Shrinking AV Product Sales Margins? Not If You Follow These Tips

Integrators shouldn’t throw in the towel when it comes to AV product sales margins, but instead turn it into an opportunity to stand out from competition.

Noel Darby Leave a Comment
Shrinking AV Product Sales Margins? Not If You Follow These Tips

There has been a lot of talk about shrinking margins on AV product sales and how contractors must find new sources of income. Some people have even argued that contractors should forget about making more than 10 percent margin on product sales because that’s the trend of the future.

As an independent sales rep who works with a number of contracting firms, I believe there are other ways you can win and I’ll cover three here.

1. Education on Latest Tech

As AV product sales people, it’s our job to help people understand the benefits of our products and services as well as how their investment pays off in the long run.Technology continues to evolve rapidly,but it seems not everyone keeps up with it.

For example, as I’ve shifted from promoting products for CobraNet to Dante to AV-over-IP systems, I’ve noticed a lot of contractors waiting for the market to request it rather than promoting these new advancements.

Well, no one asked for a handheld device that allows you to make phone calls, send messages and email, view documents, and take photos before the smartphone was introduced.

Most consumers aren’t aware of the benefits of networked AV, acoustic treatment, or highly intelligible sound systems.

Educating customers about new technologies is a very solid path to grow your business as it not only creates new opportunities but also establishes your company an industry leader.

2. Differentiate Brands from Competitors

A second way to bolster product margins is to sell non-mainstream brands. If it appears “everyone” is using a brand then the margin has likely been reduced because there’s always someone willing to race to the bottom.

There are a lot of solid companies that make great products but aren’t very good at marketing. I’ll bet a lot of your AV product sales reps work with this type but you probably haven’t given these companies much attention.

Your customers expect you to select the best products for their systems —regardless of brand name familiarity. All else being equal, are you wrong to choose the products that help you lower the overall project cost and earn some more margin for yourself? You don’t always have to sacrifice quality for price. Do your research.

3. Lean on Reps as Resource

A third way to increase profitability harkens back to the first two: use your sales reps. A lot of us work with manufacturers that are on the cutting edge but don’t market well,if at all.

Sales reps are a valuable resource that can help you enter new markets and introduce new technologies. We can show you products that increase margin without sacrificing quality —many times actually increasing quality! We have a vested interest in the continued success and growth of the resellers in our territories and we want to help you.

Listen: What to Tell Your Sales Reps to Get More AV as a Service Contracts: Episode 38 of AV+

There are two known paths to success: Do what everyone else is doing but find a way to do it better, or figure out what others aren’t doing and become an expert before everyone else discovers it. You don’t have to lose out on lucrative AV product sales.

Be open to new ideas, do your research, be willing to be the first and make more money!

The person who follows the crowd will usually go no further than the crowd. The person who walks alone is likely to find him or herself in places no one has been before. Think “smartphone.”

About the Author

Contact:

Noel Darby is VP of sales for rep firm Darby Reps (darbyreps.com).

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Comments

  • Brent Handy says:

    The key to profit for me and my business is meeting people’s needs, plain and simple. We do what we say we will do, when I say we will do it, for the cost we agreed to. We answer calls by the second ring, reply immediately to texts and emails, generate designs and proposals quickly. We work within our wheelhouse. When a client needs something more, we network with other leaders in their respective industries to meet those needs.

    We have an effective marketing firm, but the majority of our business comes by word of mouth. We are able to maintain margins others haven’t seen in years, because we do not do bid work. Our business model allows us to provide more service after the sale. Service builds relationships and stimulates loyalty.

    I would add one thing to this article. Don’t be specific with quarterly projections. Don’t rely on reps too much, unless you have a great relationship and/or you are a big portion of his/her paycheck. It is not uncommon for registered project info to land in the hands of competitors, because they want the sale and don’t care who sends the PO. I had a rep firm bring me a couple of jobs from other competitors. They are now out of business. We get what we give.

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