical information for a salesperson. This can be done by reviewing the last 12 months of utility bills, and accessing energy databases like the U.S. Department of Energy's Commercial Building Energy Consumption Survey (CBECS), or by using software tools such as the U.S. Environmental Protection Agency's (EPA's) ENERGY STAR^® Portfolio Manager.

Complete an Energy Benchmark

Several states, including California, Washington, and the District of Columbia have recently passed legislation that requires energy benchmarking information to be provided as part of the public disclosure for the sale, lease, or refinancing of certain commercial buildings. This will only serve to accelerate awareness and create demand for energy benchmarks. The good news is that the tools provided by government agencies are just complicated enough that building owners often find the process difficult, and as a result, may not ever generate benchmarks for their buildings. However, an energy-savvy salesperson with the experience of generating a few energy benchmarks, won't find the process difficult at all. This creates the ideal situation for delivering added value as part of your energy services offering.

Communicate the value of Energy Service Agreements-Selling energy services will require selling value, not price. An Energy Service Agreement will sell for a higher price than a standard preventative maintenance agreement. That's good, right? It increases your revenue per service contract which is the whole point of this. Virtually all of the contractors that we work with are already more expensive than their competition. Integrating energy services into their service offering raises the price even further, but it provides additional value that far outweighs the incremental cost. In the end these points of differentiation reduce price pressure, not increase it.

Once your salesforce is energy-savvy, they need to have something to sell. Figure 1 illustrates a simple model for the delivery of energy services. It identifies a few key elements of an energy services offering that provide the foundation for driving revenue for your program. It's important to note that this process doesn't necessarily require in-depth engineering resources such as energy engineers or certified energy auditors. If your company has such resources, that's an effective addition, but isn't a prerequisite for getting a program started.