hvactoday.comFEBRUARY 2024 HIGH-PERFORMANCE HVAC TODAY TM If You Don’t Measure, You’re Just Guessing! ™ Market Trends RESIDENTIAL 2024 ALSO IN THIS ISSUE: • The Best of Rob Falke: Selling with Diagnostic Leads • Airflow Measurement: Old School Meets New TechFEBRUARY 2024 VOLUME 8 NUMBER 2 HIGH-PERFORMANCE HVAC TODAY TM SALES: Best of Rob Falke: What Do You Do with that Diagnostic Lead? We revisit an article written by the late, great Rob Falke where he shares how to close the sale on a diagnostic lead. TECHNICAL: Airflow Measurement: Old School Meets New Tech How did residential HVAC system measuring and testing come into being and what does it mean for today and tomorrow. Based on a presentation at AHR Expo by NCI’s David Richardson and TEC’s Chris Hughes. 14 DEPARTMENTS FEBRUARY 2024 3HVACTODAY.COM Today’s Word .........................................................................................4 High-Performance Product Review ...............................................5 NCI Update .........................................................................................19 HVAC Smart Mart ...............................................................................20 Ad Index ................................................................................................21 One More Thing ................................................................................22 06 COVER STORY: 2024 Residential Trends and Opportunities What is happening in the U.S. that will impact your business and open opportunities this year? Here are some thoughts. 10need to understand and manage all financial aspects of your company including budgeting, pricing, and profitability. It also means think- ing strategically. Success depends on plan- ning for the future, anticipating market changes, and building in flexibility to deal with the changes that constantly take place. 5. Team Development — Your future depends on your commitment to training. Investing in the continuous training and development of the team enhances their skills and keeps them up-to-date with industry advancements. But training isn’t enough. A great leader em- powers team members to take initiative and make decisions within their areas of responsibili- ty based on their experience and education. 6. Ethical Conduct — Let’s face it. In today’s world ethical behavior is often compromised. It is vital for you and your team members to have integrity and to build trust by maintaining high ethical standards. Being transparent about business practices and ensuring honesty in all dealings greatly contrib- utes to a positive reputation in your market. This will make your company and brand stand out. 7. Adaptability — The HVAC Industry is dy- namic with evolving technologies and regula- tions. A great leader must be flexible to adapt to these changes. They must be willing to embrace innovation. 8. Safety-Minded— Last, but not least, a focus on safety and following safety protocols is critical. A great leader prioritizes the well-being of both team members and clients. In this issue of High-Performance HVAC Today, we offer some strategic, forward-focused, and technical content that can help you be the leader your company needs to meet these chal- lenges, both today and tomorrow. I t’s never been easy to run a small business. With the constant amount of change impact- ing our daily and professional lives, leading your High-Performance HVAC™ company is challenging on many levels. A great HVAC contractor, like any effective leader, needs to have a combination of technical expertise, interpersonal skills, and business acu- men. As we kick off this new year, here are some leadership qualities to consider: 1. Technical Proficiency— This includes hav- ing decent industry knowledge based on under- standing how HVAC systems (not just equipment) work, what latest technologies are available that provide your team the best chance of achieving solid system performance, and staying abreast of industry trends. The latter means participating in industry events, reading trade journals, and training your- self and your team continuously. 2. Leadership Skills — Book after book has been written on the vital importance of having great communication skills. Effective com- munication benefits both your team and your customers. It ensures everyone understands their roles and responsibilities. Leadership also means motivating. You must find ways to remove roadblocks for your team’s success and help inspire them to be their best all the time. And finally, you need to have strong deci- sion-making skills. This is crucial, especially in high-pressure situations. 3. Customer Service — Having a Servant Leader mentality means putting customers first by addressing their concerns quickly. This is best done by creating a High-Performance HVAC™ professional culture in your company. 