10.16.2008 — For Guardian Home Technologies, optimism abounds — even amidst the downtrodden state of the current housing market.

The Warrendale, Pa.-based company, which is the current No. 1 integrator in the 2007 CE Pro 100, is using the residential construction slowdown to ink deals with more than 600 builders and buy certain particular competitors in key markets.

The company is showing off an operational business model that just might be the future of custom installation companies wishing to work with large production builders.

The $37 million division of Guardian Protection is aggressively courting long-term relationships with builders to the tune of a dozen new proposals every week, with more than 200 new builder-clients added by its 20 branch locations this year alone.

A centralized process and large installation force enables the company to churn out the proposals and meet builders' demands to install structured wiring, security, multiroom audio, central vacuum and home theater at a low cost and in a timely manner.

To support its commitment to the home-tech channel, it has also bought some key integrators, including Ranger American's Florida and Texas operations.

A Builder & RMR Focus

Guardian Protection Services started in 1950 as Guardian Alarm Systems, a company specializing in jewelry store alarm systems. Entrepreneur and current CEO Russell Cersosimo purchased the company in 1975, renamed it Guardian Protection Services and quickly expanded the company's focus to include residential security.

The company has a UL-listed central station located in the corporate headquarters, and it has achieved the Central Station Alarm Association's new Five Diamond certification, which demonstrates 100-percent operator certification and an ongoing service commitment.

The company expanded into the home technology industry and officially established a new division, Guardian Home Technologies in 2000, after executives realized there was a significant opportunity in the structured wiring market.

"In general, the homebuilding industry has not been well served by alarm dealers trying to do these installations," says Bill Graham, senior vice president of sales and marketing.

"There are a lot of good alarm dealers who may want to enter the market but do not have the infrastructure or capital to work with large production builders. They get in over their heads."

For example, he mentions that most small alarm companies are not in a position to hire more technicians and add vehicles when they bring on a new builder contract, nor do they typically have the working capital to support the construction cycles in the builder market.

Guardian's financial resources have enabled the company to gain a foothold in the new-home construction market. Additionally, the RMR from alarm contracts gives it the ability to thrive during the housing downturn, using its cash flow and sheer size to gain the advantage over other integrators seeking to forge deals with builders.

"One of the reasons we have been able to maintain our business even with the homebuilding business down in 2006 and 2007 is that we are constantly capitalizing on opportunities to gain more marketshare," says Graham.

The company is garnering the market-share by offering certain services at below-market prices to builders. Its "foot in the door" offering to builders is a free security system for customers in exchange for signing a long-term monitoring agreement.

Keys to Working with Builders

Indeed, RMR is "king," and the security monitoring contract is the primary sales focus, even when presenting other upgrades. Guardian has also taken the scalable, repeatable product package concept so prevalent in security and applied it to home technology, marketing it as a "lifestyle experience."

The company shies away from builders that do a large number of spec homes or townhomes, but Graham says the market is ripe to meet builders.

"Unlike 2005, builders now want to talk to you. Unless their barn was on fire back in 2005, and they were having trouble with their existing provider, they did not want to talk with you."

He adds, "Historically, a builder may be happy with his integrator because the installer is not disturbing the construction cycle, but it an integrator is not offering anything beyond a basic product array, he is not helping the builder to maximize its overall profit margin per home. Now, we have a different story to tell builders.