The Parable of the Clown and the Lamb

What Moves You?

For me, that's easy...Music! It really is the universal language. The older I get, the more I appreciate every nuance of it. It seems, everyday I discover more artists that have something to say to me via their lyrics, music, rhythms or tones. I believe everybody has a desire for music in their soul just as they have a need for food.

Just as people consume food everyday, they also consume music. Food and music can be commodities or passions for humans. People's "experience" with them dictates their importance in their lives. If you have grown up eating McDonald's all your life and have never tasted the "Colorado Rack of Lamb" at John Elway's Steakhouse in Denver, then food for you, is a commodity and it does not bring joy to your life. But, once you have bitten into that pink, succulent, perfectly seasoned, bit of lamb flesh at Elway's, then you are ruined for life and NEVER want McDonald's again! Food, for you, has become an obsession all because of the "experience" of that glorious morsel (see pic below) that made you want to slap Ronald McDonald across his pasty, white face! You may not be financially able to eat at Elway's all the time, but you are going to sacrifice and pinch your pennies to be able to have that experience again. Your taste buds have been awakened and now, demand a better product. The story illustrated above holds true for music also. But sadly, there are not that many places left that you can go to get that musical "experience".

This musical experience may be different for each individual but for me, it is when my hair (the little that I have left) stands up on the back of my neck and I get goose bumps. But, I do not give up those goose bumps easily. There has to be just the right circumstances in play that stirs my emotions and makes that special feeling wash over me. First, it has to be music that I relate to and second, the quality of the recording (or live venue) has to be very good and presented at a certain volume level. Once a person experiences this feeling, most will want to spit on iPods and generic ear buds just like the person that ate the lamb wants to slap Ronald McDonald.

My industry (Custom Integration Channel) and the dealers associated with it, used to be the Kings of getting goosebumps from their clients. Sadly, a lot of them have lost the art or never possessed the talent in the first place. Some however, are masters at their trade and are making music disciples (and plenty of cash) every day.

I have three questions for my CI Industry friends-

1. Are you feeding McDonald's or beautiful, tender lamb chops from Elway's to your clients? Some of you are introducing them to products that will  move them and set them on a quest to feed the lust for better music / audio in their life whereas, some of you, are taking the easy sale and letting them eat McDonald's because its "good enough" for your taste and faster to cook. Do you want to be the one telling them how good Big Macs are when your competitor is letting them taste Elway's lamb chops?

2. Is your showroom (if you have one) a McDonald's or an Elway's? Very few of my dealers have a showroom anymore but, they may have a place (client's home / their home) that they can take a client and show them their wares. If you do have a space, what are you "serving"? Are you showing them the same thing that Best Buy or other mainstream vendors are showing them? If you are, you are feeding them McDonald's and they will never be hungry for anything else. If you do not have a space, I would highly encourage you to find one and start cooking! The only reason I ordered the main course of lamb, was because I was able to taste it as an appetizer first!

      



3. Do you want to be a fry cook at McDonald's or Head Chef at Elway's? The  fry cook at McDonald's works hard all day long and gets paid very little but, worst of all, he is not remembered by his patrons. The Head Chef that made the "Colorado Rack of Lamb" that I ate at Elway's, is well paid, still works hard, but is definitely remembered by his patrons and is considered by them, an Artist!

Our channel has the talent and ability to be Artists. Let someone else cook the fries...we need to be roasting the lamb!  

Please click below and enjoy some new artists that move me. On YouTube no less! Who knew they had quality content on their site?

                                                     

You can never get to the Moon if you are stuck in Earth's orbit !

Lessons learned from Neil Armstrong's life applied to the A/V Industry 

When I look back over Neil Armstrong's life, I see that he was no different than you or I (maybe a little smarter). He just made a courageous decision back in the 60's that changed his life and the Nation that he was a part of. When NASA asked him to go and be the first man to set foot on the moon, he could have said "No, I want to stay on earth, raise a family and live a safe and comfortable life", but he didn't. On July 19, 1969 when Neil stepped aboard Apollo 11, I would argue that he was prepared to die that day and the odds were definitely not in his favor. It was a chance that he was willing to take to better our world and bring it together for a brief moment. 

Lately I have been so frustrated with this industry that I love and I'm not alone. Most other reps, dealers or manufacturers I talk with share the same sentiment. We, as an industry are "stuck in earth's orbit" but, we want to get to the Moon! There is hope to get there but the voyage to the moon is hard and plotted using Courage and Change. 

