Interview with Bill Rau
Insider: In 2012, you were named the Insider Man of the Year. To refresh our readers, you were recognized for your work in developing the market for ductless products in the U.S. market. What’s been going on since?
Bill: It was a real honor to be your 2012 Man of the Year. In 2012, I was working with the company which, at the time, was the leading mini-split supplier in the U.S. market. In total I was there over 19 years. Let me just say that those were great days. The company was great to work for, the customers were the best, and the employees were just simply outstanding.
Insider: Well, tell us just a little bit about what that was all about.
Bill: When I started in the mini-split business the whole market was about $30 million dollars. I was recruited away from Lennox where I had spent about eight years. Working for Lennox, under a man named Dick Ansley, I learned what it was to sell and market in the HVAC industry. Dick was a salesman’s salesman. Plus he was highly regarded throughout the Cincinnati market area as an innovator and a big believer in Dealer Group (TV) Advertising. Our Cincinnati branch ran more TV advertising that some of the other Lennox Divisions.
Insider: Does that help to explain why your team led TV advertising in the mini-split market?
Bill: It does. The power of TV to introduce a concept like mini-splits was unequaled. No one had ever heard of, or seen, these funny looking things before, and it took a lot effort to show, explain and convince. At that time brand name was critical in lending credibility to the product.
Insider: Has that changed?
Bill: Well that company is still one of the leaders, as far as I know, (I don’t see sales data anymore), and I think it fair to say that during my tenure we led the development of mini-splits throughout all channels: in sales, infrastructure, marketing, branding, education, etc. We must have done a lot right because our business volume grew by 30 times over the 19 years I was there. We were the recognized leader in the ductless category, no one would reasonably question that. For our employer, we were the world-wide market share leader.
Insider: Why did you leave?
Bill: It was time. It was a mutual decision. Over 19 years of travel to Japan (somewhere around 50 trips back and forth), I missed a lot of my kids growing up. It takes a toll. I grew weary of the whole corporate thing, and I am sure they were tired of me telling them so.
Insider: What did you do?
Bill: Bounced around some, always hanging out in the mini-split segment. I realized that the market was changing. We used to see how commoditized mini-splits had become in Japan. It was amazing to see the retailing of HVAC over there. It was inevitable that people in the U.S. would gain familiarity with the concept and want to adopt it. We were learning that the key was how to make it affordable for more people. That learning continues to this day.
Insider: So that’s what led you to Affordable Ductless?
Bill: Yes indeed. One of the great blessings of starting over at this point in my life is that I get to work with my son. When I was working the corporate gig, he was in school and then out trying to make it on the professional golf tour. We finally agreed to try something together. He had tried to make a golfer out of me and that was a total failure. I wasn’t even a good caddy. So instead we settled on mini-splits since I helped create the market and he has a natural salesman’s ability with people. He never met a stranger.
Insider: How’s it going?
Bill: It’s an education. In the past, we did such a good job of convincing people of the need for a big corporate brand name that contractors don’t want to give that up. What we are doing is re-introducing the product line to a much broader segment. It takes a ton of work, and in many respects its 30 years ago, all over again.
Insider: Is this the right time for contractors to consider change?
Bill: Well, it depends on who the contractor wants to work for; himself, or his suppliers. Independence, the thing that caused most contractors to go into business in the first place, is too often sacrificed for the expediency of brand.
The message we are trying to deliver is that this isn’t 30 years ago. If you buy a mini-split from the top five or so manufacturers you find that there is a lot of commonality in the product and its performance. However, as the market has grown in the U.S., that commonality, consistency and performance has expanded to manufacturers not as well known in the U.S. That means we are able offer more value choices to contractors and consumers for those brave enough to consider change. The issue becomes what can the customer afford, and which brand offers the best value to the buyer. Baseline, acceptable quality, is not very much of an issue among the leading manufacturers.
We have this idea that high-priced brand names are always the best quality. Brand names imply a promise, that is undeniable. It’s called the “brand promise.” But not everyone needs and can afford the promises implicit in a high-profile brand. They need functionality. As with all purchases there is a balance of price versus value. Years ago Goodman started as an affordable alternative to the accepted brands of the ducted systems, now they are an accepted major brand name.
We offer systems made by Gree. Gree, as your readers are aware, is the largest volume maker of HVAC products in the world. “One in three is a Gree.” Names that are major players here in the U.S., are an afterthought in other areas of the world. So what we see here is not the way it is everywhere. Gree is world-class quality, make no mistake. However, because Gree provides private label products to other HVAC manufacturers, their brand recognition is not as high as the traditional names within the industry here in the U.S. Most of us in the business are well aware of Gree’s size and quality.
If you buy one of the top three, four or five international brands, you will get a quality product. Basic functionality is what it takes to be in business. My friend Joe Mastroianni, a hugely successful brand marketer from the Lennox and Mitsubishi days, calls it “table stakes.” From that point on, each person gets to decide how much of the value supposedly added by the brand, is worth paying for.
Insider: Where do you go from here?
Bill: Well, Nathan, my son, and I are determined to make this idea work. I still get aggravated when I talk to people who want to solve a heating or cooling problem and they don’t know about mini-splits. I think mini-splits are terrific, and like Rush Limbaugh, I am not going to stop until everyone agrees with me. Look us up at www.affordableductlessusa.com.