Changes are afoot for home improvement installation contractors
If you’re a provider of installation services for home improvement retailers, you may be experiencing a frustrating trend (or a rewarding trend, depending on your perspective): Retailers are consolidating their installer networks, looking for ways to reduce the cost and effort of managing installation jobs.
Unfortunately, this means that many will lose their direct connection to new installation jobs sourced through these big box retailers. It drives an urgent point: installers must diversify their sales channels to protect their business pipeline.
In this blog, we’ll discuss this trend, how it may affect your business, and how Cilio can help you transition to this new world.
Why are they doing this?
In a year that has been more challenging than most, you may be wondering: why on earth are these retailers throwing more change our way?
Of course, there is financial motivation. A smaller installer network reduces the time and resources the retailers must put into managing installation jobs. It may also help them leverage buying power to keep customer prices competitive. Yes, they have investors to answer to.
There is also a customer service aspect to it. With fewer installers, it is easier to manage the quality of providers and the service they deliver. In the retail world of intense price competition, service is an important differentiator.
Geographic consolidation
You may see some retailers begin to funnel their installation jobs through a smaller network of large installation contractors.
If you’re one of the larger contractors chosen to represent your region, congratulations! You’re now in the enviable position of having to figure out how to take on all this new work.
Will you subcontract work to the smaller, local installers in your area? How will you find and onboard the best ones? How will you distribute and track jobs to your subcontractors? How will invoicing and payments work?
Your key challenges will be to have back-office operations buttoned up tight and a network of subcontractors to take on the extra work. In fact, if you have all this ready in advance, it can give you a leg up to becoming one of these chosen contractors. These are proof points that you can successfully take on the additional work.
If you’re the smaller contractor who gets squeezed out of this arrangement, you have a different challenge. You will lose your direct link to the retailer for new installation jobs.
There is potential to regain some of this business by becoming a subcontractor to the larger installers. The challenge will be to convince them to put you on their roster.
Your past experience and positive customer reviews will be key selling points. Also important are any technology solutions you have implemented to automate service management, financial management, scheduling, etc. This signals that you will require less hands-on interaction with the prime contractor, and therefore will be easier to work with.
On-demand services apps – Uber for installers?
Another way retailers like to consolidate their installer networks is to distribute jobs through online apps, or aggregators, that take over the installer relationship.
It’s very much like the Uber model: someone triggers an order for a ride, the application finds drivers in the area, and the job goes to the driver who accepts the ride first. In this case, the retailer posts jobs through the online aggregator, where they are made available for approved installers to place their bids.
These “on-demand service” apps are typically reserved for less custom installations such as plumbing and lighting fixtures. They’ve been around for many years, but have gained popularity as smartphones and “Uber” culture have exploded.
5 ways to diversify your sales channels: aka, put your eggs in many baskets
It’s becoming clear that installers can no longer depend on a single channel for sales leads. Having more sources for jobs will mean less impact to your business if one channel shrinks or goes away.
Here are 5 ways to expand to new sales channels to keep your sales and revenue strong:
- Market your business as a subcontractor to regional contractors
At Cilio, we’ve seen several users of our CiO installer software lose business to consolidation. In multiple cases, we were able to introduce that client as a potential subcontractor to another client – a larger installer who had secured the regional retail business and needed subcontractors to absorb the extra work. If you’re losing business, reach out to your contacts, vendors, and peers to try to connect with the larger installers in your area. - Become a contractor for multiple retailers
Try joining installer networks for multiple organizations, including Lowe’s, Home Depot, Costco, and others. If you don’t already have field service software or an order management system, now might be a good time to investigate it. Find one, like Cilio CiO, that offers integration with the major retailer platforms. This means jobs from multiple sources can be automatically uploaded and managed from a single system, which makes it easier to diversify your job sources. - Sign up with online aggregators
These third-party apps aren’t going anywhere, so if you can’t beat ‘em, join ‘em. Find one that caters to your specialties and log on. Again, you can find field service applications that offer automatic integration with these platforms so you can easily capture, manage, and track orders from these sources along with your jobs from other sources. - Acquire other businesses in your area
Perhaps you’d like to become one of those larger installers that can compete for the big retail business? Merger and acquisition activity in the installer market is huge right now. If you have goals to grow through acquisition, then now is the time to get your operations in order so you can scale to take on the additional staff and workload. Digitize what you can – technology is a key enabler of scalability in your business. - Consider investors for your business
Plenty of companies out there are looking to invest in a strong business. For example, the $20 billion HVAC market has been loaded with investment announcements in recent years. You can structure a deal in which your business continues to operate independently with the support of a larger organization. Look for a business broker in your area to help prepare and market your business to investors. Meanwhile, streamline your operations, digitize your business, and button up your financials to increase your value to potential investors.
How Cilio CiO can help
No matter what stage their business is in, or where their job leads originate, Cilio CiO helps installers of all sizes integrate with sales channels and manage their operations, from order entry through invoicing. When you are trying to run, scale, or sell your business, you don’t have time to waste on scheduling, tracking paperwork, reconciling with your financial software. Cilio CiO web-based installer software does all that and more.
If you’d like to schedule a demo to see how CiO can help you scale your business and diversify sales channels, you can schedule one here. We look forward to hearing from you
