Wednesday, August 6, 2014

Digital Signage, Need to Know: Cheap is, as Cheap does.

One evening this past week, as I prepared to click over to Netflix to watch a movie, the old sitcom “Leave it to Beaver” was on.  Wally, played by Tony Dow, the older of the two kids who star in this American classic, was lamenting the fact that his sarcastic and hard-headed friend Eddie Haskell, played by Ken Osmond, could never change his behavior and he said something like this:

“You could slug him a thousand times and he’d never get the message- Eddie is Eddie!”

Well, that is exactly the attitude of some sign companies who still sell LED Signs on price alone, cheap price alone!

We’ve slugged them and slugged them with information. Heck, they “slug” themselves each day with unhappy customers, repeat service calls, and technical issues: LED signs that dim after a few months for example, but some never seem to “get the message”.

Many LED sign companies have gotten the message, but sometimes when their customer  screams “Price!” they run back to those importers who advertise their product on “price” alone- those importers who steadfastly deny all they know, hear and see to be true when they advertise that “All LED signs are alike!”

Really, there is never a reason to sell on price. I know, I know… you are thinking “that one guy across town said he’d only spend $8,000, so I had to import a ‘burner’ to make him happy!”

Let’s try to shift your LED sign paradigm a bit! Shall we?

When you buy a watermelon that is an expendable item, right? When you buy an X-Box or a TV set, for example, those are items that have value because they entertain you. These items are commodity items, or consumer items. Other items such as a refrigerator or a kitchen range have value because they help you live comfortably as we can store and process our foods effectively.  They have utility value.

Sometimes a person can save money by “going cheap” on commodities or consumer items. A cheap range may be all that is required if a person only cooks once a week. Or if a refrigerator is for occasional use in a vacation home, then you can argue that a basic model may suffice because it’s not relied upon daily. 

An LED sign is not a commodity no matter how determined the ad in the magazine declares that it is!

An LED display is called upon frequently to run 24 hours a day, 7 days a week. It is the “face” of the business that is projected to new customers and the community. It is the “pitchman” always promoting the business. 

Here is how you show the customer that they can afford a quality LED sign having it paid for from the increased sales the new LED sign provides.

You’ve heard it before but here again is the process:

  • Determine what life-span you wish to assign your LED sign installation. For the sake of argument, be conservative and say “5 years.”
  • What is a realistic interest rate for commercial financing,"8 percent”?
  • Assume a percentage increase in the customer’s business from the new LED sign,“15 percent”.
  • Assume a gross margin percentage for the business, “25 percent”.
  • What is the current sales level of the business, “$600,000”?

Do the math:

The finance cost of $20,000 at 8% interest for 5 years is about $405 per month.

If sales increase at 15% from the current $600,000, at 25% margin, how much new income is there available to pay for the LED sign?  ($600,000*.15*.25) = $22,500 per year or $1875 per month.

So the sales increase from the LED sign should cover the cost of the financing and add an additional $17,640 to the business’ annual income ($22,500 – ($405*12 months)). It's a "free" sign!

Why go cheap? Why suffer with poor, cheap software? Why project the face of your business or non profit concern with an LED sign that operates intermittently?

Customers have a belief that “X” dollars is all they can spend or that's all the project's worth. It is your job to dispel that myth stuck in their head. Slug 'em with some information, or an example to keep them from buying an LED sign they'll regret for years.

Other considerations when selling LED signs:

What do you do when you have a non-profit? How do you make the return on investment point?

Each new member of the church’s congregation, or each new member of the Elk’s Club (for example) adds to the success of that non profit. Ask the question:

“How many new faces will the LED sign attract?” Or, if that question is too precarious, ask how much money the non profit spends on bill board or TV advertisement that will not longer be required.

A local church had suspended it’s billboard ads, and then suddenly a new LED sign popped up at the church! Someone was on their toes at that LED sign company!

Another suggestion is to challenge the customer and have them drive around the town and look at the LED signs that don't work! Who makes them? No-name Nellies... imports. Show them the LED sign carcasses that litter the sign poles in your town.

On premise advertising works. That is an undeniable fact. 

It works better for all parties concerned when the product is a high-quality,  and domestically engineered and manufactured. Say it… “USA, USA, USA!”

All I've needed to know in life was learned from Wally Cleaver, "Golly, that sure is neat!"

These comments are my personal perspective and do not reflect the opinion of Vantage LED, Inc. or SignVine, Inc. or any other person or organization. If you have constructive feedback please email me at  - Mike Prongue

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