es olled Different ways to offer installed sales

By Roy Burleson

VOU'VE seen different products I and programs come and go. Today's program de jour frequently ends up in tomorrow's graveyard of temporary fads.

However, there is something different about this installed sales concept. It seems to gain momentum every day. It doesn't go away. More and more dealers are offering installation services. Maybe this isn't just another fad. Maybe it's the real thing and you need to take a long serious look at it. But every time you think about offering an installed sales program, your mind is flooded with questions:

What products should I start with? Do I hire employees or simply refer the work to contractors? Will my customers think I am competing with them? Will the investment be worth it? Who can I turn to for help and advice? What about liability issues? Do I need a separate company to offer the service? What is the best way to address labor issues? While all these questions can't possibly be addressed in one column. we'll address some of the more frequently asked questions in this and future articles.

There are three primary components to any installed sales program. Obviously, the installation service is the chief function, followed by sales and product supply.

There is more than one way to offer the installation programs. Some simply refer the job to a good customer hoping the contractor will buy the materials from him. Others sell the projects and use subcontractors to perform the labor. This guarantees the dealer the sale on the product and possibly some margin on the labor. The most aggressive programs sell jobs and provide both the product and inhouse labor. Let's examine the pros and cons of each scenario.

Referrals. Some dealers simPlY refer the customer to one or more contractors who sell, furnish and install.

Typically this is an informal arrangement where the dealer refers business in exchange for the contractor's product purchases. On the surface, this appears to be a win-win proposition. The dealer sells the product and his customer makes money on the labor.

It also appears that this arrangement lessens the dealer's liability. However, there are downsides. I have seen contractors take the referredjob's product purchases down the street for a cheaper price. And what if the contractor doesn't treat the customer properly? Couldn't that reflect negatively on the dealer? Sure it could, and frequently does. Some dealers have even reported that they got caught up in a dispute between the contractor and the customer. This arrangement offers the dealer little, if any, control.

Subcontractors. The dealer sells the job, supplies the material, and offers the installation to his contractor customers. Most dealers feel if the work or labor is being given to a subcontractor, the appearance of competing with his customer has been diminished. It also reduces the up-front investment by eliminating the need to hire a labor force.

The dealer's reputation is still on the line and can be affected directly by the service quality being offered by the subcontractor. Without a formal agreement that details the dealer's service expectations, the dealer's image and credibility could suffer. However, with quality subcontractors who fully understand and agree to detailed service expectations, utilizing subcontractors can work well, especially with installations that require skilled and experienced craftsmen.

Many dealers find it beneficial to use subcontractors when their customers want products installed such as framing, roofing and siding. I have a friend that exclusively uses subcontractors for his multi-million dollar kitchen and bath installation service.

This arrangement provides solutions for the dealer's builder customers while increasing product sales.

In-House Employees. Using inhouse employees is the best waY to control the processes that make an installed program successful. Successful, one-stop-shopping programs help builders reduce construction cycle times, solve labor issues by eliminating finger pointing, simplify billings, and are more convenient than juggling multiple subcontractors and material suppliers. Using in-house labor also enhances the dealer's ability to control service quality and to stay on schedule because the dealer has complete control over the installation processes.

Product Offering. TodaY's builders, production and custom, are transforming themselves into general contractors. They perform less work with their own crews, and most use subcontractors to build the house. About 20 or more subcontractors are needed for every new home. That's 20 possible services that a dealer could offer to their builder customers.

Here are some questions to ask yourself when making the decision to offer installed sales: Should I offer products that require high or low level skills to install? What installation services best offer real "solutions" for the builder? Which suppliers will offer superior installation support programs? Are there synergies that can be capitalized on with multiple product installations, such as a multiple-product, after-paint program?

Most pro dealers want to increase their builder sales. This can be accomplished in by either lower prices or increased value. It's axiomatict sales increase when either action is taken. With margins eroding, lowering prices is usually not the logical approach. We are left with trying to add value. And properly executed installed sales programs unquestionably add value.

Customers are driving the demand for installation solutions. In some markets, it is already very difficult to sell certain building materials, including framing,withoutoffering them installed. Builders need product, distribution and installation-with the latter being the one that creates the biggest challenge for them. Help them solve this problem and you'll increase sales and improve margins.

- Roy Burleson is director of Builder Solutions for Guardian Building Products, Greer, S.C. Contact him at (248) 760-5791 o r roybur le s on @ bp. guardian.c om.