The Importance of Developing Relationships With Builders and How to Do It

Once you align yourself with a builder, what are some of the daily challenges you might encounter?

GONZALEZ: When we bring a builder on, we have a full implementation checklist. If at any point we’re not sure who needs to talk to who, that’s where it’s important with communication. It sounds simple, but oftentimes we forget the little things such as who we need to reach out to when certain things happen. I view it as a relationship business. We have relations with these builders, so at different levels within our company we have builder-relations managers. We have folks who reach out to their counterparts in case there are some issues and problems. By no means are we perfect. We’re always trying to improve, but that’s our goal. As long as we show the builder that we are making strides to improve in whatever area that may be causing them some problems, that’s important. I can’t stress enough how important it is to have a team and to spend a bit of money to make sure your builders are being taken care of.

BARRY: There are many service providers with some of these builders that have conducted 20+ years of ongoing business. Because it’s so relationship driven, when you bring in new shiny objects into the ecosystem like a smart thermostat, they have an HVAC guy. For the smart switch, they have an electrician. For that garage door technology, they have a garage door installer. A strong trend and something I certainly recommend is that as a service provider you don’t have to install all those things. With a lot of these large builders, they prefer to keep their network in place, their HVAC guy, their electrician, etc. Just tell them what products to install. If you spend the time embracing that existing network, you’ll find that your job will get easier. They become an extension of your own company.

GALLUP: In the average builder relationship, in a perfect world you’re going to roll a truck three times. You’re going to do a prewire, a trim-out when the dry-wall is on and they finish everything, and then you’re going to go back and activate whatever the smart technology security system is. But it seldom works out that simply and typically requires a lot more attention. Long story short, it’s going to take someone dedicated on the operation 24/7, even if you’re dipping your toe in because it’s day to day. When you’re going to get in, they’re going to hold you like any other contractor. It’s never their fault. It’s always our fault, so how do we be nimble so we don’t have the resources sitting around and we can move things forward? It is not just another residential job with a prewire ahead of time.

Let’s talk about pricing and competition. What are you charging and how are you gaining a competitive edge?

GONZALEZ: We want to come in as low as possible so it’s a benefit for the builder to engage with us. Showing the purchasing manager he might be able to save a couple of bucks somewhere. If we have the ability to meet with their customers, once we get them in our showroom we know pretty well exactly what they’re going to spend on upgrades. Through the years, we kind of know we can go down this far if we see a penetration at X amount. We plug it into a spreadsheet to analyze, which allows us to be competitive without giving away the business.

BARRY: If you consider a community where there’s 100 homes, you may reach out to 50% of those homeowners. The close rate, what we’re seeing, is roughly 50% of that. So in that sense, you’re closing about 25 deals for a 100-unit community. But the key is being able to work through the builder to achieve 100% penetration and talk all of those 100 homes. Then if you upsell 50% of them you double the business. We’re really excited about a slight twist of the model, where there is some risk by offering something free. We feel confident our upsell rate will be over 40% in the first year by offering a “freemium” model to gain access to more homeowners.

GALLUP: With all the different builders we have in our purchasing locations, no two communities are the same. Some communities we make money on the gross margin. Some communities we make an investment on the gross margin. Some communities convert at 75% and some convert at 25%. They could be within the same builder, but one’s in one state and one’s in another state. It’s really a community-by-community kind of conversion, not even at the builder level. If the builder has a community in the north and the west, the economics could be different.

You’ve got to figure out where you want to make the investment in order to get the builder to say yes. Then are you going to pay the builder a monitoring rebate on the conversion? Are you going to do some work for him or her for free in order to get the list that you want to call the customers from? What is your strategy to get the customer to say yes? If the customer has enough credit capacity, you might finance the upgrades into the mortgage. So you start talking about it as $20 or $25 a month. It really will vary by community.

If you enjoyed this article and want to receive more valuable industry content like this, click here to sign up for our FREE digital newsletters!

Related Content

Active Shooter Situations in the Workplace: Surviving the First Five Minutes

Global Security Operations Centers: Trends and Opportunities in 2024 and Beyond

Security Customers Push Integrators to Be Long-Term Partners, Not Just Salespeople

Genetec Underlines Dealer Centricity, Hybrid Approaches at Global Press Summit ’24