Keith Davis is the senior manager of the Dealer-to-Builder (D2B) program for home automation products distributor AVAD. As such, he works often with dealers learning to expand into the home technologies business, and in this new column series, he brings t
In our first two columns, we defined the categories within home technology and described the qualities you as a security dealer need in order to successfully profit from this new opportunity.
Hopefully by now you have decided to add audio, video and other home technologies to your offerings and are wondering what happens next. What more do you need to know or do before you can expand your services beyond security basics and into home technology?
That question has many answers, some obvious, some not. Today I want to share several ideas that are not as obvious as dealer training, finding a good source for technology materials and hiring quality installers. These are important no doubt, but first, you must learn how to recognize and sell the benefits that technology provides. Otherwise, your efforts to expand into this market will be fruitless and frustrating.
People do not buy unless they see value in their purchase. It's up to you to alter their perspective about technology in the home. Many people are initially weary of technology because they think it is complicated and difficult to use. Remember, we said earlier that current home technology is not the Jetson's home of the future, so the first benefit you must provide is simplicity.
For homeowners, technology must enhance their lifestyle, not complicate it. We all love what technology can do, but early adopter, bleeding-edge systems are not what a potential buyer wants. Your technology offerings must be the very opposite of that model. When your systems are simple to sell, easy to install and straightforward to use, then you are providing a rare commodity -- order among chaos! Simplicity is absolutely required, every time in every system, no exceptions allowed.
Helping Your Builders
Builders, often your gateway into a home, demand simplicity too, not only for their clients, but within their operation as well. Building a house is a complicated undertaking and builders are always seeking methods to remove the inherent complexity of the building process.
Since home technology is a new trade to many builders, they will naturally be apprehensive about your methods and processes, so you must demonstrate to them without fail that your operation fits seamlessly into their standard operating procedures. Look at every aspect of your company and streamline every practice that could negatively impact the builder's ability to deliver a finished home in a timely manner. Create and document reliable methods for your installers to use that are trouble-free and use them consistently. Make the builder's life easy and he will provide you more and more opportunities. Make their life difficult and be ready to say goodbye!
Once a system is designed and installed, predictability becomes the second benefit you must deliver on a consistent basis. Technology must perform as advertised and there can be no glitches in its operation and use. A client must be confident that every time they use the system, the results will always be the same. When technology gets too complicated and operates erratically, the client will stop using the system, leaving a very bad taste in their mouth and resulting in complaints. Here is yet another reason to focus on providing simplicity. Install predictable systems and your business will be far better prepared to seize and capitalize on the home technology wave than your competition.
Builders demand a predictable approach as well. No one likes unpleasant surprises, especially many of today's volume builders - who have profit models which require they stick to strict schedules. Thus, your operation must be consistent and predictable using people and installation methods that fit well inside the builder's operation. Say what you are going to do and do what you say. Under promise and over deliver, not vice versa. Yes, clichâ€šs, but there is a huge element of truth in those few words that must be kept for successful relationships.
Another benefit you must provide is quality. No one wants poorly designed systems that sacrifice quality in exchange for the lure of low cost, when the cheaper alternative does not provide a good experience. Therefore, you as the technology expert must design systems using well-respected and known components. So maybe it's not the coolest and latest gear, but it works well, which is what your clients demand.
You must also deliver excellent customer service. Let's face it, sometimes things fail to operate as planned and a service call to make repairs is necessary. Callbacks and punch lists reflect very poorly on your business. Yet another reason simplicity works so well. Your installers and service people will learn every nuance of the system, so installations and after-the-sale service calls will make you look like the professional you are and generate more opportunities for customer good will and add-on sales.
Creating Collaborative Profits
The next benefit seems so obvious, yet I have seen so many dealers overlook the potential for bottom-line profit, and not just increased sales revenue. In order to be successful in the new home builder market, you MUST provide a builder profit margin in every system you sell. How much profit? Only you and the builder can make that determination, but it has to make sense for both you and the builder. A word of caution: Too much builder mark-up will certainly overprice the system in the perception of the homebuyer, so be careful in how much mark-up a builder says he has to generate in order to make a profit. No matter how you crunch the numbers, 50% of zero sales equals zero profit and marking up technology that much is a sure way to reduce or entirely kill the opportunity. You as the dealer must demonstrate to a smart builder that a 15% mark-up for example, of any amount sold is a positive number and goes almost straight to their bottom line. Price the systems so that you the dealer make a reasonable profit and the builder as well. Anything less and you will be out of the builder's market and soon out of business too.
So, Mr. Security Dealer, are you prepared to offer these benefits as the foundation of expansion into home technology? If so, you have the tools and mindset to be successful through increased sales, additional revenue opportunities and increased profit. If not, then rethink why you are in business in the first place before you venture into this market segment. Remember, it's not about the gear; it's about the customer's experience, so consistently provide these benefits in your company to deliver the best experience possible.
In the next column, we'll present ideas on how to create and sell technology systems that provide these benefits. Until then, work on your business, not in your business.
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 firstname.lastname@example.org.