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LD+A The Magazine of the Illuminating Engineering Society of North America

Lighting Research & Education  


New Sales Leadership for New Types of Lighting Companies

 

With the advancements made in solid-state lighting, companies not only have to rethink their product offerings, but they also have to think hard about the sales and leadership skills their management teams bring to the table. That was the essence of a recent article in LD+A magazine by Ted Konnerth, CEO of industry search firm Egret Consulting Group. Konnerth writes that “the tide of technology sweeping through the lighting industry impacts more than just the product and system innovations we are witnessing. New leadership is needed to guide companies through the seismic shifts; the new lighting executive must be someone who clearly sees beyond the boundaries of the past. New lighting executives, much like the lighting solutions their companies brings to market, need to be bold and creative.”

One trend is toward hiring chief technology officers (CTO) to lead the increasingly important innovative division of the company, Konnerth continues. CTOs are often whiz kids—research and development gurus. They tend to be lab-oriented but also able to understand the end application of a design. They can see applications that are currently underutilized or non-served and create solutions for those. The right CTOs are highly technical, driven and, above all, true visionaries.

The sales model within these companies should also change “to match the needs of the new technologies they're aiming to sell.” The sales philosophy popular with legacy lighting companies—the "pyramid of profit"—does not adapt well to current LED technology. The pyramid of profit is primarily a structure of the new construction market. As such, new construction is heavily constrained by the current capital markets. It's very difficult to add LED into new construction projects and get the additional capital required to include it into the design. The pyramid will swell given that LED is inherently more costly at the product level, and will get marked up by the manufacturer, distributor, contractor and, then, the lighting representative. The pyramid will collapse under the margin dollars, and new construction budgets don't always consider operating expenses. The return on investment can't overcome the bloated margin weight.

Thus, LED requires financial selling skills. Companies need to understand total cost of ownership (TCO) as well as the impact of governmental rebates, incentives, tax deferments and so forth. The sales team needs to know how to sell new and innovative products through the eyes of TCO. This requires extensive training on core selling skills as well as customer definition. TCO sales requires boardroom level sales savvy--selling to the CFO, CEO or COO, not the traditional purchasing or even specification market selling process of product features and benefits.

Going forward, Konnerth concludes, sales professionals in lighting companies will also have to be market-savvy—knowledgeable in retail, hospitality, property management, industrial and municipal markets. These “market specialists” will target and sell to end-users. The traditional new construction market for selling lighting may remain the same, but the market share for the total lighting market will be dominated by end-user sales strategies for years to come.

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