Mark Jewell's Blog: Selling Energy, page 315

The Drivers of Higher NOI

Long-time readers may recall a blog I wrote back in May titled “The Building IS the Business” (in case you missed it, you can read it HERE). In that blog I talked about the importance of understanding how a building’s utility costs are split between landlord and tenant. This information determines who your real prospect is, and what sort of value proposition you should bring to the table.

Today, we’re going to discuss the metric that you should focus on when presenting an expense-reducing capital project to a landlord.

For most landlords, one of largest controllable operating expenses is the utility bill. Payroll for the chief engineer, porter, doorman, and so forth may make up a portion of the landlord’s controllable operating expenses; however, these costs generally pale in comparison to the utility costs.

Your task is to convince the landlord that a reduction in operating expenses for his or her building through energy savings will result in an overall increase in his or her Net Operating Income (NOI). NOI is the mother's milk to real estate investors. It's why they get up and put their pants on in the morning.

In a case like this, there are three drivers of higher Net Operating Income:

Higher rent
Lower vacancy/less tenant churn/better tenant retention or attraction
Lower landlord share of operating expenses

If you want to sell energy efficiency effectively in the commercial real estate environment, you have to explore these drivers and determine which ones might have the greatest positive effect on your prospect’s NOI.

 

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How Do You Fit in Their World?

To be a truly successful sales professional, you must reframe the benefits of your product or service so they can be measured with yardsticks your customer is already using to measure their success. I’m sure most of you have heard me say this before, and I repeat it often because I believe that this concept is absolutely vital to efficiency sales success.

Today, I’d like to share a story that comes from one of our Efficiency Sales Professional™ Certificate Boot Camp graduates. This ninja (who we’ll call Sarah) started out her sales career selling anti-violence training programs to schools.

Sarah would go into each school, meet with the principal, and she would typically say, “I’m here because my mentor and I are advancing this anti-violence program that I think would greatly benefit your school.” Before too long, the conversation would advance to, “How much does it cost?” She would tell the principal the price (I believe it was somewhere around $9,000), at which point the principal would recoil and say, “Did you take a look around? I mean, we don't have enough books, we don't have enough computers…we hardly have enough money to put the chains on the doors to keep the drug dealers out during the school day. Where do you think I'm going to get $9,000 to buy your training system?”

Sarah was a sales professional, and was unfazed by this concern. She would say, “Let me ask you a question: How many fistfights did you have last month?” At which point the principal would say something like, “Oh, don't even get me started.” Sarah would continue, “Well, what happens when you do have a fistfight?” The principal would respond, “We suspend the kids.” Sarah would then ask, “One kid or both kids?” The principal would say, “Both kids, since we can’t usually determine who threw the first punch.” She would then ask, “How many days do you suspend them for?” At which point the principal would respond, “A minimum of three days.” Sarah would respond, “So, if I'm doing the math right, is it true that this district gets paid $40 per day for every student who shows up to school?” The principal would respond, “Yes.”

Now comes the fun part. She knows that every fistfight costs this principal 3 days x 2 kids x $40, or $240 of potential funding from the district. So she would respond, “You know, with all due respect Mr. Principal, you'll probably be break even on this $9,000 investment in the first month of the fall semester, and after that you can use all of your outsized savings to pay for more books and computers, which you and I both know you need.”

Sarah told me that when using this rationale, her success rate was better than 95% (as well it should have been, because she was connecting dots and using the right yardsticks). I'm sure when she walked into the room, before she started speaking, there was no way that the principal was thinking about average school attendance subsidies or how much revenue he loses from the district every time he suspends two kids for three days each. He probably hadn’t even thought about quantifying and monetizing the number of fights he'd had in the school. When all that stuff is lined up, it’s easy for him to agree with her that the best thing he could possibly do is buy her training system and start using some of the savings of avoided lost subsidies to improve the learning outcomes in his school.

So what’s the moral of the story? Figure out what yardsticks your prospect is using to measure his or her own success, connect the dots for your prospect, and make your product or service a no-brainer investment decision.

 

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Why? How? Where? (Part Two)

Today, we’ll continue on with two more examples that address the following questions (again, through the lens of an HVAC sales professional selling “smart valves”):

Why should a particular prospect or group of prospects be interested in what I have to say?

