Dean Swenson, President and CEO of The Swenson Group (TSG), began his career at Xerox in California soon after graduating from UC Santa Barbara in 1991.
He recalled that at that time Xerox was in the early stages of channel marketing and they were incentivizing employees to start Xerox agencies. The agencies operated as a strict sales arm of Xerox, with the owners taking on daily management and the hiring of staff to sell the products, and Xerox taking care of supply fulfillment, billing and service.
Dean Swenson, CEO
Swenson believed that if he could build a professional organization utilizing the Xerox name, it could grow into a solid business. He convinced his father to come out of retirement and he lured his brother, Jeff, back from the East coast. They started a family business in 1993. Over 10 years they built it into an approximately $30 million operation that included six branch offices. The only problem, he noted, was that the model lacked back-end revenue.
In the early 2000s Xerox ran into some financial trouble. Although they were the largest Xerox agency in the nation, Swenson decided it was in their best interest to part ways with Xerox and partner with Konica. He wanted to move to the independent dealer space anyway to better control the client experience and build the back-end revenue.
They began the new business in 2003. Swenson says that they went from a sizeable organization to almost nothing overnight. He had 30 sales reps when he left Xerox, and Xerox took 29 of them within two weeks. The one individual who stayed is still with him.
For Swenson, it was important to build on their experiences. They took all the positives they learned from big business and made sure they heeded the lessons of what they didn’t like and they continue to keep that front and center daily. Today the Swenson group is located in Livermore, California, and services the five counties around the San Francisco Bay Area. They have 26 employees. Their primary hardware vendor is Konica Minolta which accounts for the bulk of their device business. On the low end they offer Oki as well as Muratec. Their primary solutions vendors are Nuance and Square 9 and they partner with All Covered for managed network services. They did $8 million in business last year.
We know you’re bullish on managed services. How is that going for you?
Dean Swenson: We love managed services. It’s recurring revenue and a high-level relationship sale. In general, we find if you earn the MNS business, you’re going to get the peripheral business at some point. You’re probably going to get the MPS too because you’re at the right level. It’s not easy though. There’s a lot of small mom and pop IT companies out there. When we call on companies and question that relationship and ask how it’s working, we discover that there’s not a tremendous amount of satisfaction in that space. But that doesn’t mean they’re going to jump ship and change because switching out IT providers isn’t like switching out one copier for another copier. We have to overcome that, but our position is we can bring in a more professional and comprehensive IT solution to them and do it cost effectively. The All Covered partnership has helped us provide our clients with professional tier one, two and three Help Desk nationwide. In the appropriate situations, the All Covered partnership enables The Swenson Group to offer a wider breadth of services, resources and expertise than we could offer by ourselves. This flexible strategy brings more value to our clients and we are excited about the MNS space.
Who makes the best customer for managed solutions?
Dean Swenson: When we go after accounts we ask them if they are currently in a vendor relationship or if they are in a true business partnership. We want a true business partner. If we can bring a comprehensive managed program to them that addresses their pain points, then they don’t have to hire more people which allows them to focus on their growth initiatives. That’s a good foundation for that partnership. Those are the companies we tend to keep because they value our model and our approach. The support is deep and wide. It’s not just a plug and play thing that can be replaced at the end of a lease.
What are the challenges with Managed Solutions?
Dean Swenson: To understand the importance of responsiveness and uptime. When your network is down it is stressful. It has a different level of intensity and set of challenges than just a copier being down. We’re fortunate that we have a lot of tools to manage these situations. Our whole focus is to take a proactive approach, avoiding problems whenever possible as opposed to waiting to fix problems. That has absolutely worked in most cases. Also, sometimes a client will want something that’s not your area of expertise. You want to say yes, but if you’re in it for the long haul, you may not be the right answer for that component.
What about MPS? How is that going for you?
Dean Swenson: We’re actually revamping our MPS program right now. I do believe that it has become something of a commodity. We’re now focused on two things for MPS. Instead of a singular focus on a hard dollar percentage savings, which everybody has done for years, we’re also focusing on time savings. We’re now leading with that. The combination of those two gives us more traction than just going after the savings of just managing their fleet and predicting the costs. We’re excited about making that focus change and trying to capture all of their spend.
