Charlotte, N.C.-based Simonini Builders was looking to secure the simplicity, branding and reliability that it and its clients want when adding A/V systems into a new home. Local integrator Digital Home Systems wanted a contract for future business that it could take to the bank. Distributor AVAD wanted to capture more business and a bigger presence with the regional builder community.
Through AVAD’s Dealer to Builder (D2B) program, everyone got their wish.
Money in the Bank
Digital Home Systems has maintained a relationship with AVAD for roughly three years and, since its founding in 2000, has served as a subcontractor for Simonini, a custom home and neighborhood builder operating in the Carolinas. During that time, the integrator installed structured wiring and the occasional home theater system.
In October, however, the three parties signed a D2B program contract that formalized a much tighter relationship. In particular, it gave the integrator direct access to Simonini’s home-building clients. Digital Home Systems now will not only install structured wiring in Simonini homes, but also has the right to up-sell Simonini customers on home A/V technology packages during the home design process, the costs of which can be rolled into the mortgage.
The contract covers roughly 240 Simonini homes in multiple developments that will be built over the next two to three years in the Charlotte area.
Last month, Digital Home Systems installed a Samsung flat panel TV and a Bose home theater system into a Simonini model home that was later shown to 400 realtors, according to Digital Home Systems President Richard Shepard. Even before that showing, he says, contracts were already signed for 11 of the 40 homes in the subdivision, “so we’re ahead of schedule. That’s good for us.”
Shepard says the D2B contract has radically changed his business. Based out of a small office in Waxhaw, N.C., south of Charlotte, Digital Home Systems installs structured wiring, home automation and control, lighting and central vacuums, multi-room audio and home theater. “We’re not doing $500,000 systems, but we are doing $100,000 systems,” says Shepard. Working for Simonini via the AVAD D2B program has “given us the opportunity to actually go to the bank and say, ‘We have signed contracts for this amount of business,’” he says, “and we can open a credit line to buy new vans and hire new help. Rather than ‘work today, eat tomorrow,’ it actually brings some worth to your company.”
Packages Can Lead to Custom
Simonini has built roughly 110 homes a year for the past four or five years, according to its director of sales, David Smoots. Its customers are typically in their late thirties to early forties and are looking for homes in which to raise families for the next 10 to 15 years. “They’re into knowing what all the possibilities are,” says Smoots. “Whether or not they can afford them, they want to know about all of them.”
For the past year and a half, Simonini has been interested in creating technology packages for its customers “to simplify the process for both us and them,” says Smoots. “We’re not concerned about the latest plasma TV or the latest speakers,” he says. “We’re more concerned about the wiring and the deliverables that are in conjunction with the wiring. Our relationship with Digital Home, and now AVAD, has helped us keep the houses wired properly and future-proofed.”
As a result, Digital Home Systems is one of the first vendors Simonini introduces to its customers during the home design/construction process. “We’re trying to get them to ferret out exactly what [the customers] want with the A/V side of things,” says Smoot.
The basic technology package offered to Simonini clients includes a 42-inch Samsung plasma TV, a Peerless Plasma Wall Mount system, Bose speakers, bass module, remote control, Adapt IQ audio calibration system, and a media center that includes a progressive-scan DVD player and AM/FM tuner. An outdoor music system is also included. An upgrade package includes a 50-inch plasma, Panamax power protection, additional Bose in-ceiling speakers and a larger media center that can store and organize 200 hours of music.
The packages range in price from $8,000 to $15,000, Shepard says. And, of course, Digital Home Systems is willing to oblige any Simonini customer who wants to move beyond the packages into a custom design.
Smoots expects competing builders will follow his company’s example of offering technology packages as part of the home design process.
Eye on Close Rates
A two-page, AVAD-designed flyer presents the packages to the builder’s customers. Branded with both Simonini’s and Digital Home Systems’ logos, the marketing brochure outlines the features, benefits and costs of each package. A form on the back enables the homeowner-to-be to select options and upgrades. When signed by the homeowner and the Simonini sales rep, the form becomes a binding installation contract.
