Eliminate Sales and MarketingBy: John Honovich, Published on Sep 30, 2008
10-20% of all spending on video surveillance goes to sales and marketing costs yet customers find great difficulty determining the best solution for their needs. The solution to this, just like in stocks and real estate, is to eliminate traditional sales and market, replacing it with online tools and information sharing. While a complete elimination will never be productive, significant elimination is a very valuable goal for consumers and society.
Though not generally examined, sales and marketing costs in video surveillance are very high - far higher than in other business like real estate and stocks. Take the costs of manufacturers for sales and marketing organizations (often 6 to 12% of the manufacturer), add in the integrator's (often 3 to 6% of the product cost) and often the manufacturer's rep (often 2 to 3%), and you easily have 10% - 20% of the total end user price going to sales and marketing.
For end user, that means they are essentially paying tens or hundreds of thousands of dollars for sales and marketing efforts. The dinners and the demos and the on site visits are nice but I doubt hardly any security manager would view this as worth the cost.
Collectively, this results in $1 Billion in inefficiencies (assuming the video surveillance market is $10B according to industry estimates). Given the market is expected to triple or more in the next 5 years, the total 'waste' could rise to billions of dollars.
Despite this enormous spending, figuring out the best solutions is incredibly challenging. Does anyone really know, with confidence, what the best solution is for them, out of the dozens of products available? And if you do, do you really know why its better than other alternatives? The more I have researched and talked with dozens of vendors and analysts, the more I realize how difficult and crazy this whole process really is.
Basically, everyone is forced to make the best decision with very limited information. The sales and marketing efforts of vendors is focused on their own products with minimal understanding of competitors. Because of the difficutly in acquiring and vetting information, almost all integrators and analysts must focus on a small set of products. Indeed, big conglomerates actually take advantage of this problem using their channel power to drive revenue at the expense of their customers.
At the end of the day, you make your product choices and hope they are the best, despite the very limited information available. Most end users get solutions that are sub-optimal and a small but significant minority have projects that blow up. All as a consequence of the difficulties of getting good information.
The Internet, industry by industry, is fundamentally blowing up traditional sales and marketing, replacing it with online tools that empower end users to learn and specify directly. This transition is complete with stocks, where transaction fees have dropped $50 to $5 in the last ten years. We are currently in the midst of similar transition in real estate where the traditional 6% commission fee structure is being attacked from multiple fronts.
Given the high costs and the poor results of sales and marketing in video surveillance, it is inevitable that the same transition will occur in our industry. The pain is there and it's certainly technologically feasible to enable such online tools. Indeed, the goal of this site is to help enable this future.
There is a lot to be discussed on this theme, but let's start with this question: Do you think the costs are high and results are poor from video surveillance sales and marketing?