In this age of online purchasing, how commercial integrators source the products that their AV businesses sell is incredibly important. Choosing a value added distributor is a daunting process, but I hope my experience will help.
Back in the day, most of us in commercial AV worked directly with manufacturers. In the 1980s and 1990s, this was the norm. A manufacturer would have a group of sales people who called directly on integrators.
For some time, this worked very well… as an integrator, you could simply call your salesperson and get demo units and engineering support. If the project was large enough, the manufacturer’s salesperson would even accompany you on the call to the client. Fond memories… Right?
So, what has happened to change this manufacturer-to-integrator sales process?
A full answer to this question is too complex for this article… but it boils down to:
- technology advances
- the effect of the internet
- declining hardware prices (and profits)
- the need for broader market coverage and penetration
Regarding prices, in 2002 when LCD flat panels started to emerge, a 40” display was approximately $3,000. Today, that same commercial display is under $1,000.
So many products today have become a commodity (or headed in that direction). Both manufacturers and integrators have to sell more to make the same amount of money they made just a few short years ago.
This plus other business complexities meant that manufacturers had to broaden their reach. Enter the era of manufacturer-distributor relationships, mirroring what has previously been typical on the IT side of the technology universe.
On the surface, this appeared to be a perfect solution… a manufacturer would sell to a distributor, and through them they would reach a much broader market. The quantities the distributor would buy were much larger than to a single integrator, thus reducing sales expenses.
The integrator would “simply” buy from the distributor. Problem solved, right? Wrong.
The disconnect was two dissimilar industries trying to work together. The integrator was historically used to the manufacturer’s direct support and all that it entailed, and the distributor was historically reactive in nature and provided order fulfillment and logistics.
Just like you can’t break the laws of physics, you also can’t break the laws of customer support and thrive.
Commercial integrators continue to need support as in the past… but in the beginning of the distributor model (in AV), this degree of involvement was alien to most distributors.
This brings into play that famous quote of necessity being the mother of invention. Voila, the creation of a new model… the value added distributor. This, of course, begs the question of what this new model entails.
The Key To Making Value Added Distributors Work Well
As an integrator calls in to a distributor, they may simply require a product to be shipped. No problem… and very efficient. If they need more than that, the distributor salesperson will probably not be as well informed as a representative from the manufacturer.
This means that there will have to be an escalation process to somebody inside the distributor that has more expertise.
This handoff is the key to making this model work so that the integrator is well served and the distributor salesperson can move on to the next customer. If yet more is required, then the manufacturer can become involved.
So…Who To Choose?
The outstanding question for the commercial integrator is what distributor to partner with. [related]
The good news is that we have several to chose from. Rather than go into specific names (you probably already know who they are), please permit me to explain some things to look for.
Of course, the obvious thing to look at is what products a value added distributor carries. In most (but not all) cases, you can get nearly anything (or comparable products) from anyone.
They all carry the big display companies, major mount manufacturers, signal processing, etc. If you are tied to a certain brand and a given distributor does not carry that brand, then that should be one of several deciding factors.
In addition to the products they carry, the issue of warehouse locations, logistics, and shipping comes into play. How long does it take to get your order delivered and what are the freight costs?
The biggest deciding factor for the commercial integrator is the level of service you receive beyond placing an order. This hearkens back to the manufacturer direct to dealer days of hands-on support.
Here are my top 10 questions to ask a value added distributor:
- Is there a specific sales person assigned to my account?
- What is the escalation process for in-depth inquiries?
- Is there in-field sales support?
- Is there application engineering support? If so, how do I access it?
- Are demo units available?
- Is project registration available, and special pricing allowances?
- Is financing available?
- How do returns work? What is the return policy?
- Are extended warranties available and at what cost?
- What other support services are available?
Listen: What Percentage of Your Revenue Should Be Managed AV Services? Ep. 47 of AV+
All of the above fall under the umbrella of finding a distributor who can be a partner and not just a supplier.
Pick the issues that are important to you. Focus the majority of your business with one prime distributor. Let them know that they are important to you and that you intend to be important to them. Loyalty goes a long way on both ends.
Two Final Points: Price & Exclusivity
I haven’t spoken much about pricing because there is typically not much difference from one to another. In some cases, a distributor may have a big buy-in of a given product and run specials. Of course, take advantage of those… but know that this is a competitive market and prices tend to seek their own level.
The final point is that some manufacturers do not work with distributors and still maintain either a direct sales force or employ independent reps to call on you. It is hard not to appreciate the hands-on approach. Simply understand that the value added distributor is moving rapidly in that direction.
