It makes perfect since philosophically, but the execution can sometimes be a little tricky.
“It is very difficult for any company to pay the same commission on a $5,000 service contract as on a $100,000 system sale, so most salespeople will naturally gravitate toward system sales at the expense of everything else,” McGinnis says.
“Some firms address this by using negative incentives — no commission or a reduced commission on any hardware sale not accompanied by a full price support agreement — some make service a mandatory line item and some use a discrete sales force typically with lower compensation expectations to sell follow-up or post-warranty service contracts. I’m not sure which is right or best, but the need to find the right formula is at the top of almost every sales manager’s to-do list headed into the new year.”
A word of warning, however, to those sales managers: It might not be lack of incentive that’s preventing sales associates from selling service contracts; it might be lack of infrastructure.
“I think one of the biggest reasons many companies aren’t there [selling service contracts effectively] yet is that the sales force is hesitant, not because of compensation but because of their relationships,” says Landrum of Technical Innovation and PSNI. They may be concerned that their firms “haven’t invested in a service infrastructure. If I’m going to put my reputation on the line, I have to feel comfortable with the support [my customers] will get.”
Becoming Clients’ Business Partners
An overarching goal for integrators — one that can address a lot of these challenges in one fell swoop — is to become more important to customers. Savvy security integration firms have recognized this opportunity, especially since access control and surveillance solutions have migrated to clients’ IT networks.
There are now opportunities for integrators to provide clients with valuable data on employees’ comings and goings and room utilization, for instance. Firms can articulate clear return on investment in the form of productivity metrics.
“As integrators, we have to change our business focus from hardware and software to how the customers can benefit post-installation,” said Art Miller, VP of marketing for Warrendale, Pa.-based Vector Security, in an April 2013 CI Profile. “How will this help them solve their business issues, reduce risk, increase their bottom line? We need to be providing them with business intelligence that is beyond the contacts at the door or the cameras in the hallway.”
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For AV-centric integrators, finding the formula for providing clients with valuable on-going information isn’t as obvious — but it’s still critical.
“It’s a little harder on the AV side, but it’s absolutely important for companies to maximize their profitability. That’s where they’ve got to go,” says NSCA’s Wilson, adding that logical areas in which AV integrators can provide money-saving metrics for clients relate to building automation, energy management and life safety. “It’s hard to show ROI sometimes, but [integrators] are getting better at it.”
Zdi doesn’t see any choice but to become good at articulating ROI, according to CEO Aaron McArdle.
“As opposed to getting somebody to spend $200K on a boardroom because it’s cool, we have to be able to provide [ROI] that affects the company’s bottom line,” he said in the CI Profile. “If you can add to a conference room the ability to show how often the room is used and how many people are typically using it, the company can adjust accordingly.” That may seem esoteric, but for a client that has 300 conference rooms it can lead to significant savings.
“I think of AV as kind of in a juvenile stage,” says USAV’s Schwartz. “It’s time we grew up into young adulthood as an industry and start thinking about our role in demonstrating business value, not just running around talking about projectors.”
This is an area in which there is a clear need for traditional integrators to evolve beyond selling boxes, says InfoComm’s Labuskes.
“I get it, the boxes are important. I value the boxes. I value manufacturers. They’re providing technology and appliances that allow us to accomplish and provide the types of solutions our clients need. But that’s only one part of the solution. If you focus your efforts on that part, you’re forgoing the opportunity to be part of the strategy of the client,” he says.
Those strategies, Labuskes continues, have almost nothing to do with products.
