Sorting out a problem with your boiler or getting a new one installed can be the stuff of nightmares.
Most of us have a story or two to tell that involves an all-day wait for a no-show engineer or weeks spent having cold showers while you try to schedule an appointment around working hours.
But new heating start-up, HomeTree, claims to have the answer – video chat appointments with an engineer on your mobile, tablet or browser.
Not only that, but it claims to offer longer warranties, quality guarantees and to charge around 30 per cent less than using established services such as British Gas.
Winning idea? Simon Phelan set up HomeTree in 2016 with co-founder Andreu Tobella
While most are replaced only once every 10 years or so, a whopping 1.6million boilers have to be installed in the UK every year, leaving many people frustrated and out of pocket.
As it’s not an everyday expense it can be difficult to see whether you are getting ripped off or to know what to look out for to make sure you are not using a rogue trader.
Getting a broken boiler replaced or upgrading to a more efficient one for most means a lengthy process of online searches to find local installers, gathering quotes, trawling tradesmen reviews and asking friends and family for recommendations.
Most people will tend to get two to three quotes, one from British Gas, a local plumber and perhaps from a mid-sized company focused just on installing boilers, according to Hometree’s founder Simon Phelan.
This often means pressure tactics from installers in your own home – so on the face of it, an easy to navigate tech platform that you can switch off sounds like a most sensible application of technology. But how does it really work?
We asked Simon Phelan a few questions.
What sparked the idea for Hometree?
Through my previous job, I had had some involvement with one of the UK’s largest home improvement companies, and I couldn’t believe that in today’s day and age they were still employing commission-based sales people to pressure-sell these products to consumers within their living rooms.
It felt like a better model was needed, and more broadly, it felt like the energy industry as a whole needed fresh blood to really challenge companies who continued to rip off customers and offer no transparency whatsoever.
How did the business kick off?
What is the internet of things?
As technology develops, manufacturers are gradually upgrading previously ‘un-smart’ technology such as fridges, washing machines, cars, lighting, heating – whatever you can think of – to include smart technology.
This allows these physical ‘things’ to communicate with each other, start to read and react to our behaviour and provide responses accordingly.
This could be your heating system learning when you’re in your home and turning on and off to match this efficiently, or the ability to control it from your mobile phone remotely.
It’s even suggested it might be your fridge knowing when to re-order your weekly groceries shop.
The internet of things essentially describes smart technology incorporated into physical appliances and processes.
Hometree came together when I met my co-founder Andreu Tobella who had previously spent 10 plus years working with technology and start-ups in the climate change and energy space.
Through his work at Hive, now the biggest ‘internet of things’ player in Europe, Andreu saw the value of having a network of engineers as a channel to disrupt the energy space, and pretty soon after meeting we decided to set out to develop a better model for home energy – kicking it all off right where it counts, with the most unloved part of the home: the boiler.
What did your career look like before Hometree?
After graduating I got onto a new programme called the New Entrepreneurs Foundation, which was set up to train the next generation of UK entrepreneurs.
Through this I got partnered with a leading private equity investor, Jon Moulton, who had just set up a turnaround fund called Better Capital, which I later joined.
Working with Jon certainly contributed significantly to my view of the world and how to run a start-up. He taught me that in an entrepreneurial business you need to keep on making decisions, and if 70 per cent of those decisions are right, ultimately you will be successful.
Boilers: HomeTree has taken aim at what it thinks is the country’s most unloved necessity
After six years there I started getting itchy feet in 2014, but was given an opportunity to join our largest investment in Ireland, an office supplies wholesaler, as chief executive to turn it around over 12 months. I had 250 employees and found the experience running a large business really challenging and exciting.
Following a successful year there I left the business and set up Hometree in January 2016, aged just 26.
My background also proved extremely helpful for fundraising as I not only knew a lot of investors personally, but I had also been on the other side of the table, so had a good feel for how to build a credible pitch.
Who is the service really set up for? What type of consumer will benefit the most?
Hometree does away with unnecessary waiting times and is a solution for those who are unwilling or unable to take days off from work just to stay at home and wait for three or four different salesmen to come into their home and quote them.
It is also for anybody who is unwilling or unable to pay the extortionate prices the national utilities charge for a boiler installation and for those of us who are fed up with having to endure up to a week without hot water for somebody to come out and replace their faulty boiler outside working hours.
A boiler is typically a once in 10 plus year purchase, so customers aren’t too familiar with the process when they need to buy a new one.