4. Business Management — This means you 4 FEBRUARY 2024HIGH-PERFORMANCE HVAC TODAY Eight Traits for Leading Your Company to Current and Future Success TODAY’S WORD By Mike Weil Mike Weil is editor- in-chief and director of communications and publications at National Comfort Institute, Inc. Contact him at ncilink. com/ContactMe.HVACTODAY.COMFEBRUARY 2024 5HVACTODAY.COM Next you reference the measured pres- sure drop to a flow chart, slide rule, or a flow wheel to determine the flow in GPM at that given pressure differential mea- surement. This is how hydronic balancing was performed for decades. With the introduction of wireless tech- nologies and smart phone apps, the pro- cess of balancing has greatly reduced the time necessary to balance. This di- rectly relates to project profit margins by lowering the cost to balance. Such sav- ings have been realized in all realms of balancing, not just hydronic projects. The most significant advantage to this approach is that you select the specific model and type of valve or circuit setter and the flow in GPM will be instantly dis- played on the smart phone. There is no Dwyer 490W Hydronic Differential Pressure Manometer During the last decade, one of the most significant balancing instrument advancements is the incorporation of wireless communication technologies and smart phones into measuring in- struments. Hydronic pressure differen- tial manometers are no different. The Dwyer Company introduced its first award-winning wireless hydron- ic manometer in 2017. Since then it has been further developed to the newest version available now. When using a conventional hydronic manometer for balancing, you first must zero and install the instrument, purge it of air, then measure the pressure drop. HIGH-PERFORMANCE PRODUCT REVIEW Written by HVAC Professionals for HVAC Professionals longer a need to reference a flow chart to complete most projects. After the 490W ’s initial award-win- ning release in 2017, Dwyer continued to update the instrument and various kits every year. They also updated the hy- dronic application software. The integration of the software to the instrument is not just for the water side of balancing, the other instruments on this platform have huge benefits on the air side as well. Learn more abut Dwyer’s 490W Hy- dronic Pressure Manometer at ncilink. com/Dwyer490W . — by Jeff Sturgeon, NCI Instructortumbling to an 11-month low in November,” ac- cording to Reuters. They go on to report that new construction will remain key by “an acute shortage of houses on the market. “Homebuilders have an opportunity to capital- ize on the low supply of homes on the market,” says Chief EconomistJeffrey Roach from LPL Financial in Charlotte, North Carolina. “If mortgage rates move lower in the latter half of next year, we could see some improved demand for residential real estate.” From a home sales standpoint, Greg Mc- Bride, Chief Financial Analyst for Bank- rate — a financial advisory company founded in 1976 — mortgage rates have come down from their peak but are still high, and steep home pric- es are dissuading would-be buyers. He also says that if rates drop in 2024 (and there is a chance they will), that could spur the market for buyers and sellers. In a blog post on the Bankrate website, Mc- Bride says, “As long as the economy continues to motor along, the new normal of higher rates is here to stay. A sharp economic slowdown would bring mortgage rates materially lower — but be careful what you wish for.” Bankrate reports that the median home sale price as of November 2023 was $387,600, up 4% from one year ago. They state the U.S. in- flation rate as of November 2023 was 3.1% — slightly higher than the Federal Reserve’s stated goal of 2%. LEGISLATIVE TRENDS TO NOTE Several regulatory movements are in play that will impact your High-Performance HVAC busi- ness in 2024 and beyond. First is the ever-in- creasing demand for more efficient equipment W ith 2024 just one month old, it’s still essential to put together a plan for the year to map out the best path to maintain last year’s busi- ness level and find opportunities for the rest of the new year and beyond. To do that, you must know what’s happening in your immediate mar- ketplace and understand the industry trends that can impact your company and your plans. From national regulations to residential mar- ket statistics, new technological opportunities and customer demands, the next 11 months will offer challenges, opportunities, and roadblocks. Some of these come from increased demand in high-efficiency and Indoor Air Quality (IAQ) to housing issues, high prices, and labor shortages. First, let’s take a look at the residential housing market across the U.S. U.S. HOUSING MARKET TRENDS According to the Trading Economics web- site, housing starts went wild in November 2023. They “soared 14.8% month-over-month to an annualized 1.56 million, the highest rate in six months, and well above market forecasts of 1.36 million.” Trading Economics also