Lessons Learned: Industry Best Practices

Vice President of Innerspace Electronics, Inc. Andrea Reiner, is featured in this Residential Systems article from January 27, 2016.

Business Tools/Techniques and Product Categories that Drive CIs

For some custom integrators, the road to business improvement has involved applying lessons learned about setting employee performance standards at CEDIA Business Xchange. For others it has meant joining a buying group and streamlining the number of product lines carried. Similarly, some product lines or technology categories are more effective in one market than another, whether it’s adding more network and remote management services or utilizing Crestron Digital Media and Control on large projects.

When it comes to successful business tools or product portfolios, there is no magic bullet that works for every CI company in the exactly the same way, but much can be gained in this business from sharing success stories and tales of best practices learned along the way.

Patrick Hartman, Diversified Systems International, Reno, NV.

For instance, in 2015 Diversified Systems International started using a detailed job costing process, to improve the profitability of the Reno, NV company’s projects. AV operations manager Patrick Hartman noted that although DSI did “a pretty good job” with this in the past, continues to have high net profit on most projects, and “runs a pretty tight ship” in general, its management team realized that their overhead was higher than they thought.

“Over the past four months, we’ve continued to evaluate everyone’s position in the company and are adjusting expectations with everyone     on how/when to job cost as many hours as possible to a project, to cut down on wasted overhead,” Hartman explained. “Most recently we began sharing monthly (instead of quarterly) overhead expenses, overall department profitability, and job cost results of projects with all staff members, and the awareness is now much higher on a daily basis. Each and every person has become more engaged to be more ‘lean and mean’ to increasing profitability and efficient for our department.”

Jamie Briesemeister said that lighting control and automated window shade solutions have been hot sellers this past year for Integration Controls, in St. Louis, MO.

As for successful product lines and technologies, Crestron Digital Media and Control systems have most recently provided the most opportunity for DSI. Hartman said that since September 2015, his company has been hired to complete three projects totaling more than $500K before June 2016 that “absolutely require” these technologies.

In April of 2015, Integration Controls sales and marketing director Jamie Briesemeister went to CEDIA’s Business Xchange, where she focused on some of her company’s business challenges, many of which revolved around aligning employee behaviors behind common goals.

“While we do performance reviews, they typically centered on the tasks required of our employees– not so much with their attitude,” Briesemeister said. “We needed a bar to measure attitude against, which we developed at the Xchange. A simple acronym (C.A.R.E.) that outlined how we were to behave with each other and with our clients and stakeholders. Once we announced this initiative back at the office, it quickly became very obvious when someone violated our C.A.R.E. promise, and we were able to identify who should stay and who should go.”

For the St. Louis-based integration company, lighting control and automated window shade solutions have been hot sellers this past year. “Our clients find ease of use and energy savings valuable for their busy schedules,” Briesemeister said. “Lutron and Vantage are our top-two selling product lines, both of which have a ton of options in design, aesthetics, and programming customization.”

Andrea Reiner, InnerSpace Electronics, Port Chester, NY

In an effort to capture as much information as possible to determine a projects profits, Andrea Reiner, co-founder and VP of InnerSpace Electronics, said that her Port Chester, NY company has started using Stratustime, a product developed by Paychex Payroll Services. Her technicians, engineers, and programmers are required to sign in using their iOS devices to enter a client name and function when they begin work on a job. Then they can easily print reports that show exactly how much each function of the project–lighting, audio, programming, etc.–has cost them.

“It even takes into account the overtime factor, which provides us feedback if a project is costing too much, and in what types of labor,” Reiner explained. “It also allows us to refine proposals based on past information; and, when a client asks for a discount, we know how much room we really have.”

InnerSpace continues to receive “overwhelming responses, support, and referral activity” from the Savant systems that they have installed over the past few years. “It has provided us with an opportunity to upgrade systems from years past and have clients that are incredibly satisfied with our work,” Reiner noted. “It’s a very user-friendly platform, which helps with the overall user experience. We provide tutorials on each of our control systems, but most clients can learn to interface before we’ve formally gone through it with them. The fact that clients are able to control their systems with their iPhones and iPads in their home or remotely is a huge plus, especially for those clients who have multiple homes.”

Jeff Halloran, Audio Video Innovations, McKinney, TX

Jeff Halloran, president, Audio Video Innovations, in McKinney, TX said that his management team has made “an intentional effort” to limit the number of product lines that they carry. This consolidation, he says, has benefited them on the technical, sales, and business fronts.

“Installs run smoother and service calls decline,” he said. “Sales staff can turn proposals around more quickly and more accurately estimate labor costs on known products. Our leverage with vendors has increased, allowing us to negotiate better pricing, experience better support, and even take advantage of offers that allow us to greatly increase margin on products that we are already selling.”

Lewis Franke says that standardizing operation processes and inventory control were a keys to business improvement at Texadia Systems, in Dallas, TX.

Halloran’s crew has also begun to recognize the value in selling remote management solutions. “Remote troubleshooting and proactive automated support products, like Watt Box and Ihiji, save us countless truck rolls and in an expansive metro area like Dallas/Fort Worth, this offers tremendous savings,” he said. “Our 2015 goal was to have at least one remote management device in every project we complete. As we open our service division in 2016, I believe our dedication to installing remote management products will allow our service division to get off the ground running in terms of performance and profitability.”

