Obviously, we would have liked for you to have been in attendance for Total Tech Summit 2018, which included CI Summit 2018, but maybe you missed it.
Maybe you weren’t there excellent integrator fueled conversations on important topics such as managed services, how to boost profitability on projects and how the onset of a more lifestyle-centric workplace creates opportunities for AV integrators equipped to seize them.
We hope that you’ll be at Total Tech Summit 2019 (CI Summit 2018) in Fort Wayne, Texas. That being said, if you missed CI Summit 2018, here are 22 discussion points that we wish you were there to see in person – and ask questions … and add your two cents.
Tips on Selling Managed Services
Don’t Get Caught up in Marketing Buzzwords.
“Many of you in this room are offering these things and don’t call it managed service,” said Dan Abrams, VP of business development at IVCi
Also, Don’t Get Caught up in Semantics.
“Much of it has to do with semantics. Are you providing something that someone is willing to pay for regularly?” Bill Riley, New York regional director at Sensory Technologies
However, Words Matter.
Most car dealers, says Abrams, no longer use the term “lease” because it implies some level of user ownership and most customers are used to paying monthly fees for other services, from their cell phones to cable TV services.
Take a Wide View of Managed Services.
Managed services, says Abrams, comes in many forms from dispatching an employee to work with a customer after an installation to remote monitoring to more traditional services. They can be digital signage, videoconferencing, refreshing a conference room’s technology or sending staffers to a client to work there as embedded employees, where they help with meetings, video production and more, says Riley.
Managed Services Require Creativity.
All it takes is a little creative thinking in some integrators’ offices—particularly in their marketing departments—to launch or expand their service offerings, says Abrams. That would counter the AV integrators who say they don’t have enough support or the right staff to launch a managed services branch. “You’re not creating new things to do,” he says. “You’re creating new ways to package the things you’re already doing.”
If It Works for You …
IVCi regularly does self-evaluations when it comes to how much they use the systems installed in their offices and Abrams says they do the same for customers, even if it means taking out some pieces that don’t get used like they originally thought they would.
Choose Language Carefully.
“Sometimes selling yourself out of something embeds you so much further into the company,” he says. “It’s a comprehensive look at yourself.” Using terms like “licensing” will help the conversation because it’s how they already pay for most of their IT-related contracts, he says.
Add Layers to Customer Relationships.
Managed services can also help integrators increase their leads by giving the customer more points of contact within your organization, says Riley.
Entrench Yourself.
“Whenever we get people involved with a client, that’s going to increase our margins. It develops a level of stickiness. We want them so entrenched with our services that they don’t even look at anyone else.
Revisit Your Company’s Story.
“The whole purpose of putting in a system is to have someone watch over it and monitor it,” says Riley. “There needs to be a shift in how we tell our story. We’re not here to hack into your business. We want to make your system work better for you.
“If you’re continuously selling just integration, accountants will look at you in terms of assets. But if you sell AV As A Service and contracts, you’re going to increase the value of your business.”
Tips on Opportunities from New Work Environments
Get in Your Customers’ Mindset.
“When you allow for environments for people to feel free, great ideas come forward,” says Rebecca Milne of Perkins Eastman.
Offices of today and the future need personalization to allow people to make it their own, access and linkages so people feel part of a larger community, variety and choice, and flexibility such as various desk heights, a variety of textures and elements of surprise.
These changes can “drive new connections between departments,” says Milne. “The more likely you can inspire people in your environment, the more likely they are to be driving toward new ideas.”
‘Play at Work’ Equals AV Opportunities.
The right kind of play at work connects people, boosts our brains and sparks creativity, says Scott Fallick of Perkins Eastman. Spaces still have to be functional and have all the tools people need, he says. Changing a paint color, altering a wood surface and using different carpet patterns is a good splash of variety that could spark creativity.
Remote Workers Spur New Approach to AV.
Hosting informal interactions with remote employees and scheduling in-person meetings with them helps them feel more a part of the daily operation.
“The more you feel part of the team, the more likely you are to do a good job,” says Milne.
Millennial Workers Have Changed How Companies Work.
Because of Millennials taking on such prominent places in offices around the world today, “the expectations to the workplace have a different feel,” says CI editorial director Tom LeBlanc. “That’s the biggest opportunity in front of the AV industry.”
Integrators Need to Nurture Creative, within Reason.
“Variety for us means keeping the technology current,” says Tritech Communications VP Mark Vitt.
“It’s important to set boundaries,” says ET Group CEO Dirk Propfe. “There are spaces where it’s mission-critical and spaces where it’s OK to take chances.” He advises getting clients involved in the planning of AV integration and attending customer meetings to see how they interact with the technology they have before deciding what they need in the future.
Tips on Boosting Profitability on Projects
Vendor Relationships Are Key.
Panelists Ivan Collins of Innoface, David Bishop of Pro AV Systems and Mike Harmon of ESCO Communications stressed the importance of carrying fewer manufacturers, focusing on vendors that appreciate the need to maintain margin.“Consistency of products reduces cost over time,” Harmon said, citing that it requires less unwieldy spending on training for various products.
Be Careful Bringing on One-Off Products.
