Core Brands Helps Dealers Combat Internet Sales

Until Core Brands' new online intellectual property protection program is better established, the company's entire sales team is empowered to step in and make a proactive decision to save a sale and to offer dealers the ability to make the same margin percentage they would if they sold it normally.
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The other day, I got a call to go and spec out a job for a new audio system. I felt like I hit it off with the homeowner and developed a good rapport. After our chat, I prepared a quote based on the things we discussed and emailed it off to him.

The next day, I got a return email from the prospective customer that said, “I am familiar with the Niles indoor/outdoor speakers. They are available on Amazon for half the cost of your quote. I have no problem with the install billing rate, and I want to use your company. Can we arrive at a cost on hardware that is good for both of us?”

Of course, the first thing I did was check Amazon’s pricing for myself, and sure enough, the speakers were pretty widely available and for a price that was not only less than half what I quoted, but less than my preferred, Tier 3 direct dealer pricing. It would literally be cheaper for me to buy these speakers from Amazon than directly from Niles. Not cool.

Figuring there was nothing he could do, but too pissed off about it to just let it go, I forwarded my customer’s email to my Niles rep, Dave, along with the comment, “Dave, I know there's nothing you can do about this, but I thought I'd at least let you see what goes on with Niles. Pricing on Amazon is literally below our Tier 3 dealer cost...”

Dave, in turn, forwarded the email to the regional sales rep for Core Brands, Jason Davis, along with the message, “I see them at $116 and $111 pair on Amazon. Jason, is this authorized by Niles? Warranty? Really does not make sense.”

To be honest, I pretty much expected that to be the end of it, or possibly I’d receive an email saying, “Well, yeah, it sucks, sorry, but these speakers aren’t being sold by an authorized dealer, and if the customer buys them, they won’t be covered by a Niles warranty, and they might be B-stock or grey goods,” or blah-blah any of the other lame excuse comments that manufacturers expect us to tell customers to scare them from buying things on the internet.

This is point in the story where you know what usually happens. I’m forced to call the customer, telling him that I can’t sell the speakers at that price, and that he can go ahead and buy them and we’ll put them in for him, and I just write off the entire audio portion of the deal. Or he just bails on the whole project.

Except that’s not what happened.

Instead, I got a call from Davis. He started off by apologizing for the situation and then instead of just offering an empty apology or backpedaling, he made me an offer I couldn’t refuse. Davis said that Core Brands has a plan coming that will deal with internet issues, but until then, it’s the company’s goal to make sure dealers never lose a sale to an unauthorized internet reseller. To make sure that happens, Core Brands will discount products to make sure dealers earn the same profit margin at the price you match to your customer.

So, Niles allowed me to match Amazon’s pricing, and reduced my dealer cost to give me the same margin as if I’d sold the speakers are regular retail.

This was an unprecedented level of support from a manufacturer and when I expressed my shock at Niles’ solution, Jason suggested that I talk to Core Brands national director of CI sales, Gordon Isaac, to hear more about the company’s policy on dealing with these kinds of pricing issues and the plans they are taking to stop it from happening going forward.

Isaac stated that internet sales are a problem for most manufacturers, and that it became evident several years ago that Core Brands products were being used to generate traffic and business for people’s websites. (Core Brands is a subsidiary of Nortek, and consists of nine brands totaling more than 200 years market experience: ELAN, Furman, Niles, Panamax, Proficient, SpeakerCraft, Sunfire, Xantech, and Korus.)

While Isaac has only been in this position since January, he started noticing these internet sales issues were coming up quite a bit more. “We had to take drastic measures to get everything under control, so we could support our dealers better, and we had a plan for a program we were putting in place.”

That plan is through a company called Vision Werks, with whom Core Brands signed an agreement at CEDIA EXPO last year. Isaac explained, “Nortek has over 40-plus best-in-class technology brands” and already employs a variety of different price management programs. However the program being readied for launch with Vision Werks is one of the most comprehensive yet within the Nortek umbrella and is “by far the most powerful of any of them out there, and really the only one that can work with a company of our size.”

Vision Werks is a third-party legal company that protects intellectual property online. The company accomplishes this by monitoring websites, constantly scraping the internet through thousands of online resellers, and having lawyers implement processes to insure a company’s model numbers, brands and images are not being used in ways they shouldn’t. Other companies that employ Vision Werks include Bose, McIntosh, and Nest.

“Our goal is to have this program in place by this year’s CEDIA,” Isaac added. “I would love to show people at CEDIA how many unauthorized sellers have already been removed, and once this program is in place you will almost instantly see products disappearing from unauthorized sellers. We intend to make the situation you found yourself dealing with directly a thing of the past.”

But until the program is in place, Isaac admitted, “We continued having dealers frustrated by the fact that they would occasionally run into stuff online, and their customers bringing it up.”

Isaac also related that Core Brands president, Joe Roberts, defined the company’s mission statement as, “Delighting our customers with exceptional customer service, innovative products, and market-leading programs.” Looking at that first statement of exceptional customer service, Isaac explained, “if we have dealers losing projects because of unauthorized sellers, we really have to figure out a way to empower our people to take care of our customers.”

The result was a conference call between Isaac and his sales team. “I told them we don’t want to lose or upset our customers, but this internet thing is real and we need to address it,” Isaac related. “So we told our team that if anyone brings a situation to them where they are in jeopardy of losing a sale over price from an unauthorized or even authorized dealer that isn’t following policy, that’s our job to address on the back end, but for the dealer we want to make sure they are maintaining their margin percentage and getting the sale.”

The result is that the entire Core Brands sales team is empowered to step in and make a proactive decision to save the sale and to offer dealers the ability to make the same margin percentage they would if they sold it normally.

“We are doing this because we truly want to be a great partner with our dealers,” Isaac explained. “People use that term loosely a lot in this industry and in business in general, but there aren’t a lot of companies out there looking for ways of creating additional value and differentiating themselves from being just another supplier of product and being an actual partner working together to help them grown their business. To me a true manufacturer partnership enables the customer to find opportunities to make more money and strategically work with somebody much larger on things like marketing initiatives or different business ideas. This is part of what we are rolling out right now; the concept of delighting our customers with best in class customer service and being a great business partner that’s easy to do business with.”

Isaac concluded our conversation with a quote that perfectly summed up the situation. “It’s not just about our products,” he said, “it’s about the sale. And if you lose the speaker sale, you might have also lost the rest of the sale.”

In my case, Core Brands support helped me land the entire sale. And that’s exactly what you want from a partner.

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