reports that this in- crease may be due to a decline in mortgage rates and an increase in inventory. They say that hous- ing starts jumped 18% to 1.14 million, breaking the record set in April 2022. Even so, Reuters reports that total single-fam- ily U.S. housing starts are only moderately up by 0.2%, while multi-family starts are up 4.9%. “U.S. single-family homebuilding increased marginally in October, and activity could remain moderate in the near term amid higher mort- gage rates, which sent homebuilder confidence 6 FEBRUARY 2024HIGH-PERFORMANCE HVAC TODAY 2024 Trends and Opportunities in the Residential Marketplace By Mike Weil MANAGEMENTresponses to their inquiries, quickly scheduled services, personal- ized communication, and convenience at every touch point. The good news here is that as High-Performance HVAC profes- sionals, you already meet or are in the process of meeting these require- ments based on your training, techni- cal expertise, and ability to solve root problems. Speaking of eco-friendly – anoth- er legislative issue faced in both the residential and the commercial HVAC markets is the push toward new- er refrigerants with much less global warming potential. This change is the result of the American Innovation and Manufacturing Act (AIM Act) of 2020, which authorizes the EPA to “address hydrofluorocarbons (HFCs) by providing new authorities in three main areas: to phase down the production and consumption of listed HFCs, manage these HFCs and their substitutes, and facilitate the transi- tion to next-generation technologies through sector-based restrictions.” We are talking about new non-HFC refrigerants that have slightly flam- mable properties. Known as A2L re- frigerants, these refrigerants are al- ready included in equipment being manufactured and installed in the U.S. today. There are changes regard- ing how technicians handle these re- frigerants, what tools they need, and even how systems are charged. This means contractors must focus on technical training for servicing and changing out older equipment for new A2L-based products. SMART/CONNECTED HVAC TRENDS Smart thermostats and smart HVAC equipment are nothing new. Howev- er, with the huge popularity of home automation systems provided by Mic- rosoft, Apple, Google, and others, con- sumers — especially Gen Zers — want to control their home environments in the same way they manage their lights, music, and more from apps on their smart phones. Today, HVAC systems can connect to online networks and devices that allow contractors to monitor, main- tain, and control equipment remote- ly. Often, this connectivity enables gathering real-time data on tempera- ture, humidity, and other HVAC sys- tem metrics. This technology is starting to lead to something called predictive main- tenance, where Smart Systems gather (often erroneously called systems), making this one of the most signifi- cant contributors to the North Amer- ican HVAC marketplace. As part of this growing demand, many states have enacted electrifi- cation programs to replace older gas- fired heating equipment with newer, highly-efficient heat pumps. There are several issues contractors face with this trend. Still, there are also many opportunities for dual-fuel heat pump systems, geothermal, vari- able refrigerant flow (VRF) tech- nology, and even solar-powered HVAC systems. Advances in these technologies make this equipment more viable in regions where they traditionally didn’t offer the same level of comfort as gas- fired high-efficiency furnaces. By the way, did you know that more than 50% of HVAC customers are will- ing to pay more for these “eco-friend- ly” and energy-efficient products? It’s true, according to a blog post on the SBE website. However, consumers today also ex- pect to work with HVAC contractors who are true professionals and who not only deliver the comfort and ef- ficiencies they want but can prove it. Consumers also want immediate FEBRUARY 2024 7HVACTODAY.COM8 FEBRUARY 2024HIGH-PERFORMANCE HVAC TODAY MANAGEMENT Sure, most contractors make use of the avenues provided by digital com- munications – social media, email, digital video, and texting. But most of the time these efforts are used for initial contact and not used enough for setting appointments, generat- ing future business, and keeping their brands top-of-mind. Marketing veteran Kristen Mc- Cormick, of Hatch (a web-based marketing organization for targeting leads, prospects, or existing custom- ers), says that consumers today pre- fer digital communications over the phone. And that’s not just for initial contact, but also for appointment con- firmations and bill pay. She adds that the U.S. HVAC Indus- try should continue growing through 2026, which means that competition will also continue growing. Contrac- tors should take every opportunity to optimize sales AND marketing strate- gies to keep their competitive advan- tages. Such efforts should be their