Successful electrical contractors have “branded” themselves in the eyes of their customers, which in this context means they have differentiated themselves from competitors in one or more ways.
“Branding” is difficult in the traditional power distribution market because customers see those installations as a commodity. Conversely, in the emerging and fast-changing voice/data/video (VDV) market, branding is easier and essential to success. Customers view their VDV systems as essential to their businesses and they usually demand reliable 24x7 operation. As a result, knowledgeable customers are very concerned about who is installing, maintaining, and upgrading their VDV systems.
The key to success is your ability to differentiate your firm so it will be your customer’s first choice for VDV and power distribution system installation, maintenance, and upgrades.
The need for branding
Successful firms understand what system performance, project management, after-installation support, and other services the customer wants. These firms then provide those answers at a fair price that recognizes the firm’s value to the customer. These companies often negotiate VDV work and usually earn higher profit margins because they understand what the customer values.
If the contractor attempts to compete for customers’ business on price alone, it will not be successful. There are too many operations with lower direct installation and overhead costs doing VDV work for the electrical contracting firm to be successful using a low-price market strategy. In addition, price never provides sustainable competitive advantage. There will always be a competitor that can, or at least believes it can, do the work for less. Therefore, the company must differentiate itself in ways other than a price.
Differentiating your firm from others
Differentiating your firm from competitors on issues other than price is the essence of “branding.” First, understand what the customer wants and needs, then provide it. Only by knowing what customers value can you differentiate your business from your competitors’ and make price secondary in your customer’s decision. Knowing your customer’s needs and being able to deliver is only the first step. You must also inform your customer of how you can meet those needs.
“Wow” your customers
This phrase is borrowed from Tom Peters who wrote The Circle of Innovation among many other books on competing in today’s topsy-turvy markets and profiting from change. The phrase “wow your customers” is used here to highlight the importance of providing outstanding customer service in the VDV market. “Wowing” your customer is one way of differentiating your firm from competition in the VDV market and “branding” it in the eyes of its customers.
Outstanding service is the key to success in any business undertaking. It is especially important in the VDV market, where there is the potential for long-term customer relations and ongoing work. It is not the original VDV installation, but after-installation services that result in the greatest value for the customer as well as profit for the contractor.
How does the firm “wow” its customers? The most successful ones are sensitive to their customers’ operational needs and work around them wherever possible. These VDV installations are “neat and workmanlike” with cables neatly trained, bundled, and tagged. Cables are properly installed and supported, and raceway and boxes are securely fastened to surfaces and plumb. Work is performed in accordance with industry codes and standards, and system testing and commissioning is performed in accordance with the contract and manufacturer’s requirements.
The quality of cables, terminations, and equipment installation can significantly impact system performance. The effects of poor installation may not be noticed until the customer attempts to use applications that push the system to its speed and bandwidth limits; when this occurs, the system may not perform as designed. This can result in premature obsolescence and require costly rework or replacement to provide the technical capabilities the customer needs. Similarly, poor workmanship, incorrect or lack of cable tagging, sloppy cable installation, and no provision of cable and raceway spare capacity can increase time and cost for routine customer moves, adds, and changes.
From the project management standpoint, “wowing” the customer involves completing the project on time and within budget, while meeting their stated and implied needs. When problems arise, the customer is promptly notified and the problem is resolved as quickly as possible. The firm operates as an extension of the customer’s organization and attempts to identify and resolve potential problems before they impact the project.
“Wowing” the customer in the VDV market isn’t much different than what a successful electrical contractor does daily in the traditional power distribution market. However, providing superior service is very important because it differentiates your firm from competitors. Customers recognize quality work and value the electrical contracting firm’s project management and technical capabilities.
Providing single-point responsibility
You should view traditional power distribution and new VDV businesses as complementary. Competitors both inside and outside the electrical contracting industry often cannot provide full service. The electrical contractor’s ability to provide a coordinated installation as well as single-point responsibility for the overall VDV system performance is an important selling point. Single-point responsibility for overall VDV system performance means there is no finger pointing when the system fails to operate as planned. Instead, the firm works with the customer and suppliers to solve problems and meet performance requirements, which usually results in quicker response problems and increased VDV system uptime.
