Representatives of land mobile radio vendors recently interviewed by MRT agreed that dealers need to adapt their businesses to a fast-changing environment by providing new value-added services to customers, but the quartet provided little consensus about which strategies represent dealers' best bets for future success.

“Voice communications has always been the primary need that we've delivered to customers, as driven by our dealers,” said Mark Jasin, national sales and marketing manager for Kenwood USA's communications sector. “But we also understand that users want more from that device they put on their hip or use in their mobile vehicle. The requirements have changed.”

Not surprisingly, many of the suggestions to dealers proposed by the four seemed to reflect the business plans of the companies that employ them.

M/A-COM, which employs an Internet protocol-based solution to provide voice and data services, is transitioning from a traditional dealer base consisting primarily of “radio heads” to resellers that are IP-network savvy, according to Larry Ward, M/A-COM vice president of sales and marketing.

“If they want to expand their value, they have to understand networks and the power of networking … as contrasted with conventional [systems],” Ward said. “Some of the dealers are getting it, and a bunch of entrepreneurs have sprung up to seize an opportunity.”

As the transition to long-promised IP technologies becomes a reality, the dealer community is becoming segmented into “haves” and “have nots,” according to Ward. The “haves” are embracing the IP platform and should be viable players for years to come, while the “have nots” — the vast majority of dealers — will continue to focus only on LMR voice products and expose themselves to extinction, he said.

While some dealers may decide to eschew IP offerings because of a lack of technical expertise, Ward said the advanced ages of many radio dealers also is having a significant impact. For some older dealers, learning the intricacies of an IP-based market may not be worth the time and effort, particularly if it is apparent that there is enough traditional radio business in the area for the foreseeable future, he said.

“I think it's a race against the clock,” Ward said. “[Dealers are saying,] ‘Am I going to be able to survive until it's time to retire? Or, do I need to do something else to maintain my business until I retire … or so I can leave it to my kids?’”

Gary Lorenz, national indirect channel manager for Motorola's Radio Products and Services Division, agreed there is a “generational change” occurring in the dealer industry and that dealers are becoming more diverse in their revenue streams. In addition to selling and servicing LMR equipment, dealers commonly offer cellular and paging services.

And “thinking outside the box” of traditional LMR services is becoming even more common with the new generation of dealers, Lorenz said. Although the idea of becoming a wireless Internet service provider is not for everybody, dealers with access to tower positions may want to consider teaming with independent ISPs to generate a new revenue source through the deployment of broadband wireless technologies such as Motorola's Canopy solution, he said.

“They can partner with a current ISP that wants to expand but doesn't have the RF expertise that many of our dealers have,” Lorenz said. “That's a real nice fit. There's something to be said for that, and that's something we've seen over the last couple of years that's really begun to emerge.”

There also will be future opportunities in security, wireless video and seamless mobility between cellular and Wi-Fi systems as technological advances make the promises of convergence a reality, according to Lorenz.

“What we were talking about four, five and six years ago is happening today,” he said. “The dealers that are embracing this — the ones who have a good future — are saying, ‘I've got to bring these kinds of solutions to my customers.’”

While considering new technologies is important, RELM Wireless CEO Dave Storey said dealers should be careful not to expend precious resources pursuing strategies that are a “distraction” from their core businesses. Storey said the key to survival for any company is to establish a core business and execute the fundamentals — “focus on blocking and tackling,” he said — within that market.

“I've always believed that the whole idea of reinventing yourself is a crock,” Storey said. “You know, the reason most businesses get out of sync is because they forget them … they take what they have for granted.

“They have to identify their niche and [stay in] their niche — don't get off the playing field, don't turn into an Internet company.”

While the struggles of dealers during the last five years are an indication that changes are necessary, Kenwood's Jasin also cautioned dealers not to stray too far from their LMR competence unless users demand it.

“You can't get too far in advance technologically of the requirements of users; then, you become a novelty,” Jasin said.

