Home Technology Buying Groups: Comparing HTSA, HTSN, ProSource, Azione
HTSA, HTSN, ProSource and Azione are considered the leading buying groups and networking organizations for home-technology and consumer-electronics professionals. Should you join one of them?
Given the slim margins on most of today’s custom installation products and technologies, common knowledge would suggest that anyone doing more than $1 million per year in sales should join a buying group.
Why? Because buying groups negotiate very good product discounts for their members. Ranging from 2 percent to 15 percent off dealer cost, these savings drop directly to your bottom line, and for many integration companies, they represent the total amount of net profit at the end of the year, without which you might be breaking even, or losing money.
CE Pro spoke with leaders of the major buying groups serving the custom electronics industry to get an overview and discuss other benefits of joining.
Do the Math
The first order of business in deciding which buying group is right for you is to meet with the different groups to hear about their deals and determine how their vendor line card matches up with the manufacturers you support.
Then do the math to assess whether there is a financial upside factoring in the amount you will pay in annual dues. Sometimes, beyond discounts on products, members get extended payment terms or more favorable freight allowances as well as free marketing or training benefits.
Brand Loyalty vs. Better Deals
In most industries, how much you save on product purchases would be the only criteria when deciding to join one group over another.
In other industries, there also seems to be a strong expectation that buying group members will completely align their product line mix with that of the group’s vendor deals, but in the custom electronics channel, though brand alignment is ideal, there is less pressure for integrators to stop selling certain lines.
Clearly this is better for integrators who don’t want to significantly alter their current brand lineup, but less so for vendors. They must make tougher decisions when supporting various buying groups since their investment is only justified when they can see significant year-to-year growth within a group that makes the discounts they offer worthwhile.
This is a complex issue because on one hand, integrators can feel great loyalty to certain long-time vendors they’ve used or even to certain reps whose lines they support. On the other hand, looking at discounts on a buying group’s high-volume, low-margin lines or even deeper discounts on high-margin audio products can be very appealing.
Also, owners need to take into account that their team already knows how to sell certain brands that the buying group may not support, so you need to weigh the prospect of higher profits against a steeper learning curve for new products and services.
Four CI/CE Buying Groups to Consider
CE Pro reached out to the leaders of the top buying groups in the channel: Jon Robbins, executive director of HTSA; Richard Glikes, founder and executive director of Azione Unlimited; Andy Orozco, director of business development at ProSource, and Hank Alexander, director at HTSN.
From those conversations, it became abundantly clear that each group acknowledges the importance of the depth and quality of their vendor brands and how great their deals are. But each director touted the even greater benefits of peer networking opportunities, educational and marketing offerings, and specialized support services to help their members stay ahead of the competition and run more profitable and professional companies.
Different types of people like different kinds of group interactions, and different sizes and types of companies get more from different deals and benefits depending on their strengths, weaknesses and stages of growth.
On the very top line, after assessing the brand lineup, when trying to decide which buying group to join business owners can examine the basic profile of each group to help determine where they might best fit in.
Year Founded: 1996
Number of Members: 77
Membership Requirements: Board approved/member voted
Total Buying Power: >$400 million
Membership Tiers: None
Dues/Fees: Contact HTSA
Major Brands, Stand-out Brands this Year: Sony, Control4, Dana Innovations, B&W, LG, Samsung, Savant, Harman Luxury Audio, Pakedge, Leon and more
Hot & Emerging Categories: "Strong growth in all categories"
Annual Meetings: Two major member events – Spring Members Conference, Fall Members Conference; ~10 more sessions on multiple topics per year.
Home Technology Specialists of America (HTSA)
At 77 members, HTSA is the smallest group, by design. Its members are some of the larger companies in the industry, many (not all) with showrooms and some kind of retail heritage, all doing custom integration, most in automation, networks, lighting and shade control, and many trying to revitalize audio and video sales and profits with showroom upgrades and new product strategies.
“We hang our hat on providing stellar business education," Robbins says. "We are super focused on higher end, performance-based products and technologies and helping HTSA members find better ways to show their clients how better products enhance lifestyle and enjoyment.”
Membership criteria loosely follows a one-per-market selection process, though some larger markets merit more than one dealer and there remain several markets where the group is underserved and looking for new members.
