The New World
Host of opportunities exist for security dealers looking into whole-home integration
- By Coleen Sterns
- Jun 07, 2007
GROW or die. That’s been a business mantra since the beginning of time. And ever since then, companies have been looking for ways to grow the bottom line. There are two ways to do this: Find and sell to new customers, an expensive and risky process, or improve the profitability of your existing customers.
For security dealers, one of the best and fastest ways to improve profitability of each customer is by expanding into whole-home integration solutions. Think about it: You or your reps are already in the home. The homeowners or property managers know the business. You’ve delivered before and are already familiar with the basic low-voltage skeleton in the home. You’re already tying electrical systems together to improve the customer’s life.
Consider the following scenarios:
• You install a security system in a home, and you notice a substantial entertaining area and Florida room, complete with a barbecue area, extra seating and a pool. Since you’ll be installing low-voltage cabling anyway, you could also install a Niles Intellicontrol ICS distributed audio system—stashing a few extra dollars in your pocket.
• You work in the Northeast. Heating oil costs are going up. Customers are not poor, but nevertheless, are sensitive to energy costs. You can show them how to reduce greenhouse emissions and lower their energy bill at the same time through “greening” the home—installing a zoned HVAC system to more closely control what areas of the house they heat and cool during the winter and summer months.
• You’re surveying an established home for an estimate for a security installation, and you notice the client still has an old-fashioned CRT television set in the living room and a separate stereo system. You ask the prospect if they ever plan to upgrade to a high-definition TV. When the client says yes, you can set them up for a whole-home theater system, in addition to the security system.
In each case, the additional systems, services and installations can add thousands of dollars to the total value of the job. Your crews stay busy. You spend less time prospecting and more time selling. The bottom line is integrators make more money.
“It’s all low-voltage,” said Hal Jimenes, sales manager for First Trust Alarm, an alarm and security contractor in Hollister, Calif., who began doing intercom, home theater and central vac integration about six years ago. “We got in the business because of the potential to capitalize on multiple lines of installation.”
Buying Boom
You can’t fight demographics. Baby boomers, born between 1946 and 1964, have dominated consumer goods since birth. In the 1950s, they drove demand for plastic diapers. In the 1960s, they discovered the Beatles and the Rolling Stones. They drove Volkswagen Bugs in the 70s and became yuppies in the 80s. By the 1990s, they were the key homeownership demographic. At every stage of their lives, by sheer force of numbers, they remade American culture and created entire industries. And many home technology professionals see them remaking the remodeling, home entertainment and home integration worlds today.
“The party is definitely not over,” said Joe Piccirilli, executive vice president of AVAD, a distributor of home integration products, who works with security dealers to expand their businesses into home entertainment.
The evidence? The U.S. Census Bureau estimates that the country’s population of 45 to 64 year olds in America will nearly double by 2010, climbing from 43 million to 80 million. At that point, the group will have grown from 19 percent of the total U.S. population to 26 percent.
Piccirilli also notes a recent Harvard University study finding baby boomers have generated more than 50 percent of all home improvement spending in the last decade. Furthermore, baby boomers are less likely to attempt to take on projects themselves compared to generation X homeowners (those born between 1965 and 1974) and echo boomers (those born after 1975). Specifically, baby boomers spend almost three quarters of every remodeling dollar on professional services.
“You want to reach these people,” Piccirilli said. “If you can show them value, if you can show them that technology can enhance their lifestyle, rather than complicate it, you should close a substantial number of them on additional projects—over and above the security installations.”
Reaching Consumers
Consumers today aren’t your father’s middle-aged fuddy-duddies. Today’s salt-and-pepper-haired consumers grew up with hi-fi and have been watching television since the era of “Howdy Doodie.” And baby boomers are leading overwhelming demand for high-definition, flat-panel television sets. Joe Piccirilli said it’s the most significant driver of consumer behavior since the advent of the CD player.
“For the first time, people are not waiting for their current TV sets to go bad before replacing them,” he said. “High-definition television sets are driving innumerable ancillary sales of everything from speakers to surround-sound systems to remodeling.”
Piccirilli refers to the phenomenon as the HD effect.
But television is not the sole interest. Modern surround sound and distributed audio systems are beginning to turn women into electronics enthusiasts too, according to a 2005 study from the Consumer Electronics Association.
According to the study, women are more likely than men to want these installer-provided benefits:
• Hear audio content throughout the house—37-percent women to 32-percent men.
• Control the audio system from other rooms in the home—31-percent women to 28-percent men.
• Completely wireless audio—34-percent women to 32-percent men.
• Play music from their PC on an audio system—30-percent women to 29-percent men.
The Opportunity: What builders actually installed in new homes in 2004
• Structured wiring—59 percent
• Monitored security—26 percent
• Multi-room audio—12 percent
• Home theater—9 percent
• Lighting controls—7 percent
* Home automation—7 percent
• Energy management—8 percent
Source: CEA/NAHB 2005 State of the Home Builder survey |
The Builder Market
More and more builders are looking to differentiate themselves by installing the latest in electronic amenities. You already know the monitored security world, but builders also are looking to increase value to new homes by adding structured wiring, multi-room audio, modern lighting controls, home automation and energy management features, as well. Builders will be looking to systems contractors to handle the installation. Builders are looking for simplicity, reliability, trustworthiness, complete solutions, profitability and one company that can provide everything they need—a one-stop shop. Additionally, they’re looking for knowledge.
“Futureproofing,” said Richard Shepard, owner of Digital Home Systems, an integrator in Pineville, N.C. “[Builders] want to know what technology is coming down the pike.”
A Bright Future
The opportunity for security installers exists today. Security installers with the initiative to seize whole-house integration now will have a significant advantage over those who don’t. The key isn’t to service more narrow-margin, small-ticket customers. Success can be found with fewer customers who buy more services and generate more profits per account.
This simplifies customer service, improves your follow through with the customer and contributes to referral generation. Once your crews are trained or a partnership with a reliable home integrations system professional has been established, have your sales force contact existing clients. Visit clients for maintenance or site inspection. While you’re there, introduce your new line of business. Your customers know you and know you can deliver.
| How to Get Started
You have sales knowledge and a client base. What is needed is the product know-how. A/V can be tricky, and components don’t always work together like you want them to. Chances are you’ll be partnering with a distributor or consultant. Here’s what you should expect:
Access to major brand names that customers want to own. Look for names like Niles, KEF, Bose or Fujitsu—names that consumers recognize and trust. Don’t try to be the only installer in town to carry an unknown brand, Piccirilli said. Instead, look for names consumers actually want to own.
Training. You’re going to need to train your crews. Look for a distributor that is willing to help crews get up to speed—at a minimum, set them up for CEDIA Level I Installer certification. This is becoming a key differentiator for integrators. Look for a distributor who can help facilitate that process.
Product support. Look for a company that specializes in home entertainment or whole-home integration solutions. Partner with a distributor that makes this their core business. You should be able to talk to A/V professionals who understand how different components work together in systems.
Complete-package solutions. Don’t just rely on video. Margins tend to be better in distributed audio. Make sure you offer a full-spectrum solution. Sell packages, not individual products. If you sell products, you’ll lose the sale to Internet retailers every time. Sell solutions.
Execution. You need a distributor with the muscle to move trucks on time. Distributors must always be ready to execute a delivery.
Don’t carry inventory. TV prices are still plummeting. Big-box electronics retailers are hemorrhaging money as TVs sit on the shelves and turn into gobs of plastic. Just-in-time delivery is key. |