How might I reframe the value so it resonates specifically at their frequency?

Where might I reach my prospects once I determine that that's the message I want to deliver?

Premier Owners (End-Users) 

Why?

Premier owners are opinion leaders. Getting them on your side is a very good strategy, especially in commercial real estate where most people are sheep (and I say that affectionately because I used to work in commercial real estate).
Premier owners typically have engineering prowess and they are the people who most appreciate technology like smart valves.
You get the benefit of scalability. Once you get a premier owner with a large portfolio to prove the effectiveness of your product at his own site, you've now got a lot of other buildings that they could extend that success into.

How?

Look for the intersection of engineering expertise and green press releases. Typically, if you have a premier owner who has been in the press a lot for sustainability and they're happy to be featured for laudatory efforts in sustainability, this would be a great case to bring to their table.
Look for premier owners who are frequently featured on green conference panels. The most vocal premier owners are the ones that you want to associate with, because if the technology doesn't work, they'll tell you; and if it does work, they'll be your canary. They’ll get the satisfaction of sharing a success story with their peers, and you’ll get the benefit of increased exposure.

Where?

Hines has a wonderful reputation for being a premier owner when it comes to mechanical engineering. In fact, Jerry Hines, their founder was a mechanical engineer before he started this global multibillion-dollar real estate operation.
Liberty Property Trust has had noteworthy accomplishments building LEED® certified, award-winning buildings, and they have a pronounced penchant for all things green, sustainable, and energy-efficient.
U.S. Green Building Council is a good watering hole for people interested in using cutting-edge technology to make the built environment better.

Capacity-Constrained Systems

Why?

Smart valves might obviate the need for new equipment.
Budget-minded prospects might appreciate the benefits of smart valves as an affordable alternative to higher-priced, harder-to-maintain efficiency solutions.

How?

You could focus on the fact that smart valves might help compensate for the reduced capacity of aging coils.
You might also focus on the reduction in cooling capacity in the wake of required refrigerant change-outs.
If your prospect is predicting an increase in cooling/heating loads, you can emphasize the fact that they’ll likely have more cooling capacity in the wake of installing smart valves.

Where?

Network with mechanical service contractors and data center designers – especially ones that are brought in to expand existing data centers.
Write and present a paper about how to solve the problem of increased capacity without having to add a new chiller and other costly physical plant items. That gets the word out there that this is not your first rodeo and that you have a better solution to a problem that the industry feels it faces.

 

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Why? How? Where? (Part One)

When you’re going to market with a new product or service, what niches and value propositions would allow you to stack the deck in your favor? In determining an answer to this question, there are three key questions you should first ask yourself:

Why should a particular prospect or group of prospects be interested in what I have to say?

How might I reframe the value so it resonates specifically at their frequency?

Where might I reach my prospects once I determine that that's the message I want to deliver?

Continuing on with the example of the HVAC sales professional selling “smart valves,” we’ll discuss several scenarios over the course of the next two days to get the wheels spinning in your mind as to some possible answers to these questions:

Utility Programs

Why?

Utilities need the savings, and some utilities have problems finding projects that will actually generate therms savings.
They need to prove the savings to the regulators, and your smart valve solution will give them concrete data as evidence.
Some utilities are just fond of seeking new technologies so they can fulfill a market transformation goal.

How?

Propose a pilot program to prove the concept.
Instead of just having a prescriptive rebate (where they give $100 per smart valve), suggest to the utility that they do a custom pay-for-performance incentive (where you get paid only for the energy savings).
Once the pay-for-performance incentive proves itself, you can suggest migrating to a prescriptive rebate. 

Where?

You might work with third parties to find utility partners (such as rebate administrators).
You might look for state incentives on the DSIREUSA.org database.
You also might start with the utilities serving test sites if you want to do a pilot program.

Retrocommissioning Specialists

Why?

RCx specialists are sophisticated enough to understand the benefits of your technology.
They have insight into the highest value applications.

How?

Work with a retrocommissioning specialist, have them use the product, and then feature a product case study on a reference library website (such as PECI or LBNL).
Present a paper at the National Conference on Building Commissioning about how this smart valve technology could help a retrocommissioning specialist gain more control over a facility that they get hired to optimize. 

Where?

You can meet retrocommissioning specialists by hanging out at their watering holes, such as the California Commissioning Collaborative or the National Conference on Building Commissioning.