We, as an industry, blasted off about 20 years ago and went straight into space, headed for the Moon. It was a fun, quick ride and we got out of Earth's orbit before we truly developed. We were going so fast, we had no time to look out the window and prepare for what was headed our way... a meteor in the form of the Recession that knocked out our engine and sent us tumbling back to Earth's orbit (reality). We now have to come to grips with the fact that our Moon has changed dramatically since blast off. Back then, the Moon was the top 2 percent of the population that were building fantastic new homes at a staggering pace. Now, our Moon consists of the 98 percent of the population that we ignored when we were rocketing through the atmosphere.

When I am talking to all of my peers in the industry about the state of their business, I get so many conflicting reactions. Remember, we are in the same space capsule (the industry), but some want to stay in the comfort and familiarity of Earth's orbit, and then some, want to exercise their courage and change the way they are doing business in order to explore the Moon in search of riches.  It saddens me when I am talking to a dealer or manufacturer and they are so discouraged about the industry and depressed about how much their business is down especially when I know that other dealers in the same area or other manufacturers are having banner years because they have mustered up the courage to change their business model or their direction in order to capitalize on the new economy and get to the new Moon. That being said, we cannot get there if some people in our space craft do not want to go.

We have to get everybody on board, excited about a trip to the Moon again in order to survive as an industry. Some dealers, manufacturers and yes, even us reps, have caught the dream again but it took absorbing a lot a pain before we built up enough courage to make a change and see our circumstances and the Moon differently. Here are a couple of thoughts for the crew:

Dealers-

I see all of my successful dealers in my territory always open to change and adaptation to an ever morphing public. They are finding ways to service the ignored 98 Percenters even amid asteroid fields such as online retailers and mass merchants. There are many ways to do this, but one of the ways is by changing your business model. I have several dealers that have done this in the past few years. Some have been wildly successful and some have not but at least they gave it a try instead of orbiting where they were and seeing less and less revenue from an industry that they once loved and hence becoming bitter against it. It's not the industry's fault! Could it be that some of their competitors made courageous decisions and they did not?

One of the most intriguing business models I see popping up lately is the Hybrid business. These Hybrid dealers understand, to be successful, they need to get their A/V goods seen and heard by the 98 Percenters. This is something they cannot do with a traditional A/V showroom or retail establishment. Some are using an Art Gallery / AV Venue model. My ideal Hybrid model would consist of a high end coffee shop with several AV Salons attached (BTW- I am open to franchise opportunities on this idea - lol ). The people that can buy art and a four dollar cup of coffee are our clients! They just need to have a way of intersecting with our upscale technology in their everyday busy lives to understand what makes us and our products different than the mainstream they are used to.

I hear all the time that the 98 Percenters do not have enough money to buy our upscale goods. Baloney! People spend whatever disposable income they have on products that become important to them. There are millions of iPads and iPhones sold each month and they are definitely sold at a premium over most Android or cheaper products. People are choosing them because they see them as a more luxurious, advanced product. The secret here is, as stated above, Apple intersects with them in their daily busy lives. So the question is...How are you getting in front of enough of the 98 Percenters to open their eyes to what we have to offer?     

Manufacturers-

Are you listening to the public, dealers and your reps to really get a grasp on what you need to produce to help your dealers become important to the 98 Percenters? Have you switched your marketing focus from the "old Moon" to the "new Moon"? If so, is your marketing fresh and original and have you found a way to intersect the public in their everyday lives to get them tracking to your dealers? 

When is the last time that you have reviewed or reconstructed your programs for your dealers? Is your dealer program competitive with some of the main player / manufacturers in our industry? Being a rep, I talk to a lot of dealers about my manufacturers and their other manufacturers, the answer to the previous question is that a lot of the manufacturers have lost touch with what their dealers have become and morphed into because of the recession and their programs do not "fit" them anymore. Most dealers have lost a lot of weight and need a small spacesuit now and most manufacturers are still trying to give them a double XL sized suit. There are not a lot of double XL sized dealers left in the industry. Most dealers like to be direct and enjoy that partnership feeling they get by being direct but unless your programs make business sense to them they will continue to give their money to manufacturers that understand that dealer programs sell product this day and time. The quality of the product is secondary to these dealers. A lot of quality manufacturers need to step up  their dealer programs to the level of their products.

