The Case for No New Wires
Jeff Kussard, a recognized industry leader and CEDIA Fellow, believes a direct sales model could be the antidote to the woes of our industry.
I recently posted a comment on an article by Julie Jacobson, “We Need Disruptive Business Practices, Not Disruptive Technology,” in which she opined that while today we hear much about “disruptive technologies” it is disruptive marketing and sales models that should be stimulating the marketing imaginations of electronic systems contractors.
While I believe technology is often the catalyst of new business models, as a longtime advocate of creative marketing practices I heartily agree with Julie’s premise. I responded to Julie’s position that a direct sales model could be the antidote to the woes of our industry.
My comment decried the lack of vision and or willingness to accept change among many members of the residential systems integration community. Judging by the responses to the comment, I had apparently left myself open to misinterpretation. So, let me further explain my position.
Some of the responses posted would have me relegated to the role of marketing guy. While I appreciate being perceived as such, I’d like to share a few bits of my career to help readers understand my perspective. My professional systems contracting experience began with “custom” multiroom audio in the late ‘70s (at that time “custom” meant you built everything from scratch and you wired a network into the TV to extract audio). I’ve led or participated in the startup of three residential integration firms accounting for 20 years of my 35-year career, and during that time one highlight was selling and installing the first residential THX system in the U.S. implemented outside the LucasFilm organization. I’ve designed and installed residential control systems that were custom from the code up and overseen lighting control projects that cost more than the value of the GDP of some third-world countries.
While, true, the recent decade has seen me working from an office or plane, I know a bit about what goes on in the field.
The pretext of Julie’s article is that opportunity lies in existing sites. Julie suggests a direct sales approach, like that of Tupperware, is worthy of consideration by the systems integrator. I argued that today’s no-new-wires technologies open the door to sales opportunities previously inaccessible for retrofit and prompts the use of direct sales methods like Julie suggested. This prompted comments on the un-reliability of wireless technologies based on “20 years of experience” and the preference for a wired infrastructure.
This assertion of the unreliability of no-new-wires technologies consistently overlooks the advancements achieved over the years and prefers to focus on the “then” rather than “now.” I’m not certain exactly when development of the modern-day computers began, but let’s say it was just after World War II. Work on wireless technologies certainly predates that of computers. Today we rely on computers in all aspects of life. Advances in wireless and existing wire technologies have led to huge improvements in security, quality of service and reliability. I think we can consider Wi-Fi to be a ubiquitous technology.
It’s time for systems integrators to remember our roots as pioneers. The comments offered by others seem to have missed the point of the article being sales opportunities in the retrofit of occupied, existing homes. To refuse to acknowledge the opportunity because of a misplaced adherence to an all-wired philosophy ignores the notable potential to make customers of current homeowners and renters. Whether it be done via sales parties, door-to-door sales or direct marketing, I agree with Julie it’s time to change the way we sell our goods and services.
The motivation to promote this change lies in the numbers. We need to take a quick look at history: 2005 saw the all-time high for new residential construction. The year closed with total U.S. households being 112 million, and 1.6 million (or nearly 1.5 percent) were new residences. Depending on whose numbers you believe, the market penetration of low-voltage systems was as high as 20 percent of new homes in 2005. That includes installation ranging from some Ethernet jacks to full-blown home automation systems. But for sake of conversation, let’s accept 20 percent of all new homes (or 320,000) as the market penetration number for low-voltage systems integration projects in 2005.
That means that at the peak of new home construction in the U.S. the low-voltage contracting community made its living off of less than 0.5 percent of the total market. And we did it by targeting only 1.5 percent of the market as our prospective customers.
Anyone in his or her right mind would prefer to sell a hardwired retrofit project during a boom in new construction. And even today, when the pickings are slim many would prefer to go out of business than pursue retrofit work. Of course, few, if any, informed clients would consider a hardwired retrofit today. But, were we to relieve ourselves of the need for long wire (room to room or level to level) we could easily turn that potential market of 1.5 percent of homes (not today but at its peak) into a target market of all homes. Using the most recent count of 115 million homes in 2009, capturing 20 percent of that pool of prospects would result in 23 million sales opportunities. Dwarfing the 320,000 sales made in the best year in our history - 2005.
I am not arguing no-new-wires technologies should replace wire where wire can be implemented. And I don’t suggest no-new-wires technologies are totally without fault. But considering the flagging state of our business sector, the advancements in no-new-wires technology, the market potential created when we shed our dependence on wire and the demands of the consumer for wireless technologies, one has to see a very real opportunity.
Would you rather stand by and watch someone else take advantage? Or are you open to change and an opportunity for real business?
Jeff Kussard is a recognized industry leader and CEDIA Fellow, specializing in A/V technology, the retrofit market, and business strategy for the custom installation channel. He can be reached at [email protected] Have a suggestion or a topic you want to read more about? Email at [email protected]
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