Putting Margin Back into Distribution
By Lee Baker, Gordon Dutch & Ian Sempers
Some of the main differences between the CE and Pro-AV markets are the critical elements of design, installation and service.
If you are choosing a CE TV and need to ‘whack it on the wall’, it can be as simple as researching the size you want, features you like and brands that offer those within the budget you have. Add on a wall bracket and a cable and you are most likely good to go.
If you move into a more complex home or CI system, then of course design and installation will come much more into play. However, once you move into the highly complex technical world of Pro-AV, the key elements of design, installation and service then become critical to the success of the project and its delivery.
One of the reasons that value-added Pro-AV distributors and value added re-sellers (VAR’s) are still successful, is that they have excellent tech and sales teams. These teams, and the companies they deal with, bring the best brands together to work seamlessly and provide complete solutions for the integrator and the end client. The days of simply selling lots of a single product for the cheapest price are already extremely limited in the Pro-AV space.
So how do you add margin back into distribution? Well first off you need to work with your brands to ensure that you are buying at the right price. Of course, it helps if you can provide some decent sales volumes that will be of interest to a manufacturer, but it is also about the value that you can add to the vendor, as well as the customer relationships.
As a business model the sales of accessory and service packages can often be the difference between making both a higher margin and a repeat customer.
At Peerless-AV, for example, they realised that installation time and service access was a major cost in terms of any integrator’s priorities. Being able to drastically reduce the installation time, and number of people required to install a video wall, has a significant effect on the integrator’s profitability. As does the ability to quickly and efficiently service the product in the event of a product failure. Many digital signage installations are essential to travel information and so not only need to be installed within tight time scales - for example, when stations are closed over night or when airports are at their quietest – but if there is an issue they also need to be able to resolve that issue ASAP.
This gives a great opportunity to the distributor, VAR and/or integrator to sell both a higher quality product and, of course, some sort of service package or remote service package. If critical installations need servicing, the end client wants to know in advance how quickly that can happen and this gives rise to an obvious conversation around full-service mounts, service packages and monitoring services.
To help drive these value-add products, and the higher margin that they often bring, distributors, VAR’s and integrators need to consider how to ‘attach’ as many good quality and high margin accessories to a sale.
Both Gordon and Lee have a strong background in retail where training staff to attach added value products was the norm. Indeed, Gordon and his team adapted and brought that ‘attachment’ training to both Midwich and Medium UK with great success. It wasn’t just the great products that Peerless-AV sold that made them successful, it was understanding the needs of the distributor, VAR, integrator, installer, and end user. Working those in tandem with great sales training, a good account management team and a decent incentive program, can help a business rise to the top in a very competitive field.
If you want to know more about adding value and margin back into Pro-AV Distribution, VAR’s & Integrators, then e-mail us firstname.lastname@example.org
Here’s what our Industry Colleagues say about us...
Peerless-AV would like to pay tribute to the incredible work Gordon and his team have done since 2009. It’s sales and brand awareness since we launched Peerless-AV EMEA in 2009 has been massive. Gordon’s strategic leadership and incredible work ethic, along with the dynamic leadership of a best-in-class team, which he assembled, has led Peerless-AV to the forefront of the AV businesses.
Global President & CEO of Peerless-AV