Reps-

Just as there are dealers that want to go to the Moon and some that don't, the same holds true for us reps. Are you a rep that "just sells boxes" to your dealer and knows nothing about what's inside? Or, are you a rep that can break open the box, install, program and then answer technical questions about the box? If the earlier is true, you are just orbiting the Earth. Our industry is full of reps that are just orbiting. Let's face it, the rep business is not drawing a lot of energetic new people. To be on a path to the Moon, the most important requirement is to be energetic about our industry. If you are energetic, all of the other qualities will naturally follow.  

Do you still run around each market like a chicken with his head cut off and get an hour of time from your dealer and by the time you set up your demo and he gets off the phone with his installers or clients (or other vendors), you have 15 minutes to show your demo, talk about applications, ask about his business and then you get back in your car only to run across town and do the same thing over again (insert deep breath here)? I once did the same thing but, I took a step of courage and changed the way I interface with dealers. I started doing "One Man Regional Shows" where my dealer comes to me and I have multiple vendor demos already set up. In these shows, my dealer gives me his complete attention for two or more hours in an environment that is mutually beneficial and cohesive. It's a Mini Trade Show and my dealer is impressed that I took the time to bring it to him. This may not work for all reps, but it has worked for me and set our firm on a path to the Moon.

What "One Small Step" are you making in your business to help the A/V Industry make "One Giant Leap"?  Please share, because we cannot get to the Moon alone...it takes a crew!        
                            

What happens when the Messiah becomes the Anti-Christ ?

Why the company that every manufacturer and Rep in the CEDIA channel loves to hate, is on a collision course with retail and what that means for the Custom Installation Dealer.

Preface: Let me begin by saying that I think the company that I will be talking about here has a genius marketing department and has timed their entry into our market perfectly. I think everyone reading this post will grasp who this company is, but for now, I will refer to them as "Messiah". I know some dealers are very passionate about this company and you will not hear me downgrading the company or their products in any way in this post. I think they make a good product for the money and are a good all around company. My point in this blog hinges on the way that their product is distributed. This post should get some very interesting comments!  Read on....

As an Independent Manufacturer's Rep, my line card has traditionally been filled with higher end goods for our channel. Most of the goods sold by "Messiah" did not crossover into what I was selling my dealers. But over the last year and a half, "Messiah" has started introducing product that directly competes with some of my middle priced lines. I did not think much about it at the time, but after I started asking my dealers if they do business with "Messiah", a funny trend started appearing. Half of the ones I asked readily admitted that they did and the other half said no way and would not admit to it! But, upon walking through the facilities of the ones that said "no way", I started seeing a "Messiah" box in a corner, on the shelf in the warehouse or installed in the wall in about 30% off them. Hmmm, I thought to myself, I have 50% of my dealers that admit to doing business with them and also 30% that say they are not but are. That's 80% of my dealers in my 3 states that I cover! Again, I'm not saying that if I was a dealer in this day and time that I would not be doing business with them either. Their approach to the dealer channel is very appealing, especially in the hard times that we live in today.

Let's look at why their doing so well:
     1. Free Shipping- no matter how small of an order.
     2. VIR programs- different levels.
     3. Huge margins.
     4. Can't be shopped on the Internet.
     5. Great return policies.
     6. Very convenient website ordering.
     7. Extremely fast and easy dealer sign-up.
        (This one winds up being part of my point later.)

A lot of my dealers in my 3 states have been hit hard over the last few years with the recession. Before the recession, most of them were bigger firms that had personnel in the office to place orders, keep track of VIR programs and make sure product was on time for their install. This person was one of the first ones to go in the downturn of the market. Now the typical day for the typical 4-5 man dealer operation goes like this:
Works all day doing installs; gets off at 6:00pm (or later) eats dinner; gets the kids in bed; watches a little TV; then gets online around 10pm-12 to order product for the next week's jobs (a lot of the time from "Messiah"). 

I had originally thought that most dealers of "Messiah" were only buying basics (mounts, wire, widget/gadget type products, etc.) but after sitting down and talking to a few big dealers of theirs, I have come to realize that this company's products encompass 60-80% of the products on the job. It makes sense for the dealer to do this because of the above mentioned 7 benefits. I cannot fault them.

