Classic doesn’t always mean better.
When it comes to cars and rock & roll, sure — I think we can all agree that nothing new will top the classics. But in strategic planning, the classic approach isn’t always effective.
Take the classic AV dealer strategy, for example. It doesn’t work.
In the traditional AV dealer strategy, you sell or rent boxes. You make a dealership agreement with a manufacturer to sell their product. Now, your job is to find people that need a box.
Back in the day, dealership agreements were territory-based. You were THE dealer for a product in a city. But, as the industry grew, they started dividing up those territories, making them smaller and smaller until there was no longer any territory — there were 2, 3, 4, or 40 dealers for the same product in the same city.
So, dealers started adding more products as they lost territory. They assumed that more products equaled more value to the buyer.
But it doesn’t.
I doubt you can name anyone right now that is still doing this strategy successfully… except Amazon.
For the rest of us, product is not a strategy.
Product is not a Strategy
The classic AV dealer approach doesn’t work anymore because without exclusivity and scarcity, product doesn’t have strategic value.
Dealers are purveyors easily replaced by other means if they don’t have value beyond product to offer. While sourcing and delivering a product may have been a good strategy 30 years ago, it’s no longer valuable.
But finding the right product is valuable, right?
Now, box dealers feel inclined to better help customers find the right product. It’s a good idea, except that’s all been replaced by online services.
Amazon does a fantastic job at helping us find the products we’re looking for. If you’re a pro-AV consumer, companies like B&H are excellent at helping us navigate products. Whether you personally agree or disagree with the value these online services provide, there’s enough people that think it’s valuable and subscribe to that strategy to make it difficult for everyone else.
That means finding the right product isn’t a valuable strategy either.
Here’s an example of how these dated strategies play out now:
A classic AV box reseller wants to sell more boxes. So, what do they do in this century? They build an online store — a fantastic one.
But the customers don’t use it.
There could be issues with the user interface… but even when site does everything the customer wants, they still don’t use it. Why?
They shop online but then call the company to place the order. The company then needs to add customer service reps to service the box sales which, of course, reduces the profit margin. Now, they’re having to sell over the phone at the online prices that didn’t factor in a CSR.
Soon, their competition builds a better website and it simply puts them out of business. There’s no way they can compete.
A box sale strategy without a better mousetrap won’t work in this era.
The One Strategy That Actually Works
Product isn’t a strategy in and of itself. Adding an online retail component isn’t a strategy.
But, there are still viable dealer strategies you can pursue.
There are three types of strategy that actually work in today’s market:
- Cost leadership: If you want to be a successful box-sales dealer, you can figure out how to reduce your costs and pass on the savings to the buyer. Think: Amazon.
- Differentiation: Figure out how to be unique. How will you differentiate yourself? What makes you better than your competition? Maybe it’s a better shopping interface. Think: Apple.
- Focus: Find your niche and create a specialization in a vertical market. Think: Tesla.
Any one of these strategies can be your blueprint for success.
But you can’t have all three.
You can’t even have two.
Instead, you need to focus on one strategy alone.
How To ID a Failed Strategy ASAP
Want to catch a failed strategy before it turns into disaster? Look at the actions of the company and see how many strategies they apply to.
If I go into the average AV company, I’ll often find they’re trying to be cost-leaders. Meanwhile, they’re also trying to be unique. And simultaneously, they’re trying to focus on a vertical market.
Strategy helps us understand who we’re willing to please, and who we’re willing to tell no. And if you try to follow multiple strategies, you don’t have a consistent target customer. There’s a specific market for each strategy that requires catering to one type of customer and skipping another.
You can’t be the best at what you do and sell on price. Those are two different strategies. Being the best at what you do means you won’t sell on price. You’ll say “no” to price-shoppers.
Or, if you cater to price-shoppers, don’t spend energy trying to be the best at what you do. You can’t do both.
Companies fail when they try to work two or more strategies at the same time.
You want all the customers. I get it.
You want to please everyone. Who doesn’t?
But you can’t… and that’s a fact.
Choose one strategy that works and focus only on it.