How do you add value to generic products?
When I first started my career designing and manufacturing menu boards, over 30 years ago, adding value was a given. We designed, engineered and fabricated them from basic raw materials. When the design was complete we added up all the raw material, direct labor, manufacturing burden and tooling to get a total cost. We added a markup (usually around 50%) to cover overhead and profit. That gave us our selling price. This process added our value to the product. If we did this process well and had good customer service we were successful.
The process is totally different with today’s digital menu boards. We purchase LCD screens, players and maybe even the software developed and manufactured by someone else. Even the smaller items such as mounting brackets and cables are manufactured by someone else. We are referred to as Value Added Resellers or integrators, not manufacturers. So, where do we add our value in this process and how do we cover it in our price? Our value is determined by how well we design our digital menu board systems, the quality of the products we choose and how well we manage our projects. How well it satisfies our customer’s needs and at what cost.
We add value by providing great customer service and training our customers on how to get the most value from their systems. This is an area where I feel many of us are still falling short. I have evaluated many of the systems out there and I find very few end users that are utilizing the full capabilities of their systems so they aren’t obtaining the full value. If we all do a better job of increasing our customer’s ROI on digital menu boards it would be a tremendous boost to the industry.
I have worked with several of the traditional menu board manufacturers helping them convert to digital boards. They all have a difficult time with determining how much mark up to add to their products. Many still believe they need to get the 50% I mentioned in the first paragraph. However, I don’t think that’s practical as a reseller because it’s too difficult to add that much value to the process. Also, if they take advantage of all the engineering, programming, warranty, marketing and service support the manufacturers and distributors provide their overhead would be much lower and less markup would be needed.
The companies entering this industry from the Audio/Video and IT industry don’t have as many problems converting because their process does not change as much. However, their lack of menu board experience helps even things out.