If timing is everything in business as in life, electrical distributors and their partners in the electrical-construction market are in the right spot at the right time to help satisfy the growing demand for structured wiring systems in the home.
While business in many segments of the electrical construction market has slowed in recent months, the demand for home-networking products in new homes continues on a double-digit growth track. Industry observers expect more than 200,000 homes — nearly one out of every six new homes built — to have structured wiring systems for high-speed Internet access, home entertainment, security and other applications.
The beauty of this market for electrical distributors, say industry observers, is that electrical contractors are already doing the power wiring at the time when these systems need to be installed, and they look first to electrical distributors to service their product needs.
In addition, the wiring itself is not very complicated, builders benefit if one subcontractor can do both the power wiring and home networking and it provides more business for all of an electrical contractor's business partners in the electrical construction market, too.
Arnold Kelly, director, construction market, Graybar Electric Co., St. Louis, says home-networking products offer his company's customers and others in the construction field a perfect “upsell” opportunity to provide the ultimate customer, the homeowner, with a more attractive home.
“We are trying to focus more on these upsell opportunities,” he said. “These upgrade opportunities will give the electrical contractor an opportunity to increase the amount of revenue on their homes. We as an electrical distributor win because it increases the amount of material that we will bill out on a per-home basis. It's a win-win situation for everyone involved.”
While Graybar has always been active in the residential market, Kelly says home networking will be a major focus for the company this year. In support of these efforts, Graybar recently developed The Internet Home, a 32-page publication that offers information about its package of vendors' products and services in this market.
Electrical distributors and electrical contractors and other electrical companies working in this market are finding out that builders can be key allies in creating demand for their products and services in the home-networking arena. Homebuilders are starting to promote wired homes as an upgrade, just as they promote higher-grade carpeting, top-shelf kitchen and laundry appliances, energy-efficient windows, tiled floors and other amenities to prospective homebuyers.
Last year, Graybar partnered with Pulte Homes, one of the nation's largest homebuilders, and Leviton Manufacturing Co., Little Neck, N.Y., to supply electrical contractors with the Leviton Integrated Network package of structured wiring products.
Kelly said Graybar stocks the package in most of its branches, and sells it to electrical contractors working in Pulte homes, as well as in other new housing developments. He said that when Pulte specifies that Leviton products must be used for structured wiring systems in its homes, it's just an extension of the common practice of builder specifications.
“Homebuilders have always specified plumbing, lighting, appliances, grades of carpet or roofing materials. This is just taking that phenomena further and specifying the wiring structure for the home.”
Pulte initially equipped housing developments in Texas and Florida with Leviton's standard package, which includes an enclosure box and panel, eight drops, amplifier, wall plates, jacks, and connectors. The company offers homebuyers two upgrade packages, and customers can customize any package to include additional options for more sophisticated systems, such as an Ethernet hub or video unit.
Annemarie Grady, Leviton's building marketing manager, said that Leviton's Integrated Network line offers a modular design that homeowners can expand as their budget and needs permit. For installers, the system is flexible, field-configurable and doesn't take long to install.
One electrical contractor who has been working with Pulte in these installations in the Minneapolis market said the systems help homebuyers “futureproof” their homes.
“We have been doing home networking for 18 months,” said Ralph Burrell, manager of strategic initiatives for Convergent Media, St. Paul, Minn., a division of Collins Electrical Construction Co. “We had been doing a lot of commercial and some selected residential. As this product came out, we started contacting some of these people and telling the story and started getting some opportunities.
“Pulte was the first one that we did. The experience has been great. People have a lot of flexibility, and it really futureproofs the homes, which is what we tried to do.”
Low-voltage wiring provides options for the future, said Mark Guenther, Pulte's construction manager, at the time of the announcement of Pulte's partnership with Convergent Media. “With this base, homeowners can add customized systems, now and down the line, to customize their home to fit their own unique needs.
“When these new homes reach the resale market years from now, the structural wiring will be a direct marketing advantage over other homes being built now.”
Burrell said that along with Internet service, low-voltage wiring is fast becoming a fourth utility, as commonplace as electric, telephone and gas service. He agrees with Guenther that these residential integrated networks will become a critical selling point when homes go onto the resale market. Buyers of existing homes will soon expect homes at all price ranges to be supplied with home networking products, he said.
Burrell has had to sell the concept to other builders. He said it's important to find and then convert creative builders who see the potential of structured wiring as a marketing opportunity. “There are those that are visionary,” he says. “Those are the ones who listen to your story.”
Burrell's company also installs home-networking packages in new homes being built in the Minneapolis market by Rottlund Homes, one of the nation's largest homebuilders. A major selling feature in those housing developments has been the digital satellite television service installed in all of the developer's new homes in Minnesota.
