*All percentage and number figures are based on industry averages
It’s not hard for most HVAC contractors to imagine this scenario: Your company has a solid reputation. Your team is knowledgeable, skilled, and delivers excellent installation quality. But you’re consistently losing bids on replacements.
HVAC replacement jobs are the highest-margin segment of the business. When a deal stalls or ends, profits take a significant (and disproportionate) hit. Affordability is the culprit. Without flexible payment options, homeowners will put off system replacement or shop elsewhere for a better deal or more affordable payment options.
Consumer financing flips this narrative. Implementing HVAC financing boosts new system sales more than virtually any other factor. Payment plans increase affordability and accessibility and, on average, can increase replacement close rates by 25 percent. Read on to learn how offering financing from a firm like United Consumer Financial Services can shift close rates on HVAC replacements from 30 percent to 55 percent and transform your bottom line.
The Problem: Why Close Rates Stall on Replacements
HVAC replacement jobs consistently carry high price tags, starting at $5k and possibly beyond $10k. Compared with routine repair and maintenance work, these numbers can feel completely unaffordable for most homeowners. They’re hit with sticker shock as soon as they see the total price, and when paying in full is the only option, consumers often defer the decision or shop around for competitors. Or, they do want to move forward with the purchase because their furnace or air condition are not working, but they are disgruntled with the company providing the quote, because it’s higher than they can afford, and they have no other option at the time.
Homeowners rarely, if ever, are in a position to pay for an HVAC system replacement in cash. If the only other payment option is credit, that can pose issues as well: insurmountable revolving interest and impossibly high APR can add thousands of dollars to an already high-value purchase. Without payment options, homeowners shop elsewhere, and HVAC contractors lose the sale –– and the time, energy, and money spent on customer acquisition. Stalled close rates signal a lose-lose situation for all parties involved.
HVAC contractors who don’t offer affordable payment plans regularly lose customers and big-ticket replacement sales that keep their business running.
Implementation: Rolling Out Financing to Boost HVAC Close Rates
Homeowners know an furnace replacement will cost thousands of dollars. Even with that knowledge, a written estimate can shock homeowners so much that they mentally check out of the sales conversation.
Successfully implementing your financing program includes presenting payment options in such a way that customers confidently move forward with their purchase:
- Leading with financing: Reps should present financing early and often, before the pitch ever begins. Homeowners need to know they have payment options and won’t be stuck with a huge lump-sum payment. This approach eases budget concerns from the very first touchpoint, before numbers are ever discussed.
- Presenting financing as the ideal purchase option: Many consumers see financing as a last resort or as only for consumers in a certain credit tier. Teams should present financing as the ideal purchase choice for all consumers, highlighting a fast, easy application and same-day approvals that help them replace their system almost immediately.
- Building financing into the estimate presentation: As soon as a homeowner hears the total cost of their system replacement, that number will loom over the entire sales conversation. Instead, build financing into the estimate presentation. Don’t lead with the total cost, but present it as low monthly installments.
Point-of-sale financing helps customers see that they can stop putting a band-aid on their HVAC maintenance issues and choose an upgraded replacement system today. With the right training, HVAC reps and techs can present financing to maximize conversions and nearly double system replacement close rates.
Why Financing Works: The Ways Financing Drives More HVAC Replacement Sales
The right financing program increases affordability and, therefore, sales. Below are just a few of the ways HVAC replacement financing boosts close rates:
- Mitigates sticker shock: A $10,000 system replacement is a hard number for most homeowners to say yes to on the spot. Reframed as a manageable monthly payment, the same system purchase becomes an easier decision to make in the moment, rather than one that gets tabled while the customer mulls it over.
- Same-as-cash option: when a homeowner finds themselves with a very large expense, being told they can finance the purchase, and then pay off the purchase within 12 months with a same-as-cash option, means they have time to complete all payments and not pay any interest. UCFS offers APRs that are lower than most credit cards, but paying any interest might discourage a consumer, meaning that same-as-cash is quite attractive to homeowners!
- Increases AOV: When the total cost of an HVAC upgrade is spread over time, upsells and upgrades can become attainable for more homeowners. Customers who might have chosen a base-tier replacement system are more willing to step up to a higher-efficiency unit or add on indoor air quality equipment and smart thermostats when they can pay in installments.
- Shortens the sales cycle: Financing eliminates one of the most common reasons a replacement deal stalls: the homeowner needing to find the cash or shop three more contractors before committing. This matters most in urgent no-heat or no-AC situations, where the contractor who can close same-visit has a real advantage over one who leaves the homeowner to sit with the decision.
- Widens the market: Homeowners who can’t pay out of pocket don’t disappear; they just patch the problem with a repair and defer the replacement. Financing turns that segment of repair-preferred customers into full replacement customers, capturing revenue that would otherwise be delayed or lost to a competitor.
- Establishes competitive differentiation: In a market where homeowners routinely get three bids on an HVAC system replacement, financing can be the deciding factor when price points are close. A contractor who offers affordable payment plans stands out against competitors who only accept cash or card, even when all other factors are the same.
HVAC contractors with point-of-sale financing programs can see a big jump in sales volume across the board, but especially for big-ticket jobs like total system replacement (industry average close rates jump from 30 to 55 percent!)
Increase HVAC Replacement Close Rates by 20 Percent with UCFS
With a 25 percent close rate increase on the line, HVAC contractors need to find the right financing partner for their business. United Consumer Financial Services is the ideal consumer financing provider for HVAC contractors across the U.S. Regardless of your company’s size, our seasoned team brings decades of expertise to help you implement a financing program that drives sales and boosts close rates.
UCFS provides HVAC contractors with the following financing services and benefits:
- Hands-on training and onboarding
- Strong approval rates across credit tiers
- Flexible financing options
- A fast, frictionless application
- Transparent pricing and consistent terms
- Fast, reliable funding, 1-3 days
- Proven industry experience
- End-to-end management for the lifecycle of the loan
Consumer financing options address the primary barrier to HVAC replacement sales: affordability. Partnering with a trusted, experienced firm like United Consumer Financial Services positions your HVAC company to capture the jobs that matter most to your bottom line.
A Marmon company, a division of Berkshire Hathaway, United Consumer Financial Services has the experience and resources to provide consumer financing programs built for the unique needs of HVAC contractors. Contact UCFS today to learn how HVAC financing can help increase replacement close rates and help your business grow.