Stay tuned for more examples on this topic tomorrow…

 

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Good to Great

Creating a company that will continue to be successful and profitable many years down the road requires strategic long-term planning. It’s easy to get wrapped up in the present and focus only on that which will provide immediate gain; however, a great company always keeps one eye on the future and plans for sustainable growth and success in the long run.

So what factors allow a company to experience continuous, enduring success? Jim Collins, best-selling author of Good to Great: Why Some Companies Make the Leap…And Others Don’t, studied this question in depth. He examined twenty-eight companies that exhibited exceptional long-term success and crunched the data to extract the commonalities between the companies. The results are truly compelling. If you are responsible for the long-term success of your organization, I highly recommend picking up a copy of this book.

Here’s a summary from Amazon Books:

“The Challenge:
Built to Last, the defining management study of the nineties, showed how great companies triumph over time and how long-term sustained performance can be engineered into the DNA of an enterprise from the very beginning.

“But what about the company that is not born with great DNA? How can good companies, mediocre companies, even bad companies achieve enduring greatness?

“The Study: 
For years, this question preyed on the mind of Jim Collins. Are there companies that defy gravity and convert long-term mediocrity or worse into long-term superiority? And if so, what are the universal distinguishing characteristics that cause a company to go from good to great?

“The Standards:
Using tough benchmarks, Collins and his research team identified a set of elite companies that made the leap to great results and sustained those results for at least fifteen years. How great? After the leap, the good-to-great companies generated cumulative stock returns that beat the general stock market by an average of seven times in fifteen years, better than twice the results delivered by a composite index of the world's greatest companies, including Coca-Cola, Intel, General Electric, and Merck.

“The Comparisons: 
The research team contrasted the good-to-great companies with a carefully selected set of comparison companies that failed to make the leap from good to great. What was different? Why did one set of companies become truly great performers while the other set remained only good?

“Over five years, the team analyzed the histories of all twenty-eight companies in the study. After sifting through mountains of data and thousands of pages of interviews, Collins and his crew discovered the key determinants of greatness -- why some companies make the leap and others don't.

“The Findings:
The findings of the Good to Great study will surprise many readers and shed light on virtually every area of management strategy and practice. The findings include: 

Level 5 Leaders: The research team was shocked to discover the type of leadership required to achieve greatness.
The Hedgehog Concept: (Simplicity within the Three Circles): To go from good to great requires transcending the curse of competence.
A Culture of Discipline: When you combine a culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great results.
Technology Accelerators: Good-to-great companies think differently about the role of technology.
The Flywheel and the Doom Loop: Those who launch radical change programs and wrenching restructurings will almost certainly fail to make the leap. 

“‘Some of the key concepts discerned in the study,’ comments Jim Collins, ‘fly in the face of our modern business culture and will, quite frankly, upset some people.’

“Perhaps, but who can afford to ignore these findings?”

 

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Weekly Recap, October 26, 2014

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Monday: Read Tony Robbins’ best-selling book, Awaken the Giant Within. This book fundamentally changed my life, and I am confident it will have a profound effect on your life, too.


Tuesday: Learn why you should not follow the “6 x 6 rule” of PowerPoint presentations, and discover some alternative methods for creating highly effective presentations.


Wednesday: Visualizing the ideal outcome of a conversation is a great method for productive conversation-making. Learn how to navigate a conversation toward an end goal.


Thursday: Finding high-quality leads for your product or service is vital for successful business development. Read this blog for some lead generation tips. 


Friday: Discover some reasons that a prospect might become interested in your efficiency product.


Saturday: Read this article from Slate for some tips and tricks on how to stay productive during your commute time.

 

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Commute and Work

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Productivity is a lifestyle. While it’s important to be as productive as possible during the workday, you should maintain a productive mindset even when you’re away from your desk.

The average American spends 50 minutes a day commuting. That’s more than 10% of an average workday. Think about how much you could get done if you had 10% more time on your hands! Needless to say, commute time is “wasted” time if not used productively.

Of course, there are limitations to what you can do while commuting, and I would always advise against doing anything that detracts attention from driving. There are, however, dozens of tools in the marketplace that are designed to help you be (safely) productive on the go. An article published this week on the Slate blog recommends a number of useful mobile apps, tips, and tricks for commuter productivity. If you’re thinking, “I can probably make more out of my commute time,” I would recommend you read this article and explore some of the productivity suggestions:

www.slate.com/articles/technology

 

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Why Should You Buy?

