How To Keep Home Depot Out Of The Water Heater Game
If you missed the fireworks display on the 4th of July, there's an easy way to recreate it. Walk into a PHCC meeting and loudly express the sentiment that Home Depot does a fine job on water heater replacements and is taking share from plumbers due to superior service and quality. You will see fireworks.
Oh, and it might not be a bad idea to duck and make a fast exit. There could be collateral damage. The following are some truisms to keep in mind on why you lose and why you can win against Home Depot.
First, here's why you lose:
Contractors Let Home Depot Make The Rules
Home Depot reaps the scorn of contractors because the big box wins more and more battles. They win because contractors fight stupidly. They fight by Home Depot's rules. When Home Depot makes the rules, Home Depot wins the game.
You Can't Win On Price
Most contractors realize they are not going to beat Home Depot on price. It would be a mistake to try. The business model of a successful retailer is entirely different than the business model of a service company. Marketing strategies are different. Cost structures are different. Margins are different.
Contractors Won't Do What It Takes To Win On Service
Surprisingly, contractors are finding it difficult to compete with Home Depot on service. In part, this is because the consumers have a positive impression of Home Depot - far more positive than the consumer's impression of the typical plumbing contractor. Unless he's done business with you in the past and had a good experience, odds are the consumer trusts Home Depot more than you.
Call most contractors after hours and the best you can hope for is an answering service. When I've conducted nationwide surveys of the trade, calling during business hours we reach a live person about half the time. Half! Call Home Depot's water heater hotline and a friendly customer service representative will take the call.
When a contractor has a Web site, it's generally poorly designed and sparse on content. The water heater section of Home Depot's Web site contains a multimedia explanation of a water heater's operation. It's slick. It's informative, even if it's not totally accurate.
Face it. The service deck is stacked against you before it's ever dealt. You can try to persuade consumers that your service is better, but that's a tall order. It's an uphill battle to change someone's mind. If you doubt it, just try to persuade a time and materials contractor that he should be flat rate, or vice versa. Try to convince a "Chevy man" that the Ford Econoline is better. There's an expression for this. It's called "beating your head against the wall."
If you are going to try and convince people you have better service, then you must offer PROOF. Guarantee that your technician will show up on time. Say you'll take a buck or two off the invoice for every minute that he's late. That will get people's attention. Then, even if he is late, the customer's not mad because he's saving money.
I expect that half the people reading this article are hyperventilating at the thought of discounting for delays. The other half are screaming something at the magazine page along the lines of, "What? Are you insane? You're obviously a blankety-blank idiot!"
Yeah, yeah, there're a million reasons why you can't make an on-time guarantee. A job may run long. Traffic may be bad. Yada, yada, yada. In other words, either your service really isn't superior or you're afraid to walk your talk. If you're not going to put up proof, shut up about the service.
You Can't Even Win On QualityIt's hard to make a quality argument against Home Depot. They're the only guys selling water heaters with the G.E. brand, one of the most trusted brands in the country. True, homeowners might discover they're made by Rheem, but that's hardly a mark against them.
It's hard to make a definitive case that your tank is better than their tank. You can make claims about the quality of the installation. So can Home Depot. You say you're good. They say they're good. You say you permit every job. They say they permit every job. You say you include a drain pan. They say they include a drain pan. You say. They say. And since they've got more money to say it with, you lose.
On the other hand, you get opportunities Home Depot does not. If the technician is on the scene, you've got a shot at making a persuasive argument about the quality of your work. It's probably a long shot. More than likely, you win those jobs by default, because the tech is there and represents the path of least resistance.
Still with me? Enough browbeating. Let's see how you can win:
Change The Rules To Eliminate Home DepotThe best way to beat Home Depot is to refuse to deal them a hand. Don't let them in the game. It's easier than you might think.
Home Depot's Web site features a good, better, best approach. They state that the better and best water heaters are quick recovery. They are not. At least, they are not according to the standards most people in the industry use. At Home Depot, a 40,000 Btu/hr. input, 50-gallon water heater is considered quick recovery. They consider 36,000 Btu/hr. to be standard recovery.
Try to buy a 50,000 Btu/hr. or higher 50-gallon water heater from Home Depot. You can't do it. They don't sell them. If your hot water needs are greater than what a 40,000 Btu/hr. input, 50-gallon heater will supply, Home Depot will suggest moving up to a 75 gallon water heater.