Storey agreed. “If [dealers] add value to the equation, their future is ensured,” Storey said. “Once you get out of the value business, there's no reason for you to [exist].”

Closely monitoring the communications needs and desires of potential customers may be the biggest advantage any dealer can have, all of the vendor representatives agreed.

“A successful dealer provides value-added services from a technological, sales and market development standpoint,” Jasin said. “Dealers have to set themselves apart from those they compete with.”

Storey said the benefits of close dealer-customer relationships are not just limited to dealer sales. RELM Wireless relies heavily on input from dealers' dialog with customers in determining which features are included in new products, he said.

“I think the role for the dealer is to stay closer to the customers — the state and local guys — listen to what they want and then find a manufacturer that's flexible enough to deliver that solution,” Storey said. “I've worked for big companies and, believe me, the bigger the company, the harder it is to be more maneuverable.”

And maintaining this dealer-customer communication can be done in a variety of ways other than straight sales calls. For instance, Lorenz said a dealer could notify a customer that a radio purchased 18 months ago may need new batteries to operate at peak efficiency.

“That's a service element, but it can ultimately result in other sales,” Lorenz said. “And you're providing a great value-added service there.”

One characteristic working against some dealers executing this strategy is that many are not familiar with technologies such as database mining that allow such customer-relationship-management techniques to be implemented. Because most dealers are independent businesses, many lack staff with this kind of expertise, he said. In addition, most sessions at LMR-related conferences focus on technological and regulatory issues, not general business practices — a trend that should be changed quickly, Lorenz said.

“[Dealers] need the strength of an association or a way to help them improve their business practices,” he said. “I have supreme confidence in this channel to adjust technologywise. I just think that for small businesses like this, [a trade association] has to step up.

“The discussion has always been about the technology and where [the dealers] were going to go. I've been involved with this dealer channel for 15 years, [and] the question is, what are the next steps we can take to help the dealers help themselves.”

One practice dealers need to make commonplace is to educate potential customers on their product offerings, particularly when a new technology is involved, Lorenz said. Jasin echoed this sentiment, noting that dealers traditionally have been able to generate sales on a walk-in basis — a luxury they no longer enjoy in today's hyper-competitive marketplace.

“Now, you have to walk out to generate those sales,” Jasin said. “You have to go to the market. You no longer can wait for the market to come to you.”

Indeed, Lorenz said dealers can derive significant benefits by working with businesses through local community groups such as a chamber of commerce. Meanwhile, M/A-COM is working with dealers to make more system sales on their own, Ward said.

One potentially large LMR revenue stream — Homeland Security projects — that many dealers are counting on to help rejuvenate their businesses, generally will be limited to direct sales from vendors to customers, with dealers receiving only indirect residual benefits, according to Ward.

“They will get some benefit, but they certainly are not in a position to drive or impact the benefit they get,” Ward said. “They may get some fallout from a Motorola or M/A-COM winning a contract in their area, but I don't think they are in a position to drive it.”

Despite the many challenges facing dealers, all of the vendor representatives expressed a belief that land mobile-radio dealers can continue to have a viable future, particularly if they make the right business decisions.

“I think [the dealer industry is] evolving, and I think it's evolving into a good place, coming from a good place,” Lorenz said. “In many cases, they're evolving to be more of a total solutions provider to their customers, and that's being dictated as much by the marketplace as anything. I think the dealer channel is very adaptive to those things and have been over the years.”

While adopting new business practices and adapting to new technology platforms may be part of the dealer success formula for the future, Lorenz and Storey agreed that LMR will remain the core business component.

“I believe a very slow-growing to no-growing industry has changed overnight with 9/11 and Oklahoma City,” Storey said. “It's a whole different world. Still, when the event occurs, I think the only thing you have to fall back on is radio communications. So I believe the future, if anything, remains rich for them.”

With reporting by Glenn Bischoff.

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