When she made the pitch, Dana Sanders thought she'd come to the meeting armed with everything she needed — an equipment list, detailed drawings of how the AV system would work, a cost estimate, and confidence that the total package met the client's needs and capabilities. As it turned out, she forgot one thing: the defibrillator paddles. “They had a heart attack at our proposal,” says Sanders, a presentation systems sales representative with CEAVCO Audio Visual Co., an Arvada, CO-based systems integrator.

Although Sanders' characterization is obviously an exaggeration, the client — a new athletic club — was indeed suffering from a textbook case of AV sticker shock. Perhaps the only person more surprised than the potential customer was Sanders. All the signals she'd been getting from the club and its architect — with whom CEAVCO had worked with on another athletic club system that was held up as the model for the new project — suggested price was the last thing on the owners' minds. “We were led to believe they wanted everything the other club had, but better, so I came back with a pretty hefty proposal,” Sanders says.

A volatile mix

The scenario is all too common in the pro AV systems integration industry. Integrators eager to sell and prospective clients mesmerized by ringing bells and blowing whistles play off of each other, creating a spinning vortex that ultimately sends everything crashing down to earth as reality intrudes. When both parties awake, they often find the money really isn't there. Then the blame game, often played out beneath the surface as the project is retooled, begins.

BEFORE YOU QUOTE, QUERY AND QUALIFY

In the syllabus for Salesmanship 101, managing expectations is near the top. And for companies trying to sell high-tech AV solutions, it's vital. Build up your prospect's expectations too high, and you may pay a steep price when your price is over budget. “If you present a Cadillac and they can only afford a Chevy, the memories of the Cadillac solution you presented that they couldn't afford will linger longer than the price they paid for the Chevy solution,” says Brent Stark, director of sales for Audio Video Resources, a systems integrator based in Phoenix.

Though often difficult, sales reps have to get a feel for what prospects can spend. “Expectations are created at the first client meeting,” he says. “If they aren't discussed and refined, you'll run into problems later.”

All systems integrators need to gauge a prospect's needs, wants, and wherewithal early on. Only then can a proper proposal be crafted and the chance for sticker shock and its byproducts avoided. Here are a few ways to make that happen.

  • Probe. If they're not willing to give a ballpark budget figure, look for other clues. An example: Stark says one client characterized a modest $12,000 conference table as a big expenditure. “On that basis we determined the $50,000 AV system proposal we were eyeing was going to be a lot of money for them,” he says.
  • Offer options. Come in with tiered solutions along the lines of “good,” “better,” and “best.” Kendall Self, operations manager for Ace Sound, Tulsa, OK, says offering one solution at one price can close the door prematurely. “Forty percent each usually choose the low or medium option, while 20 percent go with the most expensive,” he says.
  • Don't wing it. Accurately estimating a job and coming up with a number that won't scare the prospect away or concede too much early on is key. HB Communications, Waltham, MA, has developed a detailed job database to help in the process. “I try to get an idea of the applications they're looking for early on and then I consult the database to find projects we've done that have similar specs,” says Ron Agnello, a sales rep/account executive with HB Communications.
  • Separate wants from needs. It's critical to understand what the prospect wants to achieve. Without knowing that, it's easy to get wrapped up in crafting a solution that has too much glitter, and too high of a price.
  • Gauge if the prospect is tech savvy. “Most who aren't all that savvy fail to grasp the concepts,” Agnello says. “So when I initiate conversations I try to be very clear as to how we're going to do the project and what's involved. It helps reassure them and demonstrates the value of what we're proposing.”

  • Emphasize your skill. Although dollars and cents are still the bottom line for most AV systems buyers, some will pay up for quality. Early on, play up the necessity of having the system specified, installed, and serviced properly. “Anyone can give something away,” Stark says. “It takes skill to balance client wants and needs with your profitability.”

