In the first post of our contractor blog series, I touched on the transformational challenges and competitive pressures that spur many electrical contractors to search for opportunities beyond the traditional “install and go” business model. How contractors choose to embrace digital transformation will be unique, and we know that not everyone in the industry is fully convinced of the payback. But, what if you are asked to instead participate in a highly competitive market, only presenting solutions that minimize repeat business opportunities? I believe the answer would almost universally be NO.
Generate a recurring revenue stream by adjusting your business model
Moving up the value chain and tapping into higher-margin projects and regular revenue sources should not be complex — in fact, it could be as simple as adjusting a few variables you’re executing on in your current business model.
Right now, that model likely includes; revenue and cost considerations, customer segment and channel aspects, partnership and supplier elements, plus the product and/or solutions on offer. Factor in the customer needs and how the products and services on offer address them, and you have a typical industry business model. Altering any inputs, particularly those that improve the benefit to cost ratio for the customer and the fundamentals of a contractor’s competitive position, can significantly improve.
Solving more significant customer problems, offering more capable solutions, or partnering to develop your expertise are prime options for upping your business’s value proposition and a great way to expand into value-added service offerings.
The future of electricity is digital, smart, and connected
Digital transformation is quickly changing the industry. Customers from residential to critical application areas seek enhanced sustainability, increased efficiency, and smart, IoT (Internet of Things) connected energy management capabilities for their new installations and retrofits. This opens a wealth of fresh revenue-building opportunities for contractors, including:
- Due to the complexity and interconnectedness of modern power, control, and communication systems, companies increasingly want a single point of responsibility to oversee installation, maintenance, and upgrading. Contractors can leverage this trend by recommending solutions and services along the entire lifecycle of the product. It can then result in closer customer relationships, along with its enhanced opportunities to cross-sell, up-sell, and install higher-margin, integrated solutions and upgrades.
- Maintenance contracts
- Many larger organizations are considering downsizing non-core functions like electrical maintenance to outside specialists to cut costs. Meanwhile, smaller companies without internal expertise are looking for help keeping their increasingly complex and business-critical systems running. The need is pressing and represents an excellent opportunity for contractors to switch from low-margin reactive repair jobs to programs that generate recurring revenue, such as maintenance plans based on predefined periodicity schedules and/or predictive analytics.
- Value-added services
- The rapid adoption of connected technologies like smart panels, IoT, and cloud computing has primed forward-looking electrical contractors to be able to offer their customers a complete range of after-installation services. For example, the uptake for UPS monitoring and maintenance services is high and represents a prime opportunity for contractors to add additional revenue streams. But the pandemic, combined with economic trends, is speeding the movement away from in-person visits to emphasize remote monitoring and alarming electrical assets for early detection of anomalies and failures.
Getting what you need, to give your customers what they want
Even if you’re not quite ready to complete a “paradigm shift” or are undecided on where to begin, getting started is easy. The solutions and benefits, plus education and certification paths, are available, all in one place.
You can start your journey with the assistance of the mySchneider Contractor Program. It offers the digital tools, educational assets, and solution knowledge you need to accelerate your trajectory to a value-added services provider. Enrolling in the program is free and provides you access to exclusive benefits and personalized digital resources. You can also learn how other contractors and industry experts have solved their on-the-job installation challenges and upped their service offerings by connecting through the Schneider Electric Exchange forum. Start creating the electrical contracting business of tomorrow with the tools and resources at your disposal today.