Other builders are using home-networking to differentiate their new housing developments. Leviton recently inked a deal with another national homebuilder, NVR Inc., McLean, Va., for its package of home-networking products.
Home networking will stand on its own as one of the best business opportunities in today's electrical market for electrical distributors and their customers. But it also ties in nicely with other upscale electrical products for new homes.
Some manufacturers are promoting the home-networking market with an “upsell” marketing strategy. Pass & Seymour/Legrand, Syracuse, N.Y., recently launched its “WireUp program,” which offers a collection of promotional and marketing materials that can help the builder and residential electrical contractors promote structured wiring, as well as other value-added electrical products such as surge protection and energy-efficient items.
“Homebuilders who really want to communicate value-added application solutions to their customers in both home-network and electrical wiring devices must provide homeowners with state-of-the-art-wiring systems that will allow for future upgrades,” says Tom Lyga, Pass & Seymour/Legrand's market manager. “Homeowners want products that are aesthetically pleasing for any electrical wiring need and that match in texture, color and overall design, providing a clean, consistent look throughout the home.”
FIVE TIPS ON GETTING INTO HOME NETWORKING
Encourage your customers to get certified on manufacturers' structured wiring equipment. Even if your contractor customers have taken courses on home networking, it's a good idea for them to get certified for installation of manufacturers' structured wiring products. Some manufacturers, including Leviton, offer online courses. Leviton's one-day workshop, which costs $250, is also worth 8 CEUs in the BICSI certification program.
Be proactive. Although home networking is one of the fastest-growing markets in the electrical construction market, not all builders are installing them in their developments. Make it a point to talk with all of the major builders in your market and try to sell them on installing these systems in their homes.
Sell up. Selling home-networking products is a win-win proposition. The builder can offer a home with the Web access, home entertainment capabilities, security and other homebuyers will be willing to buy. This strategy works best for homes in the mid-market range ($150,000 to $300,000) and up. By installing home-networking products, an upgraded dimming package for lighting, surge suppression and perhaps security products, electrical contractors can double their sales on a per-house basis.
Promote your company's specialty in the supply of home-networking systems. This business is new enough in most areas of the country that you can still get a jump on your competitors and take an early lead. Once your contractor customers are trained, certified and have done a few jobs, encourage them to start telling potential customers about it. They should use manufacturers' logos and association certifications on their stationery, Web site, signage and vehicles to promote their expertise in this market. You may also suggest that they develop a mailer to send out to your market's general contractors, builders and other potential buying influences.
Develop your company into a local resource for home-networking products and training. The home-networking market can be an extension of your existing datacom business or an addition to the package of products that you offer your residential electrical contractors. Don't underestimate your value to electrical contractors in this market. If your salespeople have the proper technical expertise and your customers can depend on your company for a local inventory of home-networking products, that makes you an unbeatable one-stop resource for products and information in the exciting market opportunity.
TRAINING AND RESOURCES
If you want to get into the home-networking market, there's plenty of information available from industry associations, manufacturers, business publications and educational institutions. Here are a few of the many resources:
BICSI Telecommunications Association
BICSI, a not-for-profit telecommunications association, is a world-wide resource for technical publications, training, conferences, and registration programs for low-voltage cabling distribution design and installation. BICSI has over 20,000 members residing in 85 nations. For more information, contact BICSI at 800-242-7405. www.bicsi.org
Home Automation and Networking Association (HANA)
HANA, which recently joined forces with the Consumer Electronics Association (CEA), Arlington, Va., is the largest trade group in North America focusing specifically on the home-networking market. HANA became the CEA's new Home and Networking (HAN) division as a result of the merger. www.homeautomation.org
SPEAKING OUT ON STRUCTURED WIRING
Jason Kalin, builder for Kalin Custom Homes.
“Regular electrical wiring is 75 or 100 years old and builders know what they are doing with it. Structured wiring is still new, but it fits pretty easily into the same construction practices. It just adds about a week to the schedule.”
MILLINEUM WINS HANA AWARD
Brian Angell, a quadrapilegic from Kearney, Mo., hired Millennium Smart Homes to design a voice-controlled home automation system after a car accident left him paralyzed.
The project won Millennium the Best Specialty Home award in the 2000 Home Automation and Networking Association Mark of Excellence Awards competition.
“He has no use of his arms or legs and requires 24 hour a day/7 day a week care,” Stacy said. He's a young guy in his 30s and was looking for whatever could give him the highest degree of independence.”
Millennium installed eight microphones in different parts of the house.
“Through voice commands, he is able to arm and disarm security, control the lighting and the home theater and talk on the telephone.”
Stacy and Kaye both agree it was their most satisfying job.
“It made a tremendous difference in his life,” Kaye said.