The secret to increasing profits is to reduce opportunity cost. Squeezing additional revenue out of existing resources does not mean you have to sacrifice service, sales or employee productivity. Four ways to increase profits require little effort and can provide generous return on investment (ROI).  In these challenging economic times, large dividends may be reaped from expanding resources and strategic partnerships that already exist.   

Use Educational Resources

Hollywood is famous for it: an original movie leads to a repackaged DVD for sale, which leads to a computer game, a line of action figures, posters, and more. All of those revenue streams are built from the same original idea, thus maximizing the ROI on the original investment.

Consider innovations like the upcoming launch of Platinum Tools University. When a distributor puts this resource in front of a contractor, making product/sales education available as a value-added benefit of working with the distributor, no one needs to re-invent anything. The distributor is simply taking ownership of an existing service.

The distributor can bolster that link to contractors by attaching Continuing Education (CE) credits while making enrollment easy — through the distributor. Printed leave-behinds, counter literature, and targeted email blasts can educate the contractor that the distributor has more to offer:

• How-To Videos
• Documentation
• CE credit coursework
• Helpful workday tips

Contractors will start to see the distributor as a local knowledge bank, not just a supplier, thus promoting a stickier relationship that causes the contractor to engage with the distributor more often.

Joint Promotions

Distributors should encourage cross-promotion, in which contractors get something they need and want, while distributors increase repeat business. Contractors can advertise to their clients that they are partnering with a prestigious distributor, establishing their own value added services to their pipeline of projects.

A distributor, for example, may also bundle complementary products, so when a contractor buys 5,000 feet of twisted pair wire, the distributor includes 100 connectors free. The distributor’s price for the value added is minimal, but the giveaway boosts the contractor’s view of that distributorship, and provides a chance for the contractor’s client to have bragging rights: “My contractor has an inside track through distribution, and I get cost savings that no one else can provide.”  Word of mouth referrals, especially in today’s social media age, can have an immediate impact on pipeline growth.

Strategic Partnerships

Distributors already have existing partnerships up and down the supply chain. Factory partners can help build brand awareness and create new momentum. Contractors can spread the good word about a particular factory’s products. When the distributor ties factories to contractors, value builds for both. Contractors, the purchasers of the factory’s products, will greatly benefit from “buddy calls,” using the distributor as the common link in both directions. The factory representatives get to know contractor needs better and gain a larger chunk of their purchasing, and contractors can gain insight into new lucrative business opportunities.

Set Measurable, Attainable Goals

From factory to distributor to contractor, everybody needs sales goals. A distributor should work with factories to calculate sales targets and long-term growth forecasts. A distributor’s factory suppliers’ can be instrumental to growth when they understand each distributor’s’ sales goals, as factories can make additional marketing investments to support the projected growth.

Contractors, too, can benefit from knowing a particular distributor is driving to sell “XX” units of a particular item during a specified sales period. The distributor’s sales force may seem to be sharing inside knowledge (“Wait until next week to buy the BR1 Multi-stripper; our goal is to move 100 units, so we will cut you a break”) but the sales force is actually adding to both the distributor’s and partner factory’s bottom lines.

A strategic factory partner will help distributors break down goals into weekly, achievable numbers – and hold them accountable. To generate $20,000 in annual sales, for example, of a specific product, a distributor need only sell $80 a day of that item. Sales representatives now have a realistic target that can be measured and focused on.

Forging strong relationships between suppliers, factories and contractors, smart distributors can leverage every connection for increased profits – without growing their bottom-line.

The U.S. market for low-voltage datacom products—spread across construction, manufacturing and utilities/transportation segments—is valued at nearly $23 billion, says the Electrical Distributor (tED) magazine. The low-voltage global security integration market was pegged at a staggering $60.3 billion, according to Electrical Contractor magazine. Gaining your share of this growing market calls for research and knowledge of current trends.

Segments

Both the segment categories and regional spending patterns for low-voltage products require further examination. The tED data points to manufacturing as the largest low-voltage segment, but even within this category, some areas dominate:

• Computer peripheral equipment, computer storage devices and electronic computers (SIC Codes 3577, 3571 and 3572) account for roughly $6.2 billion within the top 10 segment industries
• Manufacturing industries account for approximately $15.9 billion of the datacom product $22.7 billion market value
• The low-voltage datacom product manufacturing sector is shared by a mere 20,000-odd companies in that top-10o tier
• More than a million companies in the construction segment share a $2.0 billion market

The top 10 utilities and transportation industries bring in approximately $4.7 billion in datacom product value, with telephony biting off the largest slice of the pie, at $1.8 billion all by itself.

