An A/V industry mantra in recent years says that “value-added services” are the key to business survival and profitability. After all, product specs don't vary much any more. A dealer or a customer can easily identify half a dozen projectors or other displays with almost identical performance and features.

With prices driven steadily downward by mass market and Internet competition, many dealers see little or no future in competing for business based on price. Quality isn't even the differentiator it once was. While dealers and buyers may perceive minute gradations in quality among vendors, the fact is there are lots of excellent products available at excellent prices.

Training, maintenance agreements, consultative selling, design, and more elaborate installation services are among the most common offerings many dealers consider when they explore value-added options to build business. All too often, expanding into these areas is easier said than done.

Pro A/V industry business consultant John Stiernberg of Stiernberg Consulting (www.stiernberg.com) says that design and installation are often the things clients need most, but they don't necessarily translate into an easy market opportunity for A/V dealers making the transition to full systems integrators.

“Design and installation are the most difficult new things for the dealer to offer, even though they're the easiest to sell because users recognize that they can't do these things on their own,” Stiernberg says. “They're hard to deliver because you need to have inhouse expertise or be able to sub-contract to non-competitive firms.”

Staffing in most markets is no simple matter. The available talent pool can be shallow, particularly in cities where the most skilled and experienced people already work for someone else.

The A/V industry faces a perennial and stubborn work force problem. All of the leading associations in the field offer large and growing education programs. The International Communications Industries Association (ICIA) has been pushing its certification options with success. In 2004, ICIA says the number of individual certifications issued will be more than 50 percent greater than last year, exceeding 1,000.

New programs are also encouraging students in high schools and colleges to to explore careers in A/V. But the effect of these programs is slow, and entry level personnel aren't nearly as hard to find as experienced technicians.

Equipping your firm to offer new services is going to be at least as difficult as persuading clients to buy them.

Firms looking to expand their installation and design services face a costly uphill struggle: finding the right people, training them, and absorbing the costs of their inevitable mistakes. Also, companies must become used to a business environment in which other professionals, like architects and general contractors, may impose inflexible deadlines and not be hospitable to newcomers.

“Many companies make this transition prematurely,” Stiernberg says. “Deliver excellent work on a tight deadline is a new concept to many.”

Marketing design services can also be hampered by the perception that this offering is product sales in disguise. Tony Hansen, system sales and training specialist at Techni-Lux of Orlando, Fla., explains how his company's new design division has tackled some problems.

A common experience, Hansen says, is being introduced and watching the architect react. “They really think we're just salesmen. One of the company's biggest challenges is convincing the architect of our legitimacy. The trick is trying to get people to understand the raw importance of lighting design.”

Even among contractors, there's a tendency to think that lighting and other A/V systems don't need to be designed, or that it's an easy job for the electrician rather than a professional designer.

“It's scary how old-school the mind-sets are,” Hansen says. “People will hire an architect and an artist to do the lobby sculpture, and then when you tell them they need a lighting designer, they say, ‘Why would we ever want to do that?’”

Independent design consultants are paid for their professional services and don't sell products, but even these pros face an education gap. “Everyone appreciates the role the architect plays,” says Scott Walker of Waveguide Consulting in Atlanta. “Our industry is much younger. There are only a few hundred independent design consulting firms in the world.”

The dealer venturing into the design world often finds himself competing with design/build contractors, as do many design consultants. “Since consultants sell time for a living, we have to be up-front about the true costs of design in our fee proposals. Design/build firms have the option of delineating their design costs up-front or they can charge little or nothing for design, hoping to make up for those costs in equipment markup.”

It isn't that the design is free, says Stiernberg. The cost is rolled into the overall project cost. The problem is that the design/build approach encourages clients to think that design is thrown in on a new construction project, especially on larger projects. “We've trained the user base to think that design has less value, or at least less cash value, than it does,” Stiernberg says.

Preparing a complete set of detailed bid specifications is a very labor-intensive process, one that no consultant or integrator should be prepared to perform for free or at a rock-bottom price.

“The days of the contractor throwing in the design for free are winding to a close, although I don't say they're over,” Stiernberg says. He sees opportunities for A/V integrators, particularly with smaller projects, whereas third-party design consultants will play a major role in larger jobs.

The competition with design/build has the potential to become unfair. That can happen especially when a design/build company develops project specs and then lets the client circulate those specs for bids.

“I don't know any consultants who have real problems with the reality of integrators doing design/build,” Walker says. “But almost every consultant I know has a problem with a design/build firm putting their own design out for bid. How fair and open is that bid process going to be? What happens if the design/build designer does not get the integration contract award? How often do they perform construction administration services overseeing their competitor to protect the integrity of the design on the owner's behalf?”

A steep learning curve, an entrenched design community, and unconvinced clients don't necessarily mean the design route is closed to A/V dealers, however. The secret is to demonstrate tangible results. “We're almost always able to make a financial difference,” Hansen says. “Usually the result is project acceleration and more bang for the buck.”

Installation services are another area in which A/V dealers could be making greater inroads. Again, some practical difficulties intrude. At the low end of the market, customers assume installation comes with the product. That's true, Walker says, for products requiring up to one-person day of labor to install.

Charging for that kind of service is never going to be easy. But when does installation become billable?

As install services become more complex, they overlap with the design function and service agreements and maintenance contracts some dealers are promoting as new revenue sources.

Stiernberg defines the catch-22 in selling service and maintenance agreements. If the salesperson is telling the client that this is the best system the client can buy, why tell the client that it's going to fail unless the client pays to keep it working?

It's a difficult question to answer. The salesman who has closed a good deal isn't likely to risk antagonizing the customer by raising the subject. So a potentially lucrative extra goes unmentioned.

“We don't have a lot of experience with this, so it ends up not being sold,” Stiernberg says. “There's a reluctance of the sales person to continue selling once they have a good thing going.”

Part of the answer is to distinguish between a maintenance agreement and an extended warranty. How many people who buy DVD players pay extra for a service plan or extended warranty? Customers perceive that the product is unlikely to fail and that if it does, replacing it makes more sense than fixing it.

The professional A/V world has to get past that thinking. Most professional gear comes with excellent warranties. The service agreement option should focus on the system, rather than the components, and stress the need to keep the system working at its best for the client.

This service can start with putting technicians at the client's disposal to offer training and solve problems.

Stiernberg says labor-intensive jobs, such as moving a system to a new location, could be defined as a service call rather than a new job. Keeping track of extra projector lamps, periodically recalibrating equipment, and training staff on a regular basis can be built in to very attractive service plans.

The A/V industry today is not unique in its need to find new foundations on which to market itself. In one business after another, product quality has become a given, and pricing has become brutal.

In this environment, integrators are challenged to devise new service offerings that not only set a company apart from competitors but which are also seen by the marketplace as being worth extra money. “Value added,” after all, is in the eye of the customer.