With increasing numbers of installers entering the gutter industry, it can be a challenge to set your business apart from the competition. To gain an edge, some companies have become dealers of specific products, while others have gone a step further and become franchisees.
Dealer or franchisee: What’s the difference? And what are the benefits of each approach? To find out, Gutter Opportunities talked to representatives on both sides of these questions.
Andy Lindus, sales and marketing manager for Lindus Construction/Midwest Leaf Guard of Baldwin, Wis., is part of a family business that boasts three decades of experience. The firm is an Englert dealer that serves western Wisconsin and the Minneapolis metro area. “We’ve had a great relationship with Englert for many years,” reports Lindus, “and they’ve helped us on everything from warranty to inventory support.”
Dealers represent a product and therefore brand themselves by association. If the product is recognized by consumers and effectively marketed by the manufacturer, or possesses unique qualities that make it highly sellable, then the dealer benefits by that association. It’s in the best interests of the manufacturer to support its dealers — as Lindus attests — but the dealers, though they may have an up-front dealership cost, pay no franchisee fees or percentages of their sales.
Another gutter installer who has opted to be a dealer is Bruce Andrews, owner of Bruce Andrews Seamless Gutters in Maiden Rock, Wis. The company has exclusive relationships with Gutter Helmet and SnapLock Gutter Systems. “Our regional manager for Gutter Helmet helps us with any problems that come up and they have a great warranty department,” he says. “More recently, we began a relationship with SnapLock and they’ve helped us know what to do in certain situations and how to take care of any issues.”
Yet Tim Staub, founder and CEO of Gutter Genius LLC in Richmond, Va., challenges installers to consider the benefits of franchising. “The industry is changing as the market gets flooded with more competition,” he advises. “To stay profitable you need a proven business model that works. When you buy a dealership, you get access to a product and a territory. When you invest in a franchise, you get a developed business model, ongoing support systems, and training in marketing, selling and managing your business. And you get a network of other franchisees.”
Getting the Best Deal
Whether an installer is a newcomer or veteran, sound research is required before jumping into a dealer contract. As Lindus suggests, “When you begin your search, evaluate a company’s system for service, their products and materials and their marketing and sales support. Does the company have a ‘system’ in place? Does it provide opportunities to network with other dealers? If your machine breaks down or you have some problem, who will you deal with?”
Lindus believes his relationship with Englert gives Lindus Construction certain advantages over competitors. “As a Leaf Guard dealer, we’re not just one company. We’re 85 companies from a branding standpoint,” he explains. “We sell the same warranty and installation process as the others, but we’re unique in our market. So we can share our best ideas with other businesses without being threatened.”
Yet Lindus cautions not all product dealerships are equal. “I’ve heard horror stories about manufacturers folding and leaving their gutter dealers holding the bag,” he relates. “So even if you’re a dealer for a company that seemingly has decent products, a dealership could still be a drawback if the manufacturer doesn’t back its products.”
On the other hand, a dealer relationship with a reputable manufacturer can open new doors of opportunity. Lindus Construction was so convinced about the benefits of its association with Englert, the gutter installer decided to take on Englert’s roofing and siding products as well.
Andy Lindus says being a dealer makes his job as sales and marketing manager a lot easier. “Englert employs a marketing agency,” he explains, “and they’ve setup a website so that dealers can download television commercials and radio and print advertisements. We can even authorize newspapers to pull ad copy directly from the site. And we can tailor each piece to fit our needs.”
Manufacturer support has likewise been a boon to the operations side of Lindus Construction. “Our representative is always looking out for us,” he notes, “whether it’s getting materials shipped to us — or even finding cheaper pricing for the shipping.” As an added service, Englert monitors inventory on aluminum product and alerts Lindus Construction if shrinkage may have occurred.
Though Lindus has had a positive dealership experience, he urges installers to do their homework. “Always find out how many other dealers they have and track down at least four of them to talk to about the product,” he counsels. “Even if the company sends you references, it’s good to find your own sources to double-check that you’re making a good business decision.”
Since founding Bruce Andrews Seamless Gutters eight years ago, Andrews has learned how branding can build success. “One of the biggest selling points of being an authorized dealer is offering a top-quality product you believe in,” he asserts. “To build customer relationships and make sales, you must have a product that people are looking for. And on top of that, as a dealer I can offer a fantastic warranty.”
Because of his positive dealer experience with Gutter Helmet, Andrews decided that another dealer relationship — this time with SnapLock — could add to his success. Yet the benefits of being a dealer, he adds, go beyond marketing. “Having a great product that works under all weather conditions, year after year, is vital,” he says, in order to avoid call-backs, build a positive reputation, and get referrals. “If the product you install stops working, you’ll have nothing but problems.”
To prevent this situation, Andrews advises installers to “be sure the product has been out there for a few years. In my case with Gutter Helmet, I’ve had to call the regional manager about an issue only once in eight years.” Finally, he points out, “Learning to install the product is also important. So before you begin offering it, be sure to learn from another dealer how to properly install the product.”
Another Business Model
Tim Staub agrees that quality is the key, both in product and service. When he founded Gutter Genius, his research suggested that “the level of support provided by manufacturers varied greatly. So as an installer, you’ve got to ask whether a supplier is really going to take care of you.”
Today’s uncertain economy also means installers, whether independents or dealers, are feeling pressure to drop prices and cut profits just to stay afloat. Staub suggests franchising provides a solution by offering installers a business model that boosts customer service and increases profits, while achieving savings that can be passed along in the form of lower prices — which in turn helps close the deal with homeowners.
In the traditional dealer business model, Staub explains, “Once you pay for everything — labor, sales commissions, materials, advertising — most gutter installers are looking at a pre-tax margin of 6 to 8 percent.”
But because Gutter Genius and its franchisees have a direct relationship, the manufacturer can pass along factory-direct materials pricing to its installers with minimal transfer costs. “We collect franchise fees on sales, so we only win when our franchisees wins.” The result, says Staub, are pre-tax margins substantially above industry averages.
When Gutter Genius and a new franchisee team up, continues Staub, “the key to a successful launch in the franchisee’s territory is positioning the brand — and then keeping the brand promise with great service,” says Staub. The company trains its installers with “a disciplined process that ensures a positive experience for the customer,” he adds. As word gets around to family, friends and neighbors, Staub says, “We get 90 percent of our leads from referrals, which then translates into a close rate in excess of 80 percent.”
In addition to a product and a territory, the franchise model offers installers access to training on the management side of the business. In that vein, most franchisors provide their franchisees with sales and service training, as well as access to technology that can help gutter installers operate more efficiently. Gutter Genius, for example, furnishes its franchisees with handheld Palm Treos, a customer call center, access to online manuals, electronic ordering of products and promotional materials, chat rooms to talk with other franchisees and an online calendar system that allows installers to schedule sales appointments and installations, arrange warranty support.
Many gutter installers can and do succeed as independents. The freedom to choose a diverse product line from a variety of manufacturers, according to the needs of each market and the strengths of each installer, can have its advantages. Installers can build their own brand identities, separate from any supplier. But it is not the only model, and gutter installers searching for an edge in an increasingly competitive marketplace have other options.
Becoming dealers or franchisees may require installers to relinquish some independence. Yet the tradeoff can be access to highly sellable quality products, association with a recognized brand, the benefits of national and local advertising, support and training in sales and operations and a network of other installers willing to share their most successful ideas.