Customers need to understand the relationship between power quality and VDV system performance. Power reliability and quality depends on a number of things including proper grounding, transient surge suppression, and lightning protection. Customers need to be educated about the advantages of single-point responsibility for the original VDV system installation, as well as ongoing maintenance. The firm’s ability to provide the entire VDV installation should give it a competitive advantage. Many firms’ power distribution work increased as a result of VDV market involvement. In addition, much of this work was negotiated instead of being competitively bid.
Embrace leading-edge technology
Customers are demanding the latest in technology, which has required the company working in the VDV market to embrace leading-edge technology. VDV products and technologies mature rapidly due to the rapid pace of innovation. Some believe only two types of VDV equipment are available today: experimental and obsolete. Being on the leading edge of technology increases your risk because system performance is the designer’s and installer’s primary risk. However, there are always higher profits and less competition at the leading edge of technology.
Successful companies have learned to balance technological risk with opportunity. They do this knowing that the reward is operating in a market that will only mature when technological innovation stops, which is unlikely in the foreseeable future. It is important to understand the difference between the VDV market risk and that of the traditional power distribution market. power distribution, the firm’s risk is in labor productivity. As noted above, the risk in the VDV market is system performance. Providing customers with state-of-the-art systems they need while simultaneously ensuring the VDV equipment meets the customer’s expectations for performance and reliability is the challenge.
How do companies balance risk and opportunity at the leading edge of technology? First, by ensuring they are working with proven technology wherever possible and avoiding technologies that have not been proven in commercial applications. Leo McMillan from McMillan Technology, Inc., recommends that firms control their risk by avoiding “bleeding-edge” VDV technologies that can be very risky.
Second, firms can reduce risk exposure by partnering with system and equipment suppliers to ensure that the customer’s needs and expectations can be met. These partners should have a history of stability and product support.
Third, educating customers as to what to expect from the system once it is installed can reduce risk. The ability of the company to embrace and prosper from leading-edge technology stems from the quality of its management team and installers, not physical assets such as expensive installation and test equipment.
The company must quickly and easily adapt to the rapidly changing VDV to be successful. Innovation is not just in the system or equipment being installed but in the tools and methods of installation as well as the company’s organization and business practices.
The firm can achieve agility in the VDV market by changing its view of it. Traditionally, the company has had a single-product view of the market. In other words, all services offered by the electrical contracting firm had to fit the traditional power distribution market model. This was fine for the traditional power distribution market that has been maturing over the past century but not for the VDV market that is changing almost continuously. The company should view its business as a portfolio of services at various stages of maturity and develop strategies to optimize its overall performance based on this portfolio.
Your portfolio of services needs to be managed very much like any manufacturing firm manages its product line. For example, there are manufacturing firms that have always made and sold soap to consumers.
However, as technology and customer needs have changed over the years so have soap manufacturers’ products and breadth of their product offerings. This is the same model that the electrical contracting firm should adopt in the VDV market. Its services will either change or be replaced as result of changing technology and customer needs. Therefore, the firm must view itself as a portfolio of services that are constantly evolving and changing. Without an expanded business model like this, it will be very difficult to diversify and remain at the forefront of the VDV market.
It is a new concept that the company is a portfolio of services that are in various stages of market maturity and contribute differently to its goals and success. A firm’s portfolio will allow it to continually renew itself and stay at the forefront of the VDV market.
Closing the loop
The successful firm must have capabilities and services customers value and competitors can’t easily provide. Further, the company must also educate the customer about why these services and capabilities are important. Differentiating your firm from your competitors based on the quality and breadth of services you provide is what “branding” is all about.
This article is the result of ongoing research into the impact of information technology on the electrical contracting industry that is sponsored by the Electrical Contracting Foundation, Inc. The author would like to thank the Foundation for its continuing support.
Dr. GLAVINICH is chair and associate professor of Architectural Engineering at the University of Kansas. He can be reached at (785) 864-3435 or firstname.lastname@example.org.