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.  

Digital Signage Need to Know: China Manufacturing Stumbles

- Mike Prongue


Markets are very efficient and work towards a goal of squeezing every nickel until it excretes six pennies.

I’m my own player in the international coffee market. I control vast sums of annual coffee purchases- one cup per day, times 365 days per year. When Star Bucks came along I was amused but refused to enter into long-term purchase arrangements. Oh sure, the quality was there, but the price was too high. I then sought-out the local convenience store and began a relationship at 33% the cost of Star Bucks for great coffee and a wide assortment of coffee services. But the price went up and now I buy coffee in bulk (2 lb can) and make it myself at a very low labor rate- free.

Five years ago when I entered the LED sign industry, the “Gold Rush” of opportunity was perceived as being China by many LED distributors. The good old USA will seek out what they think is the biggest “bang for the buck” as will any other country. As the Chinese Dragon matured however, conditions changed, as they always do, and these perceived efficiencies began to decline.

China was no longer El Dorado, the lost city of gold and many people were starting to look behind the proverbial curtain.

As our economic recovery slowly plods along here in the USA, perhaps at what some say is the “new normal” of 2% GDP increase, it is the rebound of the manufacturing sector that is helping to push these numbers. It has added nearly a half-million jobs since January 2010. A distinct slowdown off offshoring has occurred. For the electronics market, offshoring has slowed to a trickle.

Why?

Offshoring is broadly defined as substituting foreign factors of production for domestic goods and services then importing them. Things are produced where their opportunity costs are lower.

·        With China’s economy growing year on year, the ensuing cost of labor is increasing as it has done in the economy of every evolving country. At the turn of the century, 13 years ago, the wage rate of China was 25% that of the USA. With wage inflation at approximately 12.8% in China, it does not take many years to close that gap! This means that the difference in salaries, compared to our domestic talent, is shrinking. This drives up the cost of an LED sign made in China.

·        Labor productivity is tied closely to the labor rate. Last year when I attended LED China in Guangzhou, I saw this first hand. Upon visiting a Chinese LED manufacturing facility I was appalled to see so many people doing what would be a single job in the USA. And, at least anecdotally it seemed that while their labor rate was lower, it took a lot more of them to do the job. So just how much of a true value exists here versus trying to keep everyone employed?

·        Offshoring has become a “dirty word” as the US economy struggles. Even if the maximum efficiencies existed to deliver a superior product as a lower price, the stigma associated with offshoring translates into “lost American jobs” and “Anti-America”. Conversely, trying to bring jobs back to America is regarded as patriotic and “the right thing to do”. America lost over 1,000,000 jobs that can be attributed to the direct-effect of offshoring to low-cost China.

·        The Chinese currency, the RMB, has risen 40% in real terms against the US dollar since 2005. There are many ways to look at this and much controversy over the impact. Safe to say, simply said, price pressure is being felt on all goods purchased from China. How much exactly is up for argument- depending on your economics training and interest level. What it does for US manufacturers is make their LED signs more price competitive as the price of Chinese goods rise.

·        Producing a product thousands of miles away from the end-user creates a vast array of other costs. Transportation costs rise as the freight rates rise with the recovery of the global shipping industry. Fuel costs fluctuate with the price of oil. There is a cost associated with the language barrier and the time zone differential. Political costs of unforeseen events associated with the “Wild Wild West” reality of China. Shipping delays and dangers on the open sea; quality issues of Chinese LED signs; supporting documentation for end-users;  authentic NRTL registration related to NEC conformance; potential tariff increases; cost of shipping parts (money and time), are all detriments to the continued growth of the Chinese LED sign business.

The USA on-shoring manufacturing phenom is not a myth. Jobs are coming back to the USA, perhaps not in an avalanche but at a steady pace. Changing global conditions are beginning to erode the Chinese advantages that it has enjoyed for at least a decade now.

