So there was almost no education curve or anything like that. So I’m just curious if you think this increasing amount of IHCs coming from people in their 30s and 40s, where they have to actually schedule around work hours and other considerations and where they maybe don’t know the product category as well. Is that – do you think that, that’s a material factor in close rates still being a bit below where they were historically? And if so, does that mean it could be a longer process to get back to kind of historical highs? Just anything you can – any color you can provide on that would be great.
Aaron Jagdfeld: Yes. It’s a great line of questioning, Donovan, and an area that I would say that in the last 12 months, we have been focusing a lot more closely on the IHCs that are coming through. And that really goes hand-in-hand with the pull down in the close rates we saw happened during COVID. We – initially, our explanation around that was all around the long lead times of the product. And I do think that, that had a material effect on – coming off of the high point for close rates where we were to where we dropped down to in – during COVID. There was no doubt in our mind based on the information and feedback that we had that close rates were being impacted negatively by the long lead times for the products. Now, as the lead times have recovered and close rates have recovered, but not to the level that – not nearly to the level they were at, that’s where you start to look at other factors.
And so I think you are on to something there, and we have started as I have said over the last 12 months and really dig into this with more vigor. And I think what we found – one of the things that we are concluding is that the category itself. The buyers of the category largely remain fairly concentrated in the demographic that you highlighted, over age 60, people who want to stay in their homes as long as possible. Power outages are more than just an inconvenience as you age in your home. And I think that, that had largely driven the category in the early days. But as the category expands and we reach different levels of penetration, we are now reaching different demographics that are interested in resiliency as much or more perhaps than some of the traditional demographics.
We all live in a very digital age today. And I think, again, maybe owing to the pandemic, people are – the way the nature of work, the way we live today is different, right. I mean we are all working in a more hybrid nature. I would wager a bet that some of the folks in the Q&A queue here today, that we can hear anyway, are working from home rather than sitting in an office somewhere. And you can’t do that if – or you can’t do it well if you are in the dark. So, power outages have a bigger impact today on people and on your livelihood and maybe on your children’s ability to be educated. All the things that we have taken for granted for many, many years, we are doing those things from home today. And we are doing it at a time when the grid has become ever more fraught with the challenges in terms of uptime.
And we see it. There is some very high-profile examples, but day-in and day-out. There is tens of thousands of people every day in this country that suffer outages. And actually, those numbers are bigger and the outages are lasting longer. And so as we reach deeper across in terms of penetration rate, we are seeing different demographics, but your point is well taken. The learning curve or the education curve that process, the sales process is longer for different demographics that we have – there is more salesmanship, if you will, that has to be done to educate those consumers on the product category and the options that are available. And sometimes, financing is a bigger consideration for younger demographics, right. Older demographics tend to have maybe more readily available funding that they can pay for a project like this, whereas younger demographics may have to arrange for that in a different way, so – and that can elongate the sales process.
So, we do think that, that is part of what’s going on today. As we dig and continue to dig deeper, we – Amanda Teder, our Executive VP of Marketing that spoke at the Investor Day is incredibly focused on that. She comes from a consumer product marketing background and understanding very deeply who the potential buyers are and the buyers are of our products is central to not only the messaging around marketing, but just this process of selling and also the process of nurturing, right. We talked about how we nurture sales leads. We have had to adapt our nurturing processes to adjust for some of the newer demographics we are seeing. So, anyway, lot of cool things coming there. We are putting a lot of science behind it. And I feel like we have got an appropriate level of calorie burn against it, but it’s – I think it’s – these are good problems to have.
I think longer term, I think we are going to figure them out and it’s going to potentially continue to widen out the category as we grow and the penetration rate grows.
Operator: [Operator Instructions] And your next question comes from the line of Jon Windham with UBS. Your line is now open.
Jon Windham: Perfect. Thanks. Congrats on a good result. I wanted to dive back into ecobee a little bit. Obviously, it’s a product that’s having quite some success. I am just curious if you could talk through how far along you are in pulling the levers to incentivize installers to sell the value proposition of that product? Is there still more things you can do to incentivize installers there, or do you feel that’s pretty rolled out already? Thanks.
Aaron Jagdfeld: Yes. Thanks Jon. Yes, ecobee has been having a lot of success here recently. I think a lot of that was – I don’t want to be overly basic about the explanation here, but obviously, energy costs continue to rise. And as energy costs go up, I think homeowners are – I think they are in search of ways to save money. And there is a very strong payback on an ecobee smart thermostat. You can save upwards of 40% of your energy costs annually by using a smart thermostat. And this is not a product that you basically just set a regular schedule for that you can remotely check the temperature on. I mean that’s – those are basic features. There are companies out there that are offering those features and calling themselves smart thermostats.
Those are not smart thermostats. The ecobee thermostat is different in that. It actually learns your patterns in terms of when you are home, when you are not. There are sensors in the home that give it context around occupancy, and it can adjust for different variables, both heating and cooling, pre-heating, pre-cooling. There are some really cool things that it does. And it looks at energy costs in your market to make some of the decisions it’s making on your behalf or with your input. And so these are, I think really strong and important considerations for why we think the smart thermostat category, in particular, is growing and why ecobee’s solution is the best offering in that category. And that’s something that when you think about, to your question about installers, I mean I think installers they do – they try to offer, I think the value prop or to extend the value prop in their sales process.