It’s rare for a customer to insist on a particular product, Collins said, but it does happen. “Maybe an IT guy just came back from a conference excited about a particular product.”
Another example, Bishop added, is walking into a meeting and the customer puts an Amazon Echo on the desk saying, “I want this to work in my office.”
“We’ve been burned by bringing in a product that we can’t support,” Bishop acknowledged.
While it’s important for integrators to reflect their customer’s needs, it’s even more vital not to haphazardly enter a relationship with a vendor that isn’t supportive of the process.
“We’ve been burned by bringing in a product that we can’t support,” Bishop acknowledged.
Of course, if a customer needs a particular product to address their needs, an integration firm has to consider it. He suggested tackling those on a case-by-case basis. In general, though, “We’re much more careful about bringing on new lines to AV projects than we were a few years ago.”
Integration firms that don’t understand that they’re in the business of selling system solutions and not products are quickly becoming extinct. That will accelerate in this era of low AV projects margins.
“Margins are really shrinking at this point,” Collins said. “We’re competing with online shopping, Amazon.
“Margins are really shrinking at this point,” Collins said. “We’re competing with online shopping, Amazon. Everybody has access to pretty much everything.”
The trick is not to elevate above that price comparison conversation.
“We find that we get the best margins when we focus on the system itself,” he added. “When you focus on the features of the system and what value that brings to the customer that is where our sweet spot is.”
Harmon agreed. “If you uncover that value for the customer and the complex problems you’re solving,” he said, that’s when you can increase margins.
Forget Products, Margin Is in Labor.
Actually, Collins hasn’t given up on product margin. “I think there is still money to be made.”
That, however, is far from his main focus. “It’s more so about the system and the labor portion of it, which is very important in terms of making margin work and making money. You can have an awesome product, but if your margin isn’t good or the other pieces aren’t there, it just won’t work out.”
At the end of the day, he added, “it’s just about the labor.” Addressing the CI Summit 2018 attendees, he said, “You have really good techs. You have to pay them well. You have to let them do what they’re paid to do.”
OK, Don’t Completely Give Up on Product Margins.
“We don’t go in with the expectation of crashing margins,” Bishop said. “But we do try to sell them a system.”
To a certain degree, Harmon said it’s important to get the sales team on board with preserving that margin. He said ESCO Communications incentivizes the sales team by compensating them above a minimum margin level.
Make the Right Decisions about Subcontractors.
Bishop echoed the point that the margin battle can only be won based on the integration firm’s expert labor. “That said, having a lot of techs is a risk-reward. If you have too many guys sitting around you just start hemorrhaging money.”
Each of the panelists’ firms, to a certain degree, relies on subcontractors to complement their labor force. Each, however, treads carefully.
Related: Hiring versus using third-party labor
From an AV projects margin perspective, “the nice thing about subcontractors is it mitigates some risks,” Bishop said. There is usually a fixed cost associated with a subcontractor so it makes margins easier to predict.
Other variables to working with subcontractors could create other types of risk, Collins said.
“We use subcontractors some of the time but usually when we use them they’re accompanied by one of our lead techs. We find that subcontractors have the ability to make or break you. They typically don’t know your policies and the way you’re supposed to present in front of a customer.”
That being said, Collins sees subcontractors as a good part of a margin strategy. “I think it can be very valuable, but it’s about making sure you define that price ahead of time to make sure they don’t go over budget.”
Some Markets Are More Margin-Friendly.
A big part of the value proposition for customers, if presented properly, is the complexity of the task, Harmon said. “When we look at a job we look at it not just as product and labor, we look at complexity.”
It falls on integrators sometimes to help the customer understand the value of expert system designers and technicians – and some customers understand that more easily than others.
“Look at health care and all the investment in training and certification. They value that,” Harmon said. “We’re able to get much higher margins in that market in particular.”
Obviously, Service Is Significant to AV Projects.
The elephant in the room during the Total Tech Summit 2018 (CI Summit 2018) presentation on improving AV integration profitability was the topic of service revenue – and the industry’s well-documented struggle to achieve more of it.
Harmon shared that ESCO Communications has a sales team that’s separate from its AV projects group that pursues service sales.
Collins predicted that within two to five years, “AV as a service” will be commonplace.
He explained that sometimes the service would get lost in the project sales professionals’ focus and that the service sales team brings a new mindset from outside the industry.
“It’s a lot like selling insurance,” he said.
Collins predicted that within two to five years, “AV as a service” will be commonplace. He expects customers not to purchase equipment but to pay for systems on a monthly basis.
Integrators “will be providing the monitoring almost like an ADT,” he said. “I think that’s where the industry is going. The more we can get ahead of that, the more profitable we can be.”
Yes, he said when prodded by moderator MacCormack, Innoface is trying to get ahead of it. “We are working on some different initiatives to be able to present that to the market in a very special way,” Collins said.
Harmon agreed that “parts of our business will go that way.” He compared it to the mindset of today’s consumers that pay a fee for Netflix and expect that the service is going to work.
While all three panelists agreed that service is a vital component to AV integration profitability going forward, none seemed to be giving up on product and AV projects profitability. Instead, they emphasized tighter policies and more attention to detail.
Above all, they underscored how essential it is for AV integration firms to improve AV integration profitability and to continue to evolve.
