Expanding to Home Technologies, Part 4: Making Money with Packages

[Editor's note: SecurityInfoWatch.com columnist Keith Davis will be speaking as part of the NBFAA's Business Focus: "How Smart Businesses Grow" seminar on June 14-15 in Indiapolis. More information on that conference is available from the NBFAA.]

In the past few columns we have looked at some of the basics of home technology and examined how you as a security dealer can get involved in this growing field. This month, let's focus on the idea of "technology packages". It's a concept I believe to be key to achieving long term success for any home electronics dealer, large or small.

Think back to the benefits I outlined that a customer must see before they embrace the concept of technology in their homes. Then consider these three points.

#1 - Anyone who uses home technology must believe first and foremost that their system is simple to use and will work as promised. Nothing frustrates like trying to accomplish what was implied to be an easy task.

#2 - The technology system must act and perform predictably each and every time it is powered on for use. Consistency should be your mantra.

#3 – The technology system must be foolproof. The client must have confidence that their system is as dependable as their microwave oven and they must not be scared to use it for fear of "breaking" it.

Wonderful, you think. I get all excited about this technology thing and here is a bucket of cold water in my face. What is expected by the customer is impossible to create and there is no way anyone can achieve those three demands on a consistent basis. My reply to your thinking? WRONG!

Not only is it possible, it is actually easier than you think when you approach home technology in the same manner as you install security systems. Simply put, it means you sell and install one system at a time, using the same equipment each and every time. In other words, you create a package of equipment, design, programming and installation that can be repeated time and time again.

Let's compare this concept to your security business. More than likely you use one brand of panels that has worked well for you in the past. Likewise, you probably do the same with the contacts and other detectors a modern security system uses. Even the wire you use is the same every time. And now that you have installed a few, you should have a good sense of what is required for each job in the way of materials, labor time, programming and the time required to train the end user on the system. While you may not have all of this documented on paper (if not, then you should!), you still have this packaged mentality that for a house of this size, this is what is required to sell and install this system.

Home technology categories are no different. The only difference is the type of equipment included in the package. From whole-house music to central vacuums, a package of gear, labor and profits can be created to meet 95 percent of a client's needs and wants for technology systems in their home.

Let's look at an example. Your research has determined that there is a made market for a whole-house music system with four rooms of sound at a price point of X. What has to happen before we can propose to our client what will be installed?

First, decide on the type of system you want to install and then choose the right gear from the right manufacturer. This is a very critical first step and a lot of time and diligence should be spent in the selection process. Next, based upon your choice of system type and controller, what kind of speakers will be used? Then what sources? How will the system be controlled? How much wire will be required? How much labor and by what type of installer? How much profit is needed? And on and on the questions go during this design phase. Again let me emphasize, you must go through this segment BEFORE meeting any client or installing any wire and cable.

Fast forward to the day when you are ready to meet your first potential client. You have an appointment with the Smiths to discuss a security system and other technology elements for their new home. You determine that your whole-house music package meets their needs and wants exactly and now they are sold on using your company to install it. Your proposal was perfect; they love you and the systems you are going to install. Now comes the time for rough-in wiring. Your crew goes in and runs the wiring. Later, at the appropriate times, you install the speakers, hook up the controllers and sources and test the system for proper operation. The music sounds great, but there are a few minor glitches that need to be ironed out. You correct the errors and then show the Smiths their new system. They are thrilled and just love hearing their music played throughout the house. Job well done!

The next client contacts you and this time, wants a six-room music system. Are you going to redesign a new system again? NO! Take the four-room package you created above and just expand it to six rooms. You know it works, you know the time it took to install, you know its idiosyncrasies, so this time install the base package, add the gear required to add rooms five and six and walk away with profit in your pocket because you knew exactly what to do and did not have to guess.

Now will this one package meet every client's need? Certainly not, but you can design various levels of packages based upon different criteria. Price points and levels of control functions are two factors, as are speaker sizes and types. In other words, when it is all said and done, you might have five or more different packages that you can use to sell to each type of client based upon their wants, needs and budgets.

A wise business person also prepares several upgrade paths for each package as well. These are elements that can be added to a base package to better fit a client's particular needs and expectations. Using two levels of upgrades provides the client with the ability to either select a better value, such as more rooms of music at a lower cost per room, or a more exclusive upgrade such as larger speakers that provide the best music reproduction. These pre-designed upgrades will give you the ability to up-sell the client with little or no effort on your part.

Now that you have created several whole-house music packages, can new packages also be created for the other technology disciplines we talked about in the first column? That is affirmative, and it makes sense to do so now before the first client seeks out your services and expertise. Go through the design process again and again, deciding on the right gear from the right sources that make sense for your business. Come up with the upgrade paths that make sense based upon the demographic of customer you will be meeting.

Here's a novel idea: Buy the gear and install it in your office or home and learn everything you can about it before selling it. There is no better way to figure out if the package meets the simple, predictable, reliable test than having it in your place of business or home. Plus you can tell the client you live with the stuff too! That's a great selling point.

Does all this make sense? It should and I hope you will test the waters of home technology in a small way at first with a package of technology gear installed at your current operation. Get comfortable with the concept and then grow and nurture new systems in your home or office. Then go sell, sell, sell and watch the profits roll in that can be made when you install what you know, not what you guess at.

Oh by the way, what about that 5 percent of clients who want more than a packaged approach to technology? My advice, leave them to the custom installer in your town. This is their area of expertise and best left to those with the design and engineering staff who can meet the unique challenges of the custom world. As for you, smile all the way to the bank depositing real profit dollars created by using a packaged approach to technology sales.

About the author: Keith Davis is Senior Dealer-to-Builder (D2B) Manager for AVAD, a leading U.S. distributor of custom home electronics. He can be reached via email at d2bmanager@avadd2b.com.