EXECUTIVE MANAGEMENT – How Homebuilders Can Help You Grow Residentially

Expanding into the new home construction market means business as usual … NOT. No longer will you be selling your security solutions to the homeowner at their sole discretion, one homeowner at a time. Instead, you’ll be operating in a business-to-business environment, which will then gain you access to the consumer.

Successfully entering the new construction market is most easily achieved when you have a good understanding of the landscape. That means developing a well-organized plan that includes company structure and staffing; creative sales and marketing; and educating everyone else in the chain, including architects, interior designers and homebuyers. To provide you with some navigational tools, several security systems contractors who work with builders share their insight.

Set the Stage for Expansion With Proper Staffing, Structure
Pioneering new channels means preparing for extraordinary growth. According to Greg Simmons, vice president and co-owner of Eagle Sentry of Las Vegas, “Our No. 1 issue when looking to expand into the new construction market was that we needed to establish a dedicated prewire division. This was to effectively manage the large number of production homes that we estimated we could capture.”

Eagle Sentry’s first task was to hire trained personnel. In particular, they needed installers who were uniquely qualified for specific types of installations. These positions included rough installers to conduct the prewire and finish installers to install the alarm equipment. Along with hiring installers, Eagle Sentry needed to assign a foreman who would become the liaison between the builder and installers. This person would become responsible for scheduling during a very short window of opportunity.

As builders are not typically used to security companies being part of the mix, the foreman was responsible for re-assuring the builder Eagle Sentry would be on time. In addition, the foreman was to make site visits to verify the homes were ready to be prewired and/or available for the equipment to be installed.

Other personnel Eagle Sentry needed to hire included a billing clerk, who would be in charge of physical documents. Working with builders requires much more documentation than with single families, so it’s important to have someone with good organizational skills.

Billing, Scheduling, Costs Among Factors That Need Attention
Along with the new hires, the company had to incorporate a number of procedures and protocols, which radically differed from its traditional policies. These modified business practices included the following activities:

BillingBuilders expect to be offered extended terms, such as 60-90 days. This is in contrast to homeowners, who are expected to pay upon installation.

Work orders Eagle Sentry’s headquarters require sending the builder a purchase order before starting the job, which is different from traditional practices of generating a work order in the customer’s home.

Scheduling The builder dictates when Eagle Sentry must conduct the installation, which is typically a very small window, sometime between the electrician and insulate. Previously, with respect to the individual homeowner, the company would determine when it had an opening available and then schedule the installation.

Safety regulationsEagle Sentry must now adhere to different safety procedures, such as certified boots, hard hats, eyewear, etc. To make sure everyone is on the same page (and verifies the company knows the rules and regulations), Eagle Sentry has assembled a safety manual, which is submitted to the builder.

Certification Eagle Sentry participated in the National Association of Homebuilders (NAHB) quality assurance program. The company received certification in this nationwide program.

Costs Based on all the factors above, costs associated with the new construction market are different from the retrofit market. Eagle Sentry must consider all these items when developing a pricing structure for builder.

Value-Added Services Can Help Attract More Builders, Customers
Selling the builder a prewire package is more easily accomplished when a value-added service is offered. Summit Smart Homes in Kansas City, Mo., offers builders the opportunity to remotely monitor their development through a Web site the security contractor creates for each builder. Through this site, the builder can simply logon to monitor its property via Web cameras, whether it’s during construction or when buyers are touring the model homes.

Once the wiring is contracted for, or installed, Summit Smart Homes implements a unique program for cultivating growth (aka sales). Dennis Rothacher, director of business development, says, “We have a vision of a ‘connected community’ where we promote our services through the same Web site we created for the builder. We expand the use of the site so that it enables citizens of the new community to link with local vendors, such as the pharmacy, grocery store and, of course, their home automation integrator — us.”

The company pilots the relationship between the vendors and the community Web site. Each vendor is charged a one-time fee for inclusion on the site. The builder pays Summit Smart Homes a maintenance fee, which is eventually added to the homeowner’s association fee when the community is complete.

In addition to the Web site, the security contractor implements integrated solutions so that individual homeowners can securely control their residence via the Internet. Examples of this functionality would be lighting, temperature settings or complementing the alarm system by having it trigger an E-mail to the homeowner upon any type of activation, such as “latch-key child entry.”

Naturally, this means Summit Smart Homes has opened up the opportunity to efficiently sell services in addition to security systems, providing for truly integrated home automation.

How to Maintain Strong Relationships With Builders
There have been a number of cases where builders have been disappointed in their work with low-voltage installers. This history can make it challenging for you when initiating a relationship.

