Among my current reading choices is a book published last year by John Naisbitt of Megatrends fame. The book, titled Mind Set! Reset Your Thinking and See the Future, asserts several prevalent attitudes driving our culture today. While reading the book, it occurred to me why it is so important to discuss the lack of convergence among representatives, distributors, and other market players, even as the rest of our industry becomes more unified.
Ive found that if you approach two different manufacturers, distributors, dealers, or sales reps and ask about their roles in the industry as well as how they perceived the roles of other players, you will get very different answers. Fundamentally, its safe to assume that our market cannot achieve its best potential if we cant agree on who is doing what, and who is best at doing which function.
Last month at the CEDIA Member Luncheon, the keynote speaker was Marcus Buckingham, author of First, Break All the Rules and Go Put Your Strengths to Work: 6 Powerful Steps to Achieve Outstanding Performance. In his discussion, he highlighted empirical evidence that shows the best way to prosper in our businesses is to focus and utilize our strengths while working around our weaknesses. Though the U.S. leads the world in this kind of thinking, less than half of the population actually puts it into practice. Buckingham noted that those companies that foster employees strengths often have both the lowest turnover rates and the highest customer satisfaction.
Like it or not, the future growth of our industry is inextricably tied to the customers we serve. And, while I still hear people wondering why CEDIA is encouraging the participation of its certification initiatives among our design and installation members, it seems that if the customers purchasing our idea of home theater and home automation are not ecstatic about the results, then referrals and market growth will be difficult. To borrow from Buckingham, it benefits all of us to form a consensus about who does what the best.
Fortunately, we exist within a terrific community with passionate participants. Manufacturers, dealers, distributors, representatives, and professional service firms, even as their opinions differ, are making collective decisions about what directions to go in the current market. What is most appropriate, as we all attempt to arrive at a unified industry mindset, is that we use these discussions to achieve better clarity of our individual roles, and not on one of predetermined outcomes. A more robust, sustainable, and effective market is achieved when we are aware of one anothers best contribution and capability for advancing the market. Lets face it, we are not just competing with ourselves but with others seeking the same discretionary dollars of the consumer that other markets desire.
Many representative organizations have created their own answers to the mindset that they and their market partners hold. For example, they believe in having some form of distribution associated with their company as a means of getting closer to a developing, new dealer base. Oftentimes manufacturer principals and sales managers encourage or discourage participation in a distributor-related role. But how far should this model be pursued? Is that the role of a stocking representative model vs. full-fledged distributor? The stocking representative usually only stocks the lines for which they have representative contracts; and, often, it is only a fraction of those lines. The full distributor model, on the other hand, contains scores of competing lines that provide a supermarket of fulfillment to installers.
As we move forward with new categories such as Media Center PCs, we must all decide who should provide the best introduction, nesting, and cultural arbitration of this category within our market culture. I have seen manufacturer players come and go already in this segment because they made significant market decisions from their own mindset, which, in their cases, did not match the language of our market. Even the implementation of HDMI in CI, born of the single point-to-point mindset, is presenting multi-room integration challenges to our custom markets profitable and predictable delivery of 1080p signals around the home.
Finally, I will end with the challenge and a call to action in which we all need to be heavily engaged. The AV specialty distributor market has increased the availability of just-in-time fulfillment to a growing market while lowering the cost and risk of lower volume accounts among manufacturers; and, has even provided better access to resources, such as CEDIA education. What needs further attention, however, is bridging the interests of some dealers in becoming closer to the manufacturer while developing enhanced profitability.
In an attempt to facilitate this process, many representatives decided to maintain a stocking representative model but not stock certain lines (so as to not compete with other distributors) enabling them to utilize more distributors throughout their territory, and therefore, further amplify sales.
Regardless of the approach, dealers do grow their businesses and become more refined as business people. As they do so, many dealers want the option of a direct manufacturer relationship because they see continuing to sell a focused product mix as a more profitable path. Many times a dealers profitability correlates with that brands ability to transition them into a direct account relationship while keeping their relationship with the distributor sound. The level to which the manufacturer can rely on their representative to monitor what is appropriate also has to be balanced by the quality of the relationship between representatives and distributors.
Clearly, perceptions are evolving. Ironically, many, including representatives, are rediscovering the benefits of manufacturers representatives in our market. In large part, this is why my current efforts include assisting in the creation of a Distributor Action Team for CEDIAs Associate and Affiliate Member Council. Lets keep the dialogue going.