HUNT VALLEY, Md.-Private carriers are not the only entities wrestling with an uncertain competitive future. Dealers from large to small are wondering what role they will continue to play as the communications arena and customer needs change daily.
At a recent gathering at the headquarters of Hunt Valley, Md.-based super-warehouser Tessco Technologies, a select group of dealers representing every U.S. region heard industry and academic opinions regarding competitive and marketing trends in the communications world. They also had the chance to network and troubleshoot during the course of the day.
In his kickoff speech, Jay Kitchen, president of the Personal Communications Industry Association, said, “There will be ups and downs, there will be competition like we’ve never seen before, and bankruptcy courts will be busier than ever.”
Does the traditional land-mobile radio dealer face extinction? Conventional wisdom dictates “change or die.” The day of the small service shop apparently is over. Dealers were told that partnerships, diversification and top-notch customer service will be the three-pronged path to success as wireless users look for end-to-end solutions and one-stop shopping. Several major and startup carriers are looking to the dealer network to get their products to customers.
Geotek Communications Inc., which currently has two Frequency Hopping Multiple Access private systems operating at least in beta mode, will work with dealers and third-party providers to get its subscriber equipment on the street. Senior Vice President of Marketing Bill Opet said Geotek’s service, which will target small- and medium-sized businesses operating within a 50-mile radius, will use a “selective, indirect strategy*…*with distribution partners and market directors.” Dealers who install and maintain subscriber hardware and software would be eligible for such revenue streams as a one-time payment based on double the monthly service-package rate plus percentages of equipment sales and installation.
Geotek also will provide dealers with demonstration equipment, a financial package and training. “Dealers could make $54,000 on 100 units in five years,” Opet said.
According to Mary Jane Grinstead, senior vice president/distribution and operations for Ardis, “Dealers will have to bundle everything-hardware, software and airtime.” Data will continue to be the new frontier. Grinstead admitted that her company “may be swimming upstream” following its decision not to subsidize subscriber equipment-a well-used marketing ploy aimed at bringing in more business to any dealer. However, Ardis will continue to pay upfront or ongoing commissions on airtime sold, and it will use dealers for nationwide infrastructure maintenance, and as outlets for parts and accessories. “The market isn’t mature enough to come to Ardis,” she said. “We [along with dealers] have to be missionaries to them.”
While most dealers maximize their operations by carrying multiple lines, exclusivity demands continue to be a problem. Geotek, for one, wants an exclusive dealer contract. “We only chose a few [dealers],” Opet said. “This helped us secure $120 million in financing.” Some dealers are beginning to balk, however, forcing Geotek to start re-thinking its strategy.
“Things have changed in a year, and some dealers want to diversify,” he said. “We are working on this in Washington, D.C., and in Philadelphia.” Geotek’s tentative solution is to allow its dealers to carry analog lines, with Geotek’s service being the only digital product.
Diversification does have its pitfalls. Glenn Cassell of Communications Electronics Inc. in Timonium, Md., set up a mobile data research-and-development department, but he ended up selling it to competitor Advanced Wireless Technologies. Ron Postma, president and chief engineer for Communications Northwest Inc. in Portland, Ore., revealed that he will be exiting the cellular marketplace next year if profits don’t improve.
Despite instant consumer acceptance, many dealers admitted that personal communications services won’t be a part of their product mix because of the technology’s expense. PCS activations have not impacted private-radio installations yet, but dealers acknowledge that “every customer they put on is a lost one for us.”
It will be imperative for dealers to upgrade their computer systems and to redesign their sales and customer-service tactics to cater to the new, electronically savvy customer. Home pages, computer ordering systems and guaranteed pricing and delivery-not shipping-dates have been implemented by forward-thinking dealers. Some dealers are hesitant, though, to buy into an all-computer sales mode, saying that many customers-including themselves-still want a more personal touch. They continue to place a high priority on in-person product and service demonstrations. According to one dealer, “Dispatch is different from a consumer-driven product like PCS.”
Communications Northwest’s Postma wrapped the whole conference into one sentence: “Don’t lose touch with your standing customers. It will cost you three to four times more to acquire a new customer than to keep an old one.”