Using Energy Services to Drive Maintenance and Retrofit Sales

1. Using Energy Services to Drive Maintenance and Retrofit Sales

2. Series Schedule Using Energy Services To… • Session 1 – April 14th Ensure Maintenance Agreement Renewals • Session 2 – April 21st Win New Maintenance Agreements • Session 3 – May 4th Drive Retrofit Project Revenue

3. Agenda: Session #2 • Review Key Strategies From Session #1 • Selling To New Service Prospects vs Existing Customers • Positioning Energy Services With Prospects • Targeting Prospects • The Sales Process • Getting the meeting; The Pitch; The Proposal • Objection handling

4. Quick Review Of Key Session 1 Concepts • Building owners’ perspectives • Focus on Low Cost/No Cost (O&M) measures • Service dollar multiplier • “Cancellation Proof” your service agreements

5. Why Now – Building Owners’ Pain Immediate need to reduce operating costs and improve cash flow Tight capital budgets delaying retrofit or replacement projects Leverage has switched to tenants

6. Cash Flow & Commercial Buildings • 99% of commercial buildings have mortgages • Building value is determined by cash flow • Cash Flow = Income - Expenses • Income (lease payments) • Expenses (taxes, insurance, interest on debt, utilities, capital upgrades) • Cash Flow Problems Arise From • Decreased income (increased vacancies) • Increased expenses

7. BOMA Says… NOTE: Savings assume 100,000 sf building with initial ENERGY STAR rating of 50 @ $0.09 per kWh Source: Building Owners and Managers Association

8. Controllable Operating Costs Largest Immediate Savings Opportunity

9. The Financial Leverage of Service PM Agreements $1 Each $1 of service agreements generates the equivalent of $15.91 in new revenue

10. A Tale of Two Contractors

11. Look Below the Surface: Preventing Loss

12. Look Below the Surface: Gaining New

13. Repositioning As An Energy Services Consultant • Conversion from farmer to hunters • Too many contractors have become farmers • Economy requires hunters • Hunters vs. farmers: Who’s going to win?

14. Targeting Customers Attractiveness Number of buildings controlled End use (office, schools, medical office, retail) Size (25k – 200k) Fits most contractors’ service base Receptiveness Owner-occupied Lease renewal challenges Existing sustainability strategy / desire energy-savings plan Local Energy Star legislation (download provided)

15. Why Energy Efficiency is Important

16. Pain = Potential for Gain • Example: • 100,000 sf building • $2 per sf in energy costs • $10,000 cost of PM agreement $15,000 $1,000 Scenario 2 10% Reduction Energy Costs 50% Increase in PM Price Scenario 1 10% Reduction in PM Price

17. Energy Demographics Sweet Spot! 58% 98% • Buildings 5k to 200k sq. ft. • 44% of all buildings (2 million buildings) • 63% of energy use ($90 billion) Source: Commercial Buildings Energy Consumption Survey (CBECS)

18. 2.8 X 25th %tile = $0.85 75th %tile = $2.39 Median = $1.55 The Secret to Energy Services Assume: $0.10 per kWh $0.93 per therm Dramatic range of performance = Opportunity Source: Commercial Building Energy Consumption Survey (CBECS) Energy Information Administration, August 2009

19. Energy Challenges in Office Buildings Tenant / owner relationships can complicate decision making Multiple tenants Out-of-state owners Third-party property managers Critical to understand who pays and who benefits

20. Direct Benefits of Energy Savings Benefits Accrue to Tenant Benefits Accrue to Owner Benefits Accrue to Owner

21. Strategies for Net Lease Situations Increasing tenant power: “Every tenant a flight risk” Increasing vacancies Lease renewal a catalyst for action Tenant-direct relationships Progressive property manager Competitiveness / marketing tool Green / LEED

22. Case in Point 25k sq. ft. building Tenant coming up for lease renewal $90k/year in rent from this tenant at stake Contractor in Pacific NW proposed and won new… Energy Service Agreement (50% price premium vs previous maint. agreement) Test & balance project ($12k)

23. Target the Correct Decision Making Level

24. Getting Started • Define Program Offering • Build Go To Market Plan • Prospect Targeting • Define Metrics/Expectations • Measure

25. Energy Service Agreements

26. ESA Tool Kit

27. The Sales Process • Set appointment: Probe targets for financial pain • 1st appointment: Convince customer that knowing their energy bill is relevant • Survey/Benchmark: Demonstrate potential gain • Confirmation/Verification: Review results • Present Proposal: Drive new service with ESA • Plan B: Drive Low/No cost Assessment • Review Assessment: Close service agreement Transitions Into Retrofit Discussion

