TVs Are the Razors. Now Sell the Blades

The good news is that sales of high-definition flat-panel TVs will soar this holiday season. The bad news is that margins will be virtually non-existent as manufacturers slash prices and push as much as they can through big-box retailers. That's all the more reason for you - digital integrators and independent retailers - to let customers know about the installation, calibration and network integration services your company offers. And, while you're at it, don't forget about additional product sales that can be attached to a new display.

The latest sales numbers come from the folks at Pacific Media, display analysts out of Menlo Park. Pacific predicts more than 3.2 million flat-panel HD sets will be sold during the fourth quarter, twice as many as last year's quarter. For the entire year, Pacific expects an 80 percent increase in HDTV sales over 2005.

Low prices will spur consumers to upgrade and possibly buy a larger set than originally intended, Pacific reports, adding that Wal-Mart, Target and others are already offering low prices a variety of models from all major vendors, which could last through the end of the years. That means retailers and manufacturers are willing to sacrifice profits for volume, Pacific reports.

Most integrators aren't in the position to drive those huge volumes. Instead they have something big-box retailers don't have: customer loyalty that has been built upon trusted service. Head-to-head, even the biggest integrators can't compete against the advertising blitz the big boys will launch from now until the end of the year. But smart integrators are competing in their own way by contacting their manufacturer reps well before Black Friday to find out about any rebates and other sale incentives they can take advantage of and pass along to customers. Big manufacturers can blindly reach the masses, but integrators have a leg up because they can talk directly with the right buyer about a full solution that expands well beyond a one-off product sale.

Gerry Lynch, CEO of integrator System Seven in Topsfield, Mass., has been on the horn over the last few weeks telling his customers about free five-year extended warranties Panasonic is offering on its large-panel plasmas until the end of the year. He has already sold a number of them and plans to push many more by the end of the year. He also tells customers he will order the sets now and hold them until they are ready for installation. "We're basically taking advantage of any promotions, price breaks, extended warranties and rebates," he told us.

Randy Presley, general manager of Eric Grundelman's Cool AV in Mesquite, Texas, tells us he's been selling a ton of LCDs, especially smaller sizes that fit in secondary rooms, such as kitchens and bathrooms. There's not a helluva lot of margin in those, but Cool AV, like other savvy integrators, make that up through services.

Other "high-end" installers are also beginning to use TVs, whether they sell them or the customer buys them through a retailer, to sell more components such as wired and wireless network infrastructures, a variety of remotes, PC media extenders, gaming consoles, home control systems, and iPod integrations and sound systems, as well those extended warranties. Those product sales open up many service opportunities, including installation, calibration and optimization of networked components.

Selling those lower-margin products does not generate immediate returns, integrators said, but they do help prevent clients from turning to retail. The strategy makes sense since many retailers are moving up the food chain by offering more services. Your customer knows you do that best. Don't give them the chance to think otherwise.

Will West, CEO of Control4, recently talked to us about a deal his company is making with a strong integration chain, which we can't mention until later, and came up with a good analogy regarding using a central product as a catalyst for other sales.

"This isn't just about moving boxes. If it is, the Wal-Marts will win," he said. "What (independent integrators) can do that the big retailers can't is provide that high-touch customer service. Once you have the customer relationship and put a control system in their home, you can now sell all the blades that go with the razors. We really want to help people understand that."

Understood.