 

For integrators, the challenge of dealing with low budgets and high expectations is vexing. As users appreciate AV's possibilities and more of its capabilities come within their financial grasp, integrators, curiously, are finding that opportunities for miscommunication are growing. Add to that the fact that more vendors of all types are trying to sell AV products and services, exerting more price and margin pressure into the process, and you have a prescription for integrators and prospects being out of sync with respect to wants, needs, capabilities, and resources. What's the result? Wasted time and money, a climate of suspicion on both sides, and the very real possibility of burned bridges and lost business.

But progressive systems integrators are starting to recognize and understand the problem and its potential solution. Many are taking steps to address it — from securing better training for sales reps to keeping better job histories to fundamentally rethinking how they approach the proposal process (see sidebar on page 62).

Hanging in there

Meanwhile, most integrators find they must grin and bear it, frantically tweaking proposals to adapt to budget realities they wish they had known at the outset. For CEAVCO's Sanders, that has meant reworking her quote for the athletic club job several times, even in the face of new challenges from other prospective integrators the client has brought into the picture. “We're in the process of hashing it out,” says Sanders, several months after submitting the original proposal. “They seem to want to work with us because we're providing a better systems solution than others are offering, but they're still having a hard time acknowledging it's going to cost some money.”

What started out as a $500,000 proposal from CEAVCO for a multi-source distributed AV system heavy on displays, music source components, loudspeakers, and control systems, morphed into one with a $360,000 price tag. Although this amount was cheaper, it was still substantially above the roughly $250,000 the owners told Sanders they actually had in their budget — but not until after she submitted her initial proposal.

Subsequent proposals reflect technology, quality, and functionality sacrifices such as cheaper speakers, consumer-quality rather than pro-quality plasmas, and other changes that are in danger of tipping the project into the realm of undoable. “Now we've put a disclaimer into the proposal saying we're not responsible for inadequate sound coverage if we put the system in,” Sanders says. “But they're still saying they want less functionality.”

Still, the reworkings have had the effect of improving communication. The prospective client assigned a more AV-savvy point person to the project, resulting in a clearer understanding of the need to compare “apples to apples” when it comes to bids from competing integrators. And the club is coming around to understanding that CEAVCO's solution may be more functionally sound, even if it's more expensive, she says. For Sanders, the experience has been a lesson in the need to better probe and qualify potential clients.

Relying on the architect's assessment of the club's technology desires and capabilities, based largely on what was done in a project for a competitor, proved somewhat naïve, she acknowledges. “There was no indication of a budget from the club up-front — they said they didn't know, but I don't know if they did or not,” she says. “The result has been some very complex and time-consuming revisions. I probably could have come up with some ideas that met their needs up-front had I been aware of the budget.”

No-win situations

Some integrators haven't been as lucky as CEAVCO in resuscitating would-be clients after similar sticker-shock moments. For some prospective end-users, a bid that doesn't match up with their initial projection may put a bitter taste in their mouths that's hard to get rid of. That may be what happened to Ron Agnello, a sales rep/account executive with Waltham, MA-based HB Communications. The point person for one prospective corporate client looking to outfit a conference room and equip it with robust conferencing capabilities suggested to Agnello the sky was the limit. “They wanted a very high-tech room with all of the technology hidden to create an eye-friendly environment,” Agnello says. “I brought a video engineer along with me to one of the early meetings, and as we went through it, he wanted everything we threw at him in terms of capabilities. It seemed that he could accept whatever number we came up with.”

IS PRICE KING?

"How much?” Those are the two words that most business dealings ultimately come down to — and the AV products and services industry is no different. But there's evidence that price, while obviously important, may not be everything when it comes to making an AV purchasing decision.

Stiernberg Consulting, a Sherman Oaks, CA-based firm that's assisted trade groups like the National Systems Contractors Association with market research and reports, says systems contractors don't necessarily need the lowest price to win jobs. In phone interviews with systems contractors about bidding issues, the company found that while price is frequently the top criterion in winning a bid, other factors often influence the selection.

