So I hear that the recession is over and that the economy is slowly improving. I don’t know about you, but I’m not seeing signs of that in my own community. Many small businesses have closed in and around my town. Those that are still surviving are struggling with tight credit and lean inventory, the fact that once-loyal customers are shopping on price, and the value of good customer service has taken a back seat to saving a dollar or two.
What I’m hearing, especially from the ProAV community, is that selling isn’t getting any easier for them either. Bruce Banbury, president of Video Systems of the Carolinas in Charlotte, NC, tells me that several things are happening when it comes to sales this year. The first is a flood of late-year business from long-term customers who have held onto their budget money all year and are now in a “use it or lose it” spending spree. “There’s been an unusual spike in sales in the past two months. The floodgates have been open since mid-November,” he says.
Banbury explains that this isn’t exactly the best problem to have. “It can cause a huge cash flow problem down the line. Clients want you to invoice now to get it on their books, but accounts receivable may not pay it until the work is done many months from now. In the meantime, you’ve ordered thousands of dollars of product from manufacturers who will put you on a credit hold if they’re not paid within 30 days.”
The second thing he’s seeing is a rise in calls from people who are shopping on price alone. “This is even happening with good customers, so I can’t say that there is consistent behavior,” he adds.
He’s also getting requests to install pieces of gear that were bought at Costco or Best Buy, or requests to piecemeal an AV system around this gear. Banbury notes that taking on these types of projects bring up product liability (What if your tech drops it?) and service/support issues (What if it doesn’t work out of the box?).
Dave Mazzeo, system sales and engineering for AVI-SPL in Maryland, has a policy that he refuses all requests for jobs where the client has bought their gear elsewhere. But what he has done in recent months is offer his government customers a three-month help desk extension or waived fees for site surveys in order to close the deal. While he says that none of these freebies would have put the deals in jeopardy, it was just enough to sweeten the pot and make the client feel good about doing business with him.
Corporate customers, on the other hand, “try to negotiate everything. They are consumers too so they shop on price,” he says.
Banbury, who is also a member of the USAV buying group says that what really bugs him is that sometimes he’s being shopped against big box retailers, not other dealers. The fact that a big box retailer selling flat panels is a competitor in a growing percentage of business is a disturbing trend. But Banbury says there are still technologies where an integrator can still make healthy margins, such as videoconferencing and digital signage. “We’ve had a fantastic year with Tandberg,” he says, noting that the manufacturer has done well in supporting its dealers.
As for what’s next, Mazzeo says that there are plenty of companies out there who are selling low, but who won’t be able to sustain the work.
And Banbury says that his firm will still look at small “hang and bang” jobs on a case-by-case basis. As he says, sometimes you have to do these small jobs to preserve the relationship.
Linda Seid Frembes is a rAVe columnist who covers AV technology, installs, market trends and industry news. Linda has worked with high profile AV manufacturers, trade organization, systems integrators, rep firms and dealer/distributors in the industry including John Lyons Systems, Eastern Acoustic Works (EAW), Northern Sound & Light (NSL), and InfoComm International, among others. Reach her at firstname.lastname@example.org