Issue #168 | All Hallow's Eve, 2008 | by Andy Kowl

When the world came to an end a few weeks ago, it was pretty scary, wasn't it?

Halloween doesn't hold a candle to the fear that generated. I've read Chicken Little and know better, but it was hard not to peek up every now and then to see if maybe the sky was falling. For about two weeks, while the markets tumbled, doom and gloom were the order of the day. It was even easy to understand when marketing departments told us their instructions were to buy nothing – and they were talking about we sell!

Let's jump to the positive news. No, not the big market gains this week – they may be gone by the time you read this. The important thing is that shackles have already been removed at most of the RFID companies we are talking to. Companies are planning their marketing strategies again, and the spending freeze is already thawing. And with good reason. (To request a PowerPoint on advertising during a recession, contact jake@rfidsb.com )

Is RFID the best game in town?
If you were in the desert, wouldn't you want the water concession?

Well, then in a recession, which it sounds like we are in, what would you rather sell than cost saving solutions? Not cars or real estate or vacations or many other things I can think of. I may have already written this before; but if so it is worth repeating.

After all, what is more likely than thousands of company executives being ordered to find ways to cut costs? Even within IT budgets, I would guess postponing those new desktop or server upgrades and software purchases might look smart if the money could be better spent on a cost saving technology instead.

Up until last month, the RFID business appeared to be running counter to the economic slowing that was creeping into the economy. Of course, cynics will point out that was easy based on the slow sales up until then. Like the old play, "Been Down So Long, It Looks Like Up to Me."

But here's what I mean: yesterday it was announced by the feds that personal consumption expenditures were down at a 3.1% annual rate in the third quarter, "the worst decline since 1980," according to the Washington Post. RFID solution providers all over were seeing real, growing sales. There are no definitive numbers to compare; but I guarantee you the annual rate of RFID sales were up more than 3.1% during the same period.

Selling cost savings
Since every RFID solution I know of either saves the buyer money through efficiency increases, or gives a company a competitive sales edge they did not have before, why would sales of stuff that does that slow down? Credit markets you say? Sure maybe today, but if businesses need to find money, and you can save them hundreds of thousands, maybe millions per year, why wouldn't they find a way to invest in that?

It is up to you to make your solution sale clear and understandable. If you are waiting around for someone to simply buy your hardware or software, and you are not helping your channel partners understand the value proposition, since they are on the front lines, what are you thinking?!

As market share begins to solidify
The reputations RFID firms have built so far are important, to be sure; but since so few buyers have really been paying attention, market share is still up for grabs. The unfortunate fact for companies that have been on the bleeding edge, with the scars to prove it, is that most buyers in 2010, say, will not necessarily know your company just because you are an RFID leader today.

Naturally for those companies that were household names before RFID, there is that advantage. But nothing is automatic. Black & Decker, for example, has had a fine reputation for decades. But when they purchased GE home appliances, they had an uphill battle. The man of the house liked their drills and power saws just dandy; but it took three years of advertising campaigns for women, the predominant buyers of coffee makers and irons, to get comfortable with B&D. In our business Siemens, a company that has a leadership position in quality manufacturing innovation well known to the Ops people at plants across the world, find they still have brand barriers to overcome when it comes to the IT side of things.

In 2009 and beyond, all the growth of RFID sales will be from sales to buyers who don't know, or care much, about the history of RFID. If you sell RFID solutions, look at it this way – if you are already known by all the buyers of tomorrow, it would mean there were not that many new buyers, right?

Now is when RFID manufacturers must build solid channel partner relationships with the global sales force looking to profit from selling cost-cutting solutions. The competition for market share now becomes critical as the market begins to assemble itself in earnest. Unfortunately, of all years this is the worst possible time to not invest in brand building. It is likely that two years from now the pecking order will be starting to set in concrete.

But I don't sell RFID, I may want to buy it
I know, I know; too much shop talk. We've been pretty obsessed with studying how RFID is sold lately, as we build a major expansion we've hinted at. VAR Biz Exchange is coming in November, a major set of intra-industry communication tools nested with our sister portal, RFIDSB TradeMart, If you sell RFID or related technologies, you will want to be there, I promise you. Sign up now [ RFID Switchboard - Registration ] and you will be among the first to get your free profile so you can be connected with those users of RFID that I am boring to death here.

And if any of our end-user members here at Switchboard are still reading this, hang in there with us and we will be back to more general news and implementation oriented material soon.