Labor Is Your ‘Most Precious Resource,’ Azione Chief Glikes Tells Dealers
LAS VEGAS -- Amid ever-dropping hardware prices and a growing number of home control competitors, Azione Unlimited is focusing on raising labor rates, said President Richard Glikes during opening comments at the buying group’s spring meeting Wednesday. Glikes called members’ labor their “most precious resource” and urged dealer members to raise rates from their current levels of 25-35 percent of total project costs. Glikes compared custom installation dealers with other trades and said, “Do you know any plumbers who don’t make money? We're going to learn how to charge for labor because the market’s going to move us there,” he said.
In presenting the group’s four-point focus for 2014, Glikes said dealers should focus on “more expensive brands” that are “more sheltered” and not as commoditized. And dealers should focus on the higher priced lines within those brands, he said. The message Azione has gotten from vendors, Glikes said, is “we need to improve our level of salesmanship.” He cited vendor members Krell Industries, Meridian, Bel Canto and Savant as high-margin, differentiating companies that should be a focus for dealers in 2014. One goal for Azione in 2014 is to double its business with Savant, Glikes said.
Glikes called the program with Krell “deep and expensive,” citing the audio company’s surround-sound processor ($6,500) and amplifiers starting at $7,500 that deliver “huge backside in margin.” In addition to the buying group discount dealers get a guaranteed quarterly rebate as a check, not a credit, he said.
The most recent vendor addition is shading company Motion, which has made Azione its exclusive buying group “until we screw up,” Glikes said. Some dealers reported making 70-point margins on Motion shading systems while being able to remain competitively priced with other shading solutions in their markets.
Glikes also urged dealers to carry more lines within their current brands to support vendors, and he pushed dealers to prop up low-margin sales with higher margin add-on sales. As an example, he noted the high proportion of dealer members who sell the low-margin Sonos multi-room audio system and pushed dealers to piggyback a DAC (digital to analog converter) sale with every Sonos installation to push up margins.
Glikes cited the possibility of a “branded private label” from some of those vendors. “Imagine you had your own Triad, SurgX or Sonance product,” he said. The product would be branded by the vendor but the product model would be exclusive to Azione, “which enhances your margin,” Glikes said. He said Azione can be the launch vehicle for new brands and technologies, saying Sharp is showing its WiSA-compliant Universal Player at the conference, a $4,999 disc player that delivers up to 7.1 channels of 24-bit/96kHz audio.
Azione is near its cap on vendor members at 36 with a “couple more” high-end suppliers to go, Glikes said. Azione has 86 dealer members, 21 percent of which have more than $5 million in annual revenue, Glikes said. Eight-five percent of Azione members haven’t been in a buying group before and 93 percent are integrators, Glikes said. Combined annual sales of Azione dealer members is more than $260 million, he said.
Azione Spring Meeting Notebook
Sharp demoed its WiSA (Wireless Speaker & Audio)-compliant SD-WH1000U Universal Player and Q+ TV technology for Azione dealers as part of the company’s effort to target “commissioned” salespeople to sell the higher margin products, Jodi Sally, director of product marketing-home entertainment products, told us. Azione’s Glikes lauded the Sharp TV lineup for its 36-point margins for Azione dealers despite the “not-UHD” format of the Q+ technology that adds 10 million subpixels to conventional HD TV. Sharp is the only company offering that type of interim TV product between HD and UHD, which makes it a protected line for custom dealers who can explain the technology, Glikes noted. The Q+ models are the only non-4K TVs that can play native 4K, Sally said. Sharp also pushed the high-resolution audio employed in the Universal Player, which transmits up to 7.1 channels of 24-bit/96-kHz audio to WiSA-compliant speakers, a milestone in sound quality for wireless audio, Sally said. In the Azione meeting room, Sharp demoed the player in stereo mode, using a pair of conventional Monitor Audio loudspeakers paired with Sharp’s WiSA-based VR-WR100U bridge ($1,000) that enables the universal player ($4,999) to be used with any loudspeaker. According to Sharp consultant Mark Knox, the reference-grade universal player uses a rigid drive with a honeycomb stamping on the steel top panel that prevents external vibrations from reaching the drive’s pickup. Sharp, which supplies pickups to other companies, “handpicked” the pickup used in the universal player to maximize accuracy, he said. The demo included a Krell integrated amplifier, and Sharp’s Aquos Q+ LED LC-60UQ17 TV that will ship later this month. The UQ series is the flagship of the Q+ series, boasting THX certification, an aluminum bezel, a built-in 15-watt subwoofer and Bluetooth Audio, Sally noted.
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The label “electronic systems contractor is passé, dead,” said Dave Daniels, co-owner of Xssentials, Denver, during a session on changing business models. “We're in a changing business model,” he said, as integrators increasingly provide solutions and services rather than hardware. And while custom integrators have been doing business as usual, a new form of customer service has emerged, he said. Custom integrators have to learn to beef up customer service to match that of online retailers, who are constantly reaching out to customers, he said. “I can go to Zappos and buy a pair of shoes and have a better customer experience than the one they get from me,” Daniels said to dealers. He cited Amazon’s practice of follow-up emails and surveys “and we forget to say thank you to our customers,” he said. Custom dealers are missing a free marketing opportunity by not asking customers to write a recommendation or fill out a survey following a completed project, he said. It’s especially critical for dealers to differentiate now because lines of demarcation are blurred among the various contractors and Azione-type custom integrators who are all vying for parts of each other’s businesses, Daniels said. “The guy out there selling security systems and IT network systems, the electrician, the interior designer, the lighting designer and the architect and builder all want a piece of your pie,” he said. Dealers need a value proposition for customers that’s not based on price, he said. “If the customer doesn’t understand your value proposition … and if your business is complicated to him, then you don’t have a competitive advantage because he doesn’t understand you,” he said. Dealers have been doing the “same thing for many, many years and have gotten away with it,” he said, but the world is changing, “and we have to adapt.”