When you look at some of the older copier dealerships, you’ll notice that a surprising number of them got their start in the typewriter business. Before copiers were an office mainstay, you could make a good living selling and servicing typewriters and typewriter accessories. After copiers (and computers) made typewriters irrelevant, the folks at typewriter dealers didn’t close up shop or double down on typewriters — they diversified and eventually pivoted their core business. They already had the customers, but they couldn’t keep those accounts by just continuing to sell typewriters. They made the rational move and started selling copiers.
Today, digital transformation is affecting the copier industry in a similar way. And just like the generation of typewriter-turned-copier-dealers that preceded them, we’re starting to see more office equipment dealers diversify their businesses beyond print in an attempt to stay relevant in an increasingly digital world. In fact, many dealers have been taking those steps for some time now, and we got an inside look during a panel at a recent BTA event in Asheville.
The panel was moderated by Ken Edmonds, a frequent contributor to this publication. The dealers represented on the panel included Mike McCurdy, president of Integrated Technologies, Tim Renegar, president of Kelly Office Systems, and Kevin Van Kannel, president of UTEC. Each panelist took turns highlighting the ways they diversified their businesses and the impact it had, and offered up advice to others who are interested in branching out into new markets.
Choosing the right product for diversification
The panel wasn’t trying to push dealers to any one new product area. Their goal was to convince dealers that they need to pick a new product — any product — start selling it, get good at selling it, and build from there. More important than the product itself is that you take a realistic, pragmatic approach to adding it, and not bite off more than you can chew.
Dealers should make sure their core business is healthy before they venture into new territories. “That’s the very first step. Make sure you’re meeting or exceeding expectations,” said Tim Renegar. “Any venture that you go into, you’re going to stub your toe a little bit, and it’s going to take a bit of capital, so you’re going to want to make sure everything is healthy before you start [diversifying].”
Tim Renegar emphasizing his point
Renegar also said that dealers don’t have to jump into something as sophisticated as managed IT. “You can start with simpler things to diversify revenue streams that are more ancillary to your existing business, like document management or managed print services.” McCurdy had similar advice to offer. “Pick one thing and get good at it. Don’t grab the whole thing at once — one bite at a time,” he said.
Collectively, the panelists had diversified into a wide range of products, including water, ice, coffee, air purification systems, security cameras, cybersecurity solutions, document management solutions, VoIP, and managed IT services. But it’s their ventures into the VoIP space that best illustrates the idea of building pragmatically, at a steady and sustainable rate. All three panelists had ventured into the VoIP space early on in their diversification journey. They lauded the space for its high-margin, monthly recurring revenue opportunities, and the relative ease of launching a VoIP division compared to complex ventures like managed IT or cybersecurity.
“If you’re not in telephony, then you should be,” said Van Kannel. “You just have to go out there and do it, because when you don’t, you’re leaving monthly recurring revenue on the table.”
Mike McCurdy, left and Kevin Van Kannel, right, offered useful perspective
Van Kannel said that dealers can get into the VoIP space quickly by working as an agent for VoIP providers. In this scenario, the provider will do most of the heavy lifting. You bring them the customers, and they close the deal, install the equipment, and manage the environment. For this, you receive a small commission. Over time, you can expand your partnership with the VoIP provider — getting trained and certified to handle installations — to earn larger commissions. A similar path exists for many of the other markets that the panelists expanded into, although the risks and rewards vary in intensity.
The impact of diversification
All three panelists said that diversifying their business was beneficial. It helped them increase their stickiness in existing accounts. “They cannot throw us away. If they want to get rid of something, then they have to unbundle everything,” said Tim Renegar. Bundling also helps dealers to cloak pricing, making it harder for prospects to shop your deal to competitors. In addition to serving as an effective moat that keeps competitors out, diversification is an effective portal into your competition’s accounts. Renegar noted that water and ice has been an effective foot in the door with 80% monthly recurring revenue.
A message for the smaller guys
Speaking to small dealers everywhere, McCurdy had one message: “You don’t have to be big to be successful.” McCurdy also made the case that, just because you’re a smaller dealer, that doesn’t mean you have to sell your business, or that you cannot diversify their business.
You already have strong relationships with your customers. You have already proven to them that you’re a competent service provider and trusted business partner. Your customers that pay you for print — and others you’ve never spoken to before — are also buying phones, security systems, managed IT services, and even water. And if you were to call them up to talk about it, they’ll take your call and listen.