“Beyond price, the other factors determining the winning bid boil down to confidence and value,” says company Principal Jeanne Stiernberg. “The customer needs to have the confidence that the firm will deliver quality work to the design specification.”

Stiernberg cites a 2004 study by the Entertainment Services and Technology Association that found price was the second most important consideration. Meeting specifications was at the top, while dealer/contractor reputation was third behind price.

A real-world example is a trend in government procurement practices that emphasizes value. “An interesting new trend is called ‘best value,' meaning the highest quality at reasonable pricing,” she says. “Proposals are scored for quality of the technical solution to the RFP and for price. In this approach, price is important, but not the sole criterion.”

Another piece of evidence that supports Stiernberg's view comes from a TFCinfo study on projector purchasing. The survey from this market research firm, which is based in Austin, TX, found price takes a back seat to picture quality for users in business, education, and government markets.

The upshot for contractors, Stiernberg says, is to keep an eye on price but don't let the green eyeshade blind you. “Put extra time and care into the proposal,” she says. “The document can lay the groundwork for instilling confidence that your firm will deliver quality work. And include your firm's qualifications because this may tip the decision toward you and away from lesser-qualified firms that will undoubtedly offer up a cheap solution. Whether you win or lose a bid, request a quick debriefing on your firm's proposal. The results will enable you to make inferences about your customers and your competitors.”

 

 

But when HB came back with a number of $80,000, the mood changed. “Too high,” came the response. The conversation then turned to cutting back on components, primarily reducing the number of switchers. When Agnello said the cutback might affect functionality, the response was “that's fine, as long as we don't sacrifice the number of sources coming in.”

Reworking the estimate yielded a $55,000 estimate. But by that time, a month later, Agnello says, the client's mood had changed again. Now, the word came back, “We're not ready to spend that much. We'll wait,” said the client. “And I said, ‘how did we go from this elaborate system down to nothing?'”Agnello says.

For Agnello, the abrupt end to the courtship was disappointing as well as a little embarrassing. “The project came up in management meetings as it was being proposed, and the CEO even got excited about the prospects,” he says. “But it turned out that we wasted a lot of time on it.”

One door closes, another opens

Although it can be disappointing and costly for integrators to have the door slammed on elaborate proposals for projects conceived with little budgetary guidance, perseverance can often be the best line of defense. That approach paid off for Glen Aber, sales representative for Adtech Systems, a Wayland, MA-based systems integrator, when a client that wanted all the latest, cutting-edge technology in outfitting multiple conference rooms ultimately scotched a juicy $400,000 proposal. But rather than mourning the loss of the job, Aber adjusted his focus, came up with alternatives, and ultimately won a significantly scaled-back but still substantial job. What kept Adtech in the game was the sense the prospect wasn't trying to chisel. “They weren't trying to get more for less, and they didn't get us to come down on price,” Aber says. “We had to adjust the equipment and the services — the scope of the project — but not our prices.”

Over the course of the last year, Aber worked with the company to devise a less costly alternative. Rather than build out five standalone conference rooms — each with their own freestanding AV capabilities — Aber pitched the idea of one large, multipurpose room outfitted with room-combining technology. Calling for an AMX control system, LCD projectors, audio and video switching components and audioconferencing equipment, the company's redesigned $90,000 proposal was set to finally be implemented beginning this fall. “We figured we'd try to make them happy,” Aber says. “The system we've designed ends up saving them money because they're not paying for a lot of room technology multiple times. When they have more in the budget, they can upgrade the system, too.”

For Aber, the scenario was hardly unique. Dealing with prospects whose reach exceeds their grasp when it comes to AV is “a chronic problem,” he says. Others, no doubt, agree. But for integrators who have a knack for reading between the lines, keeping their cool, and remaining flexible, the challenge isn't insurmountable.

Tom Zind is a freelance writer and researcher based in Prairie Village, KS. He has written for a variety of business-to-business publications and can be reached at tomzee1@earthlink.net.