With more than 100 million homes in the United States, the residential service/maintenance market offers electrical contractors a broad spectrum of opportunities. However, competitive pricing, economies of scale and other logistical factors can make this segment difficult to penetrate or succeed in the long run. Following, a variety of electrical contractors (ECs) and industry experts discuss the residential service/maintenance business and share tips to help ECs maximize their participation in this unique market segment.
“Our residential work involves new and existing homes, apartment complexes, and student housing and includes everything from service changes and lighting upgrades to the installation of fire alarms, security systems and other low-voltage systems,” said Dan Bollin, president and CEO of Transtar Electric, Security & Technologies Inc., Toledo, Ohio, a nearly 40-year-old firm that serves northwestern Ohio and southeastern Michigan. Residential work accounts for about 15 percent of the company’s total business.
Mashell Carissimi, CEO/owner of JMC Electrical Contractor LLC, a 6-year-old, woman-owned company in Clinton Township, Mich., agreed that work in this market involves a significant share of energy-saving upgrades.
“We support a number of multifamily apartments or multiuse buildings with residential apartments by installing energy-efficient lighting, heating, controls and smart-home products,” she said. “One of the biggest things now is the Z-Wave, a platform which wirelessly allows communication with and control of different home systems such as alarms, thermostats, lighting, door locks and security cameras.”
The challenge to the contractor in this scenario often involves the home’s construction.
“In a ranch home, you can access what you need through the attic. But, in newer homes with open floor plans, vaulted ceilings, and no attic, it can become more difficult to run wires through the house,” Carissimi said.
West Side Electric Co. in Portland, Ore., has been in the market for 55 years.
“We’ve been serving the residential market since we started and branched out into light commercial and commercial service work in the early 1970s, but residential still accounts for about 70 percent of our sales,” said Karl Jensen, president, West Side Electric Co. “Our activities in this market range from one-hour service calls to multimillion-dollar new homes and remodels, where some of the ‘hotter’ products being installed include LED [light-emitting diode] lighting and lighting controls.”
Bill Attardi, a 45-plus-year veteran of the lighting and electrical products industry, and principal of New Jersey-based Attardi Marketing, said that advanced high-tech lighting is in demand at the residential level.
“Lighting isn’t necessarily about illumination anymore but about control of the whole residence,” he said. “Through new intelligent lighting approaches—primarily driven by LEDs, which are a conduit for connectivity in the home—the MRO/aftermarket business will ultimately slow down as electronic lighting gains in popularity, which will then place the focus on more service opportunities for contractors because LEDs have a long lifespan.”
Our experts share some of their best tips for maximizing your success in the residential service/maintenance business.
Navigate the economics: “From our experience, this market is very cost-competitive,” Carissimi said. “Compared to commercial jobs, which are typically larger and more long-term, residential service work involves a lot of smaller, less time-consuming jobs, but you need a lot more fully outfitted service vehicles because you may have 15–20 calls in a day in all different places. You’ll likely need to invest in a dispatch system as well.”
A unique investment is required in this segment.
“There’s certainly been a large increase in residential new construction and remodeling in our area over the past year,” Jensen said. “We’re able to keep and grow our share of the residential market, even at a higher price, based on the quality of our work, our training and expertise, our manpower, and our commitment to service, which includes being there when we say we’ll be there. We’ve found that builders in many instances would rather pay a higher price to a contractor with demonstrated knowledge as opposed to risking the outcome of a project with a less expensive contractor who’s learning on the job.”
“The key is to have a competitive rate, separate divisions, and a diversity of skill sets—e.g., lighting, cameras/security systems, etc.—so that you can provide a one-stop shop for the customer,” Bollin said.
“Overall, try not to grow too quickly, keep your overhead as low as possible and consider getting a leg up on the process where you can,” Carissimi said. “For example, once we knew what would be required in a group of apartment units we recently serviced, we did prefabrication of outlets, lighting fixtures, and wiring to make them plug-and-play and increase the ease and efficiency of our installation.”
