Specialty Installation Is Your Most Valuable Asset
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Specialty Installation Is Your Most Valuable Asset
Tim Reed
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In today’s market, fireplace retailers are struggling more than ever to maintain margin in the midst of being squeezed from nearly every direction. There was a time in our industry where most reputable products were only sold in specialty hearth stores, and the gap between their offerings and what was available elsewhere was stark—but no longer.
In recent years, we’ve seen more and more manufacturers begin to offer their products through online and big-box channels in order to recapture their profit levels from the pandemic years. Whether that’s right or wrong is a separate conversation, but the effect is that specialty retailers are forced to compete against companies selling similar products that run a completely different business model than them—often with much less required margin.
But there’s a secret weapon the local hearth retailer has that big-box and online-only vendors haven’t cracked the code on yet.
Specialty installation.
This is singlehandedly the most important asset in your company, and it’s something you can leverage to maintain your value—and margin—even as competition mounts around you.
For years, the retailers in our industry have looked to product exclusivity as an advantage over outside competition. Now, to be clear, product exclusivity can be a huge advantage, and if it’s available, take it. But don’t plant your flag there. Because you can’t control it. If a new sales manager comes to power or a manufacturer’s quarterly numbers are down, all bets are off.
Given that reality, you should build your company’s value around something that you can control.
Specialty installation.
You should build your company’s value around something that you can control. Specialty installation.
This is the most valuable part of your business—and something that customers are happy to pay for, even in the midst of all the competition around you.
If you want your company to stand out in a world of noise, then building it around specialty installation is the right choice. Here’s how you do it.
Why Specialty Installation Matters More Than Ever
One of the biggest changes we’ve seen in our society over the last 10 years is that we now fully live in a service economy rather than an ownership economy. Companies like Amazon, Uber, and DoorDash poured the fuel for this years ago, but the pandemic lit the match—and it’s now fully ablaze, making speed and convenience the driving factors of most purchasing decisions.
Think about it: There are probably less expensive options online than what you might find on Amazon, but the fact that it can be on your doorstep the next day (speed) and they have your payment information already saved (convenience) makes Amazon the de facto option for many commodity purchases.
The same is true for Uber (or any ride-sharing company). If you’re in a new city, there’s likely a cab company less expensive than Uber, but when faced with trying to figure out which one is best (inconvenient) and calling the company to schedule a ride (slow), most people will gladly take the convenience and speed of Uber.
Of course, it isn’t just these obvious examples; I would argue that many of our modern conveniences are fueled by the service economy. Think about Spotify or Apple Music—paying for the service of exactly the right music exactly when you want it. Or think about Safelite—coming to your house to repair your windshield so you don’t have to drop your car off at the shop and find a ride home. Even the local grocery store offering curbside pickup has found a way to step into this economy.
So what does this have to do with specialty installation? Everything.
Most of the people coming into your shop don’t have the expertise to install any of the products that you sell, and they aren’t the least bit interested to learn. Rather, they want to find a model that works for their home and pay you to install it safely. This seems elementary, but it’s worth thinking about.
Imagine you were looking for new windows for your home, and you visited two different shops. The first company helps you pick out an incredible set of windows for your home, but after providing a quote on the materials, they inform you that they don’t offer installation, but they recommend three different contractors who do. So you leave with a quote for the windows and three business cards for the installing contractors. The second company helps you pick out windows for your home, explains that they offer in-house installation labor, provides an estimate for the entire project before you leave, and offers to come to your house later that week to confirm all the measurements for your project.
Which company are you going to go with? There’s no question.
Our products have two factors that force the necessity of specialty installation for most customers: risk and complexity. If there’s a mistake, the house might burn down. People generally understand this and are willing to pay an expert to make sure it’s done right.
Our products have two factors that force the necessity of specialty installation for most customers: risk and complexity.
This article is brought to you by Associated Energy Systems.
Now, this doesn’t mean that customers are willing to pay any price for specialty installation, but it does mean that it’s an incredibly important factor—if not the most important factor—in their decision. The companies that understand this and make it a core part of their culture are the companies that will win.
Yes, big-box and e-commerce stores probably have better prices. But that’s okay—because in the service economy, you don’t actually need the best price if you understand the 20% rule.
The 20% Rule
What would you rather pay at a restaurant: $10 for the raw ingredients of a pizza that have to be taken next door to be cooked, or $12 for a pizza that’s cooked for you and brought to your table ready to eat?
If you’re like most people, you’ll pick the second option.
