Distributors push more than product in a time when education is critical to dealer network
The relationship between distributor and reseller is founded on the movement of security product through the channel, but has necessarily evolved to keep pace with technology complexity, difficult economic times and a seemingly unquenchable thirst for value add.
March 29, 2011 By Neil Sutton
Canadian distributors seem to agree that, next to being the source of product, their biggest role in terms of dealer relationships is that of educator. Nearly every distributor, large or small, provides an education component, whether it’s classroom training at a distributor location, drop-in seminars, webcasts and webinars, or sessions offered as part of a trade show or road show.
Tri-Ed, which carries products from DSC, Panasonic and Bosch, among others, offers its dealers a loyalty program — dealers collect points based on purchases, which they can trade in at the end of the year for things like golf clubs, flat screen TVs and vacations. While programs like that are a nice bonus for dealers, it’s the training programs that are proving to be the most popular, says Jeff Stout, network solution manager for Tri-Ed.
Tri-Ed provides in-house training at its branch locations. For topics that prove to be particularly hot, the company will hold sessions at nearby hotels to accommodate the attendees. The move in the last several years towards more IP-based and network-based security technology has really driven the desire for more training, says Stout.
“We’re seeing a huge market shift from the analogue world to the network world —whether it be fire or CCTV or whatever. It’s been a huge, huge shift towards network-based solutions rather than analogue solutions,” he says.
“The more we educate our dealers on basic network technology and some the advantages of security over a network, the better off we are. Our IP training has been an example of that because we’ve had tremendous turnouts, not only at our branch levels but also our roadshows.”
Rocky Rodrigues, marketing manager for Anixter’s security division says the writing has been in the wall for some time for IP-networked products. It’s just a matter of the channel catching up with the technology.
Anixter, which carries security products from Axis Communications, Bosch, Sony, Panasonic, HID and dozens of other companies, provides showcases in major Canadian cities, as well as webinars and “breakfast club” meetings where vendors are invited to talk about their technology.
“If you look back seven years ago when we plunged into this whole moving to IP thing for video surveillance, we knew it was moving to IP but the market wasn’t ready. So we went out and we trained the hell out of people on Networking 101. Here we are seven years later and it’s happening,” says Rodrigues.
And as integrators get more comfortable with IP, other technologies will come to the forefront in terms of training, he says. “People will struggle with audio, access control and alarm. I think alarms could be a huge topic.”
Right now, most dealers attention is still squarely on IP networking, argues Michael Flink, president of ADI Americas. ADI’s massive portfolio includes IP networking products from more than a dozen different vendors. Interest in the technology has piqued and dealers ignore it at their peril.
“Eighteen months ago, we had IP training, and people we’re saying, ‘Maybe I’ll get to it eventually, we’re happy with analogue.’ Now those classes are pretty well booked and in fact overflowing,” says Flink.
The company hosts training sessions and customer appreciation events in a variety of venues as well as ADI Expos in cities across the U.S. and Canada. It’s important for distributors to reach out to their local dealers because not everyone gets to attend trade shows like ISC West, he says.
“The owners get to go to those shows. The local managers of the offices, the techs, the sales teams, they don’t usually get the opportunity to go to trade shows. We basically bring the trade show to the local market, so the broader group from a local staff can come and learn.”
Another major distributor, Graybar, also places emphasis on its training options, according to marketing communications specialist Dawn Morrison. Graybar makes regular appearances at Security Canada events, as well as hosting its own security roadshow “to demonstrate our full security solutions,” she says.
“It’s worth it to go to the training and events. They learn a lot and we usually have high registration. We’re always working with them to offer value-added expertise — not just deals and specials.
“We are definitely putting a higher focus on our security offering. Because we have the staff and knowledge that are really experts and ahead of the curve in the security-technology combination field, we have that competitive advantage. We promote that heavily. We know there’s a huge demand in the industry for that knowledge.”
