Cameras and Software Licenses after-sales

Yesterday, I was talking with a friend of mine who imports high-end Japanese consumer optical goods. He was telling me about how call volumes were increasing but sales were decreasing. Much of these calls were around service. I asked him if service was a big profit center for him. I was surprised to hear that it was not a profit center after 10+ years in the business. The following applies to someone reselling cameras as much as it applies to the creator of software licenses.

When product companies (factories, distributors, and retail) start, they often focus on initial product sales. As they mature (and their industry matures), the value of their customer base needs to be used and they focus more on services, support, accessories, etc. This is exactly the stage my friend is in-- much of his product line is sold at zero margin because of intense market pressure. Continue reading...

Patience is the key to favorable negotiations

In a business negotiation, the goal is not to defeat the other side.  Instead, we want to gain favorable conditions for ourselves and have the other side feel good about the final outcome.  If they feel that they in any way lost, then they will try to recover their dignity some time later by making you the loser.

The correct strategy is to ensure very good conditions for you, acceptable conditions for the other side, and then to give them a small gift at the end-- like a small chocolate at the end of a nice meal to ensure that the last memory was positive. The difficult part, of course, is to gain the great conditions for yourself with enough buffer so that you will be able to give the 'gift at the end'. The key is patience and understanding the clock. Continue reading...

Tom Armfield was my manufacturing counterpart when I worked for Honeywell. Although Tom had little formal education and started his career as a welder, he moved through manufacturing positions, managed field service activities, and was ultimately put in charge of all manufacturing, test and field service for our division. One day, Tom explained to me how you hire and train welders. He said, "There are welders who can look at a new drawing and figure out the tools, techniques and sequences need to make what is described in that drawing." Then he went on to explain, "There is another kind of welder who can produce the same piece over and over again while at the same time continuing  to perfect the operation by reducing cleanup, lowering waste, creating more efficient processing steps, etc." And then the wisdom: "You can make any welder better, but you will never transform a prototype welder into a production welder and vice versa".

As I look at my career, there are production engineers and prototype engineers. I also see prototype and production people in a wide variety of other professions. I especially see prototype and production salesmen who like welders, cannot be interchanged.  I believe that this is not an issue of training, but of basic and fundamental personality differences. Continue reading...

As you expand your business beyond your initial territory, anticipate an expensive launch.

I believe that sales in always best when done locally, but not for the reasons you might expect.  I am forever hearing customers and salesmen explain that "this market is completely different within our market"; however, I usually discover that the real differences are minor and few.  Yet, knowing these subtle differences is almost as important as knowing the industry/technology in general and therefore local sales is a necessity.  Why?  My theory is that people like to know that others cannot do their job better than they do it.  There is comfort in knowing that only "special" people can work in this market.  If they could use outside products/services, then they might also be replaceable.  They form a 'club' of insiders and create special terminology that exclude others.  (any organization that loves acronyms and otherwise naming things is likely this type) By understanding and highlighting these "special" features of their industry/market, you demonstrate that you are an insider that understands and respects their daily struggle.

Whenever I expand markets with an existing product(or service offering), I often think about the Silicon Valley cliche that "every problem is an opportunity"'.  The problem is that you are walking into this new market without any credentials and  that everyone will view your first approach with suspicion.  Until you can get a few reference customers, it is going to be an expensive, slow battle.  You will need to exhibit at lots of events, employ lots of lead creation techniques (like cold calling) and be very patient.  Most recognize, but underestimate, this problem and nearly all miss the opportunity of a new market entry. So there is a problem with entering a new market, but is there an opportunity associated with being "undereducated and unknown"?  Answer-- yes, you are a threat to no one.