Uncover hidden profits

Bv Carlton Smith

offering upgrades to builders? Can you see the benefit to your builders and your company by offering several "bundled" items installed in the same home? Horv about the benefit to the builder if he or she is able to make ferver phone calls. rvrite ferver checks. chase dorvn ferver rvorkers comp and -eeneral liability policies. and in the process become more efficient and more important to ferver suppliers?

N/fOST of today's builders are proIYlfessional project managers and trouble-shooters who have traded in their work clothes and nail aprons for cell phones, laptops and PDA's. Subcontractors build the house and. as we all know, builders have many choices of sub-contractors.

From an installed sales standpoint. a strong case could be made that many builders have used this abundance of sub-contractors to leverage lower prices and still demand superior service. In some cases. builders don't see-or turn a blind eye to-corners that have been cut by subcontractors to meet these demands and keep profits up without losing the builder's business. As long as they reach that magical l2-month mark without any "maior" issues. builders and sub-con- tractors feel that they have done rvhat was required. Fortunately for all of us, not all builders vierv it this rvay.

The good nervs is that times are changing! Builders must uncover new ways to find hidden profit dollars. In the process. installing dealers have a great opportunity to increase sales. improve margins. improve perceived value. improve their builder's reputation and his bottom line. p/rrs deliver a better quality product to the consumer. Norv that's really good nervs for everyone in the supply chain!

Horv do you find these hidden profits you ask? By promoting and selling UPGRADES!

Think about this. While manufacturers have been trying to differentiate their products and define their value proposition to the market. many builders have been operating under the "simpler + easier + cheaper = more profits" philosophy. This approach makes it very difficult for anyone in the supply chain to truly define his or her value in the process.

The opportunity to change this is here today, and is being at least partially driven by the fact that a babyboomer is turning 60 every ferv seconds. As baby-boomers and empty nesters build their next (and possibly last) homes, this sets the stage for builders to build higher quality homes. rvith more "standard features" and offer upgrades galore! And many of these upgrades aren't that expensive. So. if the end-users are rvilling to pay for them. rvhy not give them rvhat they v,ant'! lf we don't. they rvill simply purchase the upgrades after they move into the house and someone else rvill make the sale.

Take a minute to look internally at your installed offerings. Does your sales and marketing plan include

Incorporating additional products and/or upgrades into your product offering that follorv a logical installation continuum. can add profits to your bottom line and to your builders' bottom line. Also. if in the process of professionally installing these hi-eher profit items. you reduce the builders' cycle time by just one day. it will help further define your "value" to the builder. giving you at least some protection against competitive price pressure. Why? Because you took the necessary steps to help your customer find nerv profits. reduce costs. and make it easier to -set through his/her day. A price issue just became a "cost" issue and 'r'orr are norv a lorv "cost" provider! There is a BIG difference betrveen price and cost.

Norv. if you're ready to take the plunge. let me offer a ferv rvords of caution. If you don't already have a great installed manager in place. it rvill be extremell important to have the right person running your nervly expanded and re-focused installed pro-sram. It rlill require a segmented approach. *'ith sales. administrative. shorvroom and installation personnel that can focus on products that lend themselves rvell to each other. Shelving. shorver enclosures. mirrors. mirror defo-egers. and bath accessories. for example. could be sold and installed by the same segment-specific team. Insulation. central vacuums. and fireplaces by another segmentspecific team. You get the picture.

A builder's desire to reduce cycle times. consolidate installation services. and provide options for his/her buyers that rvill enhance profits is movin-e full speed ahead. The foreseeable future looks fantastic for installed sales. I hope y'ou position your installed program to take full advantage of the opportunities that arvait your company.