The beauty of offering a 50,000 Btu/hr. water heater is that the price difference to the contractor for the quicker recovery is minor. It's typically around $20. Yet, it offers 25 percent more heating capacity than Home Depot's top-of-the-line and 38 percent more heating capacity than Home Depot's standard. To consumers, the increase in capacity justifies a far higher price than the premium the contractor pays. Contractors can charge a few hundred dollars more than Home Depot without most customers thinking they're being gouged.
Note that the operative term is "heating capacity." It's tough to talk about quick recovery, especially when none of the manufacturers are willing to define what constitutes a quick recovery water heater in their literature. Thus, anyone can claim "quick recovery" for any water heater (e.g., Home Depot's claims). Heating capacity is an absolute number. At the end of the day, 50,000 Btu/hr.'s is always 50,000 Btu/hr.'s. It's always 25 percent more than 40,000 Btu/hr.'s and it's always 38 percent more than 36,000 Btu/hr.'s.
Furthermore, consumers don't really understand what quick recovery means. It's harder to explain than heating capacity, which is simple. Always opt for simplicity over complexity. Start talking about the "heating capacity" of the water heater now (e.g., "It's a 50,000 Btu/hr. water heater with a 50-gallon storage tank).
Homeowners Replacing Old Water Heaters Will Want Higher Btu Water HeatersRemember, water heater replacements come at a time when the bottom of the old water heater is filled with sediment, reducing its recovery rate and effective capacity. What may have been mostly adequate when installed new, can no longer keep up with the home's requirements. When replacing an older water heater, homeowners are prone to accept arguments in favor of a higher heating capacity unit. Ever since you were a kid eyeing Mom's chocolate cake, you've known that more is better.
Energy-Conscious Consumers Will Want Higher Btu Water Heaters With Smaller Tanks"More" may be better, but "more" means more energy use, right? Not with water heaters. There's an energy argument in favor of higher heating capacity units. It's like getting a larger water heater in the same space without the standby energy cost of a bigger tank. Put in a 75-gallon water heater instead of a 50 gallon and you can make the case that the standby energy cost increases by 50 percent (actually it's a little less than 50 percent, but let's not split hairs).
With a 75-gallon tank, you must pay to maintain an extra 25 gallons of water at raised temperatures 24 hours a day. It's far better to store less water and increase the heating capacity of the water heater so that the water is heated back to temperature quickly.
In addition, the storage water temperature can be lowered with a higher heating capacity water heater, saving more energy. The same homeowners that buy high efficiency heating and air-conditioning equipment will buy into the energy savings argument.
Parents Of Infants Will Want Higher Heating Capacity Water HeatersFamilies with small children should be especially open to higher heating capacity water heaters. The reason is safety. With a higher heating capacity water heater, it's possible to lower the stored water temperature without running out of hot water. Lowering the temperature lowers the potential for scalding. According to the "McKesson Clinical Reference Systems: Pediatric Advisor," a child will receive a burn bad enough to require medical treatment after 2 seconds when the water temperature is 150 degrees F. Drop the temperature to 120 degrees F and it takes a full 10 minutes of contact.
Oversized Tub Owners Will Want Higher Capacity Water HeatersHomes with the oversized whirlpool tubs that are especially popular in homes built within the last decade practically require higher heating capacity water heaters. Unless the storage water temperature is set to dangerously high levels, the hot water will run out before the tub fills. The only alternative is to buy a larger water heater.
When Good Water Heaters Die Young, Homeowners Will Want High Capacity Water HeatersHomeowners who experience the premature death of a water heater should be open to a longevity argument. Water heaters, according to many professionals, will last longer if the storage temperature is kept lower. If true, then a higher heating capacity water heater should last longer, provided the homeowner keeps the storage temperature lower.
To Deal Home Depot Out Of The Game, You've Got To Deal The CardsIt's not enough to know how to prevent Home Depot from playing, you've got to act. You've got to become the dealer to name the game. You've got to define the game for homeowners in your market. You've got to market.
Home Depot may spend more on marketing than you, but you can still out-market them. You can send focused marketing messages to targeted geographic areas. Look over your service tickets. Identify tract neighborhoods where you've begun to see water heater failures. It's likely that most of the water heaters are the same type, manufactured at the same time, often from the same factory. Mail to them. Explain the benefits of a higher heating capacity water heater. Advertise in their homeowner's association newsletters.
Get together with some of your "good" competitors through the PHCC and share the cost of a newspaper ad promoting the benefits of higher heating capacity water heaters. List all of your names at the bottom. You're promoting a category of products that all of you offer and that Home Depot does not.
You're dealing a new game, one that Home Depot can't play.