After searching for an installer, typically, the customer can expect an in-home survey to be set up within two weeks with either the local tradesman themselves, or more likely, with a sharp-suited salesman who is commission-based and well trained with a range of techniques to try and ‘close’ the customer in the home.
Staying warm: Boilers often choose the coldest months to pack up, making installing a new one a nightmare
How does a video consultation help make it easier?
Simon: We pioneered the use of video consultations as a way to get the best of both worlds – customers can speak to a highly vetted, fully trained GasSafe engineer over a video call at a time convenient to their lifestyle.
On this call, they can ask for advice in a completely non-pressurised setting, and the engineer can run the customer through all the things that Hometree can offer such as a range of finance offerings, extended guarantees, an energy switch, a broad product range and much more.
We then send the customer a quote online outlining what the engineer advised.
HomeTree cuts out the home visit to quote, but it doesn’t cut out waiting times for installation?
There is simply no way around the fact that an installer needs to be present at the home for at least a day when installing a boiler, so homeowners do need to let them in.
We obviously recognise taking anytime to deal with an installer can be burdensome for homeowners, but the benefit of working with Hometree rather than working with a local tradesperson is homeowners always have someone to contact – they receive SMS’s and emails numerous times before the install confirming the time.
Our intention with offering the video calls is about more than just removing a time wasting home visit, but it is more about removing the high pressure sale in the customers home – we believe in today’s day and age that customers should never have to take time off work only to be sold to in the comfort of their living room/ kitchen.
Will they be honest if it can be repaired instead?
Most of our customers know that they need an upgrade – either it has already packed in, or sounds like it is close to doing so.
In certain cases, one of the team from our head office can speak to a customer before a video call to see whether it might actually be worthwhile to upgrade their boiler, and we are currently developing an online journey where customers can self-qualify so as only to speak to an engineer when they are sure they need a new boiler.
That being said, if an engineer happens to speak to a customer who wanted an upgrade, but he decides that they could get away with a repair, he will of course inform them of this.
Our product roadmap focuses on developing the best boiler installation experience in the first instance.
But Hometree’s end goal is to become the single energy relationship in the home – managing everything from new product installs (for all energy efficiency and connected home devices), to repairs and maintenance, and much more.
How do the costs compare?
Most companies don’t charge for the consultation in the home, because they employ commission-based salespeople who only get paid for the jobs they close. Therefore, the cost of sending someone out to the home is in the final price of the job, and can be hundreds of pounds.
We can take the price of sending someone out to the home and their commission off our prices – making us very competitive and boilers and parts are offered at cost price.
As an example, we did a combi to combi swap, with the total price including VAT of £1,920. Within this there was £1,168 of costs excluding VAT for the boiler and all the parts, and £432 ex-VAT for labour and our margin.
We make money the same way all boiler installation companies do – by adding up the cost of the materials and the labour and adding a small margin to cover our overheads on top.
On average Hometree’s gross margin is 10-20 per cent though, depending on the scope of the project. This really depends on how much labour is required for the project and how much intervention is required from the head office.
We typically find that we are in the bottom 25 per cent of the market based on price, and on average 30 per cheaper than competing quotes we have seen from British Gas.
What happens if something goes wrong with a customer’s boiler after installation?
Having the right guarantees is essential when you are spending so much money. The contract sits with us. As long as the boiler is covered by the manufacturer’s warranty, we will organise a replacement and install it free of charge, should any product not work as intended.
And should our installers’ work not be up to standard, the customer is fully covered by a workmanship warranty and we will go back and re-do whatever work is needed.
We have specifically negotiated long-term (10-year) warranties with manufacturers so that our customers can enjoy the extra peace of mind.
For anyone put off by the video experience, what would you say to them?
At Hometree we are trying to be innovative and forward thinking, but there are obviously people who would prefer to look someone in the eyes over a cup of tea before deciding who to move forward with.
To the person who might be skeptical around our new way of selling a boiler, I would only say give us a try. I think you will be pleasantly surprised at how much of a rapport you can develop with one of our engineers over a 20 minute face-to-face video call.
What are your visions for the company for the future?
Climate change is one of the great challenges of our age and buildings are responsible for at least one third of global greenhouse gas emissions.
Making our homes as energy-efficient as possible is one of the most effective ways to rapidly reduce emissions.
Boilers account for about 60 per cent of what homeowners spend in a year on energy bills, so an efficient boiler makes a big difference – not only to the bills, but also to the energy efficiency of the home.
Boilers truly are only the start for us as a company, and in the not too distant future we intend to build a new type of home energy model that can provide a whole range of energy efficient services and products to homeowners, allowing them to take control of their energy consumption.
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