Instead of racing to the bottom with slim margins, integration companies should be competing on the unique value they bring to customers. The 2022 Business & Leadership Conference (BLC) is designed to help you create this distinction.
Often called “the race to the bottom,” many integrators get caught up in this web—but you can avoid it.
NSCA has long emphasized that integrators need to operate with higher profit margins. The 2022 State of the Industry report, which Commercial Integrator created in conjunction with NSCA, shows a “distressingly high number of survey respondents” reporting hardware margins that “arguably indicate a failure to cover overhead.”
Covering that overhead is likely to be even more difficult in 2022. Supply chain challenges are well-documented. Meanwhile, integrators report that the job market has led to escalating labor costs. There is even less room for error now, so profits are very much at risk.
Top Integrators Gather at BLC 2022
We encourage integrators to reframe their approach to competition. Don’t be part of the so-called race to the bottom by competing to land jobs based on razor-thin margins. Instead, understand the true value that your expertise and skills bring to customers—and project that value.
Each year, the Business & Leadership Conference (BLC) challenges integration company leaders to lift their organizations. The 24th annual conference comes at a unique point in time. You face tremendous opportunities—your services are much needed, mission critical, and in high demand. In 2022, however, there’s always a “but.”
But … the supply chain creates profitability challenges on projects.
But … product availability puts project timelines and customer satisfaction at risk.
But … labor costs make healthy margins more difficult to attain.
For integration leaders, 2022 is your moment. BLC 2022 will help you gain wisdom and logical strategies to lift your companies up and overcome these “buts.”
Great examples are the sessions led by closing speaker Scott McKain, an expert on customer experience and client retention. His closing keynote, “The Collapse of Distinction,” and his breakout session, “Culture Renovation: Rebuild or Reinforce?,” will guide integration companies leaders toward understanding what makes their offerings distinct vs. competitors.
Avoid the race to the bottom and join top integrators at BLC 2022.
More on Avoiding the Race to the Bottom
During the 2022 State of the Industry webinar in January, Commercial Integrator Editor Dan Ferrisi asked NSCA about the unhealthy hardware margins reflected in the joint survey.
Here’s a breakdown of our response:
- The margin challenge is great evidence of why it’s so important to project the value of your offerings and never devalue what you do.
- The companies in the survey indicating that they earn less than 5% hardware margin are at risk of not being around to take the survey next year.
- Around 30% margin is the average. The majority of NSCA members have overhead in the high 20%s. According to very simple math, a typical project has very few points of wiggle room.
- A few years back, many integrators found themselves in this race to the bottom. They saw opportunities for rebates on the back end and took on more volume, leading to trimmed profit margins. This often leads to cashflow problems.
- It all comes back to how you value your company and its services. If you’re selling equipment at 5% or 10%, then you’re missing the point of how important it is for end users to have the level of technology you’re capable of providing.
- You don’t have to race to the volume. Sell value—not price.