Here is where I start playing devil's advocate. Most of the nicer lines I sell as a Rep are territory restrictive. Meaning, I cannot have 10 Bryston dealers in Nashville, TN. It makes no sense for Bryston and it makes no sense from a competitive standpoint for the dealer. So, if I have 80 percent of my dealers doing business with "Messiah", the chances that a perspective client getting several quotes from a few dealers and that quote being made up largely of the same SKUs are very good. Remember, it took less than 5 minutes to become a dealer for "Messiah" on-line and any person with a tax re-sell certificate can become a dealer. At this point, what happens to the awesome margins that the dealer was getting from "Messiah"? The client is going to play that card and 1 of 2 things will happen:
     1. The dealer will cut their margins to get the job.
     2. Their competitor will cut their margins to get the job.
If it is not happening yet to a dealer, it soon will based off of the shear number of "Messiah" dealers in any given market. Either scenario is bad for the dealer because the custom dealer is the person that is supposed to have something special for the client to make them stand out from their peers. Now 2 out of 3 companies (or more) that the client gets quotes from are proposing the same thing. This does not come across as "Special" to the client.

It is my opinion that "Messiah's" dealer base is reaching saturation and their dealers will start to fall away quickly when most dealers in a given market start butting heads on the same line. When that happens, what do they do with this huge "machine" they have created with too few dealers to help keep running? The answer is simple and they are already geared up and have the infrastructure and business model for it. They will one day soon, turn the key and go direct to consumer leaving their dealers out in the cold but thanking them for making it all possible. It is the nature of the beast but make no mistake....the Anti-Christ is coming!

My question proposed to the dealer is - Do you sell your "Identity" of your business to this company for some of the 7 above mentioned benefits or do you do just a little more work and give your business to the Real Messiahs (traditional, restrictive manufacturers that have supported their dealers and the channel throughout the years)? Some of these manufacturers offer some of the same benefits and partner with some great Reps that make interacting with these manufacturers just as profitable and pleasurable as doing business with "the Messiah" and the best thing about it is the dealer gets to keep the Soul and distinctiveness of their business!  
          
   

Is the Magician about to die? Part 4 - The conclusion

How iDevice GUIs have taken away your "magic," forever changing the Custom Integration market and some suggestions on growing your business in spite of them.


Preface: Thanks to everybody that has taken the time and effort to read my thoughts on my first blog attempt! This post concludes my series on the Magician. Remember, these are my thoughts and I'm sure there will be people that disagree with me and that's .....okay. If you have not read the first 3 parts of this series, please go back and do so now. If you don't, this continuation of the magician's story will not make any sense to you. Let's pick up where we left off...... 

Present Day and Future - So, where does all of this leave the magician and his industry and how do we go forward?    

Let's see where we stand today:

        - No margins left on flat panels.

        - Margins dying in automation.

        - No new construction recovery, so pre-wires and multi-room audio

          are slow.

        - Systems are getting simpler so we have to turn more with

          fewer billed labor hours.

        - Gas is $3.50 to $4.00 a gallon! I thought I would just throw that

          one in there.

        - Fighting for every retro job we can get.

          

So what should we do?  One suggestion is:

Get back to your audio roots!

Let me ask two questions:

1. When was the last time that your hair stood up on the back of your neck when you were listening to music, much less when your clients were?  

2. Have the margins in higher-end audio and speakers changed in the past twenty years? 

There is a crazy trend (in our eyes) happening today and that is the re-birth of quality audio and even 2 Channel (that's right, you read it right- 2 Channel). A lot of dealers and even the industry is not understanding and is dumbfounded about how this is happening. I think I can explain if you will follow my logic below:

- Audio is the only sense that can give you that euphoric feeling of goose bumps.

- 25-38 year olds are who I consider to be the iDevice generation. They grew up listening to iPod and never have been presented with an audio demo that gives them "The Experience." 

- They’re bored with 1 million songs in their pocket because they have lived with it for so long that it has become commonplace and they’re searching for something to fill the void.

- They’re stumbling upon vinyl again and the resurrection is beginning. Sales for vinyl have grown the last four years and in the last two years, have grown 33% and 14% respectively. Even though the numbers represent less than one percent of total music sold, 2.8 million vinyl albums were sold in 2010, up from 2.3 million in 2009. The demographic buying these albums aren’t your dad and mom's generation; they are the 18-38 year olds. If they’re buying vinyl, they’re interested in quality audio and looking for equipment and speakers to play it on because they’ve never owned it or even known that this level of playback ever existed. 

