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Azione Attempts to Scare Conference Attendees into Better Business Models

Dave Daniels’ mission was to frighten his audience. Not in the way that would send dealer members of the Azione Unlimited buying group screaming out the doors of the Hard Rock Hotel, but just enough to keep them awake at night pondering the future viability of the custom integration business.

Dave Daniels, president of Xssentials, in Aspen, CO, presented the most eye-opening session of the spring Azione Unlimited conference in Las Vegas.

Dave Daniels’ mission was to frighten his audience. Not in the way that would send dealer members of the Azione Unlimited buying group screaming out the doors of the Hard Rock Hotel, but just enough to keep them awake at night pondering the future viability of the custom integration business.

During the opening day of the Azione’s three-day spring conference last week in Las Vegas, Daniels, who runs the CI firm Xssentials in Aspen, CO, was tasked by the group’s executive direct Richard Glikes to “scare” attendees about competitive threats to the custom channel’s future and to offer guidance in refocusing for the future.

Daniels’ key message was that custom dealers must innovate by changing their service models. But first they must understand what a business model entails.

“In the corporate world they thought that a business model was about being efficient,” Daniel said. “Then there was no differentiation anymore, so no profitability.”

Therefore, Daniels warned against focusing too much on internal efficiencies and more on serving the customer in the best way possible. Particularly because the CI trade primarily serves only the top one percent of the income spectrum, it must find a way to cater to these wealthy clients in the way that mainstream e-tailers like Zappos and Amazon already do so well.

“We are absolutely pitiful at customer care and customer service in proportion to the amount of money that we’re getting from our clients,” Daniels groused. “We even forget to say thank you and to ask for referrals.”

Daniels pointed to a “blurred” competitive landscape between CI, DIY options, and utilities-driven initiatives, and the lack of demarcations between product categories.

“The guy selling security and IT and the lighting designer and electrician all want a piece of your pie,” he said. “We took a piece of their pie 10 years ago, when we started selling lighting control, shading, HVAC control systems, and security monitoring. Now they’re doing the same thing.”

That’s why a CI professional must find a way to own the marketplace by taking better care of his customers than these competitors are doing, Daniels noted. Unfortunately, he said, some of the biggest companies in the retail landscape (like Zappos and Amazon) already have the best customer service. Matching those companies isn’t easy.

“Today, consumers complain because the small guys’ service isn’t as good as the big company,” he said.

Daniels emphasized the importance of developing strategic partnerships with architects and builders to help expand market share and noted that “competing on price is not innovation,” but that adding value for the customer should be company’s central focus.

“Don’t think of price as a value proposition,” Daniels said. “Your value proposition must be clear; it’s your competitive advantage. If your customer doesn’t understand what it is, then you don’t have a competitive advantage. You have to simplify it.”

Daniels recently quizzed his own employees about whether or not they had consistently asked for referrals from clients after completing their project. None of them had. For Daniels, it comes back to thinking of one’s company as a service organization rather than a retailer or reseller.

“You have to be exceptional at service,” he stated. “I think we’re services companies, but we need to start acting a lot more like a services company and less like a retailer. Are we selling a solution to a customer that they want or what we believe that they want? Zappos and Amazon ask that question and find out answers. We need to make the customer understand that we sell solutions to their problems.”

Daniels said that too many customers don’t realize everything that a custom integrator can do for them and what their value proposition is. Unless you spell it out for the customer, how will he differentiate CI from a lighting designer that sells Vantage with automation features? That designer can differentiate himself because he can tell the story about his expertise or artistry in lighting design. Likewise, a high-end car dealer only focused on one specific product. The CI trade, on the other hand, sells “20 different product categories.”

“Are you the lighting guy? AV? Network specialist? Access Control? Security? Cameras? I don’t get what you do…” Daniels said, voicing the sentiments of a typically perplexed client. “[These products] represent 70 percent of our revenue stream and yet it’s very hard for the client to understand who we are.”

