For those of us with a sales background, vertical selling was probably the first lesson we learned. (Well, that and making sure we always asked for the business and to never take the first “no” for an answer.) Because if you are selling in a B2B environment, no matter what you are selling, vertical markets are a big part of your strategy. To many solutions specialists, the idea of selling enterprise content management (ECM) into a vertical market translates into selling a completely different solution each and every time. That’s not the case with selling equipment into verticalized applications and digital transformation solutions are really no different. It’s all in how we use the available technology to address a need specific to that industry in a way that they find most compelling.
Our perspective has always been that every vertical market strategy starts with the core horizontal business use cases that every company adheres to. For the most part, every business has customers, vendors, employees and revenue, so selling a solution like ECM should focus on solving issues within the accounts receivable, accounts payable, contracts and human resources departments. It makes complete sense that these departments would present opportunities for improvement given that they typically involve highly repeatable processes. Depending on the industry, the urgency to address or improve one of these practice areas can change from one vertical to another. This is where understanding a customer’s industry and objectives becomes so important. Speaking to their specific needs and pain points makes the benefit you provide become increasingly more relevant and critical to their success.
For years, accounts payable has been the most common application where customers have sought to improve efficiency. This is because it represents a paper-intensive, highly repeatable process that is perfect for automation. So for a manufacturer looking to initiate a “lean office” initiative, this would likely be the most common area to explore a digital transformation strategy. While manufacturers are not alone in this pursuit, it makes a lot of sense for them to reduce any unnecessary overhead when competing in a global economy. Simply put accounts payable is the low-hanging fruit for many organizations, which is why it’s a topic of many ECM needs analyses, regardless of the industry. While definitely worthy of discussion, it’s not the only pressing need you should be considering when speaking to your customers.
An area worth exploring and often overlooked is your customers’ human resource needs and more importantly, their need for compliance with state and federal mandates. Human resources is another highly repetitive, paper-intensive process but it also comes with heavy penalties for not doing it correctly. For anyone who doubts the business case around this application, speak to retailers, restaurateurs, franchise owners or anyone else who employs workers in a high turnover environment.
A great example of this need can be found in the fast-food industry. A franchisee of a national sandwich shop has dozens of locations with hundreds of employees. Their failure to consistently collect and retain new hire documentation was consistently costing them six figures in fines year in and year out until they automated the capture of Federal I-9 and W-4 forms. Their exposure literally went from over $100,000 to zero after implementing ECM and automating the capture and filing of employee onboarding records. Their state labor board even complimented the franchisee on the way ECM had streamlined their audit while addressing their critical human resource needs.
So, what does all of this have to do with vertical market selling? Well in this case we have a specific industry (retail/franchise) that has a common problem, but it’s amplified based on the nature of their workforce. It’s not just limited to fast food either. This issue applies to any multilocation retail outlet, like convenience stores or gas stations, for example. All these organizations rely on young, largely unskilled resources in a highly competitive labor market, which makes them susceptible to turnover. That turnover exposes them to a higher level of compliance risk than other industries that employ a more stable workforce. Because of this, they are frequently subjected to audits by the labor board, which in many instances results in citations for compliance failures. With each instance of non-compliance in the collection of a Federal I-9 form costing up to $10,000, you can see how you might employ a vertical selling strategy around human resources within this industry. There’s a good chance they’d be interested in a solution you can provide that makes this pain go away.
Sticking with the retail/franchise vertical, there are a number of other relevant areas you might want to discuss as well. One that is top of mind for everyone in this industry is “shrinkage,” which equates to the loss of product before it can ever be sold. It happens every day in the retail and franchise industry and costs American retailers $36.8 billion annually according to Forbes. What might be even more surprising is that most shrinkage is not due to theft. According to Epos Now, only 36.5% of shrinkage is attributable to shoplifting, while the remainder is a combination of employee error (30%), administrative error (21.3%) and fraud (5.4%). With more than 50% of these losses coming from employee and administrative error, it might be a good time to speak to them about how process automation and its ability to drive adherence to strong business practices could help them to contain this erosion of their profits.
A big part of shrinkage comes before the product ever reaches the retailer’s doors. It’s not uncommon for deliveries to be short shipped or for products to be damaged in transit. One approach for improving that process begins with receiving deliveries more effectively by having the person accepting the delivery note any short-shipped items that do not arrive, or note items that arrive damaged directly on the delivery receipt. By making those signed delivery receipts easily available, your customer’s accounts payable team can avoid paying for missed or damaged goods which is money that falls directly to the bottom line. It’s just a matter of digitally transforming those delivery receipts so they can be referenced upon demand. That’s where ECM and your solution sales team come into play.
We focused on retail and franchises as examples for these four key practice areas but in reality, they exist in almost every vertical market you do business with. Take, for example, state and local government and education (SLED). While you might not consider these vertical markets as businesses in the classic sense, they still buy goods, collect revenue (taxes), have employees and issue contracts. The very same issues reside in their business offices that occur in the public sector so you can essentially have the very same conversation. The advantage, however, is that they also have incredibly unique needs that you can help them address that further enhance any investment in technology.
Looking briefly at K-12 education, all school districts have the same back-office requirements as the businesses we spoke of earlier. They also have a need for managing student records and more specifically, special education records, which can be voluminous. Knowing that many school systems have digitized their student records with student management systems like Infinite Campus or PowerSchool, you might think their need has been met, but it’s not typically the case.
For many of these schools, adoption of a student management system is a fairly recent event. That means that they likely have a significant backlog of paper-based records that need to be digitized. These are not just your average documents, either. They are records that in most cases include FERPA and HIPAA-protected information. Ensuring these records are secured is something many districts are looking to use their leftover American Recovery Plan funding on. For dealers offering business process outsourcing scanning solutions, this can be a much greater opportunity to assist in the process. And while their new student records may be digital, districts frequently receive paper and PDF records from outside sources that need to be managed. A solution that can give them direct access to these records right from their student information system offers tremendous advantages.
State and local governments are no strangers to back-office business practices or to the need to drive efficiency. With shrinking budgets, many government agencies are looking toward technology to do more with less. That focus most commonly brings us back to the classic accounts payable automation strategy as a primary goal, but the government vertical has its own unique needs as well. City and county clerks have vaults of paper records to digitize and managing Freedom of Information Act requests is another great topic of conversation. But if you are going to cost justify a government spend in today’s political environment, it makes sense to lead in with back-office solutions that will help them to beat the budget.
When taking a vertical market approach to selling ECM technology, remember that these industries have more in common than you might first think when speaking about process automation. Focusing your efforts on the four shared applications of accounts payable, accounts receivable, human resources and contract management will allow you to have meaningful conversations with the majority of prospects you encounter. There’s always an opportunity to expand that conversation into an industry’s unique content management needs, but go in knowing that regardless of the nature of their business, there is always an opportunity for you to help your customers work more efficiently.