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Understanding the Unique Challenges Facing Energy Efficiency Contractors

Curt Monhart's picture
President E3 Prime Environments

E3 Prime Environments’ focus is on commercial, industrial, multi-family and non-profit buildings, as well as agricultural applications. Our project development work includes identifying...

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Understanding the Unique Challenges Facing Energy Efficiency Contractors

July 15, 2021 by Curt Monhart 

David Gard – Executive Director MEECA

I recently had an opportunity to interview David Gard, the Executive Director of the Michigan Energy Efficiency Contractors Association (MEECA). MEECA is a nonprofit trade association having the stated goal of “working to strengthen Michigan’s energy efficiency industry for the benefit of our member companies.” 

My goal for interviewing David was to get his unique perspective on today’s challenges facing energy efficiency contractors. I also wanted to discuss his thoughts on possible solutions for overcoming these growing challenges. 

David described three primary challenges facing energy efficiency contractors: new business development, workforce development, and business performance. His thoughts regarding these challenges are outlined below. 

New Business Development

A major challenge for many contractors is profitability, and efficiency, when developing additional business, especially from new customers. This has always been time-intensive, requiring resources that could be used serving existing customers, as well as order fulfillment activities. 

Finding the time and resources in today’s business environment is especially difficult. Many contractors are working off unusually large backlogs resulting from the upsurge in business following the COVID-19 depressed economic activity that existed for much of 2020. Nevertheless, new business development is critical to ensuring a company’s long-term financial success and sustainability. For many, the backlog bubble will end relatively soon. New business development should be pursued, even during these busy times.

David’s goal for the association is to be able to assist MEECA’s members in their business development activities. Some initiatives he’s considering include:

  • Leveraging prospective customer contacts and presentations. A specific leveraging opportunity is helping members showcase their products and services to a broader audience such as trade groups or associations. This can be much more efficient than one-on-one presentations. “Speed dating”, where short presentations are made to several individual customers at a single event, could be an element of this initiative.

This initiative may also involve assistance in making effective presentations that quickly capture the customer’s attention, and sales points are made quickly and convincingly.

  • Educating customers regarding the value, and types, of various energy efficiency upgrades to help justify the necessary investments. A prior MEECA initiative that was helpful in accomplishing this was a member contest to submit images of various energy efficiency upgrades. While there was limited participation, the submitted images were very good and effective.
  • Partnering with other trades. There may be an opportunity to provide MEECA services to more than only those companies focusing on energy efficiency. Potential candidates include roofers, carpenters, and plumbers. The objective is to increase their awareness of the incremental business opportunities of energy efficiency projects. Possibilities include administering the projects themselves or providing up-sell opportunities and leads to MEECA members.
  • Increasing the effectiveness of websites. There is an opportunity to help members increase the usefulness of their website for generating sales. While there are many aspects to this, one example is the increased use of testimonials. And this shouldn’t be limited to websites but included in all marketing collateral material. It’s recognized that MEECA’s website could also be made more effective.
  • Social media.  Helping to further develop members' social media presence is another business development opportunity.
  • Project funding. Funding is a challenge for many building owners, especially after the effect of the COVID-19 lockdowns and the impact on profitability. Energy efficiency funding programs include Property Assessed Clean Energy (PACE), Michigan Saves, and various utility programs. These have been presented to the membership and are being selectively used. It may be beneficial to discuss how to bundle these programs to further increase the success at securing projects.

Workforce Development

Another key challenge for MEECA’s membership is workforce development. Several factors make this an important concern for Michigan’s energy efficiency sector.

First, Michigan is faced with an aging workforce with many well-trained employees looking to retire. 

Second, the energy efficiency contractor is now competing with all other industries that are looking for qualified employees. As discussed previously, the situation has been aggravated by the unusually large COVID-driven backlogs. 

Third, the unique skills a contractor requires from an employee necessitates expensive training or on-the-job learning. This is a big investment that is easily lost if the employee decides to move on. For many companies employee retention today is more challenging and critical, than ever before.

The above factors are creating a unique opportunity for David’s association to support the members when faced with finding, training, and retaining quality employees.

Business Performance

While most contractors are especially busy, in many cases the additional volume is not improving bottom-line performance. Rapidly escalating material, energy, and healthcare insurance costs are driving down margins. Managing pricing to accommodate them, especially in longer-term projects, is a major challenge. 

MEECA opportunities for helping address this situation that David discussed include:

  • Developing a member training program for accommodating these increases and structuring proposals to protect margins. This could include minimizing lag times resulting from internal processes that aren’t set up to quickly execute increases. Another opportunity is making sure your sales quotation process is fed by real-time cost changes. MEECA plans to incorporate more of these topics into its existing program of periodic online training.
  • Increasing the conversion rate and profitability of proposals. This continues to be a high priority for E3 Prime Environments. It has been the subject of past blogs and additional ones are forthcoming.

Online Training

Online training will play a key role in providing members solutions to these challenges. It’s low overhead and relatively easy to do. The sessions are recorded so members can view the programs at their convenience.

Action

Please contact David with any questions about the MEECA organization and how your company may benefit from its services. He would appreciate knowing your perspective on today’s top challenges facing energy efficiency contractors, and your thoughts on possible solutions including training programs, sales tools, and other resources you think would be helpful.

Here is David’s contact information:

David Gard, Executive Director
Mobile: 517-896-2960

Emaildavid@meeca.info
Michigan Energy Efficiency Contractors Association (MEECA)

Thank you.

Curt Monhart, President E3 Prime Environments

cmonhart@e3pe.com
(414) 788-0844
www.e3pe.com
linkedin.com

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Matt Chester's picture
Matt Chester on Dec 10, 2021

Educating customers regarding the value, and types, of various energy efficiency upgrades to help justify the necessary investments

Do you also see the challenging of educating customers who already did implement EE solutions? Many think the act of installing certain upgrades will unlock efficiency for them, but in many cases they need to be effective and actively used to see the results!

Curt Monhart's picture
Curt Monhart on Dec 10, 2021

Matt,

Probably because of the type of upgrades we're mostly involved with, it's fairly easy to see the results. These include upgraded HVAC systems, lighting, solar and insulation.

What we have seen is, in proposing energy efficiency upgrades, most contractors only focus on lower utility bills. They do not address the reduced maintenance, service and repair costs of new HVAC and systems, or the extended life and reduced maintenance of LED lights. And for commercial buildings, the improved environmental comfort resulting from upgraded HVAC and lighting often results in increased occupancy and lease rates, as well as easier tenant acquisition. Reduced energy bills drive net operating income, which in turn increases the value, and marketability, of buildings. Having a LEED-certified building also often increases in value. 

These factors can go a long way to justifying the necessary investment in the upgrades and has been the subject of a number of our blogs.

Matt Chester's picture
Matt Chester on Dec 13, 2021

What we have seen is, in proposing energy efficiency upgrades, most contractors only focus on lower utility bills. They do not address the reduced maintenance, service and repair costs of new HVAC and systems, or the extended life and reduced maintenance of LED lights. 

Great point-- thanks for the follow up, Curt!

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