Hands Off

Manufacturers who go to market through retail and custom channels have to tread very carefully when they market directly to end-users, as a current promotion by Sonos, Inc. illustrates.

For the month of June, Sonos is offering a free wireless bridge to American customers who purchase a Play:3 or Play:5 all-in-one music system. A similar offer is being made to Canadian customers, but it covers only the Play:3. The Bridge, which connects to the user's network router and communicates with Sonos music players throughout the home, has a retail value of C$59. The Play:3 and Play:5 retail for C$329 and C$449 respectively.

The offers are presented on the home page of Sonos' American and Canadian Websites. Sonos has also sent out e-mails promoting the offer to registered users in both countries. Customers who bought direct from Sonos received the promotional e-mails, as did those who bought from retailers or custom installers. The messages offered customers a choice of purchasing direct from Sonos, or searching for a dealer in their area.

The promotion has angered a group of Canadian Sonos dealers. Botched execution and poor communications by Sonos have made the situation worse, as have irregular registration practices by some Canadian resellers.

Sergei Shinder, Owner of Yana Imaginative Audio Video Solutions Inc. in West Vancouver, B.C., learned about the promotion from a customer who had recently bought a Sonos system for his main residence. "This client didn't know Sonos existed before we presented it to him," Shinder told Marketnews. The client was thrilled with the system, and returned to purchase more Play:5 speakers for his cabin, his sister's home and for another zone in his own home. He needed a Bridge for each of these systems. Having been informed by Sonos of the promotion, the client wanted Shinder to throw in a Bridge with each speaker.

This was the first Shinder had heard of the promotion; and he was incensed. He sent a group e-mail to several Sonos resellers, and copied Marketnews. "They [Sonos] have already sent out an e-mail to ALL of OUR clients with this promotion," Shinder wrote. "I am personally very disappointed by this decision to exclude dealers that have promoted, installed and supported Sonos for years."

Several factors aggravated the situation. First, the promotional e-mails sent to Shinder's customers presented the American offer, which covered both the Play:3 and Play:5. That's because Yana Imagninative encourages Sonos purchasers to register as American users rather than Canadian. By doing so, they have access to online music services that aren't available in Canada, including Pandora, Rhapsody and Spotify. Those services are delivered to Sonos devices through Sonos' own servers. Canadian IP addresses are not blocked, as they would be if those services were accessed through other devices connected a Canadian network.

Moreover, Sonos had mistakenly offered the free Bridge on both the Play:3 and Play:5 on its Canadian Website, as the screen grab below shows. The company did not rectify this mistake until June 8.

Finally, even though the promotional e-mails offered to direct customers to local resellers, Yana Imaginative couldn't match Sonos' offer. As noted, the Play:5 promtion doesn't apply to Canadfa, and the Play:3 promotion is open to the retail channel, but not to custom integrators. For June, Sonos has a different offer for the custom channel: a $100 rebate to customers on the installation of a Sonos system covering three or more zones. However, Shinder learned of the custom promotion only after he contacted his Sonos rep about the Play:5/Bridge promotion.

Sonos Spokesperson Eric Nielsen says the custom channel is very important for the company. "For our CI channel, we make the same or better offer. The effort to provide customized promotions is never going to be perfect. If over time, it becomes difficult to manage, we may offer one promotion for all channels."

Nielsen says Sonos wants its resellers to participate in its two annual promotions, which run in June and December. "We make sure our dealers see these offers in advance," Nielsen told Marketnews, although Yana Interactive's experience suggests this doesn't always happen. "We are asking our dealers to proactively take these offers to market. We fully arm our dealers to take these offers out."

As this story shows, manufacturers navigating a minefield when they approach their dealers' customers directly. If they want to preserve good relations, they can start by keeping their hands off their dealers' customers. By all means, market directly to customers who have purchased directly, but don't step between dealers and their customers.