Contractor discovers a winning approach that went against conventional home performance wisdom—that selling savings was working better than selling comfort.
A willingness to go to market differently, coupled with a well-trained and highly efficient back office crew, have helped a New York residential remodeler turn five years of recession challenges into a successful business model. A model with a diversified base and a more promising future.
In 2007, Murtha Construction was a traditional remodeler with a 20-year history and a base in West Islip, NY, also serving Nassau and Suffolk Counties. But Owner Michael Murtha saw storm clouds ahead. “The economy was clearly non-sustainable and all the indicators were poor,” he says.
“We needed to diversify and decided quickly that home performance was our best option. We signed on to Home Performance with Energy Star (HPwES), got our technicians certified and our company accredited with The Building Performance Institute Inc. (BPI) .”
It was a slow start. Although the decision showed great foresight, Murtha’s timing was ahead of the future state and utility incentives that would fuel survival for many as the recession took hold. “We first had to get customers and motivate people,” says Murtha.
In early 2009, Murtha hired Director Steve McKenna to run the Home Performance division. The company was approved as the third of five contractors in Home Performance Direct, a new Long Island Power Authority (LIPA) incentive program to offer subsidized upgrades to all-electric residential customers.
At first LIPA offered incentives for all-electric homes of up to 75% with a $5,000 cap. That has since been reduced to a 25% incentive with a $1,500 cap.
In their first year, Murtha Construction did about 500 audits and turned 350 of them into jobs, typically insulation and air sealing. McKenna had discovered a winning approach that went against conventional home performance wisdom—he found that selling savings was working better for him than selling comfort. Under the LIPA program, all savings estimates have to be checked by Conservation Services Group (CSG). BPI’s quality assurance program also requires periodic QA checks on the work performed by accredited contractors.
His sales approach was straightforward. “In a down economy, homeowners are motivated by cost savings. You listen to the customer first and that’s what I heard.”
Knowing that promises of savings provoke skepticism, Murtha sent out surveys six months after each job to check actual savings. “Very few came in under our estimates.”
McKenna made sure his prospects got to hear about his customers’ savings, encouraging and motivating word of mouth with a referral program. Murtha used no traditional paid advertising, but leveraged visibility through truck sides and lawn signs and included a homeowner-friendly web site.
For more information, contact BPI:
107 Hermes Road, Suite 110
Malta, N.Y. 12020
Phone: 877-274-1274 : 518-899-2727
In 2011, the New York State Energy Research and Development Authority (NYSERDA) launched its Green Jobs – Green New York program, which has helped Murtha continue to grow its home performance business. In 2012, although the incentives are less, McKenna’s sales approach got a boost from NYSERDA’s on-bill financing mechanism. It’s enabled him to make a ‘positive cash flow’ offer to new customers where the monthly payments are less than the forecast savings.
“Our diversified business model is well set now,” says Murtha, “with traditional remodeling making a comeback at the same time as incentives are being cut.”
What’s his final word on home performance? “We did well because we have a great business automation system, a highly efficient, well-trained back office and a great team. You need a complete business model for scalability and to compete.” PR