HELP Electrocompaniet stole Christmas


What a mess:
After finally deciding that spending money on the latest EMC-1 parts mod, I contacted Electrocompaniet's distributor back in October to arrange to bring my EMC-1 MkII to him directly in PA so as to avoid RT shipping risks and expense for this 50 pounder. All was set for a Christmas week mod, as I was to be in NJ visiting my relatives that last week.
I called on Christmas eve to arrange a drop-off time, and was told that Christmas Day noon would be fine, but that I had to arrange the deal through a dealer! Yikes! So I remembered Fathers & Sons and called them, arranging for the paperwork and profit to be credited through/to them. Fine. So I drove 2 hours through a nasty winter storm to arrive at Warshaw's house, where he said he'd NOT perform the mod if my EMC-1 didn't have a serial number on it, as there was a grey-market guy in New York who sold a few of these this year. I assured him that mine indeed had a serial number, was produced in spring '01, and bought used by me in summer '01. He said OK, and lugged the player into his house, saying he'd call me in a couple of days to pick it up. Great!..............
I returned to NJ and watched the storm intensify....
Two days later I called to arrange a pick-up hour, and Alan told me that he did NOT perform the mod because the player had been originally sold by a Danish dealer, and NOT through him, so he had made a decision to NOT support any players not originally sold thorough him. No warranty repars, parts, nor mods!..............
I was stunned, couldn't convince him to make an exception since he had never asked me to provide a serial number beforehand, and I went through a total of a half-day of driving through a storm to accomplish this mod.
He just told me to come pick it up at my convenience. I glumly arrived on Saturday and retrieved my untouched puppy, where Alan said that unfortunately I had to share the victimization of the gray-market. I asked if I should contact a Danish dealer to see if a board-swap could be done (of course thinking he didn't really know the answer), but he thought that Electrocompaniet wouldn't support my player either! I asked with some incredulity what was going to happen with all the players that people have when they move from one country to another (!), but he said that this policy was the only way they have of penalyzing the gray market.... I suggested that in THIS CASE he should have installed the mod because of his lack of due diligence in assessing the production/sales history of this particular CDP, ESPECIALLY given my enormous effort in delivering it to his doorstep on Christmas Day.... I left sadly but gracefully.
WHAT SHOULD I DO? I contacted the Danish dealer but he's not responded. Should I contact Electrocompaniet directly and try to arrange a board swap or purchase the parts mod "kit" and instakllation directions (I'm pretty familiar with boards and soldering)? Should Alan have acted differently? Isn't the world getting small enough so that internationally-sold products should have protected lives independent of sales point?
PLEASE HELP!
A Happy and safe New Year to all!
Ernie
subaruguru
Subaruguru,

I've read with great interest your past threads (especially the one detailing all your system tweaks). I also own an Aleph P & Aleph 2s - I love them.
After seeing your problems w/Electrocompaniet, I'm going to talk to my local Pass/YBA/Electrocompaniet dealer here in Phoenix. They are very fair & will check into this! They just took on Electrocompaniet & sold their first EMC-1 a week ago.
If the distributor is going to be this hard-nosed with you, he does not deserve anyones business!
This is simply Byzantine and Neanderthal. I recognize that some companies' management decides to price products differently in different markets. Their hope is that their pricing isn't transparent because customers dont travel that much, dont have friends in other places, or are too lazy to get competitive quotes on a product.

Companies have gone through GREAT efforts to make this happen. After all, why should the wealthy who can pay more, pay what the poor pays? Its all about segmenting customers and applying a pricing policy. Its like B-School 101. So, certain companies brand their products differently or distribute under different names to hide their pricing (alcohol companies, automotive companies, etc). Some forbid publicizing their prices, hoping that ignorance would be bliss (check out some camera gear in shutterbug sometime). Some use grey market warranties.

The essential element is to do anything a company can do to avoid price transparency. Basically, don't let a customer buy something for less than they are willing to pay for it by not telling them there is a lower price.

The biggest con artists, before the mid 1990s, was the airline industry. No one had a clue what the right price for a ticket would be. Basically, some clueless $10/hr telephone agent would use archaic text commands in a green screen terminal to call up prices based on the customer's request. The problem was, that airlines price every seat differently on every flight. They call it Yield Management. It gets so damn confusing to the customer, you end up in mini revolts about airlines not sharing accurate pricing.

Then the internet happened. Customers could log into expedia, etc. and see prices for all tickets on competing airlines, and change dates/times/flights to get a cheaper price. You know what happened?