top priorities. Her advice: “Invest at least seven to 10% of your revenue into sales and marketing strategies and tools like on- line advertising, SEO, listings, lead aggregators, CRMs/FSMs (Customer Relationship Management/Field Ser- vice Management), as well as sales training and business coaching. “Invest is the word here. When done right, none of the money you spend on marketing is wasted. In fact, the average cost per lead for HVAC businesses get more predictable rev- enue streams and customers experi- ence the satisfaction and cost savings of maintenance and efficient service. WORKFORCE ISSUES The HVAC Industry continues to suffer, along with most other indus- tries, from labor shortages that impact a company’s ability to handle the in- crease in consumer demand. In an ar- ticle by Dr. Charles Allgood of Chemo- urs Company, the current U.S. HVAC workforce is only a third of what it needs to be to meet demand, “threaten- ing operations of businesses of all sizes. “This, combined with new technol- ogies, including A2L refrigerants that require special safe handling consid- erations, means companies must place an even higher priority on training.” He adds that “The crews in the field today need to be proficient in working with HFCs, HFOs, A2Ls, and possibly even older legacy refrigerants that are “hanging on” in some applications.” Read this article by David Holt of National Comfort Institute that discusses the important role of training. COMPETITION AND MARKETING MOVES Competition inside and outside the HVAC Industry is nothing new. Yet contractors generally don’t make good use of marketing communications to explain what makes their company unique to potential customers. data and analyze it to find operation- al anomalies and potential defects. This data analysis enables contractors to monitor and repair potential is- sues BEFORE they become problems! Imagine adding this to your service agreements. Even homeowners can access these capabilities. The entire Internet of Things phenomenon continues to change the HVAC Industry. As con- tractors, it certainly behooves you to stay abreast of this technology and find ways to take advantage of the op- portunities it provides. HVAC AS A SERVICE This sounds goofy, right? Of course, most residential HVAC contractors of- fer service to their customers. This is something different. HVAC as a Service is a different ap- proach to selling and installing HVAC equipment. With normal HVAC ser- vices, the homeowner purchases and owns the equipment, which the HVAC business installs and maintains. With HVACaaS (HVAC As a Ser- vice), the HVAC business maintains ownership of the equipment and the homeowner pays a monthly subscription for the business to ser- vice and maintain it — largely through connected devices and the cloud. This approach has been working in the manufacturing community for years and is only beginning to work its way into the residential HVAC arena. It can be a win-win: HVAC FEBRUARY 2024 9HVACTODAY.COM MANAGEMENT what services they offer that put them at the head of the pack. Don’t cut your budgets for them – if anything, in- crease your budgets. No one will un- derstand why they should do business with you unless you tell them. As we look forward into 2024, there will be challenges for sure. But there will be opportunities too. Be a strong team leader, set the tone for everyone in your company and lead your team to success in this new year. waste. Offer tips on conserving ener- gy. Adopt the same practices they do, and you’ll have Gen Z customers in no time.” GET GOOD AT SERVICE In the end, HVAC contractors real- ly should become experts at service — not just equipment, but people too. And be sure that you price your ser- vices properly so you can make the profits you deserve. Follow the industry trends and work on adding services and technologies that fit in best with your business model. High-Performance HVAC contrac- tors should also consider marketing and advertising key to building their reputation and profits by explaining marketing on Google is $62 — and with jobs earning you thousands of dollars, the ROI is undeniable.” One more thought about marketing and sales – know your audience. Right now, Gen Zers are the newest genera- tion of homebuyers and business own- ers. They have a completely different outlook on what they buy and most importantly, why. They are savvy buy- ers who want transparency and corpo- rate responsibility. I guess that is the key to their decision-making. Your marketing strategy needs to not only recognize this, but it also must prioritize sustainability. McCormick says, “Sustainability is not just in the products and services you offer but in your own day to day operations. Go paperless to reduce Mike Weil is Director, of Communication for National Comfort Institute, Inc. and the Editor-in-Chief of High-Performance HVAC Today magazine. You can reach him at ncilink.com/ ContactMe.Next >