With dealers looking for a closer relationship with their distributors, the smaller players, who can offer more of a personal touch, may have the advantage, argues Tibor Legath, president of NOD Access, based in Montreal. The distributor carries only a handful of products compared to its larger rivals, but that may have worked to its advantage, he says.
“What I’m finding is that larger distribution houses have a very large product offering. Having such a large product offering, they aren’t able to specialize or focus their attention on specific products. That’s why we try to specialize,” he says.
“Our distribution offering caters mostly to access control and identification solutions. Being focused on that, I think we’re more able to hand-hold our dealers and walk them through the process and have them better understand the different technologies that are available and how to apply those technologies instead of just doing a box sale.”
Legath says he has “definitely” picked up business from dealers frustrated with the lack of service from larger security distributors. They are looking for “more guidance, more hand-holding” than the bigger channel players are able to provide.
NOD Access recently held a roadshow with manufacturer HID and invited its dealers to attend. “We do demonstrations of products and go through feature sets. The dealers said they found it very interesting and very informative as far as providing them information on new products hitting the market.”
Legath says that NOD Access will also roll up its sleeves and represent its dealers on service calls. The distributor offers a printer repair service for dealers who aren’t able to help end users directly. “Or in some cases they’ll ask us to go directly on site and do a repair in their name. That’s also a good niche business for us.”
Legath has a technician on staff and will sometimes go on service calls himself.
As “old school” dealers begin to retire and pass on their companies to a younger generation, either through a sale or handing it down through a family, the dealer/distributor relationship has fundamentally shifted, says Stout of Tri-Ed.
You’ve gone from a lot of dealers that were, for lack of a better term, old school analogue guys that worked on handshakes and catalogues,” he says.
“I think it has become more incumbent on the distribution model to continue to find ways to add value, because anybody can go on the Internet and find the price of a product . . . to be a value-added resource for a customer, not just a place where they can go have a cup of coffee and pick up some parts in the morning. It is a constant battle to value add to what we bring to the table.”
One area where distributors can step up to help their dealers is through financing, says ADI’s Flink. The economic troubles of the last few years have necessarily changed the ways in which dealers and distributors do business with one another and how money changes hands.
A growing role for ADI has been one of providing credit services to its dealers, says Flink. Integrators and dealers don’t have a lot of capital to invest in product, nor can they afford to have inventory lying idle. As such, ADI offers financing options, allowing dealers to buy product on credit, then get the product paid for and installed for the end user before repaying ADI.
“Very few of the mid-size integrators are well capitalized with bank credit lines. They depend on the distributor offering a credit line to be able to buy that product and install it. We have worked at times on project financing where there’s a bigger project and worked on specific terms to help the integrator. That’s an area we’re focusing more on in 2011,” says Flink.
A lot of manufacturers aren’t interested in taking on credit risk, he adds. Vendors that may have been willing to sell direct, on credit, in the past are taking a second look at those practices, says Flink.
“In most cases, the big companies are capitally sound, but their business model is, they don’t want to hold paper, they don’t want to have credit, they don’t want to have inventory — that’s the role of the distributor,” he says.
Flink says that ADI has been approached by a number of manufacturers in the past year, asking the distributor to take over customer lists.
“I think they’ve eaten a lot of bad debt in the last couple of years. I think the marketplace is struggling with capital in general. In a competitive market, the end users are demanding better terms and conditions and it backs up the food chain.”
The next 10 years of security integration will almost certainly be more challenging than the last, says Flink. Lifted by post-9/11 spending, security prospered, becoming a necessity rather than merely an option, particularly in the areas of CCTV and access control. But the economic downturn has again changed the perception of security, putting the onus back on distributors and dealers to innovate if they want to survive.
“The days of the standalone burglar alarm that doesn’t do any type of home automation or the days of standalone CCTV systems that are not integrated with intrusion or access control — I think those days are coming to a close. Ten years from now, our dealer base is going to have to be much more knowledgable about new technology,” says Flink.
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