Thursday, May 23, 2013

Digital Signage, Need to Know: You Deserve to Make a Profit on LED Signs

- Mike Prongue


Yeah, I know what you're thinking. You read the title of this post " You Deserve to Make a Profit on LED Signs" and you asked the snarky question "Really, ya' think so Mike?"

Yes, I do, in fact. But how many of you leave profit dollars on the proverbial table?

Hey, I know it’s a tough environment out there in American business – still! It doesn't matter if you sell mums, straw, pumpkins or LED signs. Is this the new normal? No one knows for sure, but we all know that infinite multi-digit sales growth is impossible mathematically. So, what you do sell must provide profit- makes sense to me.

Competition for many LED sign dealers is intense. There’s a battle going on in the industry of the “imports” versus the “domestics”. However, this competition is not like the one that impacted the US automobile market when Japan produced a high-quality, high-technology, reasonably priced, value intense option with Honda and the Toyota and whacked the market share of GM, Ford and Chrysler.

The current war in the LED sign industry is a curious one where LED sign companies have sampled imported LED sign products and despite a documented record of poor performance and customer unhappiness the cost is compelling low. Never mind that the cost of the subsequent service issues, the loss of trusted customers and the hassle with every element of dealing with the importing process wipes out any net profit on the project.

Sadly, I think that some dealers are content with losing money on an LED sign project, then trying to make up for it on subsequent projects by doing exactly the same thing. Insanity: doing the same thing over and over again and expecting different results.

Look, you have a right (if not an obligation) to make money on the sale of an LED sign and allow that profit contribution to enhance the profitability of the overall project- labor, static sign upgrades, permitting, whatever your project entails. If you’re not making some reasonable profit margin, for argument sake say 30% on the LED sign (cost is $7,000, sales price is $9,999) then you need a plan to regain what you are entitled to. 

Oh yes, I have one, a patented 5-step plan for your review:

  • Sell a product that works and does not drive your true profit margin to zero, or worse, with service calls and customer hassle. 
  •  Sell something that stands out (differentiated for you marketing elite)- technology, simple for the customer to understand and use, or has something that makes the customer want it. An electric seat warmer is one odd example that has sold many an automobile for those customers living in cold weather.  
  • Promote your company and stand out from the crowd. Does your office have an LED display outside? You have to “walk the talk”. Many domestic suppliers will offer price concessions for a display on your own wall or pole. Also, what about your Website? Sure it has vehicle wraps displayed prominently on it and that looks great, but what about the LED sign page? Does it need a little work? A better set of LED display images?
  •  Do you have a LED sign demo trailer? There are many awesome designs for compact trailers engineered for LED signs. If you email me at Michael@vantageled.com I’ll turn you on to a company I recently ran across that provides a compact trailer with LED sign lift capability for under $8000. There are countless examples but dollar for dollar this is the best one I've seen.
  • Promote LED signs in different ways. Participate in charity events, actually go to those Chamber of Commerce meetings, attend regional trade shows and rent a booth (some are affordable). Having a great Website is one way to attract customers, but taking the LED sign to the streets via a trailer or a portable display of some kind, allows you to market the old fashioned way – “eyeball to eyeball”. Not every customer appreciates your e-efforts as much as you do despite the planned upgrades to your LED sign page. They’d rather have the old “touch and feel and inspect” buying experience.

These ideas are not new. Very little is truly new, but rather a rehash or a recompilation of an old idea. But think over these five points.

What am I saying? You deserve to make a profit on LED sign, but if you're not, then you may have to "earn the right" to make a profit. LED signs are not a commodity, at least not yet. There are major differences, but sometimes, not unlike other major purchases, the customer needs a reason to pay more. They are paying as much for many LED sign projects as a new car. How many times have you purchased a new car by going to the Web and saying "okay, I'll take one of those, let me click here"?

You have to figure out what kind of dealer you want to be. If you want to be the “lowest priced kid on the block” then you’ll attract customers with the least money to spend. Not only will they have just $8,000 to spend, but they’ll try to spend only $4,000 of it. They’ll come to you and buy the lowest priced LED sign on the market, work an even lower price than your first quoted price then get you to promise some type of support and hold you accountable each and every time the LED sign hiccups. You know what I’m talking about.

On the other hand, if you are able to prove you have an LED sign product that shows a great return on investment by driving new customers in the door, installed by experts, with a “no fooling around” warranty, you will have proved  you are not just dabbling in the LED sign game. You’ll attract smarter customers who want a quality product and are willing to pay for it… hence, your 30% margin.

Your choice, but it’s your right to make good money on what you sell. If it’s a no-win, “toxic”, request for bid… run away, don’t try to administer CPR to a dead chicken.

These comments belong to me, Mike Prongue, and do not reflect the views, opinions, hopes or dreams of anyone else, anywhere else and this includes Vantage LED. I appreciate your constructive opinion which may be sent to me at michael@vantageled.com.  

1 comment:

Paul Martin said...

Great article, Mike !!

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