Turnkey Rental Program – Details

The core product of the Vaughn TurnKey Water Heater Rental Program is a comprehensive service which provides all of the variables necessary for a utility to get into the business of renting electric water heaters to their customers.

The goal of the TurnKey Program is to create, implement, and conduct a water heater rental program to meet the specific marketing goals of the utility in the most profitable manner possible.

The key to the TurnKey Program is that most of the work has already been done. Vaughn supplies the equipment, services, and experience to run a program along with a host of resources including professional service trade relations, finance options, legal and marketing assistance.

Many of the program variables can be outsourced, removing the need to create new positions, add additional personnel or go through the tortuous process of creating programs from zero.

Outsourcing program variables not only allows a utility to get started with a minimum of resources, but also provides an excellent way of assessing the program's profitability by allocating specific costs for specific functions.

While by definition, the Turnkey Program suggests that Vaughn will perform all of the program variables, a more accurate description is that TurnKey means a partnership with Vaughn where functions are allocated based on ability to perform in the most cost effective manner.

A rental program requires the performance of many functions. Some of which you may choose to perform directly, and some you may choose to outsource. Whatever level you choose to directly participate in, will dictate the risk/return ratio you create in the program.

For example, you can choose to maximize your returns by purchasing the water heaters and earning 100% of the profit from customer rentals. Or you can decide to minimize your capital resource risk and lease the heaters through a third party.

The good news is that whatever service you choose not to perform, Vaughn can and will perform. The following represents a brief description of the major functions necessary to a rental program and the options associated with each:

Warehousing: As the utility does not purchase the heater until it is installed in the customer's home, then the heater must be made available to the installing contractor within the utility service territory. Warehouses can be set up either on utility premises or in consigned locations. Vaughn has set up warehouses to support previous utility programs.

Installation: Either the utility or Vaughn can take the lead role in selecting, training and certifying contractors to install the water heaters. Water heaters will be installed to the highest industry standards.

Vaughn has strong relationships with the top echelon of trade allies and uses a quality management approach to ensure that every heater is installed to the customer's absolute satisfaction. Also, Vaughn can manage the installation process by having the work done on a contract price basis, avoiding the need for the utility to get involved in the complex process of micro-managing a team of contractors.

Service: A utility with a strong trade ally network may wish to run the service operation internally. Other utilities may wish to leave this task to Vaughn and its allies.

An often overlooked factor associated with this option is the cost of keeping up with the paperwork. If you outsource the service work to Vaughn, you will save substantial dollars in paper work alone.

Provide Capital: To achieve maximum return on investment from the program, a utility could purchase all the water heaters for its program and earn 100% of the profit from customer rentals. Or it could choose to have a financial services firm take this risk. Vaughn knows several sources of capital which have participated in such rental programs and is prepared to make them available as a resource to the program. The ultimate selection and conditions remain with the utility.

Program Administration: Program administration can cover a wide scope of services. The most important of which is customer interface. Vaughn strongly suggests that the utilities retain this service. It is one of the most critical to the success of the program, and one from which the utility can derive the most benefit. A utility may decide to outsource most of the mundane aspects of the administration function or provide them in-house depending on resources, staff skills, and other factors.

Marketing and Promotion: For a successful program, your utility should take a strong role in the marketing and promotional activities. Support for this function can be provided by Vaughn and its allies. Vaughn has more than 40 years experience marketing electric hot water systems in the U.S. and Canada. The goal is to create a targeted and cost effective promotion plan.

Committed or Confused: While we try to give you an overview of the aspects of a rental program, we recognize that there are huge gaps in the information and therefore many areas of question.

Vaughn has developed the comprehensive one day TurnKey Business Plan Seminar dedicated to this subject which guides you through all of the questions and decisions one has to address in setting up a rental program.

The goal of the session is to explain in detail all of the program variables and discuss which options make the most sense to your utility. You will then have all of the information, specific to your utility, necessary to decide how you would set up your ideal program and what kind of financial return those decisions offer.

In essence, Vaughn will develop your business plan by and for you. You then will have a working plan from which to set up your own program independently, or to work together with Vaughn. In either case, you will understand everything you always wanted to know about a rental water heater program, but were afraid to ask.

If you would like to know more about our TurnKey Business Plan Seminar, please contact Vaughn right away. With our help, you can have a TurnKey rental water heater program up and running in only 60 days.

© 2003 Vaughn Corporation
P.O.Box 5431 • 26 Old Elm Street
Salisbury, Massachusetts 01952
tel: 800-282-8446 • fax: 978-462-4683/6497