 

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In last Friday’s blog, we discussed some of the yardsticks that key decision-makers use to measure their success. (In case you missed it, here’s a link to that blog). In that blog, we used the hypothetical example of an HVAC sales professional selling “smart valves.” Using the same scenario (and some fun alliteration), let’s discuss some reasons that a prospect might become interested in installing smart valves in their building:

Credibility: Let's say you're a controls contractor or a retro-commissioning expert. When you're competing for work, you demonstrate your credibility when you say to your prospect, “Not only can we take care of your existing mechanical system, but we recommend that you install some of these smart valves to make sure that the amount of chilled water your physical plant is generating and distributing through the building is the sensible amount of chilled water that is needed.”

Capital Cost Avoidance: As I mentioned in last week’s blog, the Chief Financial Officer or one of his colleagues might consider the smart valves to be a less expensive approach to improving comfort or satisfying new load without adding chiller capacity.

Control: The chief engineer would likely appreciate knowing that his finite operations and maintenance effort is allocated optimally. It gives him a level of confidence about how well the building is being run.

Case Studies: If you include a case study with the installation, you satisfy the prospect’s desire to be publicly lauded for their environmental initiatives. The case study shows, in a very public way, that they are doing a great job in reducing their carbon footprint and making better use of their utility dollars. Utilities, universities, and even building engineering firms may actually be more interested in the case study than the savings.

Credentials: Your prospect may say, “If we put these smart valves in, we'll be able to have better control over the amount of kWh and therms we use in this building. That would help us get us a higher number of LEED® points, and may even make us eligible for an ENERGY STAR® label. Ultimately these credentials would give us more brownie points in the environmental press and would maybe even qualify us for an award for which we would not have otherwise been qualified.”

Confidence: If you can provide visible evidence that savings are actually occurring, you’ll instill a sense of confidence in your prospect. There are lots of energy service companies out there doing “pay for performance” scenarios that depend on a verification of system operations. To the extent that these smart valves actually give you data to tell you what's happening in the building's chilled water plant, it might be visible evidence that savings are actually occurring, enabling someone to write a check to reward the realization of those savings.

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Finding Great Leads

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Finding high-quality leads for your product or service is vital for successful business development. Here are some lead generation tips to keep in mind: 

Embrace and cultivate all of the empowering qualities of a sales professional.



Commit to being proactive rather than reactive.



Learn to leverage those who sell your typical prospects before and after you do.



Property managers who need to field and address all of those “hot/cold” calls from disgruntled occupants.
Building engineering firms that have to operate the aging equipment you should be replacing.
Mechanical contractors who have to service equipment long past its estimated lifetime.
Other suppliers who provide parts for aging equipment.
Air balancing firms, duct cleaning firms, etc.
Real estate brokers with knowledge of thermal comfort, noise, and other building shortcomings in the buildings they know well.





Think carefully about your ideal prospects and build a profile to begin pursuing today.



Take the time to build the tools you’ll need to open doors and keep them open.



Get organized and automated so that you can keep up with the surge of sales activity you’re about to experience.

 

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Visualize the Outcome

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I’ve written a number of blogs about how to deliver a great elevator pitch. Your elevator pitch is the icebreaker that allows you to have a productive conversation with virtually anyone you meet. After you’ve delivered your elevator pitch and started a conversation, do yourself a favor by taking a moment to visualize the outcome of where you want the conversation to end up.

Why is visualization important? Because if you simply go where the conversation leads you without any forethought about the end goal, you wind up in a meandering conversation that wastes both your time and that of the person with whom you’re speaking.

Based on the information you know about the person you’re talking to, you should be able to determine the ideal outcome of the conversation. You can help navigate the conversation toward that end goal by preparing some conversation “building blocks” ahead of time. Here are some examples of building blocks that you can use to steer the conversation:

-Something about your company

-Something about a landmark client that you’ve worked with in their space

-Something about one of your experts who just helped execute a project for a client

Use these building blocks – and any others that you come up with – based upon both what you see the person becoming most interested in and the ideal outcome that you’ve visualized in your mind.

 

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