Inside the Pro AV Channel
The sales channel for professional AV products is as vast and varied as the companies within it.
The sales channel for professional AV products is as vast and varied as the companies within it. Each player–from manufacturer and distributor to sales rep, consultant, and integrator–cannot function without the other, yet their distinct needs and wants are what make the channel so complex. And even before the recent economic downturn, there were unique challenges facing each segment of the channel.
As a senior consultant with Cavanaugh Tocci Associates, Mike Maynard has seen the time from spec and drawing to bid shrink, while the projects remain just as complex.
Credit: Bryce Vickmark/WPN
North America, according to figures from InfoComm. Its 2008 Market Forecast Survey also indicates that the AV market is growing at a rapid pace, with 40 percent of companies planning to expand their focus with new technologies. Staffing plans are also robust, with just under 60 percent planning to hire more tech staff and over half of companies investing in additional training.
But no one that Pro AV spoke to throughout the channel is blind to the economic realities that could test it. Manufacturers are hungry for sales forecasts from their reps; distributors are giving ROI pointers to help sales; and reps are hearing about delayed projects from customers. "AV demand is still high, but payments are getting delayed longer and longer," says Matthew Sittloh, a Midwest-based manufacturer's representative. "The dealers who have good credit and took advantage of quick pays are the ones who are doing well right now."
Andrew Sellers of integrator Sensory Technologies says, "This year, we'll see business failures at all levels. We're already seeing some things that may drive prices up and drive a change in payment terms."
But everyone agrees, if the channel can pull together to help one another, the industry will weather the storm. And as the AV market gets back to expansion, it's important to understand the viewpoints of those channel partners who make that expansion possible.
Integrators & Dealers
Selling Concepts, Not Commodities
The biggest hurdle facing integrators over the past decade has been the commoditization of certain AV products. The positive effect has been increased awareness of AV and the technologies that drive the industry. The negative has been that integrators have needed to reformulate what it means to stay successful.
"What many manufacturers now sell is geared towards the end-user market versus the commercial market. Think flat panels and projectors," says Sellers, CTS, co-owner and principal at Sensory Technologies. "It changes the delivery method, which is why you see more distributors interacting with dealers."
In addition to commoditization, says Dawn Meade, CTS, director of marketing and AV sales for Advanced Video Systems, "The influx of IT and computer companies into our market, and the 'everyone's an expert' mentality drives up expectations and drives down the perceived value of what a system should cost."
Technology lifecycles also put pressure on integrators to keep informed of new trends. "I've been in the industry for 12 years and have personally witnessed the end of three-gun projectors, the rise of LCD/DLP projectors, their rapid shrinkage in size and price, the rise of the plasma display, and then the rise of the LCD display," says Meade. "Now we hear 'plasma is dead,' and few, apart from road warriors, bother with projectors when nice crisp flat panels work just as well in the end-users' view."
Sellers says he uses a consultative sales model whereby Sensory does not give out an equipment list. "We do provide a functional description but we do not give away the recipe. When a potential customer asks why, that leads into a discussion about value and intellectual property," he says. "We are selling concepts and solutions first; not just products."
Sensory has gone a step further and has made significant infrastructure investments in engineering and sophisticated project management. "Our process-driven approach is vital to success. We feel that a specialist is required at each step of the project process," says Sellers.
In the face of increased competition and product commoditization, Sellers laments the end of exclusivity for dealers. "What I often ask for from a manufacturer is a way to protect our sales in the market; especially a design/build that may turn into a competitive situation, i.e., a price war," he says. "For example, I'll ask a manufacturer for an exclusive offer. The easy thing is price discounts so there's a better chance of winning the deal, but other strategies are extended warranty, training, or buy one quantity and get a free quantity."
Designing with Less Time
AV consultants work on AV designs that may not become a reality for several years. "By the time an integrator sees the bid package, the consultants have been living with the design for years. Things may have been value-engineered out," says Michael Shafer, senior consultant in The Sextant Group's Phoenix office. "The package you have in your hands is the best possible solution after this months-long process."
Shafer has been in the AV industry for 25 years, most of that time as a consultant. "When I first started as a consultant, customer needs and equipment choices were simpler but changes in the form factor happened quickly. My job is to work with architects to create the space, made more difficult because the forms were very volatile."
Today, the volatile equation is time. "It used to be unusual to 'fast track' a project, but now it seems like all of them are on a fast track," Shafer adds.
Mike Maynard, senior consultant with Cavanaugh Tocci Associates, agrees, "Project time lines are shorter but the amount of work is the same due to complex AV systems. The biggest challenge is time compression. The time period from specs and drawing to bid for a medium-sized performing arts center used to be one-and-a-half years, but now it is less than a year."
As a result, Maynard says, "You have to become sharper with coordination between systems because you are designing more systems in less time. There is no such thing as 'fix it in the mix' anymore."
Shafer thinks that the rapidly changing costs of building materials are driving the time crunch. "The faster the building can come together, the better for the owner," he says.
Shafer says one of the things that would make his job easier is if manufacturers understood that a consultant's role on a project requires different information or faster response. "For example, long-term projects from programming to final commission can be three years. We work with architects who need to know what they need to design to hide AV that doesn't exist yet," he explains. "Some manufacturers will sign confidentiality agreements and will tell us about product development and what we can expect in the coming years."