Jeff Blankensop of NEC made a very profound statement during an interview with Alan C. Brawn of Brawn Consulting last year, wherein he stated:
“There are 25 to 27 million small businesses in the USA in terms of the TAM (total available market). The majority of the TAM that is available to us is not in the huge rollouts of displays rather in the bottom third of the TAM and relates to digital signage using less than 10 displays. In fact the majority of the volume is in the bottom one to four display level.”
In terms of the TAM, digital signage has not quite reached the mainstream. And, the question that should hover in the minds of all digital signage vendors out there is, “how do we most effectively reach the total available market?” Is that not the golden question of the decade when it relates to digital signage?
Various distribution channels abound. The remainder of this post will focus on how we can use each channel to effectively target the TAM.
Value-Added Resellers as, Duh! Resellers
I have written previously on the importance as well as the struggle had with value-added resellers in digital signage. If your digital signage offering is too complex to sell without the aid of a sales engineer you may wish to simplify it first. If this is not feasable, catoring to value-added resellers may be your next best option. In my previous post I go into a bit more depth about effectively utilizing VARs, including local VARs.
Local VARs, as a rule, are not very good at marketing “high tech.” VARs, in general, are somewhat problematic as mainstream distribution channels. Why? “Because of their inherent instability as an institution, their lack of strong financial underpinnings, and their lack of marketing, they are not normally appropriate as a mainstream market channel” (Moore, 177).
OEM (original equipment manufacturers) as Distributors
OEMs are great for small companies seeking to tap the established sales force of a giant player within any industry. However, there is a general struggle when it comes to the OEM. “The OEM sales force is likely to be focused on the big-ticket products that come out of the company’s own R&D labs, not the add-on product coming in from another vendor” (Moore 180). This is true because platforms almost always beat out applications. Unless you get lucky with your Facebook widget or iPhone app, those making the greatest margins and reaping the benefits of the economies of scale are the platform providers, not the application creationists.
Consequently, the OEM sales force is not suited for distributing to a mainstream market. This is a good general statement because OEMs are often self-interested platform providers, seeking more big-ticket opportunities.
Systems Integrators for Digital Signage Distribution
Systems integrators are an essential part of marketing to the TAM. However, it is important to keep in mind that systems integrators are not a channel. Integrators do not generally sell the same thing twice. Accordingly, digital signage vendors need to treat them differently. “It turns out that the most important markeitng contribution to ensuring effective working relationships with systems integrators is a communications task, not a selling one” (Moore, 179).
When catoring to the digital signage integrators, it is also important to keep in mind that they are looking for a strong relationship with an industry leader. They will, in most instances, avoid half-baked solutions. I offer my sincere apologies and condolences to all the privately-traded companies in the industry–especially those new-entrants with a partly completed product. However as essential players in larger projects where revenues can be seen far in the future, integrators can set the stage for project implementation strategies and lineups for numerous deployments for years to come.
Direct Sales for Distribution of Digital Sign Products
For as long as I live, I’ll always be the biggest advocate of direct sales. In former lives sales was the bread n’ butter. I love the effectiveness of direct selling. Regardless of what you’re trying to sell, nothing beats a warm body pushing the product. If you do have the available leads, what is to halt an actual person banging down the door of every interested party? Nothing! Persistance in salesmanship will always beat out the worlds best crafted online shopping cart or VAR–especially for a technology-driven, big ticket product. One of the greatest benefits of a direct sales force is that it is optimized for creating demand. The direct sales force also gives a company direct control over its own destiny (Moore, 168-170).
However, there are some limitations to the direct sales force. If you do not have enough sales leads to go around, your salespersons may resort to “thumb twittling”–not the most productive activity. And, “As price points lower,” as they are currently doing, “it becomes increasingly difficult to sell through a direct sales force” (Moore, 169). Then what becomes the most efficient method of marketing to the TAM once the market begins to move into the mainstream?
The Internet as a Distribution Channel for SMB
There are many benefits from doing marketing via the Internet–especially when you are looking to target small to medium business (SMB). The Internet is a superb channel for small and no-name companies. The WWW gives smaller outfits an easy way for making a name for themselves. The Internet allows this to happen in a much broader way than even the largest direct sales force. Prior to hitting the mainstream, direct sales are essential. Once digital signage hits a mainstream audience, such channels, although still essential, will play less of a key role going forward.
“Crossing the chasm requires face-to-face meetings with the target customer to help diagnose their problem and prescribe an heretofore unavailable solution. There is a lot of orientation to get through and live dialoge is the only medium that can make that work. Moreover, post-sales services are always a significant component of a chasm-crossing whole product, which means the sales channel has to be able to show and supervise the reuslts. This undercuts the whole economic model of the Internet, which is to be ‘hands-free’ in its offers” (Moore 182).
As a “hands-free” method of distribution, the Internet, of necessity, must simplify and streamline the entire product purcahse process for a once “techie” product that has finally reached a mainstream audience. The question hangs: as digital signage reaches the mainstream, how will vendors target the TAM by streamlining solutions for online distribution? This will be key for taking digital signage to “mom and pop shops” worldwide. When the Internet becomes the main source for information, education, and purchase of digital signage product, watch out, because penetration and saturation of the total available market will take place shortly thereafter.
We all have had experience with the reward of purchasing something late. The total available market will be looking for ease of use and cost efficiency as digital out-of-home moves that direction. And, they will have it. The reward for waiting for market institutionalization and maturation is getting a simple-to-use product with small margins above cost. Keeping margins high enough, especially as prices continue to drop as a result of market maturation, can be extremely difficult. Similarly, maintaining a viable pipeline through various marketing efforts and distribution channels can be just as taxing. In attempting to keep margins high and the pipeline full, remember, it is better to be a little underdistributed to protect profit margins, than to get overdistributed and have them shrink or drop out entirely (Moore 184). If you become overdistributed, you end up becoming like Wal-Mart for digital signage: always competing for the lowest margins, only making up for it in volume. And, with the expenses industry entrants have earned over the last several years considered concurrently with digital signage sales leads, it may be best to take the seemingly conservative route of product underdistribution. Regardless of how it’s accomplished, digital signage product distribution must be at least somewhat diversified betwixt the aforementioned methods. Otherwise, your digital signage organization may suffer the consequences from lack-of-distribution-itis–a rare, but deadly disease, striking the extremely young, the slow and old, and the weak and feable.
Many of the quotes herein have been taken from Geoffrey Moore’s revised edition of Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers.