The Future of Installed Sales

By: Todd Banhidy

Founder & Lead Architect | Installed Sales Subsidiary Architecture & Delivery

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For over 40 years, my experience within the installed sales industry has spanned diverse markets across three continents, covering nearly every product category, service type, and distribution model. Throughout these transformations, one principle has consistently guided my efforts: maximizing profitability through efficiency, automation, scalability, and customer satisfaction.

My extensive industry involvement has solidified my perspective on how manufacturers, distributors, and retailers should strategically approach installation services. Approximately 170 out of 510industries require products to undergo on-site service before becoming fully functional. In these industries, companies consistently face critical strategic choices:

• Build an internal installed sales division
• Partner with a third-party service marketplace
• Acquire an established service provider
• Rely on downstream partners (dealers or retailers) to handle installation

Each approach carries distinct merits and inherent risks. Organizations integrating and directly owning their installed sales capabilities—either through internal development or strategic acquisition—typically achieve greater long-term profitability, customer loyalty, and brand consistency.

Developing an Internal Installed Sales Division

This approach offers significant strategic advantages, such as complete control, customization, and alignment with company branding and operational goals. Internally built installed sales divisions:

• Align closely with the company’s culture and enhance customer experience.
• Enable installers to represent the brand authentically, fostering customer loyalty.
• Allow direct control over pricing structures, service scope, and quality standards.

However, internal development is notably challenging. Unlike manufacturing processes, installed sales require active management of human interactions, real-time problem-solving, and adaptation to unpredictable customer situations.

For example, a prominent home appliance manufacturerattempted to build an internal installation division but struggled withtechnician management and customer service quality, resulting in significantlosses. Conversely, another manufacturer successfully established a cohesiveinternal division, increasing profits and boosting customer satisfaction.

Partnering with a Third-Party Service Marketplace

Engaging third-party marketplaces is a common, low-barrierapproach providing immediate access to installation networks. These platforms,often backed by private equity, offer pre-built technology solutions andexisting contractor networks.

Despite ease of implementation, limitations include:

• Reduced control over customer experiences, impacting brand perception and loyalty.
• Difficulty aligning installation services with specific product merchandising strategies.
• Generally modest contributions to incremental earnings, with approximately 75% of such partnerships falling short of significant profitability enhancements.

For instance, a national retailer partnered with a third-party marketplace and quickly integrated services but faced ongoing customer complaints about inconsistent technician quality, negatively affecting their overall brand reputation.

Acquiring an Established Service Company

Strategic acquisition represents a viable middle-ground solution, providing immediate operational infrastructure, experienced management, and established installer networks. Advantages include:

• Rapid integration of skilled labor and proven operational workflows.
• Existing customer bases and ongoing market presence.

However, acquisitions introduce unique risks:

• Potential cultural misalignment, especially between traditional product organizations and service-oriented installation firms.
• Legacy compliance issues, such as workforce classification and regulatory complexities.
• The risk of overvaluation, potentially compromising long-term financial benefits.

For example, a global furniture brand acquired a well-established installation service, quickly benefiting from their experienced workforce but faced prolonged integration challenges due to cultural differences and compliance complexities.

Delegating Installation to Downstream Partners

Entrusting installation to dealers or retailers is straightforward yet strategically limited. Companies adopting this approach:

• Lose direct control over the customer experience, pricing, and service quality.
• Experience unpredictable revenue generation, relying on partners' inconsistent promotion of installation services.
• Face fragmented international service quality when dealing with multiple independent partners.

For instance, a major flooring manufacturer relied heavily on independent retailers for installation, encountering significant variability in service quality and customer experiences, leading to inconsistent revenue and damaged brand trust.

Final Thoughts: The Strategic Importance of Ownership

Based on extensive industry experience, companies that owntheir installed sales capabilities—through internal divisions or strategicacquisitions—consistently outperform those relying on external parties.

Direct ownership ensures:

• Controlled brand representation, superior customer experience, and flexible pricing.
• Increased incremental revenue through integrated product-service offerings.
• Enhanced operational scalability and greater adaptability to market changes.

Strategically managed installed sales divisions serve as robust assets, reinforcing market competitiveness, customer loyalty, and sustained profitability. For manufacturers, distributors, and retailers committed to long-term market leadership, ownership of installation capabilities is not merely beneficial—it is essential.

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