There’s a lot of talk about seat-based billing right now. Is that something you’re considering?
Dean Swenson: We’re interested in seat-based billing. Our ideal client is one who we’re supplying IT services, copiers, and we’re providing break-fix service on printers. If you do seat-based billing and you’re able to pull it off, then it’s different in the marketplace and it’s predictable for the customer. They can actually budget all those things. Organizations like Print Audit are pushing Seat Based Billing and we’re talking to them to try to learn more. We’re not there yet, but 99 percent of our clients have bundled agreements where we’re billing multiple things for them in one invoice. Seat based takes it to the next level.
Is there a product or solution that you’re offering today that would have been unimaginable 10 years ago?
Dean Swenson: Well, 10 years ago I wouldn’t have seen 3D printing coming, but we are not offering that. Ten years ago I would not have imagined the importance of the multi-function product on a network; how it’s now connected to the Internet as well as to Google Docs and SharePoint, and the importance of the solution and the integration with all the different applications out there. I certainly didn’t see that 10 years ago. It’s changed the way we go about our business.
Is there a product or solution that you are not currently providing that you plan on providing in the future? Maybe 3D printing?
Dean Swenson: We’ve had a lot of conversations about bright shiny objects. If you are not careful, it is easy to lose focus of your core business. Who’s making money at 3D printing? What’s the recurring revenue? In a service-based business we focus on how we build recurring revenue. How to build recurring revenue with 3D printing is still evolving.
Do you have any plans to enter digital signage or wide format?
Dean Swenson: We’re considering it. Oki just released some new wide format. Konica Minolta has the KIP products. We will always consider adjacent technologies or offerings. If it has recurring revenue, absolutely.
What segments of your business are growing the fastest?
Dean Swenson: Managed network services by far. It was about 10 percent of our revenues last year. We’ll take that to at least 15 percent this year. Solutions is growing very rapidly too. By and large, we need to sell the Nuance suite with copiers as part of a packaged solution. So if they’re not in the market for copiers or they’re already in a lease with somebody else, you’re not going to get that business right now. With Square 9 or document management, we’re finding that you can solve a problem that has nothing to do with the copier leases. For example, if they have all new MFPs, it doesn’t matter because you’re focused on how you manage, retrieve, store, index and secure their documents. You can get in the door that way.
What percentage of your business is MPS?
Dean Swenson: MPS is roughly 10 percent of our business. When people start talking about percentages I pause because our total services business output is approximately 55 percent of our revenues.
Business owners often talk about the difficulties of finding and retaining good employees. How do you retain good employees?
Dean Swenson: We’re all about culture and our core values. We hire by our core values and we partner with clients who have similar core values. When we interview people, we explain our six core values. If that’s not you, then we’ll find out quickly. We are a family business and we make an effort to treat people like they’re family. When people have hardships or get sick, we ask, ‘How would you treat a family member?’ We seldom lose people and I think it helps recruiting. It also makes it a fun and supportive work environment.
What was your biggest accomplishment of the past year?
Dean Swenson: We grew the business about 20 percent last year without adding head count. I feel that we’re growing in the right direction. We have a great team of people and to accomplish that type of revenue without sacrificing the bottom line makes me proud. I take limited credit for that because it was accomplished by our people’s efforts by everyone wearing a lot of hats.
Can you imagine yourself doing anything else?
Dean Swenson: I wouldn’t mind being a golf pro, but that takes a lot of imagination because I’m not that good [laughs]. We have a lot of fun. We work hard. Whether you’re selling office technology or promotional products or widgets or whatever you’re doing, it’s important to have good people who are having fun and helping clients. It’s really fun to see people grow and develop and be part of the team. It’s rewarding in that aspect.
How do you see the next five years for the Swenson Group?
Dean Swenson: I’m bullish. It’s critical that the next hires we make fit into our culture and have the same mentality of the 26 people we have today. We’ve really pushed the vision of the company throughout the whole organization. The whole team has bought into the vision. They came up with the “People. Passion. Purpose.” I sent an email out to the company one day and asked each employee to give me three words that would explain why we are different. We compiled those. It’s printed on our walls. That whole mentality is how we treat customers, regardless of position or title.
