New slide show for the 2400

Competitive notes on other products

New sales training course for sales reps - initial slots free

Competitive sales course

Telemarketing has been approved for coop funds

National lead referrals are being tracked by NEC using Telemagic computer software. Leads will be going out and followed up on.

Discussion came up on how leads were being distributed as most dealers weren't getting any.

New electronic on-line library to inform dealers. $100 fee -(Why?)

Discussion came up on NEC and others selling parts directly to end-users.

Dr. Millard asked us to survey dealers on refurb equipment and where dealers are getting cards/phones fixed.

Dave Reaper is the NEC consultant liaison. Suggest we send him reports in writing on consultants attitude toward NEC product line so we can call for info when a bid comes out.

Discussion ensued about the lack of technical bulletins on the 1400. Dr. Millard said he was concerned that the competition would get their hands on any official bulletins that were sent out that didn't show that the problem was resolved. New on line system may solve this.

Under the Robinson-Pittman (?) Act, there must be an equitable distribution of coop funds.

At that point, the meeting took a break. After the break, the dealers requested that we postpone any further discussion on products and marketing while we deal with the important issue at hand - the competition between the independent dealers and Direct.

Note: The discussion was lengthy and I will try to summarize. Others attending the meeting can add to this and I will send out a revised set of minutes later, if necessary.

Some of the issues that were brought up were:

1. There are not any written guidelines for Direct. The original policy statement has not been followed.

2. The dealers reported the Direct sales people have been calling on dealers' customers seeking maintenance agreements at a lower price. Tom Burger (Direct) responded that his sales people were getting very little commission for maintenance contracts, so there was little motivation for this. He also indicated that the dealers were doing the same thing with his accounts. Tom said he has 24 sales people and 10 of them are in south Florida. Part of the problem has been that Direct was initially told to stay away from the dealers.

3. The general lack and decline of established territories with the addition of Direct to the marketplace. Direct has opened up offices based on the number of existing Tel-Plus customers still left. With multiple prime dealers and direct in the same areas, we're fighting among ourselves for the same business. Instead, Direct should have offices and operate in areas where there isn't adequate dealer distribution.

4. The 1400 is now being sold by Direct. When the product was being introduced, we were told is was going to be available to Prime Distributors only. The high cost of babysitting the numerous software problems has been an expensive problem to the dealers with no reimbursement from NEC. The dealers feel we should be given a chance to market the system now that it is relatively bug free before giving it to BCS.

5. Dr. Millard stated that the goal now for direct is not to grow, but to get profitable. He said that Direct is paying it's way, except that they are not paying off the initial cost of buying the Tel-Plus base. The goal is to grow the overall business, with Direct doing 30-35% of the sales. He felt they might have to buy more base.

6. There is growing concern about NEC selling parts directly to non-NEC dealers and end-users at a lower price than the dealer can afford to sell them from off the shelf. Also, the secondary market is selling new and refurbed parts directly to non-dealers and end-users.

Dr. Millard stated that he intended to draw up guidelines for Direct after these three meetings, based on the discussions that occurred. He has been advised (legal) that he cannot provide direction for the dealers due to the Sherman Anti-Trust Act. The dealers association (via the Dealer Council) will have to draw up their own guidelines.

NEC and Direct representatives left the meeting and the dealers met to select representatives for the dealer council. Members selected were Allen Wood (Scientific Telecom), Bob McArdle (Deltacom) and Steve Autor (Digital Communications) and Randy Smith (Protecom) as an alternate. Steve Autor passed out some ideas on how we could set up the dealers and direct in a manner to minimize competition and begin working together. These were based on a new program being set up by another manufacturer (copy enclosed). Part of the motivation to work together would be to pay each other for leads and sub-contracting work.

After lunch Allen Wood (Scientific Telecom) tried to get some consensus among both parties on how to resolve these problems:

a. Could we start by avoiding raiding each other's customer base? If a non-customer calls wanting a price on maintenance or adds, move, or changes, call the company that put the system and find out what's going on. If the customer is truly unhappy with the original installing company, then the customer may be fair game. We need to stop underbidding each other for the AMC business. Direct typically charges $3 to $3.50 per port for maintenance contracts.

b. The question was posed to Direct if they would pay commission if we refer large systems to them. Dealers have avoided notifying NEC of large jobs coming up in their area as Dealers have felt that it would help Direct grow in their area and bring on more competition. Tom Burger (Direct) did indicate that they would work with dealers in this matter. The Dealers indicated that they would eventually like to work together if Direct was not competing in the key system and 1400 market.

c. Direct indicated a problem with National Accounts that they service. When they hire a local dealer to sub-contract installation and AMC work, the customer soon begins to hire the dealer directly at lower rates, taking revenue away from Direct. Direct has had to respond by hiring a different dealer.

Discussion time ran out on the direct issue and those that could stay did want to have 30 minutes to hear about the new features coming for the 1400 and the 2400. Kanji Suzuki did a excellent presentation describing these.

Note: We have 46 dealers signed up with the NEC Dealers Association already. More are coming in daily. Twenty dealers have sent checks in with their information sheet.

Meeting adjourned about 4:30.