   

- They’re the demographic that have at least a little disposable income. 

- They still have some "kid" left in them and, like their parents were with 2 Channel at their age, are susceptible to the idea that making their system sound just a touch better for $1,000 dollars, is worth it. 

- The best thing about this revival is that it is being pushed up from them to the industry instead of the other way around. Usually the industry tries to shove things down the consumer's throat. Just look at all of the manufacturers that were scrambling to show their re-worked turntables just in time for CEDIA last year!

What do you have to do to garner these new clients ?

Automation - You still have to do automation and do it right. Today, you have to sell and properly hang a flat panel with hardly any margin, don't you? The same will apply in the next few years with automation. If it is not a DIY project, you will have to do it correctly and at a fair price and it will have to be reliable and be user friendly. Your only concern needs to be to make sure you are partnering with a company that is respected, makes a reliable product, has a good track record and, last but not least, has the most legitimate margin that you can find.

Demo Space - You will have to have some type of demo space to raise hair on clients’ necks again with an audio demo. This can be a showroom, your home or a client's home. Your competition, more than likely, will be showing automation very similar and at the same pricing that you will be, so you really need to have audio equipment and speakers that set you apart from them and are capable of emotionally moving the client. If the rest of the job is similar in pricing and quality, the client will remember the dealer that "moved" them and which dealer just showed them  a pair of dumb-dumb in-walls.  

Education - Get a re-fresher course or learn everything you can about sound and the physics of sound. Don't just talk the talk. You really need to understand sound and learn to present it to a client in a simple, non-technical way. Most clients get turned off when technical jargon starts spewing out of our mouth.

  

Product Mix - Develop a high margin/high quality audio equipment mix that is hard to shop on the Internet, but keep your offerings slim so that you are important to your manufacturers and not the other way around. Keeping your lines to a minimum also cuts down on a lot of client confusion. They are coming to you because they see you as the expert. It's up to you to confirm that to them and relate to them that you chose this manufacturer because you (the expert) see it as the best. Why would they want anything less?

Salesmanship - The art of actually selling will have to make a comeback into your model. The easy sell is over and very few jobs are being delivered to your door like they were in the mid 90's. Focus on your selling techniques. Educate your staff on this fundamental talent and practice it with them in your down time.   

To sum up: Things have changed rapidly in the past 14 years since I’ve been in the industry, but one thing has not changed. If I know more than my client about what he is interested in and can give him an "experience" he will always put me on the pedestal as his magician. True magic comes in trying to figure out what act our client will want performed 2 years from now and prepare for it starting today. 

The magician is not dead, he is just changing his set.

Is the Magician about to die? Part 3

How iDevice GUIs have taken away your "magic," forever changing the Custom Integration market and some suggestions on growing your business in spite of them.


Preface: If you have not read Part 1 and 2 of this series, please go back and do so now. If you don't, this continuation of the magician's story will not make any sense to you. Let's pick up where we left off...... 

June 2007 - The ushering in of the Dark Ages.

1. The New Construction collapse.

2. The introduction of the iPhone.

 What happens when your whole world changes? It seemed like over night that "sticks" stopped coming out of the ground and my regular contractor clients stopped calling. On top of that, contractors that still owed money, were getting very hard to contact and corner. Clients that were still in the midst of building projects, started coming back to the design table wanting to cut certain sub-system controls or leave rooms pre-wired for future fill in. The press was in full swing of casting serious doubt on the economy and the public was listening! The press did not have to tell the banks that our gold mine of a housing market was about to play out, because they caused it and knew they were just bidding their time. A lot of our clients couldn’t afford our toys anymore because the banks wouldn’t allow them to get rolled into the mortgage. The ride had officially come to a stop and a lot of dealers started to exit that had based their model on new construction and automation.

About this same time, that pesky little iPod company pioneered and shipped a new cell phone that re-defined the word magic and how I practiced it. Our clients wanted to buy our cool toys, but began to save their money in fear of the economy. They could however, let go of 500 or so dollars and buy Apple's latest gadget. It was far more than a gadget in retrospect.

Let's talk about what happened when it was released:

Sales - They sold 6 million iPhones (touch panels as far as we are concerned) the first year! Let me ask a question...how many touch panels do you think we sold as an industry since the first Pronto or RAV came to us in 1999? That's right, everybody reading this should have their head hung low by now. It's been 12 years since then and Apple eclipsed us in just 1 year!