“We are also extremely judicious about choosing vendor partners that share our values and want to support the group,” Robbins adds.
HTSA is a not-for-profit member-owned group governed by an elected board of directors.They have two very-well-attended shows per year and are clearly benefitting from new leadership that has added great energy, new programs and a high level of dealer engagement in all group activities.
They also share an alliance with HTSN (Home Technology Specialists Nationwide) that allows HTSA members to selectively leverage some of Nationwide’s excellent marketing services, enjoy better deals on credit cards, financing and other non-product group deals, and access the Nationwide EXCHANGE Distributor purchasing portal.
Special Benefits & Accomplishments, 2017
- Dramatically Increased Level of Communication for Best Practices Sharing. Expanded opportunities at every meeting and event to gather best practices and share them group-wide.
- In-Depth Educational Offerings Every Two Months. The group has had great success offering a series of in-depth management workshops on category specific topics that help owners take a deep dive in a particular area of their business. HTSA also partnered with Maverick Technical Institute in Nashua, N.H., to train technicians.
- Introduced EOS (Entrepreneurial Operating System) for Owners. HTSA launched a comprehensive program for CEOs to learn how to run better companies. Several members have had great early success implementing these new practices.
- Hired Tom Doherty as Special Projects and New Business Development Manager. As a well-respected industry visionary and innovator, Doherty has been brought on to help HTSA identify “the next big thing” so to speak, and develop management education programs and practices around these new initiatives.
- New Online Marketing Program. The group is about to announce a progressive marketing program designed to turbo-charge the marketing prowess of members in conjunction with HTSA vendor partners.
Year Founded: 2011
Number of Members: 179
Membership Requirements: 3 years in business, desire to grow and share
Total Buying Power: Sales were >$600 million
Membership Tiers: All members are equal
Dues/Fees: $750 a quarter
Major Brands, Stand-out Brands this Year:Sony, Sonance, Access Networks, LG, Samsung, Integra, Liberty, Meridian, McIntosh, Seura, Leon, Middle Atlantic, Corebrands, Triad
Hot & Emerging Categories: Networks, control, wireless anything
Annual Meetings: At least five, spring and fall, key leaders, the science of selling, CEDIA
At 179 members, five-year-old, fast-growing, forward-thinking Azione is the only group composed primarily of custom companies doing roughly 85 percent of business in residential and 15 percent in commercial and not much online business.
The lion’s share of the group’s education and benefits focused on the business side of running a custom integration company.
Less than 10 percent of group members have showrooms, though many have very tricked out conference rooms to demo automation, lighting control, motorized shades and more
They are a for-profit group and the only group that welcomes manufacturers as full-fledged members with five vendors on the board.
“We like to thinks of ourselves as the most focused business group of the bunch with that focus being on running a successful systems integration company,” says Glikes. “We don’t think dealers should be in the business of collecting so many brands. We only offer 45 vendor deals, but they are the right deals for our members.”
Two annual meetings are completely free for members to attend. Annual dues are $750/quarter or $3,000/year. Vendor members pay $6,000/year.
Special Benefits & Accomplishments, 2017
- Launched a Custom-Designed Virtual Show House (VR) App. Azione’s Virtual Reality Show House app shows a virtual 6,000-square-foot house in which Azione members can drop in more than 100 products from 30 brands from an easy-to-use dropdown menu while in the customer’s home. Members can customize the virtual showroom in myriad ways.
- Introduced SLAK Chat-based Communications Tool to 70 Percent Participation. Azione rolled out a group-wide SLAK initiative as a new platform for members to communicate with each other on a daily basis, for dealers to communicate with vendors, and for members to use in their own companies.
- First Middle Managers Meeting in Chicago. The group held a dedicated meeting for operations and sales managers to learn from experts in their fields — and from each other.
- First-Ever Planning Meeting with Vendors. Glikes met with 30 Azione vendor members to figure out new ways to structure programs that drive new business, motivate salespeople and improve dealer level marketing efforts. They also spent time identifying strengths and weaknesses of working with the group.
- Group Contest: Winners Get Free Trip to Turks & Caicos. Azione held a contest with various categories for integrator and vendor members to win a free trip at a luxury Caribbean resort.
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