Industrial Evolution: D&B CEO On New Direct Business Model And Industry Mega Trends

d&b audiotechnik CEO Amnon Harman has spoken exclusively to Headliner about the company’s new Direct and Solutions operations, what they mean for the business, and the industry 'mega trends' that are shaping the pro audio landscape.

The German pro audio giant has experienced an incredibly busy first half of 2021, with the launch of d&b Direct and d&b Solutions marking significant milestones in the history of the firm and the direction in which it is moving.

In this exclusive interview, Harman describes in detail the reason behind these new launches, the measures the company is taking to ensure that these new initiatives don’t bypass their partners in the channel and their plans for a post-Covid world…

How are things currently looking for you and the company with regard to the return of live events?

It’s a very diverse picture, globally. In Europe we are opening up more and more, vaccination rates are going up and people are getting confident with things like local touring – not international – being possible again. This is reflected in our business.

We had nothing in that area for 15 months, so everything we did in that time was fixed install business. In markets like South America, Africa and India it’s still very difficult with live events. But our core markets in Europe, the US and Asia are starting to come back.

With global tours, I think we’ll be lucky if things are back by summer 2022 - more likely it’ll be 2023.

How vital has your installation business been over the past 18 months?

You cannot always react quickly to the market. So, our installation story goes back seven years, when we knew we would need a healthy balance between our mobile and installation business, because we couldn’t rely on mobile and live events continuing to grow as they did in the past. So, we planned what segments we wanted to address in the install market.

Sometimes these are live entertainment venues that will install rider-compliant systems and then they channel the tour through them – this is a trend I have seen with the likes of Live Nation.

Then you have these smaller house of worship venues that don’t install performance systems but still want to have quality sound for intelligibility and getting a message across. They require smaller systems, so over five years ago we decided to adjust our product range.

If you look at our product range today, we accommodate amplifiers and smaller systems for clubs and bars, restaurants and conference centres. This is where we benefit today as we can address market segments that have continued to exist through the pandemic.

Tell us about d&b Solutions. What is its purpose and why was now the time to launch it?

There are mega trends taking place in the market which were there before the pandemic and have since been accelerated by it. These are trends of globalisation, green initiatives, the importance of education and more connectivity. When we look at these trends there is a clear indication that customers and markets are becoming more consolidated.

The result is that we are seeing bigger customers and they have a requirement for a full range of not only product suites but services as well. It’s this end-to-end thinking that we are observing.

We realised that we have much bigger chances to win a large installation project if we are sitting with our partners at the table and can influence the buying decision. The engineers who have invented the innovations are at the table and they can explain the specialities of the system.

So, it makes sense that we offer a service that is not only delivering the system but also offering a service, from consulting the end customer to planning the right solution with them, doing the installation and providing post-installation services. This is a very important part of our expansion.

What does this mean for your sales partners?

We don’t want to go direct only and bypass our channel. This would not be possible if we look at our global business; we are active in 70 countries, we just couldn't do it without our network of expert partners.

It’s more about the ability to be closer to the customer and see how we can incorporate the end-channel requirements of the market into our innovation process.

What has the response been like to the launch?

Externally we are having discussion with our partners. Some can see where we want to go and know they aren’t in competition with us, but there are others who say SFL is in competition with them. So they want to evaluate if we are developing business with them and investing in the partner network, or if we are taking business away from them.

So they are going with us but keeping an eye on developments. And then there are partners who probably have a bigger piece of the market where the discussion was not that easy, but even with these partners we are seeing our way through this.

That shows the trust we have built up over the years. There is constant relationship management with our partners to show them they can trust us on that.

Also, through this closer relationship with end-customers, it creates a situation where we can get some insights on end-customer strategies, which as a manufacturer we couldn’t get before. That is very interesting for us.

Will the relationship management become easier as things start to open up again?

Absolutely. Even when there was some confusion about it or negative expectations, it’s about the working relationship you have on a day-to-day basis. When we are walking the talk then everything is fine. As the markets come back the demand will take all these doubts away.

We have bigger chances to win a large project if we're at the table with our partners. Amnon Harman, d&b CEO

What can you tell us about d&b direct? What was the thinking behind this launch?

The original idea came from an initiative in the US a couple of years ago in the church market, where we would provide an installation amplifier and some loudspeakers for each project. These are typically small churches and not big installations.

But with the number of churches seeking these solutions, the potential was very high. However, we couldn’t find a way to establish the go-to market there, as our partner base was focused more on the larger projects and greater revenues. So we decided that we had to find a way, and an online channel was the best way to address this market.

At the moment it’s a pilot in Germany Austria and the UK, where we are addressing market segments where we are well established, like house of worship and clubs and conferences. But for customers typically not approached by our channel, we are making a small, ready to ship system bundle available to our customers at the click of the button, so they can make an inquiry via one of our sale partners.

Would you have launched d&b direct irrespective of the pandemic?

It was fast-tracked by the pandemic. Before the pandemic we were so busy selling large systems that we didn’t have time to look at these things. It was always a project, but we didn’t have the capacity to make it happen.

With the pandemic, we said we had the need and we wanted to address a market where there was business, so it was the right time to launch.

The Westville Music Bowl in the US recently acquired the first ever CPO Certified Pre-Owned) J-Series loudspeaker system. How much of a focus is there from the company on green initiatives like this?

We were working on it for a long time. There is a pretty attractive secondhand market because our systems aren’t losing value over time. If look at the financials here, it’s good business. You buy a system for four or five years and you still have the warranty. If you go from five to 10 years, you don’t have the warranty, but you still have a high value system.

So, the initial idea was just to target the secondhand market. But we looked at it and decided we wanted to provide something that isn’t competing with the existing secondhand market of our partners but is still attractive in that it has a difference from a price perspective compared to a new system.

We had to position ourselves from a quality perspective between secondhand and brand new. So, we offer a two-year warranty after refurb, which a lot of secondhand players cannot do, and we are only selling it with new amplification. Our partners can also do CPO installations.

For artists or concert organisers, the lowering of the carbon footprint is becoming more and more important. We are now thinking more about what we can do to expand the lifespan of products.

Another recently launched initiative is the Subscription Series. What can you tell us about that?

It’s a tool that will help customers, especially when they are coming out of the pandemic, to finance their systems. The principle behind it is a change in buying behaviours, so we are seeing a trend that is more about pay as you go or renting and sharing. It’s new to our industry and we have established this series to address that trend.

Previously we offered the finance series, where over a period of time you can buy a system, now we have an option where you pay only for what you consume.

You subscribe to the programme for a minimum of two years, everything is installed through our partners, and we handle the contract with the end customer, so they are paying a subscription fee for the system.

On top of that, we have the option to make it a real pay per use option. So, if you want a Soundscape option, we can work that in but you only pay when you use it.

What else does d&b have in the pipeline?

There is more coming, but I can’t say any more at the moment…