Your business is in a whirlwind of growth and is spiraling, looking for some way to use technology to stabilize the vortex. All of a sudden, you find yourself in a strange land of AV full of unfamiliar and inconspicuous players. Somehow, you assemble the proper combination of Brains, Heart, and Courage that it takes to navigate the obscure landscape, arriving in the Promised Land. Then you finally meet “the One”. A masterful Wizard who will lead you to your destination on the other end. He is larger than life, louder than thunder, and very intimidating. Then a funny thing happens. Someone pulls back a curtain. Sitting there behind an impressive array of Audio Video hardware and trickery is an ordinary man.
This is where we are at in our industry: The curtain has been pulled.
The AV industry has always been protected by a shroud of mysterious hardware, proprietary and protected product lines, and hard to find equipment costs that have assured us work and maintained our margins. If you don’t think this is a fair assessment, take a look at the phrases below, all things I heard said at Almo’s E4 event, either by industry thought leaders or seasoned veterans.
“The Margin is in the Mystery.”
“Others don’t understand our industry’s ‘smoke and mirrors’.”
“When we don’t know what to call something in AV, we just make stuff up, which has helped protect our margins.”
These are all ideas that resonate within the AV industry, and for quite some time these strategies or philosophies or whatever else you’d like to call them, have worked. People had no clue what we were talking about, no idea how to do it themselves, and no idea of how much it should actually cost to purchase the equipment, if in fact they could even discern what equipment was needed in the first place.
However, in today’s world, this is no longer the case.
People have mini touchscreen computers in their pockets and are more familiar with technology than ever. Anything they don’t know is available within a few swipes on that very same device. Online retailers without inventory or brick and mortar locations sell products at a few percentage points of margin. As equipment has become easier to learn and use, many manufacturers are starting to move from a protected dealer based model, to a direct to consumer model to distribute their wares. The consumer based experience, like it or not, also sets the expectations in both functionality and approximate cost in the commercial world as well.
The truth is, that in today’s world, if your business model assumes consumer ignorance to maintain profits, you are in big trouble.
So, should we all pack it up and find new careers? Let’s pick up the Wizard of Oz example again. The curtain is pulled and the Wizard has to step out from behind the shield of AV hardware, exposing himself as an ordinary man. However, if you follow the story further something interesting is revealed. The Wizard is still the only one who knows the way to help Dorothy get back home and accomplish her goal. He didn’t need that hardware shield after all, as his true value lies in the knowledge he possesses. So how do we turn this into useful knowledge in our businesses?
It’s time for the return of the value added reseller (VAR).
I worked at IBM Direct back in 2000. Direct was a new concept, at least for IBM. They had always sold their business machines internationally through a network of VARs. This made a lot of sense, at least when the concept first originated. Back in the days of AS400 mainframes, RS6000 RISC based computers, token ring networks, and dumb terminals it was imperative that IBM sell their machines through a partner that would assure they were set up, programmed, and integrated properly. However, with the increased IT skillsets of companies, the growing use of Intel based PCs and Enterprise servers in combination with Ethernet based server-client and node to node networks, things started to change.
All of a sudden, IT managers of small to medium businesses were buying their own servers and PCs from companies like Compaq, HP, Dell, and Gateway, bypassing the need to work through a VAR, as the VAR at that point really became more of a middle man than a value add. Sound familiar?
As a result, IBM made their Intel based products available “direct” to their small to medium business clients to compete. Did this kill the VAR network? No.
VARs knew what their value add was. They had experience with the enterprise level mainframes and RISC machines. They knew how to manage the logistics of large rollouts, across multiple locations for enterprise clients. They offered services to image machines, license software, and provide service contracts for their clients. I’m not saying it wasn’t a transition, I’m just saying that the “direct” model only killed off those who were stuck in the mode of collecting a premium on products they no longer added value to.
In the AV industry we need to take a cue from the VARs of the IT world.
When looking at a vertical or a potential job, before bidding ask yourself what you bring to the table.
When adding a product line, ask what value that line adds to your business. What gap does it fill?
Look at lines that you have traditionally offered that have been commoditized or whose margins have shrunk dramatically. What more complicated complimentary products enhance that existing product?
Articulate your value add.
If you really want to know what value a customer places on hiring a firm like yours, ask them! Many times the customer already knows what value they want you to provide. We all know that they have probably already found a price on the products they are looking for on line, and could have already purchased them if they so chose.
Anytime a customer in the past would tell me they could buy something for less at Best Buy or on Amazon, I always asked one question. I would say-
“I know, those retailers offer some amazing pricing don’t they? I honestly don’t know how they do it, and I never begrudge anyone saving money, so I’d understand if you buy from them. I also know that you saw that pricing, knew what product you wanted, and still came here to see me today. I don’t think you are someone who would knowingly waste their own time, so what were you hoping to find here with our firm today that you didn’t feel you would get with them?”
It’s amazing what you will hear. The answers range from those who want advice, to those who aren’t actually sure what they want or what is possible, to those that have either had or have heard horror stories of previous AV installs and want to avoid them at all costs.
Make customers articulate the value they expect to get, as if they say it out loud, they will mentally assign a price tag to it.
If that price tag and the cost of your services align, then you have found a customer worth having. If not, and you reduce your price, or sway them into paying more than they feel is fair, you open the door to a nightmare client experience for both of you.
Sell the expertise that you have, and not the products people want to buy. In this way you serve the client and your business, creating ROI for the customer and maintain margins in your business as well. It won’t matter that you’re now integrating an iPad vs selling a $6000 touch panel, because your business won’t be based on margins for being a middle man, but based on the real value you add along the way.