I think that the USA would benefit from having its factory workers employed right here at home, making a high-quality LED sign product that end-users and business customers can utilize to promote their business. They say that “nothing lasts forever” and in the case of the rise of China manufacturing this proverb can’t come true fast enough!

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. 

LED Sign Sales- Closing Technique Suggestions- 1 of 3

- Mike Prongue

The reality of working in America today is that you have to be a multi-talented, creative, communications-oriented person or be left behind. 

As my career evolved, there were many times when there was a “break in the action” and I looked up to ask the proverbial question “who are these people and how in the heck did I get here?”  If you have never asked yourself a question like this, then I would suggest that perhaps you have a few more miles to travel on the old career odometer.

Job “A” leads to job “B”. You learn, you get some education- either in a school or on the street in the “school of life”. You get promoted, you take a chance and you take a leap of faith to open your own business. You risk money and time and start to generate some revenue to pay the bills. A year passes and you have a business that not only survived but is starting to actually succeed! 

Good job.

You know a lot of stuff, but can you be an "expert" in everything- probably not so much.

You are probably very hands-on, perhaps more technically oriented, perhaps familiar with how to state the facts and “nothing but the facts” but how much time have you spent learning the fine art of closing the sale? So you don’t need that “slick talk stuff”?

I’m going to give you 9 techniques to close a sale. No, not all here today because I know you’d be out on your boom truck by item 4, so I going to give you 3 techniques for 3 consecutive blog postings.

Some of these will not work for you. Some are not your style. Some are cumbersome. But if you read all 3 blogs and consider all 9 techniques, you may find 2 techniques that you feel comfortable doing. 

It’s a buffet! Take what you like, leave the rest in the pot, on the table for someone else!

Here we go- remember to find 2 techniques of the 9 that you like:

#1 Sets of 3

Approach:

Use “3” as the magic number for bullet points and summary. Think of what has worked on you- “good, better, best” for example?

The “3” points may be feature, function or benefit. Or perhaps price, delivery time or warranty.

The points may be related to drive home a common point, or disparate to “shotgun” a wide sales presentation area.

Three (3) is the perfect business measurement to make your point.

Examples:

This LED sign is made in America, has a 5 year warranty, and can be delivered in 6 weeks.

Our installers are certified, experienced and friendly.

Purchase today and you will get a end of year tax deduction, a 5% discount, and a great deal on an in-stock P-16 full-color LED sign.

#2 Sleep on It! 

Approach:

Smart soldiers live to fight another day. Defer today’s sale to a future sale. If you have a good product and a secure relationship with the customer then what's the harm in giving them time to think? LED signs are a large investment and they may need time to consider your words and review the quote.

How and When to try this:

•  You know they are not going to decide today anyway!

•  The offer is on-the-table and you are pretty sure they will give your offer very serious thought.

•  Tomorrow may be better from a money standpoint for them- budget constraint, revenue pending, etc.

•   Don’t let them make a bad spontaneous decision and damage the relationship!

•   Making the sale today is not life and death for you. Don’t get married on the 1^st date!

The sun will come up tomorrow and there is always another meeting!

Example:

I know this is a big decision for you’ll and an immediate answer is not a great idea- think it over for a few days. Can I call next week to see when I can come by?

The “Sleep on it” close is particularly easy to manage when the sales person visits the customer, and a break in the tension may be required. A quick exit is not always a bad idea.

#3 Financing Makes it Affordable!

Approach:

Overcome price objections by demonstrating that they can afford it!

Determine what they can afford. Show them that with financing that they can afford it. Break it down on a dollar per month  or a dollar per week basis. Make an assumption that the display will improve their sales by 15 percent and do the "profit math".

Also discuss the reallocation of existing advertising expenses from newspaper or radio to an on-premise LED sign.

The “too expensive” objection may be more of an excuse than a real objection. Remember that you can overcome objections but not excuses and if they don’t really want to buy, you at the beginning of a long list of excuses.