Be an ideal candidate: The residential service/maintenance market can be a great opportunity for a worker who wants to start slow, such as an electrician who wants to become a contractor.
“These individuals can effectively service the low-hanging fruit that other bigger companies might not want to touch,” Carissimi said.
Be a product expert: “Successful contractors need to reinvent their business every couple of years and diversify,” Bollin said, adding that his broad-based firm has since expanded into installing and servicing lighting controls, security systems, and automatic standby generators.
On the lighting side, “Homeowners are entertaining products that at one time they couldn’t fathom or afford, such as residential LED fixtures for downlighting, chandeliers and integrated table lamps as well as organic LED [OLED] panels that provide sheets of light which can illuminate whole walls,” Attardi said. “Contractors are also getting increasingly involved in conversions to solar energy for highly efficient or net-zero-energy homes.”
Be an integrator: As residences in America eventually move toward greater connectivity and smart-home systems become increasingly wireless, circumstances will change.
“Homes won’t necessarily need an electrician anymore but rather a contractor who understands Wi-Fi, Li-Fi and other IT elements and can integrate the whole system,” Attardi said. “Consumers will likely be confused by some of this and contractors will need to be able to explain and demonstrate these more complicated and connected products and concepts. Because it’s a continuous learning process and because things can go wrong with these electronic systems, successful contractors may see an increasing opportunity to build a guaranteed monthly service contract into their offering.”
Identify targets: Carissimi recommended that contractors in the residential service/maintenance business market themselves to real estate companies, property and facility managers, and residential builders.
“Some of these companies offer maintenance agreements to cover their repairs—essentially making the contractor their electrical department—which can offer both the company and the contractor sought-after security,” she said.
Bollin’s firm has experienced success by aligning with its local utility company, Toledo Edison, to provide service upgrades.
“There are a lot of older homes out there with outdated 60–100-ampere service that no longer supplies adequate power for today’s modern outlets and appliances,” Bollin said. “So, we’ve capitalized on the opportunity to partner with the utility to do some of their residential service work.”
Alignment with homeowners’ associations (HOAs) and over-55 communities can also provide a potentially continuous source of contract work for a proactive contractor in this field.
Quality counts: “If you’re not in the residential service/maintenance business now, you need to make sure that you have an estimator/project manager and electricians who are experienced in this market,” Jensen said. “It’s very different than the commercial market in terms of the way the work is done, the timelines and the customers you’ll be dealing with. If you want to grow your business, you need to make sure you have a good reputation for quality and service and that you keep getting your name out there.”
“Integrity is key, and you need to keep your word and treat people with respect and in a professional manner,” she said.
As a show of both pride in the company and their investment in the industry, JMC’s 39 employees are all outfitted with logoed attire to reflect well on themselves and the firm they represent.
Market yourself: All experts agree that a strong web presence is a critical marketing tool in today’s competitive business environment.
“Residential customers all go online, so be sure to have a professional website and consider offering how-to videos online to demonstrate your expertise and investment in the field,” Carissimi said. “Getting on Angie’s List is another great tool, as it prequalifies you and opens you to referrals and testimonials.”
Social media use is key.
“It’s imperative that you monitor social media referral and review sites like Angie’s List, Yelp, etc., as these can be very beneficial for growth with positive reviews (or very harmful with negative ones),” Jensen said.
Network: “There are several residentially focused organizations that we network with, including the [National Association of Home Builders] and, local to us, the Oregon Remodelers Association,” Jensen said. “In addition, we have a good relationship with several property management companies and homeowners’ associations and also host a pizza gathering every year with several of our builders as well as other builders we’d like to work for. They enjoy meeting their competition and discussing issues they have in common without giving away trade secrets.”
“It’s great to join networking groups,” Carissimi said, who serves as vice president of the Detroit chapter of the National Association of Women in Construction. She said it’s been an effective way to meet residential builders, property managers and other market influencers.
“The bottom line is that you need boots on the ground,” she said.