GUI (The start of my blog point) - Their GUI immediately became the standard to which everyone else’s was compared. Most of Apple's customers had never seen or touched a touch panel before. Their first experience was one of fun and amazement. The GUI educated millions overnight to the simple expectation that all touch panels should be easy and just work. Even we as an industry could not wait to get our hands on them and we had been doing touch panels for at least 12 years!

  

Multi-Touch - Try explaining to an AMX or Crestron client that his 12 thousand dollar touch panel he just paid you for will not do flick or gesturing like his iPod in his iPhone does. That is not a good conversation! 

What did the iPhone's introduction do for us? 

Loss of credibility - We have to look through our clients eyes and step out of our industry to fully understand what was going through our clients’ minds when we were pitching them on our touch panels since the iPhone's introduction. Most of our new clients were introduced to touch panels through the iPhone and here we were pitching them something that does not do as much (in their eyes) or is not nearly as clever for four to twenty times the price of their iDevice.

Decrease in customization = decrease in programming billing hours - Their GUI spoiled our clients and caused many to settle for it instead of desiring a fully custom GUI from us.

Bye, Bye Margins - No more high margin touch panels sales.

Made some of us Trunkers! - I have a lot of dealers during this time that looked at their bottom line and realized that the total margin they were showing did not have enough money in it to support a showroom anymore. They closed it and became "by their own definition," a Trunker with a van. In all honesty, they were better off because the jobs that they were getting, were by referral anyway and the client never entered the showroom.       

January 2010 - The iPad is introduced. See my thoughts above and multiply by ten!      

Here is where I make the point that it’s the iDevice GUI, not the hardware, that is changing our industry. Could I sell another twelve thousand dollar touch panel? Sure I could, as long as it could make the iPhone /iPad GUI of today look terribly outdated like their GUI and features did to us in 2007. Most of our rich clients have as much or more money than they did back in 2007, but they have to feel justified that what they’re buying is going to be tops in the market for a while and turn their peers’ heads just like my Pronto did back in 1999. For now, you have to tip your hat to Apple. They have done an incredible job! Here is the scary part.... Apple did this to our industry with a ricochet. They weren’t even going after our industry or developing a product for our channel when they introduced first the iPod and then the iPhone. We’re but a pebble in their pond. What would happen if they took aim at us and put serious resources and thought into developing for our channel?         

September 2010 - Little black boxes and the cloud.

CEDIA 2010 brought a barrage of companies wanting to "play nice" with the iPad and iDevices. Companies started to spring up (Bitwise, Red Eye, etc.) that had these little networked black boxes that had control ports on the rear and claimed that all you needed for control was one of these boxes (that are inexpensive-low margin) and an iDevice. Dealers were flocking to these companies trying to understand how they could use them to spring board into the lower/middle end of the control market. Just as my clients pushed me in the early days of the iPod, their clients are starting to give them push back and demanding to use their iDevices to control their home. These clients are being educated by the iDevice GUI and the App Store that going forward, they should only buy networked equipment and "programming" is as simple as downloading the App. Even if they spring for a Crestron or AMX processor, they are cutting back on the number of sub-systems attached to it because of the high cost of programming. 

To add to the race to zero on automation margins, later that year, companies like ADT and Schlage Link started using the "cloud" to monitor these boxes and even give (included in your monitor fees) you storage space in the cloud to store your footage from your IP security cameras and re-stream them back to you. 

So now, as a dealer, I'm not making much margin on the iDevice or core equipment and programming of these systems is much less complicated resulting in not as many programming hours billed. My "gold mine" in the midst of the booming new construction market has turned into a "coal mine" in the downturned new construction / iDevice era. I have to move a tremendous amount of systems in order to make a decent living now. 

The worst thing that has happened here is that magic is starting to dissipate from our industry. Even today, we do not get the reaction that we used to when we would press one button and the client would watch a multitude of things happen as a result. In the past, that was an "experience" to him and in some degree, magic and it validated us as pros at what we could offer him. In the next few years, that experience is going to turn into a DIY project for most of our clients. It will be expected and part of everyday life because of iDevices and devices like them that are yet to come. 

Is the Magician about to die? Part 2

How iDevice GUIs have taken away your "magic," forever changing the Custom Integration market and some suggestions on growing your business in spite of them.


Preface: If you have not read Part 1 of this series, please go back and do so now. If you don't, this continuation of the magician's story will not make any sense to you. Let's pick up where we left off......          

