Extra Products Mean Extra Profits
Dealers of home control, security and theater are bolstering their profits and sharpening their competitive edge by selling “extras.”
“Installed entertainment and communication products” and the extras that go with them “are the most desired additions for a new home,” says Bob Gartland, president of AVAD LLC, Van Nuys, Calif. “Data shows that many consumers who are not offered these options purchase them elsewhere within six months.”
VIDEO SURVEILLANCEOf all the extras dealers may sell, video surveillance systemsâ€”including those that allow consumers to remotely monitor activities in their homes via an Internet connectionâ€”are a good bet based in part on their strong profit potential.
According to T.J. Dickson, vice president of sales and marketing at Speco Technologies, Amityville, N.Y., video surveillance not only integrates nicely with existing burglar alarm systems, it is relatively easy to install and can therefore be profitable if sold properly, he says.
Heightened demand among consumers also figures into the equation. “These days, there’s so much talk about safety that [such] popularity is to be expected,” says Tim McKinney, director of custom home services, North America for ADT Security Services, Boca Raton, Fla.
Joe Polizzi, vice president of operations for dealer American Burglary and Fire (ABF), St. Louis, corroborates McKinney’s comments, adding that prospective customers’ security concerns render video surveillance systems equally popular for upgrades and new home construction.
ABF features products in this category in its ads and direct mail pieces, with a “stunningly high” level of response, according to Polizzi.
For best results, dealers must take a strategic approach to promoting the category. Judy Jones, vice president of marketing at Napco, suggests starting by targeting existing burglar alarm customers via brochures mailed with their monthly monitoring service statements.
Dickson also favors this strategy. He notes that video surveillance can and should be touted as a “second line of defense” and an ideal complement to a burglar alarm configuration.
Asking customers leading questions, and using their responses as a springboard for discussing the full range of video surveillance applications, often proves equally effective.
For example, at ABF, Polizzi and his colleagues inquire whether consumers have children and pets, then explain how a remote video surveillance system would allow them to keep tabs on what is going on at home while they are at work.
“We point out that with the system in place, parents will know not just that a child has walked in through the back door at x time, but who that child has brought along with him or her,” the dealer says. “Similarly, we point out that if there’s an alarm condition and the customer is on vacation somewhere or at a second home, he or she can log in to the system on any [Internet-enabled device] and determine the cause.”
ADT includes video surveillance systems under its ADT Custom Home Gold Service program umbrella. The program is aimed at providing affluent homeowners with one-on-one security services.
Dedicated, specially-trained ADT Custom Home Gold Service security advisors and installation technicians work closely with homeowners to help address their specific security and home automation needs and preferences. Monitoring is conducted from a specialized facility in Kansas City, Mo.
Subscribers are given a dedicated telephone number that offers them 24/7 access to a preferred customer agent who can respond to questions or concerns, as well as a designated ADT e-mail address.
McKinney admits that despite representatives’ consultative stance and programs like ADT Custom Home, some prospects still are a bit hesitant about purchasing video surveillance technology.
“Their most common concern is that if they install a system like this, ‘Big Brother’ will be watching them somehow,” McKinney concedes. “We counter by explaining that these systems are all password-protected, and nobody can see into their homes without inputting the correct password.”
Price, too, might surface as an issue. “It’s important to emphasize that the price of video surveillance has decreased dramatically,” says Jones. “Hardware can be had for about $500, and service runs $10 to $30 per month. That’s within reach of most people.”
TV/PROJECTOR MOUNTSDevices that mount flat-panel television sets or rear projectors to walls and ceilings work nicely as add-on products for custom dealers.
“Installation is best handled by professionals, so we collect that fee on top of the sale of the mounts themselves,” observes one Northeastern dealer.
“To the point of maximizing profits, talk about mounting and furniture options from the beginning of the flat-panel purchase,” asserts Kimberly Fabiano, brand marketing manager for OmniMount, Phoenix. “Emphasize that these accessories are necessities for enhancing the home theater experience, not just mere add-ons.”
In many cases, though, obstacles remain. Some consumers still fail to understand why they need mounts at all, observes Jason Cole, marketing manager at Premier Mounts, Anaheim, Calif.
“It’s important to come right out and tell people there’s no purpose in paying all that money for a ‘thin’ television set if they aren’t going to get the best from it by mounting it in the optimal spot,” Cole points out. “It really makes them think.”
Convincing customers of the intrinsic value high-quality mounts bring to the table and steering them away from lower-price lines sold at retail constitutes another challenge.
Dealers can scale this roadblock by explaining how the different features of each type of mountâ€”such as basic fixed, in-wall swing arm and automatedâ€”enable installations to be tailored to customers’ particular requirements.
“A basic fixed mount creates a quick and low-profile solution,” notes Kim Klietz, associate marketing manager for Chief Manufacturing, Savage, Minn. “An in-wall swing arm creates an aesthetic solution that completely hides the mount in the wall but still offers viewing flexibility with an extending arm. An automated solution is the ultimate home theater experience that allows users to conceal and reveal a flat panel or projector at the press of a button.”
Some vendors also offer dealers assistance in specifying the appropriate mount for each installation. Chief Manufacturing’s Web site (www.chiefmfg.com) features a full library of product and application photos that depict how various mounts satisfy different installation requirements.The company also has an online “MountBuilder” product configuration tool.