The cheap, who always traveled cheap, traveled more because they realized just how much cheap travel there was. The business men, who routinely got screwed by the airlines by paying full fares, got HUGELY upset and starting booking cheap tickets. The airlines suddenly became awash in people wanting cheap travel, but their infrastructures cost too much for those low profit customers. And now, one by one, they are going into bankruptcy.

So, what does this have to do with EC? The company thinks it can swindle the customer by pricing items differently in different markets. Its probably right in some regards. However, the problem with goods vs. services is that goods have a lifetime...and they may end-up anywhere in the world after their initially sold. So, while EC practices 1980's pricing strategy games with its consumers (pissing them off more now than ever because we can SEE the european and asian pricing), the consumers eventually want to sell their products as they continue the road toward audio nirvana. And you know what, EC? These customers sell them to the highest bidders, just like you're doing on new products because now there are internet sites, like this and ebay, that makes pricing COMPLETELY transparent. And voila, the products end up in the USA.

So, what is good for the goose isn't good for the gander? EC can sell its products for whatever it likes to specific markets, but restrict free trade of the used products by its customers through grey market warranties and explicit policies to not upgrade so-called "grey market" units? Its no wonder that customers get angry.

You know what I like? I like companies that warranty and service their products because they know that the products and the accompanying services are their ONLY vehicle to make a customer relationship. Companies that dont understand this are going to go the way of Communism - extinct because the governments/companies forgot that their citizens/customers are their #1 objective. Customers should be anyone using one of your products. I could cite a dozen CRM books on this exact subject, but I'll let EC figure out how to manage their own customer relationships. Hint: customer acquisition is the first part, initial customer retention/cross-selling/servicing is the second, and 2ndary customer retention/cross-selling/servicing is the third. Your competition shouldn't be on PRICE, it should be on product differentiation and COGS.

I, too, have been shopping for certain components, a preamp and a CDP. I struggle with BAT because they wont support 2ndary customers with the initial warranty, so I'll probably go to a company like Thor or ARC that warranty products, not initial customers. As far as CDPs, EC wont get a nickel from me, either as a customer of new products or as a customer of old products. I want a relationship I can trust when buying a $5k CDP.
Leftistelf, I agree with your position re: customer relations/service. I think your comments on the airlines may be a bit incomplete. Airlines have been troubled with bankruptcy for a very long time. The airline industry is particularly sensitive to world affairs, and the current state of the world is not helping the airline industry.
Leftistelf, you raise a number of good points (with Unsound's caveat) and all companies must now face increased price transparency. But, where should CRM (customer relationship management) be applied? The company must walk a fine line between their customers (distributors) and the end customer. It is distributors and their networks that still drive most of the business. Plus, distribution costs do vary widely from country to country as transportation costs, duties, insurance, operational risk, financing costs, economies of scale and exchange rates vary.

If the company could cut the middlemen, they would. But the distributors serve a valuable function and drive demand (via supply availability) for the product. The internet has not yet come close to replacing that channel in most businesses. It seems to me that a forced equalization of pricing could end up bankrupting the company. Countries with higher cost distributors in many areas would vanish as would the distribution and product demand. Countries with lower cost distributors would be charged a higher price since demand fell and fixed costs would have to be recovered (by the way, r&d would also suffer). I won't argue that price differences only reflect these cost and risk differences, but I will argue that most companies simply can't offer a product for the same price in all countries.

The best long term solution is clear and you point it out eloquently. But, you have to get through the short term first and differential pricing based, at least on large part, on different cost structures is something that is here today. I'm hardly defending EC's actions in this particular case -- this situation is a no-brainer for most people. Rather, I'm suggesting that many companies need to balance two kinds of customers -- their distributors and their end customers. Focusing on only one of these will kill the company unless, like Outlaw, they started off without distributors so don't rely on them today.

So, the company must focus on their distributors. In the same way, the distributors must focus on their dealers. The dealers must focus on the customer and must convince the distributor to do the right thing by the end customer. The distributor then places the pressure on the company to do the right thing for the customer. In theory, this works great. In practice, a bad distributor with an exclusive franchise can really screw up the works. Then it's up to the consumer to place pressure on the company through buying elsewhere. Smart companies demand that their distributors maintain some consistency in service and customer relationship practices across all boundaries to avoid potential disasters. Let's see how smart EC is.
I like Resolution Audio's method of "distribution": all through the internet, direct to customer, with a trial period for anyone interested. No middle men. And you can see for yourself, in YOUR system, what the piece sounds like. And, everyone gets the same price... fair, smart, and appreciated!