March 2004 - Convenience, Automation and New Construction become buzz words.

Convenience - The iPod has fully taken root now and most clients only care about how many songs they can carry in their pocket and not about the sound quality of the music. We are in the early stages of the iPod becoming the core music source in the home and quality music, especially quality 2 channel music, is starting to disappear from the stage.

Automation - Full sub-system automation (AMX, Crestron) is starting to become mainstream now and the perfect storm is brewing between it and huge growth in new construction. This new control category becomes a gold mine for A/V dealers to tap into and now the Custom Integrator channel is born.

New Construction - Banks are our industry's new best friend! All of the bigger houses that are going up (and there are a lot of them) are getting cost + financing. This means that a client that is building a 600K house is borrowing 750K from the bank. A lot of that extra 150K is going to buy our "toys" that consist of full automation, multi-room audio and flat panel TVs.

How did the above effect us as dealers? When you are digging for gold, you get gold fever. Generally as human beings, we take the path of least resistance and that even bleeds over into our salesmanship. Our clients are building these big houses and are asking us for 4 things: automation, multi-room audio (in which they want their iPod used as a source), flat panel TVs and a home theater. Notice what is missing.... good, quality audio (nice speakers and amps). We propose our design to them which includes everything they want but we try to throw in some quality audio also. They are not interested because they have their precious iPod and music has become a "convenience" for them and not an "experience." We take the easy path and take the sale but do not stress to them the benefits of quality audio. So quality audio (our anchor and reason we are in business) becomes something we drag along and if it gets into the job, it’s a bonus, not a necessity.

During this time there are three different types of business models in our industry.

1. 2 Channel Shops - These dealers did not see the future coming and are now stuck in the past. They did not embrace automation or home theater and kept denying what the iPod meant to their business. They are starting to feel the pinch and will dwindle down in numbers drastically in the next 5 years.

2. Custom Integrators with Showrooms – These dealers did see the market changing and adapted and are reaping the rewards in this time. They have had full out showrooms for a couple of years now where they can display all of their wares: Automation, Theater, Multi-Room Audio and the latest video gear. This is the "New Experience" that clients are looking for and this model is truly helping to close sales. All the while in these showrooms, automation is king and quality audio is in a back corner somewhere.

3. The "Trunker" is born - The scourge of the industry! He has no showroom (just a van) and therefore does not have the overhead that a true CI guy with a showroom has. So, he can be more competitive on price and often win the client over even if he has no way to provide that showroom "Experience." His description changes later in the story.

March 2005 - We as an industry strike gold in the midst of the perfect storm and I step up a level as a magician.

I moved to a bigger market with a ton of new construction and clients that were hungry for full sub-system integration. I needed to find a manufacturer that could provide this new set of tools. Remember, I had only done Pronto style remotes until this point. I chose AMX and it was a huge learning curve, but after training, I had the same feeling that I had the first time I held that Marantz RC5000 in my hand. I was holding an 8.4 inch, battery operated, AMX touch panel and looking at all of the cool graphics that were available, when a concept burst into my consciousness. What if I could take my proposal I normally give my client in a binder form, turn it into an interactive presentation on this panel (that is part of their design) and let my client take it home and play with it? They could view their proposal on it along with my job gallery, ad slicks of products, an example GUI with faux feedback, recommendations from other clients and, to top it off, it would be fully personalized with their name and even a picture of their home they were building. I step up from the magician to a wizard at this point! I get the form and structure down so I wouldn’t be re-inventing the wheel every time and begin wowing my clients. I again become the expert (in their eyes) they want to do business with because all of my competition are still giving a paper proposal in this new digital age and I’m delivering them technology that they have enough money to afford.

At this point, I’m still making decent margin on flat panels, multi-room audio, home theater and automation hardware. I’m making good margins on programming, mostly because of selling or the client requesting, cool customizations to the GUI of the control system. Again, I find the client wanting to take his control system GUI or hardware one step above his peers and he does not care (to a certain extent) how much money or time it takes for that to happen. Truly, automation is King of the day; quality audio becomes its peasant and the housing / automation Renaissance continues! (at least for a couple of years)

Is the Magician about to die? Part 1

How iDevice GUIs have taken away your "magic," forever changing the Custom Integration market and some suggestions on growing your business in spite of them.

