Digital Connection, June 2006
Selling Clients on the Benefits
Marc and Jennifer Leidig, Ambience
Ambience Systems, A $2.5 million dollar high end home integrator in Clifton Park, N.Y., has been on a roll lately, pulling in seven high-profile installation awards in the past year alone. The company has gained national media attention through creative marketing, increased service and product sales with existing customers, and implemented new technologies to gain incremental business. Marc Leigig, CEO and President of Ambience systems, and his wife jennifer, Director of marketing, recently spoke with Digital Connect editor Jeff O' Heir about the state of the home integration industry. Here are excerpts from that interview. For more of the interview, go to DigitalConnectMag.com.
DC: What's the biggest concern you have about today's consumer-electronics and digital home industry?
Marc Leidig: This industry has a lot of growing up to do. I find everyone is jumping into this marketplace: electricians, IT guys, retail stereo stores, etc...They're beginning to dabble in A/V installs, some are getting into networks, some are getting into home automation. In a lot of ways, its a train wreck. You have to ask, how qualified are most of the people do do what they are doing? Today there's no quality control. The vendors are desperately trying to expand their marketplace, adding people that are not qualified. Twenty-five percent of our business last year was cleaning up messes caused by other companies. That's the big concern to me because ultimately that will taint the customer.
DC: What needs to be done to increase market awareness of the skilled, professional integrators that provide proven technology solutions?
MARC: There are a lot of models the industry can look at. (For example) what the kitchen industry is plugging for is the idea that the kitchen should be 30 percent of the value of your home. We're trying to tell people, look, you're going to be looking at technologies that are anywhere between 5 percent and 15 percent of the value of your home. Home owners don't understand that. And physically their kitchen will be used less then it has in the past 20 years. In our industry, statistically, (the technology) is going to be used more. One thing we really need to sell (customers) on is we are not selling technology, we are selling benefits.
DC: You recently dedicated one of your best employees to providing service, particularly calling upon past clients to see if they need new products or upgrades. How is that going?
MARC: It's the new revenue stream we're finding from that existing clientele. Just interacting with old clients or people that have bought old client's houses, the new sales opportunity starts right there. That has been enormous.
DC: What upsells is he making through existing clients?
MARC: he did about $100,000 in revenue in a single month. And he has about 20 percent of our overall sales just for this year. The $100,000 was essentially from three clients. One client was somebody who has purchases a previous client's home where we put in a nice home theater. The new client ended up buying a surround sound system for the bedroom with a plasma TV and a mirror over it. The woman is now mapping out all the different things she wants to do, including putting another plasma TV downstairs in the living room. (The second case) was an existing client to upgrade his existing system. He had put in a media room with a projector 10 years ago. So we upgraded it to a new DLP projector with HD, and we're updating a family room with two plasma TV's . The third was a client who has called us 3 years ago to fix a system done by another firm. When we contacted him in January he told us the batteries of one of his touch screens were dead. That led us to replace his media wall. We took out a rear projection TV and stacked two 61-inch Runco plasmas and flanked them with 32-inch Runco LCD's. This all started with a bad battery.
JENNIFER LEIDIG: There are a couple of lessons there. I would say a good 25 percent of our business happens because we had to go in a fix other people's jobs.
DC: Any recent shift in the type of client, demographic of home you've been serving?
MARC: We are certainly trying to cultivate a more moderate end, because the high end can certainly get pretty out there. Some of those high-end jobs take five, six, seven years to do. I'd definitely have to say that we have seen many more women really involved in the projects we're doing. It helps that we focus on the benefit aspects of what we do, rather than on the technology.
JENNIFER: the more clients you have, the more opportunities you have for word-of-mouth advertising.
DC: How will you change your solution or product offerings to tap into the more moderate jobs?
MARC: One of the things that manufacturers are doing is coming out with more modestly priced products. Runco's got projectors now at $3,995. Creston continues to come out with smaller-end processors and less expensive touch screens. Creston's Adagio line is a great example....Lutron is another one that has come out with great packages over the years. They've dropped their prices so we've been able to offer services to a broader range of people. The nice thing about that from a business point of view is that your increasing your relationship with a partner you've selected years ago., you're now doing more volume with them, and you don't have to learn a whole new product line.
DC: What's your mix between new and existing homes?
MARC: It's 50/50. Quite frankly, if we could do 75 (percent) existing homes, we'd go after that. Thats something we're working on- to figure out what's the most effective way, marketing wise, to go after existing homes, because it's a much bigger market.
DC: Can you break dow revenue and profit of product sales vs, that of service?
MARC: For revenue, it's 70 percent products and 30 percent services. On the profit side, it's 60 percent products and 40 percent services. The problem with a services-based model is that homeowners are not used to that kind of situation. Businesses will pay for service contracts, they understand them. Individual homeowners can't understand that.
DC: Has there been any major shift or trend in the industry that has caused you to do anything different?
MARC: We've focused on home networking for some time, providing hybrid networks and wireless solutions. We embraced that a long time ago, whereas I know a lot of people in our industry are scrambling to get up to speed with that. We're using a lot of remote management. What's interesting is that there is obviously a focus on the new companies that are doing IP-based solutions, and we've taken a slower approach to embracing them. And I haven't has a single client come to me and say they've wanted an MCE (Microsoft Media Center Edition) system as part of their house. I haven't done a single one.
DC: Do you think that as the PC-related technology becomes more proven in the home there will be more acceptance, or do you think that's years away?
MARC: It's difficult to say. The (question) is if Microsoft's embedded MCE stuff does not sell as fast as they want, will they just abandon it? I would rather sell a client less of a system but of better quality that we can grow with then sell them more of a system of lesser quality. My concern is if we turn into what the IT industry did, which was become service heavy and product weak, the fundamental way that homeowners deal and adapt to that business model will be an important part of the success.
