Business Opportunity While Home Depot features the Eco Options® Program and offers consumers a variety of “green” products, the current business model is a reaction to customer demand for environmentally responsible and cost saving products. The program has failed to get any widespread brand recognition and remains unknown to most consumers. Thus, the following outlines an action plan for Home Depot to change the model and provide a more proactive approach to attract consumers.

The Offering: Home Depot should adopt a new service as part of the Eco Options® Program - free energy audits. A “Green” station/department should be set up with “Green Consultants” in every store in a high traffic area where customers can set up appointments to have an “Energy Auditor” visit their home and assess their energy usage. The Energy Auditor will then provide a list of recommended improvements and the potential savings that could be achieved from implementing such improvements. If customers choose to hire Home Depot to perform any of the improvements (such as caulking and insulation), they will receive a 10% discount on both labor and product costs. In addition, both the Energy Auditor and the Green Consultant will be knowledgeable on current federal and state incentives in order to educate homeowners on which improvements will qualify for the various programs.

Impact on Sales and Marketing: With this service offering, Home Depot would expect to see an increase in sales for many of the commonly purchased energy savings products such as compact fluorescent light bulbs, water conserving faucets and toilets, and other D-I-Y products. Currently, there are many utility organizations that will offer free energy audits, but they focus their assessments on the services that they can provide such as replacing furnaces, air conditioners, and water heaters. However, Home Depot’s energy audits will be more holistic in nature and provide an extensive list of cost saving measures that range in price from replacing light bulbs to replacing a furnace, and complement the diverse product line that Home Depot has. What this new service offering is ultimately doing - is bringing customer service back as a key differentiator for the organization. Home Depot has been criticized since 2008 for a diminished customer experience. With free energy audits, now the customer experience is happening within the consumer’s home and continues at the store with the Green Consultants. The marketing team will want to spend time structuring commercials and programs to publicize this offering and attract a lot of attention. The expectation is that once Home Depot announces this initiative, competitors such as Lowe’s may follow and offer a comparable program. Therefore it is critical that this offering becomes branded as a Home Depot initiative very quickly so that the public associates free energy audits with Home Depot despite what any competitors may be doing.

Impact on Human Resources: The most important part in making this program a success is finding the right people for the three consumer touchpoints - the Green Consultant, the Energy Auditor, and the contracting team.

The Green Consultant will need to be knowledgeable on both the types of improvements that are typical for increasing energy reduction savings and the federal and state programs that are available for homeowners to take advantage of for rebates and incentives. They will also need to have gone through sales training and customer service training as they will be the ones who make initial contact with the consumers and they will also follow up with consumers after the energy audit as part of the sales process to showcase Home Depot as the contractor for improvements and the supplier of green products. The Green Consultant will also stay involved to act as the face of Home Depot during construction if hired.

The Energy Auditor will need to be a certified home inspector that can assess homes in their entirety. They will also need to be knowledgeable on government incentives and they should also have customer service training as it will be important for them to establish trust with the homeowner. For the home improvements themselves, Home Depot will follow its current practice as it does with other departments (such as flooring) in that it will subcontract the labor to local independent contractors. As with all of its engagements with subcontractors, Home Depot will hold the subcontractors to specific service levels and quality standards to ensure work quality.

Because of the importance and potential that this program has in establishing Home Depot as a leader among green initiatives, Green Consultants should receive a base salary plus a commission based incentive that varies based on whether they sell just products or products plus contracting work. Energy Auditors should also receive a base salary that is comparable to other inspectors in the industry and they should be awarded an annual incentive that is tied to customer satisfaction and maintaining a professional face for Home Depot. As with Home Depot’s current practice for subcontractors, there will be service level agreements as part of the contract with rewards for superior ratings from customers.

The other key practice that will contribute to the success of this program is educating the rest of Home Depot’s customer facing staff on this new initiative so they can encourage customers to stop and speak to a Green Consultant. Communicating this new program to the staff will be key in elevating the importance of what this new department can do to boost sales throughout all of the other departments.

State of New Jersey Board of Public Utilities
Title
New Jersey's Clean Energy Program
Source
2009, 2011, 06/11, http://www.njcleanenergy.com

The Home Depot
Title
2010 Annual Report and 10-K
Source
2011, 2011, 06/11, www.homedepot.com

U.S. Department of Energy; U.S. Environmental Protection Agency
Title
Energy Star
Source
2010, 2011, 06/11, http://www.energystar.gov