Mike Anderson, CEO and owner of 3vNet, knows that he has his work cut out for him. The process of overcoming the tarnished image of the brand that he recently purchased began when he jettisoned its old name (Colorado vNet), which carried with it too many negative connotations. Now he and his team are working on re-establishing credibility with integrators and building a solid dealer base.
3vNet CEO Mike Anderson
“The bottom line is that we understand that we’re coming into this with a lot of baggage,” Anderson told Residential Systems. “We have a lot of hurdles in front of us, and if we’re going to be really honest, a lot of them were created by the company.”
Anderson said that far too often he has seen companies try to ignore problems, but that dealers (he used to be one) don’t buy it.
“We have to establish credibility and to do that we have to acknowledge our past and acknowledge the warts that we have,” he said. “We’re going through the cosmetic surgery to get rid of the warts the best we can, and it’s going to take some time.”
The next step, Anderson pointed out, is scaling back an “active dealer” list of nearly 3,000 companies to a much more manageable group of 150 to 200 dealers who look at the brand as one of its top-three offerings.
“What we want to do is get to the point where we can have really good relationships with our dealers, so they will know all of the people inside our company, and our people inside will know all of our dealers,” Anderson stated. “We need to become more of a partner with them and a real solid resource that they can count on. If I had 150 dealers supporting the line and running their business well, and we were one of their top three vendors, then we would have a very successful company and we would be able to support our dealers the way we’d want to.”
That will require the company to study each market and find out who the best dealer is, then target them, rather than only depending on past sales numbers as a guide. The quality of the installation, Anderson said, is just as important as the number of systems sold.
“One of the challenges we have as much as anybody else is that the final user experience is pretty dependent on the quality of the installing dealer, and we have some issues out there with dealers who maybe haven’t had the right training.”
By scaling back, 3vNet can have a dealer network that gets that training they need, not just on 3vNet products, but on networking and networking principles and how to manage their businesses more effectively.
“We’re envisioning an education program where we can do financial training and how to manage labor forces and do all those kinds of things, because all of that will help our dealers become more successful, and the more successful our dealers are the more successful we’ll be,” Anderson said. “I’m constantly amazed at how many people in the CEDIA channel don’t know what their real labor costs are. It’s their single biggest expense, and they don’t what their labor cost is. They don’t know how to burden it, they don’t know what their overhead rate should be on labor and don’t know what their inefficiencies are costing them. It’s just something we don’t learn in school, unless you’re earning an MBA.”
As for product plans, Anderson acknowledges that his company has some voids it needs to fill and upgrades that need to be made. But a new initiative is that no products will be discussed until they are actually in the warehouse, ready to ship to dealers.
“We are obviously ramping our engineering department significantly to support what we’re selling already, as well as working on new stuff,” Anderson noted. “While we have several products in the pipeline, I don’t have anything ready to ship tomorrow so I’m not talking about it yet. If it’s in the warehouse, we can talk about it, but not until then.”
3vNet began shipping from its new Orlando headquarters in mid-June, and its warehouse now contains more finished goods than the company has ever had in its history.
That Orlando headquarters will eventually house a training facility for dealers, but not right away. In the meantime, 3vNet will be making house calls to offer its training. The company also will be at CEDIA EXPO in Indianapolis this September, but they’re not sure in what capacity. “We’re a 10-year-old company in start-up mode, so we have to be smart about how we spend money,” Anderson said.
And speaking of spending money, 3vNet already has “rationalized” its product pricing model, so it makes more sense. “We’re more cost effective than we were before, and the margins are more consistent between the products that we offer, so the dealer knows [how much money he’s making], Anderson pointed out. “Some of those prices got reduced by 40 or 50 percent, which is pretty significant, and we were able to accomplish that with new vendor relationships.”
With new products in the pipeline, Anderson wants to build on the momentum that he thinks will come from this new rationalized pricing structure. “We’re hoping to become more competitive and have more flexibility with our systems.”