The Rebirth of Residential Sales: Why You Should Entertain Structured Wiring

It will be increasingly difficult for dealers to retain customers selling alarm systems only. Protect your customer base from competitors with multiple product offerings for the home.

<p>Structured wiring refers to various types of wiring installed in a home for the distribution of audio, video, telephone and data signals.</p>Hard Wire Home Computers and More

As of June 2008, the numbers of personal computers in use worldwide hit one billion, and it is projected to rise to two billion by 2014.

There are computers in nearly every home in the United States. One clear method of communication of desktop computers is a direct Cat-5e cable. This not only keeps the system stable and increase
s the speed, it also secures the communication to the Internet and company VPN versus a wireless local area network (LAN).

The wire will always be needed, and while you’re wiring the alarm in the home it’s a perfect opportunity to install additional value while the walls are open and accessible.

Pulling wire for an alarm is the same technology and method as pulling wire for speaker systems and structured wiring systems.

“Add an extra Cat-5 wire distributed from the main distribution point to each room. This provides a lifestyle enhancement to your customer that they appreciate every day,” says Gene Hauk of HSS Security in Downey, Calif. “We’ve had customers shut down their service because they no longer saw the value in just setting the alarm each night and paying monthly for monitoring services.”

Upselling customers with home entertainment packages changed HSS Security’s business by substantially decreasing attrition, Hauk says. Similarly, using lifestyle products as an add-on to basic services can set dealers apart from the larger corporate alarm companies, and could even be the answer to expanding their business with fewer customers, he says.

Add Revenue to Your Business

Installation companies earning $25 per month for contract monitoring services have the opportunity to double that amount with a minimal investment of time and product knowledge. This could result in a turn-around in your business by selling at double the 10x that you would typically get for contracts today.      

If you now earn $75 per month, by extending the cost of the product plus installation over time, you’ve tripled the value over the life of the account. Let’s take a closer look at the numbers for a typical project:

Four-room audio system: parts, $647; labor, four hours

Structured wiring for eight rooms with video, telephone, computer, wall plates: parts, $145; labor, eight hours

Intercom over existing phone line: parts, $275; labor, 1.5 hours

The total parts cost is $1,067. The total labor cost, calculated at 13.5 hours X $30 per, is $405. The total amortized over three years is $40.88 per month.

Many business models would calculate the cost and value received after the three years while other models would look for immediate return. It is best to review these numbers with your accountant and banker to meet your financial objectives, both long term and short term or your cash flow may limit your growth.

Providing tremendous value to your client by delivering a package that captures all of their business not only greatly increases account retention, it also keeps the competition out of your core security business.

Articulating to a customer that structured wiring increases a home’s resale value is key to securing the sale. A “wired home” allows the customer to increase their resale price while saving service call time and labor costs in the future.

Finally, another related revenue idea would be to offer a “trade-up” program and make monthly revenue by selling a “never-out-of-date” technology product. There’s ROI opportunity from audio, video and structured wiring technology in the form of upfront cost, plus a buy-back program for active customers under contract. The objective is to keep them for life!

Darrel Hauk is President and CEO of Costa Mesa, Calif.-based Channel Vision Technologies. He can be contacted at [email protected].

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