Preface: I have split this blog into four parts because it is so long. I have a lot to say on this subject because I have lived it as a dealer and am continuing to live it as a Rep. The best way to get my point across is to put it into a time line that most in our industry are familiar with so I can use history to paint a clear picture and trend towards a future where most of our industry (dealers and manufacturers) are thriving. My first two posts will deal with a lot of history and the last two posts will make my point and give suggestions on going forward. I will post one every week and although I am open to comments on the first two, I know most of the comments will come from the last two. Please read them as a continuing story and thanks for riding my brainwaves in your spare time.           

I want to start by re-telling the story of the magician from his start to where he is today. To some reading this post, the early days of the magician will be foreign because you came into the industry during his hay day and did not know him in the beginning. So, bear with me while I re-hash his story.

April 1998 - This was the month that I first saw magic in the industry. I couldn’t believe my eyes. I was watching a TV that was so thin, clear and sharp that it looked alien to me. This was the first Pioneer 42 inch HD plasma screen to hit our store. What really surprised me, was when a few clients started asking when we could deliver one of "those new thin TVs" for $14,500.00 and didn’t try to haggle the cost in any way. Huge margin and high ticket items....what could be better for our fledgling industry? I didn’t sell a lot of them over the next year, but it created excitement and traffic. Those were great times, but well past us now.

May 1999 - A little over a year later, magic again appeared on my desk in the form of a little "touch screen" remote called the Marantz RC5000 (the Pronto in a different skin). Wow....this was the first customizable, touch screen remote that I’d ever seen. My mind started spinning on how I could use this new "tool" to differentiate myself from my competitors to the point that I had trouble sleeping at night because I was constantly thinking of different graphics and tricks that I could put into it to amaze my clients. These were the same clients that were buying my 10K to 20K flat panels TVs. They did not mind spending $1,200.00 (programmed) on a remote that had a gray-scale picture of their house or picture of their face on it to use as a button. I became the only person in my area that fully embraced and understood this new gadget that became a "deal closer" and validated me as someone that was a step above my competition. In essence, I had become the Magician in my clients’ eyes and my little remote became my wand! It became so fun to watch my clients’ faces as they pressed the CNN logo and "abracadabra" everything turned on and the TV tuned to CNN automatically. It was an "Ah-Ha" moment for them and a great time to be in the industry.

March 2001 - Skip ahead a couple of years and business is great in all categories (Audio, Video, Remotes). Even though my margins in flat panels had started to trend down a little, my volume was picking up. I had developed a great client base because of my realization of how important it was for my clients to "stand out" from their peers through options like my customized remote systems. To make things better for me, color versions of my touch screen remotes had hit the market and were double the cost of the gray-scale ones. Yippee!!

March 2002  - A funny thing started happening. I noticed that the most important item that came up in my client interviews was "ease of use" of the system. A couple of years back, they wanted an A/V system that was cutting edge and provided that "hair raising" experience you could only get with the latest surround sound / 2 Channel gear and the best video possible which meant high-end manufacturers with hefty margins for me. Before, they were okay with using multiple remotes to accomplish a task. Now, they demanded one easy to use remote and if they had to sacrifice a lot of their budget to programming to make it happen, that was okay. So, this was the beginning of the descent of the "Audio Experience" in lieu of the "Control Experience." I didn’t mind it that much because in my mind, it all worked out on my bottom line because now I was getting my margin in programming. Even though true sub-system automation (AMX / Crestron, etc.)  was starting to come of age at this time, I was oblivious to it because my store hadn’t grown to that level and we were satisfied with just doing fancy custom remotes that worked our AV systems and multi-room systems. In a couple of years, I would tap into full automation and discover this new "set of tools," but for now, in South Mississippi, I was still the magician.  

December 2002 - Clients are catching me off guard when they start asking me if we have this new music player called an "iPod." Supposedly, it came out Christmas of 2001, but only now am I getting requests for it. I try to quickly educate myself on what this crazy, new "little piece of audio crap" is so I can sell against it to my clients that are asking about it. No matter what I do, the inquiries keep growing and growing and I find myself in a daze being bombarded with clients’ questions and even outright defying their magician when they go out and buy one even after I tell them that it shouldn’t even be considered as a piece of audio gear! Oh, and now they want me to integrate it in their system and be able to control it with my precious touch panel remote! The Nerve!!! But, I cave into them and make it play nicely with their system and I still remain who they consider to be the Guru. However, all the while, my quality audio business starts to slip.