News

It began with an email from reader Ed Hoffman. "I was looking for a Pass Labs dealer and found out that Pass Labs has dumped all of their dealers around the country. Do you have any information about what is going on?"

"Look into this," John Atkinson requested. I dialed the manufacturer's number at 9:30am EDT, which put it around 6:30am in California, reckoning that a disconnected number would tell me a sad story. The phone rang once.

"Pass Labs," chirped a cheerful voice. Not disconnected—and not shuttered either, apparently.

I spoke to marketing manager Joe Sammut and told him I'd heard a rumor the company had decommissioned all of its US dealers. "That's no rumor, Wes," Joe said. "We've been concentrating on our export markets and, well, frankly, we've ignored the US network. As a result, as dealers have gone out of business and new products have garnered attention, our presence in the US just stagnated. We've hired Jim Smith to re-establish the network and our image in the marketplace."

Smith, who has owned successful high-end stores and, more recently, was the US distributor for AvantGarde loudspeakers, called later that day. "I've known Nelson Pass for years, going back to the early days of Threshold," Smith said. "I looked in on Pass at CES and was impressed by the gear, so I accepted an invitation to the factory to get to know the people there. They told me they needed to re-establish their American operation, so I assumed they would be just hanging on by their fingers—most of the time when somebody tells you that 'most of our business is overseas,' that's just because they can't confess they're dead. But I went to Foresthill and the place was just jumping. This company is doing really well—it's even paying its bills early!"

"I'm not really a solid-state guy, but I took some Pass components home and, my gosh, it's got soul. So here we have a company that's making products as good as any available, that has a great story, and even has attractive pricing. The problem isn't the company, obviously, it's the marketing."

Smith's first step was to send a letter to all of Pass Labs' US dealers. It's an interesting document:
"We all know that the US market has undergone a lot of changes over the past few years, and in responding to changes we occasionally find ourselves headed in the wrong direction. We have seen ourselves doing that, and decided to change our US marketing and distribution model in keeping with the same high standards we apply to our products.

"In the 'road-to-hell' model, product is sold over the telephone and Internet, based solely on the lowest price, without a proper demonstration and with little or no support. Retail margins suffer, customers suffer, and the perception of Pass Labs suffers.

"We have decided to take the high road, which will involve a few well-qualified dealers who know the product, are concerned about customer satisfaction, and are not just selling at the lowest possible price. To do this we are fully prepared to suffer a major shortfall in domestic sales. We will be increasing our promotional efforts to better support our retail dealers and improve the general awareness and image of Pass Labs."

The letter went on to terminate the dealers' authorization to sell Pass Labs gear, except for pending sales, and offered all current dealers the opportunity to re-apply for the reconstituted dealership network. Smith says the company has already chosen 19 dealers to re-launch the domestic operation, possibly as soon as the end of May.

"We're really trying to do something I think has never been successfully done," said Smith. "Since Pass can exist without the US market, we thought we'd assemble the dealer network of our dreams, by concentrating on dealers that offer that extra level of personal service to their customers—who build relationships that last a lifetime. We know the products are as good as anything on the market and we know they offer value for the dollar, so we can concentrate on the few dozen dealers that really get what the high end is all about."

Smith can be contacted at (770) 777-2095 or at jsmith@myusp.biz.