Don’t try to use approaches that you are not “cool” with or that feel awkward. You are a unique person and you have to find your own way.

Stay tuned for the next blog and suggestions 4, 5 and 6.

**

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. 

Digital Signage Sales 101: Sticker Shock Syndrome; dealing with cost objections

-Deacon Wardlow

     The discussion went well. The client's needs were discussed, a proposal was put together outlining the value of the solution, discussing how the solution fit the customer's needs and the various options available. When you get to the cost, you get "the face." Maybe not, maybe you get objections or surprise or (the worst) complete and utter silence.

When a customer gives you the same look as the baby in the picture to your left, things are not going well. Overcoming sticker-shock is an issue in any industry. I feel somewhat safe in saying we've all likely been there at one time or another. Today's blog, some ideas on overcoming (and completely avoiding) Sticker Shock Syndrome.

1. Budget
     Discussing budget is separate from price. If you were selling real estate, you'd want to know what price range the buyer is looking at so you don't waste their time (and they don't spend yours) on options they won't really consider. You could work with ranges. Are they looking for something which falls between $30,000 - $50,000? $35,000-$20,000? $20,000-$10,000? Don't dig for specifics, but if you have a range, this gives you something to work with. At least that's what many believe.

What you've just done though is start the wheels in motion and potentially built up concern and stress on the buyer's end. You just gave them a bunch of numbers which (to many) are rather expensive and there's no justification for the cost, no value. Just a bunch of high numbers. Many salespeople skip over a budget consideration and discuss the solution itself (which I recommend wholeheartedly). With Digital Signage (specifically LED Signs) you'll get an idea of what the client is looking for; then it's a matter of giving a few pricing options (good, better, best) and building the value of the proposal.

2. Build Value
     How was the proposal submitted? Did you hand the customer a folder with some system information, a job print and the price? Did you give them a single piece of paper with the cost in the corner? Did you shake their hand, look them in the eye, and say, "$$$$$$$$$$$$! Will get you what you need."? Don't give them a map and tell them where you want them to go, walk them through the proposal so everyone arrives at the same time.

I like folders (though there are several options which achieve the same end). Get as many folders as there will be people in the meeting and one "extra" for yourself or a surprise added member to the meeting (ideally something branded with your company logo/contact info). Hold on to anything you're going to hand out.

Part 1: Your company and why XYZ Company is the best for this solution (1 page, images of similar installations/work on that page).
Part 2: Why the solution is a great fit for their business (case study/best-use example, etc.) 1 page.
Part 3: The solution. 1 page for the hardware, 1 page for the software. Keep it short. Keep it simple.
Part 4: The implementation. 1 page, how long will everything take from order to installation and when can they use the system.
Part 5: What they're getting, a breakdown of costs associated and the final price.

Hand them each part as you discuss it. This helps keep everyone on the same page and paying attention to your presentation. Build the value in the system and how the solution will help them achieve their objectives (demonstrate how this will be a return on the investment vs. a purchase, discuss how the DS solution can achieve better outreach to customers and the community). By the time you reach the actual cost, there should be inherent value built into the pricing. The customer will see how the system either uses expenses (advertising money allotted from alternatives which aren't working well) or how it generates enough traffic to support the price (increased revenue or better outreach outweighs the initial investment in the system).

Overall, the best way to overcome Sticker Shock Syndrome is to avoid it completely by being pro-active. If there's true value in the solution you're providing the customer and you've outlined how they'll benefit, the initial cost is justified and then it's a question of not if, but when they'll move forward.

*I invite you to comment here and/or email me directly with requests at deacon@vantageled.com. Vantage LED has white paper resources and more educational material on the website (http://www.vantageled.com), please check it out when you have a moment. Note all posts/thoughts/writings are strictly the viewpoint of me and me alone and do not reflect nor speak for Vantage LED’s beliefs, attitudes, thoughts, etc. unless specifically stated.