Why? Because the convenience of having the pizza brought to you is easily worth $2 compared to the hassle and uncertainty of going next door, hoping it gets cooked right, and bringing it back in to eat.
The same principle applies when it comes to specialty installation.
There was a day when the best price in town would win. It was the old Wal-Mart mentality— stack ‘em high, price ‘em low, watch ‘em go—but this is no longer true for the products in our industry.
Dan Woodward says that in today’s market, you don’t have to have the lowest price, nor should you. Instead, you just have to have a competitive price. After all, a competitive price that removes the hassle, worry, and risk of coordinating installation between different contractors will beat a “best” price every time that leaves the customer in charge of a project they didn’t want to manage in the first place.
And this informs the 20% rule, which goes like this: “Most customers will pay up to 20% more for a product or service that’s less of a hassle than the alternative.”
Most customers will pay up to 20% more for a product or service that’s less of a hassle than the alternative
I often see retailers point to their higher prices as the biggest reason they aren’t winning more work over e-commerce and big-box stores, but this often isn’t the case.
Just like Han Solo’s question to Luke in the Mos Eisley cantina—“But who’s gonna fly it, kid? You?”—customers buying online or from a mass merchant still have to figure out who’s going to install it, and how much that will cost. If you’re able to survey your market for average installation rates and make sure your prices for materials and labor are within 20%, you aren’t going to be losing jobs because of price.
This is true for customers who pay cash out of pocket and for customers who finance. Here’s why.
Customers paying for their fireplace project out of their pocket feel the pain of the purchase and care tremendously about what’s at risk by parting with this money. The peace of mind provided by taking on the liability of product procurement and installation is easily worth the extra dollars spent in comparison to saving 20% and being left holding the bag when something goes catastrophically wrong.
If this is true for the extra $2 on a pizza to make sure it’s cooked right, it’s true for the extra $1,500 to ensure a fireplace is installed right.
Customers who are financing don’t feel the same level of pain from the purchase because the amount is so spread out, but they do feel the risk of something going wrong in their home. By offering to handle the installation for them, you take that risk off the table, which is a huge relief, and the extra five to ten dollars a month isn’t anything that will be a barrier to their purchasing decision.
In a service economy dominated by speed and convenience, you can use the 20% rule to win more jobs and stand apart from the competition—if you’re able to communicate to customers in a way that shows them why it’s so important and that it’s unique to your company.
Valuable to the Customer + Unique to You = Unshoppable Advantage
One of the most powerful concepts I’ve ever seen in sales is something that Tim Rethlake showed me a number of years ago called “The Value Wedge.” Coined by Erik Peterson and Tim Riesterer in Conversations That Win the Complex Sale, a value wedge is created when you merge two important things: something important to the customer with something unique to your company.
If you don’t have both of these, then you have a parity sale—a sale that’s important to the customer, but isn’t unique to you, or a sale where what you offer isn’t important to the customer. And you’ll lose a parity sale to e-commerce and big-box stores every day of the week.
But when your company has something that’s both important to the customer and unique to you, it creates an unshoppable advantage where your company is simply the only option.
Now, when going up against e-commerce stores or big-box businesses, specialty installation is your value wedge, plain and simple. It’s important to the customer, and the companies you’re going up against don’t offer it, so make sure this is talked about night and day until the cows come home. Your ability to coordinate the installation is a value wedge that’s more important than the product itself.
Your ability to coordinate the installation is a value wedge that’s more important than the product itself.
But taking this to the next level, what could be added to your specialty labor to further solidify your value wedge against everyone else your customer could buy from?
Consider extending the manufacturer’s warranty on all products you sell that are installed by your team. This is a huge advantage for your company in the eyes of most consumers and can tip the scales overwhelmingly in your favor.
Or think about opening up Saturday installations for customers who are willing to pay an extra 25% for the labor. I’m guessing that most contractors installing for big-box stores won’t be working on the weekends, and the convenience of not having to take work off is easily worth the additional dollars spent in customers’ eyes. Plus, if you split the additional revenue 50/50 with your installers, you’ll probably have people jumping at the chance to work next weekend.
These are just examples of what a value wedge can look like, but the point is that it all centers around your installation team. They’re the hedge that’s keeping Home Depot, Amazon, and every other mass merchant from completely disrupting your business.
Unfortunately, many companies treat their installers like old maids: They underpay them, expect them to clean up everyone’s messes, and think that they’ll always stick around because it’s the only thing they know how to do.