“We’re not marking up the actual AVAD product that’s going [into new homes],” says Smoots, “Our mark-up is for just the service that we and Digital Home Systems provide. We’re able to command the same mark-up as we do on our homes.”
Simonini typically sends Digital Home Systems advance notification—usually two weeks—of upcoming projects. “That allows you to plan your schedule around them and keeps you from having so much downtime,” says Shepard.
AVAD is training Simonini sales and design staff on the packages being offered under the program—“not so they are the CEDIA expert,” says Scott Salzman, who’s in charge of AVAD’s outside sales in North Carolina and South Carolina, but so they can give a reasonable answer to a client’s question. AVAD also will visit job sites and model homes periodically with Digital Home Systems “to make sure Days of Our Lives isn’t the [demo] material that’s being used during the day,” says Salzman.
AVAD is tracking close rates, says Salzman. “Frankly, it’s a very compelling presentation, and it should have a significant close rate associated with it,” he explains.
Salzman sees plenty of opportunity to cross-pollinate a Simonini sale with other segments of AVAD’s business, such as central vacuum, lighting control or home networking. “With today’s reality, the way flat panel is priced, you have to attack more of the home to scale the business,” he says.
Branding Is Crucial
Over the years, Digital Home Systems has provided Simonini clients with “great service, great support,” says Smoots, citing how prompt, personal callbacks from Shepard and quick resolutions to any problems have served Simonini and its clients well. But for Smoots, a reader of A/V enthusiast and trade magazines, AVAD’s branding and the backing of the D2B program was absolutely crucial.
AVAD is “a great brand name,” Smoots says. “Brand is very important to us. We’ve worked very hard establishing our brand name in the market and we align ourselves with people and companies that have done the same thing.” Indeed, vendor brand names figure prominently in Simonini home specifications, even down to the cast iron sewer pipes made by Charlotte Pipe and Foundry. “We’re doing the same thing on every level of the house,” says Smoots. “When it comes to audio/video, it’s important for us to have vendors that align themselves with reputable products. We want a good product that’s going to [require] little or no warranty callbacks.”
The builder in this case ultimately is more loyal to the distributor than the integrator. “We’re now making sure [AVAD and Digital Home Systems] maintain that relationship because it helps us with our clients,” Smoots says, later adding that, “If [Digital Home Systems] were, for instance, to lose that relationship, we would try to follow the AVAD relationship to whomever it goes to. The AVAD brand is certainly one that carries a lot of weight in our market, and Digital Home Systems has helped promote and reinforce that brand with the excellent work that they do.”
Gaining Market and Mind Share
AVAD admits it still has work to do in marketing itself to builders. “Builders as a rule do not know AVAD as a brand, yet they know our product lines like Bose and Samsung,” says Keith E. Davis, AVAD’s senior D2B manager. “We want D2B to become as familiar to the builder community as other great builder brands like Whirlpool and Pella, but also realize that will take time and a very successful implementation of D2B.”
AVAD’s parent company, mega-distributor Ingram Micro, is proving a major factor in terms of helping secure builders for D2B. Explaining that AVAD is part of a Fortune 100 company “creates a confidence that we have the corporate and financial muscle and breadth to be a viable, long-term solution,” says Salzman.
Davis reports the D2B program is growing nationwide in terms of both builder sales and the number of dealers involved. Currently, 65 AVAD dealers are participating, with seven or eight more soon coming on board. “Each of those already has a significant builder opportunity before it,” says Davis, who claims the nationwide housing downturn has “actually benefited us. [Previously], builders did not have time to talk to you. Now they are very interested in what we have to say, both as a profit tool and as an area of differentiation against the builder next door.”
A D2B relationship “allows us to garner a greater market share of that builder and that home,” says Salzman. “Most importantly, it allows us to enhance our relationships with the dealer. Now we’ve gone much further than being a supplier. We’re a business partner.
We’re a concierge. We’re support staff. We’re much more than just a pick-and-pack distributor. It increases our market share within that builder relationship, but ultimately increases our market share with that dealer.” CR