Cole advocates thinking out of the box during the education and specification process. He suggests mentioning how the design of better-quality mounts contributes to room aesthetics by concealing the screws necessary to bolt flat-screen television sets to the wall.
He also recommends hooking customers by explaining how certain mounts might allow customers to enhance their television viewing. For example, a swing-arm mount can make it possible for an individual who is cooking in the kitchen to see the screen from an adjacent open living room or great room.
Visuals also are important. Peerless recommends that samples of various mounts should be prominently displayed in dealers’ showrooms, at the will-call counter or both.
“Samples should always be mounted in an easily accessible spot, and to the extent that the environment will allow, should replicate real-world applications, such as having a screen or a projector mounted to them so they can be manipulated to demonstrate features and benefits,” the company says.
Incorporating mounting devices into actual vignettes in a showroom environment is recommended because it spurs buying by enabling customers to imagine products in their home.
“Seating is also key, so customers can get comfortable and have a chance to envision what you’re offering in their own living room,” notes Fabiano, adding that OmniMount offers an alternative to real vignettes for dealers whose showroom space is limited. The company supplies photographs that depict furniture and mounting solutions in lifestyle settings.
VIDEO AND AUDIO CABLESAnother category worth promoting is high-quality video and audio cables. These may be used not only to connect components, but by custom installers to wire houses and systems.
“There are several advantages to selling this kind of cable,” states Ed Constantine, senior product manager for wire, structured cable and home solutions for ADI, Melville, N.Y. “Easier installation speeds up the job and offers labor savings, but more importantly, high-quality cable brings profitability through the higher price consumers are willing to pay for enhanced A/V performance.”
ADI recently expanded its new A/V Branch Demo Program, in which dealers can visit local ADI branches for interaction with and face-to-face training on new technology, to more than 50 of its branches across North America.
Solutions presented in the program include home theater, whole house audio, and control and automation products. Dealers have a first-hand opportunity to see, touch and test-drive the products, including cabling, before presenting them to customers.
The biggest mistake dealers make when it comes to selling cable is neglecting to promote it in the first place. “Cable is often the ‘forgotten component’ because, in an ideal installation, it is invisible,” asserts Steve Lampen, strategic account manager, broadcast for Belden, Richmond, Ind. “The key is for the salesperson to recognize that the cable is just as critical a component as any piece of equipment, and to point this out to the customer.”
Even when a dealer does mention cable to customers, the response may not be positive because of a perception that quality versions of this component are too costly. It is imperative to point out that quality and consistency need not be expensive, and better cabling paves the way to system reliability.
“Even a low or moderate cost installation can benefit from higher reliability,” Lampen asserts. “Consistency also means easier installation, the connectors always fit, and the cable always performs as advertised.”
Belden distributes cable installation guides that include tips for conveying this message to consumers. Similarly, as part of a new intensive in-store training program, Monster Cable Products Inc., Brisbane, Calif., educates salespersons on how to help customers fully understand the benefits of high-definition equipment and the connective components needed to operate it.
Deane Myers, regional manager at Coleman Cable Inc., Waukegan, Ill., advocates broaching the topic of cablesâ€”and overcoming objections related to priceâ€”by telling customers that “the object is to get the best performance out of your equipment,” and that “using inexpensive cable products with cheap insulation and jacket materials will give you the opposite outcome.
“Poor capacitance and unbalanced line and impedance issues can wreak havoc on high-end equipment,” Myers notes. The fact that “cheap” cables are often harder to install merits a mention as well, he says.
As is the case with mounts, having visual support in the showroom supports verbal product endorsements from dealers.
“Have some samples available for customers to see and take home,” Myers suggests. “The tactile thing really does work. Sometimes customers want to show off the high-end cable that supports their gear.
“If you’re really ambitious, put together a mock installation with the walls open to show the quality of your work,” he suggests. “Clean, colorful cables are impressive to the customer. Seeing the actual product is always better than a description.”
CENTRAL VACUUMBeyond the extras in home security and home entertainment, dealers also might fare nicely with central vacuum systems, according to R.J. Hirshkind, senior product manager for residential and commercial A/V, telephony and central vacuum at ADI.
Installing central vacuum systems designed for entire homes and configurations for use in one room of a house (typically the kitchen) takes training, which ADI provides to its dealers.
“However, learning this category is worth it, because you’re looking at an untapped retrofit market,” Hirshkind states. He adds that contrary to what dealers may assume, pipe need not be run to every room in a house to install a central vacuum, so they can be easy to retrofit.
Many consumers can be “wowed” simply by comparing the convenience, power and efficiency of owning a central vacuum system versus the headache of running a conventional vacuum cleaner throughout the house, Hirshkind notes.
Nevertheless, he says some people still have a perception that such equipment is practical for use only in large homes.
“The good news is that central vacuums are really relatively inexpensive, especially when you compare it to the time spent vacuuming any size house,” Hirshkind emphasizes. One dealer has had success in offering a single-room central vacuum system that fits into a kick plate.
These are just a sampling of the add-ons that are available for dealers to sell to customers to increase their margins. Others include personal emergency response monitoring (PERS) devices, HVAC, video gaming connections and more. Some are more popular in some regions than others.