Trying to find a way to simplify an obviously complicated business model, Daniels coined a new name for the trade. “We’re an aggregator,” he said. “We take a lot of stuff the customer needs and put them together.”

Yet, Daniels admitted that a title like that wouldn’t serve the industry well enough in its efforts to gain better traction with clients.

“I don’t have the answer, but we’re in a changing business model, and we must understand how we’re uniquely differentiated,” he said. “We must make an impact in our community and take care of our customers. Are we better than anyone else going after that little bitty target audience?”

Looking down the road, Daniels said, labor and services billing will outperform revenue from products sold by the trade. Now’s the time, he noted, for the industry to take action, not only by improving service methods, but by increasing its hourly labor rates.

“Labor sales is a big business model driver,” he said. “Just raise your labor rate five dollars an hour and multiply that by the number of employees. It’s all bottom-line profit.”

Also, Daniels encouraged dealers to reward employees for high performance with financial incentives and share with them the performance goals and milestones of the company, so they know when targets are not met or the company is off schedule.

When Daniels asked for comments from the audience, Azione members shared their own stories related to service. Kim Michels, a 26-year industry veteran out of New York City, said that clients must always know when their integrator has been at their residence and serviced their system. Some attendees said that they leave behind handwritten notes, while others have an email follow-up policy. Some leave gift baskets at the conclusion of a major project. Many others send holiday presents to their key clients. One dealer makes a donation to charity on behalf of his clients during the holidays. Nearly the whole room agreed that they wear booties when they’re on a service call in a client’s home. Some send out a client satisfaction survey after the job, yet most have failed to even ask for referrals.

After Daniels’ kickoff, the conference included discussions on making money on labor and how to sell high-end products. Mark Valenti of the Sextant Group spoke about using Technology in the 21st Century, and guest speaker Steve Turner offered insights into using mobile technology for improved time management in a business.

At the conclusion of day 2 of the conference, Azione presented dealer sales awards to Bill Charney, Advanced Home Audio in Shelton, CT, with its Golden Member award; Tom Farinola, Atlantic Stereo, in Costa Mesa, CA, with its Azione Champion award; Xssentials with the prize for “Most Vendor Lines Supported;” and Captive Audio (Austin, TX) and Definitive Electronics (Juniper, FL) with its Biggest Mover awards. On the vendor side (in Azione Unlimited, “vendors are members too”) Access Networks was awarded for “Most Growth as a Percentage;” Leon Speakers earned the title “Dealer Champion – Dollars;” Middle Atlantic “Dealer Champion – Headcount;” Savant Systems won the Golden Goose award; and Hermany’s out of San Carlos, CA, and Netsertive won the award for “Vendor-Dealer Teamwork.”

Azione Unlimited executive director Richard Glikes awards the executive team at Leon as a Dealer Champion – Dollars, during the buying group’s spring conference.

On the final day of the conference, Dave Chace of Training Allies, explained how his company had been hired by Azione to create an online training module for qualifying clients in the sales process. Consultant Mike Detmer also presented “Your Annual Physical,” where he took Azione dealers through a series of strategic planning steps that culminated in the beginning of each dealer’s working business plan. With clearly defined vision, mission and value statements and general SWOT (Strength, Weakness, Opportunity, Threat) analysis, dealers were able to identify the top strategic objectives for their businesses and note them as the basis of a working plan.

All-in-all, Azione executive director Glikes said, attendance at the conference and the quality of member participation was good. Although, he added, there’s always room for improvement.

“I’m very happy with the attendance. We always get 100-percent vendor attendance, but we have about 65 percent dealer attendance, which disappoints me because it means that too many people are working in their business, not on their business,” he said.

For the 155 people that did attend, Glikes said, most walked away with great ideas and new friendships that will make them want to come back for the next meeting.

“They find people with similar problems to themselves, and there’s this little bonding thing that happens and energy, and they go back and look at their business with fresh eyes.