From the beginning of our visit to ECSI, a subsidiary of Hunt Electric, Bloomington, Minn., there was no doubt we had landed in the midst of a very busy organization that fully aspires to be, as they describe it, “a team of low-voltage electricians, technicians and system integration experts.”
While we have known many executives’ paths lead to traditional electrical contracting companies, we were especially curious about the career path Jerry Hein followed as a founder of ECSI that eventually led him to his current role.
For the benefit of their future success, we think electrical contractors should strenuously seek to redefine their business to encompass the complete gamut of capabilities that their company must be poised to deliver in the coming years.
Take us back to the beginning of your journey that brought you to the head of ECSI, an organization of some 150 people with a steadily climbing trajectory.
I always loved tinkering with electronics. At 12 or 13, I was constantly creating different kinds of circuits on a breadboard. In my late teens, there came a time when I helped a neighbor fix her TV. She suggested that I investigate the technical school that her son had attended. Shortly thereafter, I enrolled and earned a two-year degree. From there I went into a progression of stints in satellite TV, security, fire alarm, data and AV systems. Then I decided to start a business.
Let’s talk about customers’ needs and the changes you see happening in the marketplace that redefine service and maintenance.
The biggest difference is that customers are more open to a service and maintenance plan. After all, every place you go as a personal consumer, they try to sell you an extended warranty. I was in Fleet Farm the other day and they asked me if I wanted to buy a protection plan—on two shovels and a pitchfork!
We also see customers doing more budgeting for their annual service and maintenance costs. They like the idea of anticipating their yearly service and maintenance expenses as fixed costs. They want to “set it and forget it!”
Extended warranties and annual budgeting open the opportunity for recurring revenues. But, for this kind of business to grow, you need scalable recurring revenues. Can you scale them?
Absolutely! We typically draw from our construction workforce to move individuals into service trucks. We fully understand that we will not grow [our low-voltage workforce] through installation work. We will grow it through service and maintenance.
In addition, we are utilizing cloud-based technology to support our installed base of security and AV systems. Customers love this. It means, for example, that they don’t have to maintain on-site servers holding the terabytes of data capturing 30 days of imaging from their security system cameras. It means that we can make remote updates for them, too.
There’s a well-known adage that says, “Nothing happens till somebody sells something.” How do you make things happen at ECSI?
We do chase bid work, including big jobs for public entities. But we also have several commissioned salespeople who are out every day winning private work directly for end-users. That is the source for most of our service and maintenance work.
Such was not always the case. In our early days, when we could not afford to wait year after year for receivables from a long stream of service and maintenance income, we went for immediate revenue. Then one day we won a $1 million low-voltage contract, which we intentionally had bid at a very tight price, knowing that it would likely produce $100,000 per year in service and maintenance and pull-through income. That convinced us of the rewards of recurring revenues from service and maintenance.
ECSI is an organization with different capabilities prepared to address an even larger number of customers’ needs. Does this foreshadow the business model that traditional electrical contractors should contemplate?
In collaboration with Hunt Electric, we can offer customers a total spectrum of electrical solutions right now. They like that.