Brian Phelt, president of SmartHome Technologies, was better able to streamline his San Antonio, TX company’s product lines after joining the Azione Unlimited buying group. “By turning our focus to a select group of products and offering packages versus creating a new system on each sale, we have increased our efficiency on installations and become relevant to our core vendors,” Phelt said. “We are able to achieve rebate levels that previously were unattainable, which results in more money at the end of the day.”

Brian Phelt, SmartHome Technologies, San Antonio, TX

SmartHome Technologies also began holding all client proposal meetings at its office because it allows clients to have further validation in choosing their company, and to take a tour of their facility. They have a near 100-percent close rate since beginning this process.

Phelt implemented a another “pro tip” that he picked up in a recent CEDIA class: “When we prepare proposals for clients, we separate lighting and shades from the audio/video/automation items,” he explained. “The thought process being that lighting and shades are essential items that are not likely to be passed over, but if they are lumped in with all the electronics, there is a greater likelihood of losing a chance of doing any work if the rest of the proposal is rejected.”

Savant, Lutron, Marantz, and Sonance are SmartHome’s top brands, and they recently added Triad. Just in the past year the company started using Salez Toolz software to obtain a more accurate budget number from potential clients. “The reality is people have no clue what our systems cost,” Phelt said. “All they know is what they see at Best Buy, or hear from their friends and family. I have found this to be true with clients from all levels of wealth.”

Lewis Franke, business development manager for Texadia Systems, said that standardizing operation processes and inventory control has been a key business initiative for his Dallas, TX company.

“When you have grown as fast as we have or as others have, it’s sometimes hard to keep up,” he lamented. “We have lost a lot of money on product not being allocated to the right job, or technicians taking product from one job and using it on another without documentation. We would consistently buy multiple parts and not notate what project they went to. This resulted in a lot of money being lost out of the bottom line.”

After Texadia hired a dedicated operations leader, the company has reduced lost and unallocated inventory by locking up all expensive product, making everyone not only count it and verify that it is received, but that it is documented and allocated to the right project. The company also has its technicians verify and sign off that all product that they take with them and install is exactly what is on the job.

“We are forcing the technicians to not just take things off the shelf ‘in case,’” Franke said. “This makes the sales staff create the change order so we can bill the job out correctly and reduce shrinkage in inventory. It’s a huge undertaking, but mandatory when dealing with inventory and maintaining profit margins.”

Franke also noted that with the advent of IoT and networking, managing the system proactively when technical issues arise is “mission critical.” Being able to receive notifications when issues arise or when milestones need to be addressed is what is driving the recurring revenue model, he said, so the company has been utilizing Ihiji and OVRC to address technical issues or simply when a client needs a projector bulb changed or software updated.

For Greg Margolis, president of Dallas-based HomeTronics, “basic blocking and tackling” has been his key business focus on the past year. “All equipment is rack mounted, dressed, programmed, and tested prior to being delivered to the project site,” he said. “Clients appreciate that our techs always wear booties at every house visit. After a service call, our office admin will call the client to make sure he or she is satisfied with the work, that everything has been resolved and if there are any questions that need to be answered.”

Greg Margolis, HomeTronics, Dallas, TX

This attention to detail has allowed the Dallas-based integrator to focus on selling leading-edge technologies such as HDR televisions (LG OLED, VIZIO Reference Series with Dolby Vision), 6P HDR laser projection, and immersive audio systems from Dolby Atmos and Auro3D.

“Customers can see an immediate difference in HDR video–deep blacks, 4K, vibrant colors,” Margolis said. “The new-gen OLED shown at CES due out later in the year are two times as bright. This week, we are installing our first HDR 6P 4K laser projection system from Display Development, which has the capability to achieve 1,000,000:1 contrast ratios, up to 28K lumens, and the best color reproduction available.”

Jason Barth, CEO of The Premier Group in Carmel, IN, noted that one of the challenges facing the CI channel is harnessing the broad knowledge base that is required to maintain a very diverse set of products and technology environments that are changing and evolving rapidly. That’s why Premier formed a “wiki” for pooling knowledge and best practices from the various members of the company.

Jason Barth, The Premier Group, Carmel, IN

“It is a virtual, secure knowledge base that our internal and external team members can access from anywhere via their laptop, iPad, or iPhone,” Barth explained. “It is a searchable and tagged database with everything from ‘How to set up and configure a Uverse gateway for a Control4 system,’ to ‘HDMI troubleshooting for Product X.’ It contains a combination of articles, white papers, downloads, and links, and includes our own ‘spin’ or commentary on the steps to follow, or experience gained.”

For example, one particular vendor has a white paper that carefully describes how to set up its product in a certain networked environment. In the real world, however, the paper is missing two key steps. “It was very easy for one of our field technicians to document those additional steps right into our Wiki, thereby creating ‘The Premier Way’ to install this device successfully,” Barth said. “Our diligence in both entering and maintaining this database has proven invaluable, and provides us leverage that I think most of our competitors are missing, and which would be very difficult for them to catch up on.

Barth thinks that the biggest technology opportunity has come with “owning” the network and remote management services.

“There is no question that products at every level from Araknis (SnapAV), Pakedge, and Ihiji are helping us to provide the kind of service that our clients expect,” he explained. “Remote diagnostics and service are absolutely essential to our business model as we continue to move forward. Of course, these are appealing to us, as they help us support our clients system in the most efficient manner, and provide the best ‘up time’ for all systems (network, control, lighting, power etc.). They are appealing to our clients for the same reason, thereby creating a mutual win!”