Window companies build marketing strategies around it. HVAC and insulation contractors — usually not the most aggressive marketers — hit the airwaves to promote it. The metal roofing industry wants it all.
“It,” of course, is the increased business resulting from federal tax credits on energy-efficient home improvements; credits equal to 30% of cost, up to $1,500, for windows, doors, certain kinds of roofing, water heaters, biomass stoves, insulation, and qualifying HVAC units. When all is said and done, experts suggest that such improvements will add about $6 billion worth of volume to the total amount of remodeling activity in 2009.
Many products qualify, and already in the first half of this year many types of contractors are using the 2009 American Recovery and Reinvestment Act tax credits to generate new business. Tax credits can help produce inquiries, close pending business, shut out competitors, and solidify existing relationships with customers.
To do one or all of those, you need a strategy appropriate to your image. Is your company a closing machine that lives and breathes lead flow? Consider giving tax credits a prominent spot in your marketing message and sales presentation. Are you an up-market design/build remodeler with a portfolio of award-winning projects? If so, you need to know as much as you can about the products that qualify for the credits and why they qualify, to incorporate them when you can into specifications and design plans. You should also be prepared to explain to clients how and why they benefit from using these products.
Long and Short Cycle
The approach you take will likely depend on the type of remodeling or home improvements you sell. If your company is set up to sell and install short-cycle jobs of a day to a week in length, jobs that typically sell for less than $15,000 or $20,000, having Uncle Sam reward that purchase by knocking $1,500 off someone’s taxes might be an inducement for some homeowners to get in touch with you.
Of course that also depends on where your prospects are in the buying cycle for windows or a new roof. If small jobs are what your company is about, you have nothing to lose by putting tax credits front and center in your advertising, on your Web page, and in the scripts used by the demonstrators and canvassers representing you in stores, at events, or on doorsteps.
In fact, that’s what many home improvement companies are now doing. Windowizards, in Levittown, Pa., for instance, saw mass e-mail blasts to its database produce an immediate sales uptick. Of course, that was in the heady days of March.
The difficulty now may be that with an increasing number of home improvement companies talking tax credits, yours could end up being just another voice in the choir. In fact, if your company doesn’t offer qualifying windows, it could place you and your product at a competitive disadvantage.
But that doesn’t mean that full-service, even design/build, remodelers can’t get a piece of the tax credit action. Far from it. Companies that specialize in larger projects, built over weeks and months and often for referred clients, simply need to take a different approach. Here the value of those credits lies in suggesting appropriate upgrades or additions to the scope of work to help homeowners take advantage of a unique opportunity.
In either case, you generate additional revenue, build trust by using your expertise to help clients save money, and come out the hero. Earlier this year, for instance, Andy Ault, owner of Little River Carpentry, in Laurel, Md., had a client who had contracted for a master suite bath. Ault suggested that instead of replacing the existing hot water heater with something similar, the client should go for a tankless heater that, though it would cost roughly three times as much, would work better with the design and would reduce the $3,000 price by a third, with the energy tax credits factored in. The client agreed with Ault’s recommendation. He also appreciated Ault’s guidance.
For the full-service remodeler seeing fewer jobs and jobs with a smaller scope of work, the tax credits are an opportunity to add value to projects that involve HVAC systems, appliances, or weatherization products at a time when luxury items are often viewed with disfavor.
“Granite, heated tile floors, home theaters, all those are getting cut,” Ault says. “But clients will find money for these other things because they’re more central to the project and they can take advantage of the tax credits.”