For many years, the office automation dealer sales channel successfully sold its goods via product specifications and price. Today, however, that same channel faces radically different customer expectations that are significantly bigger and must be met — or no deal.
Dealer sales representatives who can’t sit across the table from a potential customer and answer business operations questions regarding document workflow, artificial intelligence and security won’t last in this industry. Not talking about solutions and/or business challenges leads to nothing but discussions of price, price, price. After holding margins for several decades, dealers are seeing an impact in both the machines and the service/supplies areas. Another benefit of talking solutions is being able to discover other needs that the customer might have – and perhaps not even know it. These could revolve around IT issues, potential new projects – any business initiatives that may help to drive more purchases.
Throughout my years in this industry I have seen firsthand the transformation that is rushing through an industry that had found success with “box selling.” Customers today are more focused not on just “making a copy,” but converting that document into electronic data that is more easily accessible, archived, secure and usable. This obviously requires a very different approach for dealers who must now create a team that is knowledgeable about technology-based processes that will effectively satisfy specific customer demands. This approach can be accomplished either by hiring sales personnel with greater technological skills related to document management or freelance consultants who would assist in the sales process.
In my experience, there are two types of dealers. First, there are those that actively pursue solution-led sales. They hire solutions-intelligent people, pay them well, train them well and use them as an overlay to the sales team. They are highly skilled in both technical and sales abilities. Secondly, there are dealers that are more reactive in their response to opportunities. They might ask for assistance from hardware manufacturers or software/solutions providers for assistance.
Often a dealer who starts in the latter space will move to the former space if they realize the margin potential and ability to “upsell.” Overall, the challenge is staying on top of the real needs of their customers. For instance, five years ago in the healthcare arena it was all about HIPAA. But now it’s about building out profitable revenue streams in that market through concierge healthcare, including telehealth, specifically Virtual Care Management (VCM).
This new way of thinking, though, presents a staffing challenge.
One of the primary issues is the vast disparity between the salaries of a traditional dealer sales representative and a more technologically savvy individual. The sales rep gets a small salary plus commission. As that individual generates more revenue, they actually end up paying for themselves. But the more technically minded individual commands a much higher salary thanks to their skill set that is required and in hot demand across many industry players – from manufacturers to IT-related service providers.
This disparity – and the overall increased investment in the types of products, solutions and training that dealers must support – is creating another growing trend — it may be why we’re seeing a consolidation in the industry. The larger dealerships that have the resources to successfully transform their business will survive and perhaps acquire smaller dealerships that unfortunately don’t have the needed resources.
Just looking at the growing list of new solutions and services that dealers must support is daunting. This list includes:
Artificial Intelligence (AI) – Still in its infancy in the office products world, the emergence of AI – combined with deep learning technologies and new business models – will produce vastly improved means of managing information flows in digital workplaces.
Document Workflow – Maximize a business’ productivity by increasing its overall efficiencies, reducing costs by eliminating the need for outsourcing, or boosting productivity by speeding document indexing and routing.
IT Services – Support for a business’ computing, networking, managed voice services and application needs regardless of the industry or the size of the organization. Smaller businesses can really benefit as they may not have the funding to support a full-time in-house IT technician.
Managed Print Services – A combination of consulting, hardware, software implementation and workflow management in order to lower a business’ document print costs by managing its fleet of devices, including printers and multifunction devices.
Security – This comes in many forms, such as cyber (network), physical (buildings and staff) and compliance (in vertical markets like healthcare, government and finance). But the most top-of-mind is cybersecurity, as a rash of vulnerabilities – like the recent Meltdown and Spectre – have made national and international headlines, creating panic in all workplaces.
Voice Over Internet Protocol (VOIP) – Designed to enhance how a business communicates and collaborates via one central platform, one bill, and one point of contact for its telecommunication needs.
Workplace Hub – An innovative new IT solution that unifies all of an organization’s technology via a single centralized platform. It’s designed to future-proof workplaces of every size as they work towards digital transformation.
Workplace of the Future – A borderless, digital workspace that promotes enhanced collaboration, efficiency and productivity, but requires needed solutions to accomplish this.
The one “old school” margin that remains comes from aftermarket supplies sales, including toner and paper. However, this area is growing a lot slower than it had just three to seven years ago. People are printing less — but not a whole lot less. They do want to figure out how to move information around their company, which lends itself to workflow and other solutions, which has fueled the growth of managed services. Yes, it provides another revenue and profit stream, but it also lends itself to customer loyalty, which can drive additional profits and keep dealers in accounts.
There are a couple of trends that will be evident as we move through the year. The level of consolidation will continue to increase and the big dealers will get bigger. The smaller dealers will continue to look for ways to add value to their businesses and their customers, while customers will continue to be more savvy about how they buy office equipment and solutions. Disruptive shifts in a channel can create great opportunity, and dealers are in a position to take advantage of this by harnessing the latest technology, partnering with best of breed vendors and training and hiring wisely.
Konica Minolta Business Solutions USA
This article originally appeared in the February 2018 issue of The Imaging Channel.