The CE Pro 100: Real and Representative

The publication of the prestigious CE Pro 100 list garners reaction in the industry like no other. I am sure that the 10th annual list will also stir opinions.

Much of the correspondence I receive revolves around three main questions:

1. How representative is the list of the rest of the industry?
2. How do we know the revenue data is not embellished?
3. How do companies get on the list?

Let me address all three questions.

Is the CE Pro 100 an anomaly or a microcosm of the current state of the industry?

This year's list begs that question. With all the publicity around the slowdown in the new housing market, many pundits anticipated that 2007 was the year integrators started laying off staff or turned into subcontractors for big-box stores.

The hyperbole in the media is so vehement that you almost expected to see builders, integrators and other trades standing on street corners as day laborers. Not so.

In fact, this year's CE Pro 100 shows an average revenue increase of 9 percent, an average increase in the average installation price of 7 percent and a 2 percent increase in the average number of installations.

It's not double-digit growth, but it is growth nonetheless. Really! Where's the doom and gloom?

The strong data is supported by the CE Pro Readership Study in which dealers reported growth in 2007 revenues. Moreover, it's anecdotally supported by integrators with whom I have spoken.

My conclusion is that the CE Pro 100 is a true snapshot of the industry that offers compelling benchmarks by which integrators can gauge their own businesses.

If you are searching for reasons for the growth, look no further than the existing home/retrofit market. That part of the business has long been a staple for well-established CE Pro 100 companies, driven by referrals garnered over the years from satisfied clientèle.

"He's lying." "If he earns that much, I'm a monkey's uncle!" "That company is embellishing its revenues."

OK, that's not really a question, but those are the sorts of comments I used to receive (mostly from competitors).

But starting five years ago, CE Pro started asking for financial verification of the data in the form of tax documents or a letter from the company's CPA. We also make independent calls to some vendors.

The verification started small, with only 13 companies offering data the first year. This year, 86 entrants provided some form of financial verification. My point: the CE Pro 100 is real.

Why are specialty retailers and HVAC-, IT- and security-based companies on the list?

First of all, the only revenues shown come from residential installations involving multiple subsystems.

Secondly, there can no longer be a distinction between the custom companies based on their origin. As an example, I refer to a comment made at the recent CEDIA Management Conference by Darrell McComber of McComber & Associates.

McComber, who is well known as a long-time consultant for specialty retailers, said that 95 percent of those specialty retailers have morphed into custom installation companies.

Many have even reduced their retail hours or converted their stores to appointment-only.

Comments?