And it doesn’t matter how good your value wedge is, if you build your team of installers this way, the chickens will come home to roost soon enough, and your hedge of protection will be gone. And when this happens, you trade “specialty installation” for “hired help” and are left racing to the bottom with your prices because it’s the only differentiation left.
But it doesn’t have to be that way.
Your installers can live up to the promise of your value wedge, win more jobs, and push the flywheel of your company faster than ever if you’re willing to make an investment to treat them like the professionals their craft demands.
Happy Installers Create Customer Referrals
A former boss of mine always used to say, “Customers only care about two things: Which product they picked out and what happens the day it gets installed.”
He’s not wrong.
The installation will leave a bigger impression on your customer than anything else that’s happened up until that point. And the biggest part of this impression is made by the installers’ attitudes when they are on the jobsite.
In short, happy installers leave an impression that wins referrals, and miserable installers ensure your company is never recommended again.
Now, nothing you do will guarantee that every installer is perfect at all times, but there are investments you can make to stack the deck in your favor. Remember, when you show your installers how much you appreciate them—and do things to make their lives easier—you’ll be surprised how they rise to the occasion for you.
With that in mind, here are a few ideas.
Consider providing sack lunches for your installers like a prominent retailer in Washington. At the end of each week, ask all installers to complete a checklist of what they’d like to eat each day the following week. The benefit of this is huge—installers eat healthier, save hundreds of dollars each month not going out (or at the very least, the time each morning it would take to make a lunch), more time is spent on the jobsite because no one is driving to go get fast food, and teams get off work earlier.
Or think about providing a weekly bonus for installers who are able to complete all of their jobs on time that given week. Yes, this is something that you have to track. Yes, your installers are already making a good wage. But what would it be worth to you to guarantee that all of your installations for the week were completed on time and didn’t drag out? Certainly, at least a couple of hundred dollars.
Finally, what if you made the commitment to take every installer in your company out for lunch once a month to hear about how they’re doing? During this lunch, you can ask all kinds of questions about how things are for them personally, learn how they feel like things are going at work, get feedback on how you’re doing as a boss, and find out how you can help them get to where they want to go with their lives.
Any of these suggestions, over time, will make a massive difference in the attitudes of your installers. And happy installers with can-do attitudes win referral work—lots of it.
Remember, people who buy $10,000 fireplaces have friends and neighbors who buy $10,000 fireplaces, and they can’t help but do it. Because our products are social. And any bit of grace that your installation team shows a customer will likely come out in some way, shape, or form in the form of a story later on. Whether it’s taking the time to show all of the tricks to lighting a fire in a new EPA-certified wood stove, putting on booties and going out of their way to protect the workspace before getting started, or parking in the road and coming to the door to ask permission to park in the driveway—the care shown step by step by step will swell up into an incredible experience that overflows into referrals.
The care shown step by step by step will swell up into an incredible experience that overflows into referrals.
If You Don’t Value Your Installation, Your Customers Won’t Either
Which is more important: a fireplace or an in-house installation team? Well, as much as some manufacturers wish it were different, there’s no question that it’s the in-house installation team.
How do we know this?
If you were to call all of the customers on your installation schedule and let them know that there was a massive freight problem and the model they picked was on indefinite back order, but there was a similar model from a different brand available for the same price that could still be installed on the scheduled day, most customers wouldn’t blink an eye.
Now try reversing it.
If you were to call all of the customers on your installation schedule to let them know that there was a problem with your in-house installation team, but you could provide a number for a contractor who could install their products, you’d have a riot on your hands.
Because the reason customers are coming to you is for specialty installation.
Yes, the product matters—to a degree. Yes, the showroom matters—to a degree. Yes, the price matters—to a degree. But without specialty installation, you’re bringing a water pistol to an Old West shootout and expecting big-box and e-commerce stores to do the same.
Specialty installation is the most valuable asset you have in the service economy.
Customers want it, they need it, and they’re willing to pay for it.
Sure, big-box and e-tail can get them a fireplace for cheap.
But who’s gonna fly it, kid?
In today’s world, speed and convenience are what customers desire most—and that’s exactly what specialty installation provides. The companies that understand this and push into it are the ones that will win in the days and years to come.
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Tim Reed
Tim Reed is the President of WhyFire, where he helps business leaders in the hearth industry take control of their companies by providing them with sales tools to save time and make money. He's also the host of The Fire Time Podcast, which is actively helping thousands of people grow themselves—and their companies.