28. Energy Service Agreement™ Sales Process Get the Meeting 1st Meeting - Introduction Building Survey / Energy Benchmark Confirmation / Verification Present the Proposal Not an Opportunity Today Sell Energy Services Close the Service Sale Account Management

29. Prospecting and Setting Appointments

30. Dials Survey Confirmation Sales How Energy Services Impacts Sales Funnel 30 dials per meeting (25% of dials result in live conversation) 5 per week 1st Meeting 3-4 per week 2-3 per week 1-2 per week Proposal 1 out of 3 proposals close Source: ACCA

31. Reposition Yourself in Less Than 30 Seconds “The value of mechanical service agreements has usually been recognized as providing long-term benefits such as reduced breakdowns and extended equipment life.  But we understand your need to reduce costs now, not some years into the future.  We have a unique approach that provides two important benefits: We can identify immediate operating cost savings that in many cases will more than pay for the entire cost of the service agreement – freeing up valuable cash for other parts of your business. At the same time we minimize the long-term total cost of owning and operating your buildings through services that provide for longer equipment life and fewer breakdowns. Our unique approach will identify ways that will reduce your operating costs now, resulting in positive cash flow from Day 1, while at the same time providing services that extend the life of your equipment in the future.” 

32. Dials Survey Confirmation Sales How Energy Services Impacts Sales Funnel 1st Meeting Proposal 30% more wins Source: ACCA

33. Step #1: Get The Appointment • Create your 30 second commercial • Identify your top 3 benefits • Request a half hour meeting • Stress the importance of their input • Select day and time to meet • Go back to your benefits

34. Step #2: The 1st Meeting • Learn about their pain • Financial pressure from above • Low occupancy • Renewal concerns • High energy costs • Tenant complaints • Create a spark • Use energy to look different than the other guy • Demonstrate $ savings potential • Get customer involved (wanting more) • Agree to a plan of action • Information sharing (energy bills, repair/service cost history) • Site survey • Scheduled confirmation / verification meeting

35. Steps #3 and #4 Energy Benchmarking The on-ramp to energy services

36. Energy Star Benchmarking: The On-Ramp • Energy metrics • Cost per sf • Energy usage index (kbtu/sf) • Carbon footprint

37. Energy Star Benchmarking: The On-Ramp • Energy metrics • Cost per sf • Energy usage index (kbtu/sf) • Carbon footprint • Comparison to peers • ENERGY STAR® Energy Performance Rating • Energy Cost Comparison

38. Energy metrics Cost per sf Energy usage index (kbtu/sf) Carbon footprint Comparison to peers ENERGY STAR® Energy Performance Rating Energy Cost Comparison Opportunities for savings Energy Star Benchmarking: The On-Ramp

39. An Energy Benchmark™ Determines Action ENERGY STAR® Energy Performance Rating Maintain Adjust Invest • Greatest opportunity for improvement • Invest in new equipment and enhanced O&M practices • Gain significant savings from low-cost, O&M measures • Equipment upgrades could yield additional savings • Opportunity to gain recognition: • LEED / ENERGY STAR certification • Continue to improve and maintain by focusing on O&M Source: ENERGY STAR

40. Step #5: Energy Service Agreement Proposal

41. Elements of a Winning Energy Service Agreement Proposal • Overall customer benefits • Related back to customer pain points • Document current building performance • Energy Benchmark • Equipment condition (with photos) • Deliverables / Scope of Work • Energy services • Mechanical services • Cost analysis of current vs. proposed service • Hard, soft, and hidden costs • Relevant references • T’s & C’s

42. Step #6: Energy Savings Assessment™ Deliver differentiated value Identify low/no cost energy savings Positions you as an energy consultant Uncover opportunities for larger retrofits Sold for a fee or included in higher value service agreements

43. Energy Savings Audit™ Quantification of savings Include as part of retrofit proposal Provide financial justification for larger retrofit opportunities Covered in next session

44. Key Takeaways • Prospects need your help, they don’t know you can • Taking share requires sales to become hunters • Integrate Energy Services into Service Agreement • ESA’s are not cost centers, they generate cash • Develop 30 second commercial • Set expectations with sales regarding weekly targets • “Sell” free Energy Star benchmarks $1 in Service Contracts Generates $15.91