Indicators

One simple metric for measuring the potential growth in the low-voltage field is the percent of articles the two industry publications, tED and EC, are now devoting to low-voltage articles. Nearly a third of their content is now revolving around datacom, security, IoT and other low-voltage products and services.

Possibilities

Cabling standards must address this ever-widening field of products and services, so contractors and electrical distributors can tap these new markets. Offering structured cabling that provides for future growth is vital. Electricians and contractors can offer structured cabling and avoid diverting a share of the market to specialty datacom wholesalers and big-box retailers.

The only way to seize and keep these market shares, however, is to get into a routine of performing face-to-face market research with each customer encounter. A customer has door access controls—would CCTV be a logical next step? When planning for wiring call buttons and intercoms, structured cabling could go into the planning to also provide HVAC controls and other services.

Contractors and electricians should consider selling potential alongside current reality. The future arrives very fast, and at the pace of growth in low-voltage products, a wiring plan today that includes additional built-in cabling capacity could be tapped tomorrow by the next big thing, whatever it may be.

The 2017 revision to the National Electrical Code (NEC) is coming, no matter what, but whether it will answer every question about Power over Ethernet (PoE) or not is still up in the air. PoE is progressing so fast it does not even have full standards yet, though the Institute of Electrical and Electronics Engineers (IEEE) is scrambling to provide them. With the rising innovations coming in the Internet of Things (IoT), PoE is both an opportunity and a challenge.

IoT

The Internet of Things is tomorrow’s futuristic world today. Having a telephone that talks to your front door lock from your vacation home 1,000 miles away may seem like a far fetched plot line from The Jetsons, but the IoT allows this and more.

Most IoT devices draw little power. PoE, with its promise of power levels up to 100W (IEEE 802.3BT), will allow cables and cable bundles to run power for a lot of new markets:

• Nurse call systems—Typically 50W
• Point of sale readers and printers—30W to 60W
• Financial trade floor telephony—45W
• Lighting fixtures, lighting controllers, and access controllers—40W to 50W range
• Virtual Desktop Infrastructure (VDI) terminals—50W
• Thin Clients—50W
• Video conferencing–45W to 60W
• IP security cameras (with pan, tilt and zoom capability)—30W to 60W range
• Brushless drives, motor control units—Above 30W

Opportunity

Daniel G. Walter, vice president and COO, National Electrical Contractors Association (NECA), is quoted in Electrical Contractor magazine as saying, “In my opinion, there is a certain inevitability, and PoE should be viewed as an opportunity. There certainly is similarity with voice over internet protocol [VoIP] technology, so maybe the jump to PoE isn’t so foreign a concept.

“The integration of IoT, including increasing use of sensors for multiple purposes and components to transfer that sensor data, place electrical contractors (ECs) in an enviable position,”says Walter.  “ECs could help build the backbone and be the integrator for these building systems and the assortment of devices they will require.”

What is this opportunity worth? London-based Memoori, a market research firm, pegs IoT for buildings at $85 billion by 2020. The three largest market segments:

1. Physical security
2. Lighting control
3. Fire detection and safety

Added connectivity within building systems puts sensors, lighting and access controls all within the grasp of PoE.

Downsides?

For electrical contractors, much work still remains. Standards are still coalescing. The electrical system we have has taken over 100 years to reach a level of reliability and simplicity that comforts office workers and homeowners alike. With PoE, will homeowners tolerate having to reset basic lighting fixtures after a power outage? Will electrical contractors have redundancies and solutions to bring PoE to the same level of transparent technology as 120V outlets are today?

Discounting the early adopters and novelty seekers who long to power their boss’s coffee maker from across the cubicles, or who thrill to checking their vacation home’s thermostat from the office, energy-saving, cost-saving future applications for the IoT are here:

• Electrical contractors can sell clients on the expanded sensor sampling opportunities for environmental and fire safety controls by having more objects read conditions more often
• Retailers can harness internet-connected lighting to identify a shopper’s location within a store, send a code to the smartphone, and identify to the customer promotions, catalog alternatives to store stock, and more
• Information technology (IT) and cybersecurity specialists are reassured by PoE since cabling means physical connectivity, not wireless (read: easily hacked) routers

At one time not too long ago the internet itself was a brave frontier. Power over Ethernet may still be brushing off some of its frontier dust, but the wise electrical contractor can see the path forward to profits: PoE.