At first blush, it seems like a no-brainer: replacement contractors need quality leads. Billions of leads flow through big-box home improvement stores annually. So why not partner up?
That’s exactly what contractors across the country have done with chains such as Home Depot, Sears, and Costco. Still more contract with a firm called the Home Service Store, which partners with the chains BJ’s, Lumber Liquidators and Floor and Décor. For installers who are the right fit for these partnerships, the arrangement can be a lucrative lead generation machine.
Consider for a moment that Home Depot alone processed 1.4 billion transactions in 2014, according to Chris Giallanza, with the company’s external communications division. Nationwide, he said Home Depot works with thousands of installers and offers more than 50 professional installation services. The Home Service Store didn’t respond to interview requests, but promises installers they can reach “millions” of affluent homeowners on its website.
In 2014, one Home Depot official spoke at the Joint Center for Housing Studies of Harvard University Remodeling Futures Conference and said the company's home services division does about 7,000 projects a day and subcontracted 4,200 companies with 60,000 crew members.
For contractors, just getting a tiny slice of that business can be life changing. “One Home Depot store can generate more sales leads in a day than most companies do in a week,” said Vaughn McCourt, a lead development consultant whose expertise includes the sell finish and install, or SFI, market of big-box home improvement stores. “If you can get an SFI deal, you can make a lot of money.”
Just ask Denise Firkus, executive vice president and owner of Crew2. The company started as a two-person operation, but once it partnered with the Home Depot to install flooring, it grew exponentially. Today Crew2 employs more than 200, along with 2,000 subcontractors. It now offers seven different installation services at nearly 300 Home Depot stores in 17 states. “Volume definitely happens with Home Depot,” Firkus said.
For example, she said the firm installed more than 8,000 water heaters last year through its partnership with the Home Depot. Meeting that volume means having a call center staffed seven days a week from morning until 7 p.m. with an after hours emergency contact. It also means being able to offer same day installs. “The Home Depot takes an extraordinary amount of pride in providing top-notch customer service,” she said.
That goes for other big-box home improvement stores as well. And the vetting process can be arduous. Not everyone who applies gets selected. Those installers who are selected typically must pay a non-refundable application fee plus another charge for employee background checks including office workers. Home Depot charges $69.50 for those checks.
Next, installers must provide proof of insurance (Home Depot asks for general liability, auto, workers compensation) and necessary licenses.
But the real test comes when contractors get the green light. McCourt said being a big-box installer means working by the company’s rules — and the prices they set. Because volume is higher, big-boxes typically expect installers to charge less for jobs. That trade off can work, but only if installers know how to take advantage of the volume.
“I’ve seen several companies who got in and got out very, very fast because they just couldn’t make money on it and compete,” he said. “They can price themselves right out of the market.”
McCourt said companies who fail tend to focus on installations, rather than sales. “The key is lead generation, and converting those leads into sales,” he said.
Again, doing volume sales requires a more sophisticated approach to business than some contractors are prepared for, said Firkus. “It’s not just a chuck and truck operation,” she said. “You need to be organized.”
But that doesn’t mean a company has to be huge to be successful, she added. “There are plenty of small installers with the proper business alignment who can do business with the Home Depot,” she said. “If you’re running your business in the correct way, you’re already set up for it.”