Challenges
Before examining the challenges in greater detail, it should first be noted that the market for technical building services is far from homogeneous. One reason is the wide range of sub-sectors grouped under the umbrella of technical building services. These include, among others, the following areas (without claiming to be exhaustive):
- ventilation and smoke extraction systems
- refrigeration and air-conditioning systems
- building heating and domestic hot water systems
- district heating and waste heat utilization systems
- water supply and wastewater systems
- information technology, alarm, and communication systems
- fire suppression systems
- power supply systems
Initial equipment versus maintenance
The characteristics of the various sub-sectors also influence the business relationships required in the market. One key question is how large the maintenance business is relative to the initial equipment market. Technical components are inherently subject to wear and tear.
This is especially relevant in building technology sub-sectors characterized by a high share of mechanical components, such as fans and compressors. Because initial equipment and maintenance often involve different decision-makers, the sales approach must be aligned accordingly.
In the spotlight: distributors of building technology
In the traditional building services sales model, distributors occupy a central position. Although much of the business could theoretically be handled directly, most manufacturers remain cautious so as not to disrupt established channel relationships.
At the same time, installers and architects are becoming increasingly important in many manufacturers’ sales strategies. Their influence on customer purchasing decisions is significant and continues to grow. There are also numerous potential key accounts, such as owners of hotel chains or office sites, that represent attractive targets for direct engagement. Designing the right sales structures and processes to address these groups effectively is a regular part of our project work.
The tension between direct sales and established channel business
Many manufacturers have the product portfolio and application expertise to serve not only building technology, but also plant engineering and process industries. This is where the conflict between required direct sales and historically established distributor-based business models becomes particularly apparent.
Companies also frequently encounter internal disputes over responsibility for managing industrial distributors as distinct from the traditional building technology channel. This becomes especially relevant when direct sales to industrial customers and vertical markets are being intensified and existing sales structures need to be redesigned.
Pricing in building systems
Another core area of action is pricing in a multi-channel environment. Companies need to find the right balance across a wide range of channels and preserve it over the long term. New pure online players are gaining relevant market share and, for many end customers, already serve as a key price benchmark in negotiations with distributors or installers.
Complex kickback systems and partner programs are designed to strengthen installers’ loyalty to the manufacturer brand, but they also inevitably increase complexity within the price waterfall. Maintaining transparency and actively steering distributors through performance-based commercial terms is a major challenge for pricing management. Internationally active players face the additional challenge of aligning prices across markets in a consistent way.
Solution approaches
A first priority in building services sales is the development of a clear (multi-)channel strategy. Manufacturers need a clear view of the medium- and long-term role of the various channels and market participants. Only a coordinated go-to-market approach ensures that different sales models reinforce rather than undermine each other. This also means deliberately incorporating new online channel partners into the overall sales model.
Pull activities
In our view, pull activities are becoming increasingly important. This involves engaging architects, planners, installers, and other market participants who strongly influence purchasing decisions, even though they do not buy directly from the manufacturer or do so only indirectly. Success requires tailored marketing and partner programs for installers, as well as dedicated advisory support for architects and planners. End customers usually play a decisive role in sales organization design only in the context of professional buying centers, such as hotel chains and other key accounts.
Vertical sales
Where the portfolio has strong relevance for industrial applications, introducing a dedicated industrial sales organization, often referred to as vertical sales, can be a highly effective approach. The challenge is to capture synergies with the usually much larger building technology sales organization while still reflecting the specific needs of industrial sales. This includes selecting and managing industrial distributors and addressing strategic questions around direct supply to key accounts.
Conditions and commercial terms
Conditions policy forms the core framework for managing the investments required across channels. This means aligning net-net prices across different sales routes and designing channel-specific price waterfalls to create optimal performance incentives. Additional payment flows, such as kickback programs for installers, must also be systematically integrated into the model.
International pricing, particularly in relation to Amazon and similar platforms, is also a central element of commercial terms policy. Since the major players operate on a highly international basis, it is often advisable to manage the online channel as if it were a separate country. This makes it easier to model and control the effects of international arbitrage.
Project experience
Prof. Roll & Pastuch has extensive experience across a wide range of often highly integrated projects related to pricing and sales design in the building technology market. Historically, our focus has been on the manufacturer side, with reference projects across all sub-sectors, including:
- Multi-channel strategy for pricing and sales
- Vertical sales / Introduction of industrial sales
- Sales through architect and planner advisory teams
- Development of new and differentiated condition systems
- Negotiation training and pricing tools
- Playbooks for sales personnel
- International pricing
- Value pricing for products
Discover your profit potential in building systems
We will be happy to answer your questions and provide you with further information.
Kai Pastuch
Kai Pastuch is Managing Partner of Prof. Roll & Pastuch. Before joining as Managing Partner, he was Director at a leading international strategy and marketing consultancy. As a graduate in business informatics, he also manages our software company nueprice, which specializes in the pricing of spare parts with the product of the same name. Mr. Pastuch has extensive project management experience from numerous projects for large international companies and German medium-sized businesses in the areas of price management, marketing, sales and strategy. In addition to numerous publications in renowned journals and the publication of the reference books Praxishandbuch Preismanagement and Big Deal Management, he is a sought-after moderator and speaker on all aspects of sales and pricing. As a practice-oriented manager, he likes to get personally involved in our projects and contributes his broad experience in workshops and steerings.