According to Frank Potoczak, president of Secure Technologies Inc. of Allentown Pa., “It took us a long time to build rapport with builders, due to their previous experiences with other installers. This obstacle was further compounded by the fact that builders do not want to add subs to the production process.”

Don’t Forget About Homebuyers, Architects and Interior Designers
Selling structured wiring solutions to builders and upgrades to homebuyers is only part of the process for successful penetration into the new construction market. Often, you need to market your services to the architect and interior designer. Not that they’re the ones buying your services, but rather they become a partner with you and facilitate your sales efforts, and/or bring you new customers.

According to Joe Zaleski, president of Altec Electronic Systems in Middlesex, N.J., “Our objective is to help the builder, architect and interior designer understand the integration process between electronics, architecture and décor. We want to take the mystery out of technology, enabling them to provide a value-added service to the homebuyer, such as helping them avoid costly retrofits.”

Altec’s first step was to design and build a showroom where builders, architects and interior designers could experience the beauty and simplicity of an integrated system. Furthermore, architects and interior designers could bring their clients there t
o migrate around, experiencing the essence of an electronic lifestyle.

To educate all concerned partiers, Altec is working with an industry-related marketing firm to develop a program that targets builders, architects, interior designers and homebuyers. Each group will be delivered a specific message as it relates to them. The idea is that this literature can be distributed in the model homes or be personally given to clients during meetings.

These presentations include the following:

Builders – They will learn about the prewire process and the profits that can be made when offering electronic upgrades.

Architect and interior designer – They will learn about offering valueadded services by promoting integration of the architecture or décor with the electronic system, thus saving the mishap of client costly retrofits.

Homebuyer – Buyers will learn their homes have been prewired so that they will have an electronic integration system cost-effectively installed. Furthermore, they will learn about the various systems available to them, such as distributed audio, whole-house video, surveillance, etc.

Manufacturers, Distributors Can Help You Get Started

Pioneering a new channel can be a daunting task, especially when going at it alone. For dealers looking to easily penetrate the new construction market, Alarm King of Riverside, Calif., an authorized West Coast distributor for ADT, has created a partnership program for dealers.

According to Jim Roche, president of Alarm King, “We help dealers get into the business of new construction.Our only requirement is that they have an electrical license.” As part of the program, the company offers on-site training to help dealers learn how to market to builders and homebuyers. This training includes product information, sales and marketing strategies. Alarm King will be recruiting dealers at ISC West in hopes of building a nationwide network.

The company’s partner dealers are expected to buy its equipment and then give it to homebuyers for free, making it up with monitoring contracts. Dealers are paid $7,500 per deal on a basic superior four-camera system, and upwards of $15,000 per deal when more cameras are added. Alarm King gets $1,000 from ADT per activation.

The distributor offers residential builders a unique selling proposition. It charges the builder for the prewire, but in return gives the homebuyer the electronics for free when they purchase a monitoring contract. This represents a $2,000 value that the builder can promote to the homebuyer.

Alarm King’s cost of equipment is $300 to $400, but the firm makes it up on installation fees. Alarm King also offers monitoring services for the builder so the property can be viewed during construction. The company places a local CCTV mobile surveillance unit on a trailer, which the builder either buys or rents through a service agreement. It then monitors the property for 60 months, allowing the equipment to be moved from place to place as developments are completed.

Linear of Carlsbad, Calif., is taking a new approach to the production builder market. The manufacturer’s strategy is to go beyond structured wiring and expand into other areas of electronic upgrades, such as gated communities, audio/video, intercom, central vacuum, high-speed Internet and security. The idea is builders no longer need to rely on multiple vendors for all their electronic solutions.

According Bob Patton, director of builder sales and marketing for ChannelPlus, “Due to Linear’s acquisition of multiple companies, such as M&S and ChannelPlus, the company now offers the dealer a ‘one-stop’ shop for all their structured wiring needs. ChannelPlus will continue to sell its Open House-branded solution to dealers, either directly or through distribution.”

ChannelPlus has been in the builder market for more than a decade. Its marketing programs are designed to support the sales and marketing efforts to homebuyers. One of ChannelPlus’ more notable programs includes its model home, which provides builders with special pricing on demo equipment, making it cost-effective for builders to install upgrades in the model home.

Chances for Success Grow Greatly When You Develop a Solid Plan

When considering expansion into the new construction market, start with a well-organized plan. Build your division and develop a creative sales and marketing strategy. Finally, educate all others in the chain, including the architects, interior designers and homebuyers.

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