Commonwealth Digital Office Solutions began in 1977 in a little warehouse in Manassas, VA, with 1,250 square feet of space and no central heat or A/C—it was rough. Today they are exclusively a Konica Minolta dealer servicing the Washington-Baltimore metro area with a 35,000 square feet facility as well as an office in Greenbelt, MD. While most dealers find production print intriguing, Commonwealth Digital has dived deep into this segment, building up its production print business over the years, gaining new customers and providing exceptional service.
What makes Commonwealth Digital unique in production print is that they go the extra mile for their customers. They have a guarantee that if the customer’s machine isn’t up and running in four hours, they will print whatever job they have on the same machine for free. In one case, a customer’s machine wasn’t broken; they were simply overloaded. Commonwealth Digital printed their overload for them at no extra cost. The company’s website has two video testimonials from production print customers attesting to Commonwealth Digital’s remarkable level of service.
Mike Sarelson,
president and owner
With a record year in 2015, and overall sales up 8 percent and profits up 32 percent in 2016, Commonwealth Digital Office Solutions is well positioned for 2017. The company is a debt free company, owns its building, and has its own leasing company. To gain better insight into what makes Commonwealth Digital so successful, we spoke in depth with Mike Sarelson, president and owner, about how business is going, company values, and all things production print.
What does Commonwealth Digital Office Solutions pride itself on?
Sarelson: What we do here is actually speak to the customers. Over the years we talked to customers and we’ve developed everything we have around the customer’s wishes. We customize plans for each and every customer if there’s something they want. We give their money back if they’re unhappy, and we haven’t given money back in over ten years.
How is business this year? Where do you see your greatest opportunities for growth?
Sarelson: This year was the best year we’ve ever had in business. On the production print side, in 2016 there was a 73 percent increase in equipment sales and the amount of meter clicks was up 48 percent over 2015. And we didn’t have to hire any extra technicians or sales people. This was all done with one specialist and our telemarketing department. 85 percent [of production print] was new business.
Why did you decide to go into production print?
Sarelson: Production print is where the money is. Production print makes up 10 percent of the business, but if you sell two production units a month and they average around $100,000-120,000 each, that’s about $2.5 to $3 million a year in production print in machine sales. It’s the only product you can sell that brings in more [aftermarket] revenue than for the equipment itself. One of our customers runs 24 million B&W prints a year. The amount of return on a customer is phenomenal. We have no government sales; all our business is corporations and associations. Some dealerships twice the size of ours make the same money we do. Why take on that extra work and effort? To us, it’s about profitability.
To what do you attribute your success in production print?
Sarelson: We put on a specialist about two and a half years ago and built a list of production print accounts. We had our telemarketing department for 25 years, but if we sold a production print machine prior to when we put the specialist on, it was by accident. The telemarketer had no clue who the customer was, and the sales person when they went there found out it was a production print machine. But it wasn’t targeted. The difference is now we have a specialist so we can target the customers we want.
Do you have any tips for other dealers looking to go into production print?
Sarelson: One thing we do with production print that’s so important is, since we have our own leasing company, we run a credit check [early in the sales process]. A lot of printing companies can’t get lease approval. If you don’t, the sales rep will spend a lot of time running after the customer. If the company can’t get credit approved, the rep shouldn’t start the process.
How do you view the industry changing in the future and what are you doing to adapt?
Sarelson: I don’t really think about that. Most of the major manufacturers, in our case Konica Minolta, spend money on R&D and research exactly where the marketplace is going to be. I’m busy enough running a business. We’re already in IT services, network services, managed print services, document management services, printers, MFPs…I can’t imagine much else. Where the market goes, the manufacturers will go, and where the manufacturers go, we’ll go. Being a dealer, that’s what we’ve always done. We’ve adapted to what we needed to.
Telemarketing Call Center
What was your dealership’s most significant accomplishment this year?
Sarelson: We grew our new business. Our telemarketing efforts were geared towards specifically non-Commonwealth customers for two reasons: a) to sell them document management, and b) after the sales was made we could bring in the staff for our MFPs. 26 percent of our overall sales was new customer business in 2016, which was good for us. For instance, we sold a document management system to a customer. It wasn’t a big sale, but we also sold that customer 12 MFPs. And we never would have if we didn’t sell that customer a relatively small document management system.
What was one of the biggest challenges of this year?
Konica Minolta Certified Production Print Technicians
Sarelson: The biggest challenge was bringing more awareness to new customers and also to our existing customer base about our IT services and document management. We put on special telemarketers just for that, with separate marketing efforts, from snail mail to email, and in house shows, and we’re building on that in 2017.
What was one of your biggest wins this year?
Sarelson: We had one customer that our telemarketing department reached for us. They already had two production print machines from somebody else. We took over the account and sold them four more production print B&Ws and a color unit, so they have a total of six B&Ws and one color unit. They run 2 million B&W prints a month, and they run 200,000 color prints a month. Those are the customers we’re looking for, and there are more of them out there.
Who do you see as your biggest competition, and how do you differentiate your company from the rest?
Sarelson: When we give a proposal to one of our existing customers, the field of competitors is not as crowded. There might be two others, or it might be none. When we go into a company that is actively looking to change vendors, there could be seven, eight, nine different companies in there looking to get their business. We’re in a major metropolitan area, so it’s crowded with dealers and [direct] branches. But the good side is that there’s a lot of business to be had. Our sales department’s experience is the big differentiator. We don’t have anybody in our sales department that has less than 20 years of experience of selling copiers and MFPs. When our sales reps go out, they know exactly what they’re doing and what they’re talking about.
What is one business marketing innovation that you feel exemplifies your company culture and values?
Sarelson: That would have to be our telemarketing department. They set all the appointments for the sales team, which enables us to keep the best while allowing us to write the volume that we write with just 14 reps. We have 12 reps that sell hardware, the others software and IT services. We email, have in house shows, and follow up with our telemarketing department. We have people that come in here for a demo and I tour them around the facility and when I walk them through the telemarketing department, the first thing they say is, “I want to see Mary. She’s been calling me for three years. Which one is Mary?” and go right up to the telemarketer, and it’s like old lovers. It helps us in every single area—retention, quality, customer contact, and appointments—and drives sales. That’s our big marketing innovation, the same one we’ve had for 25 years, just making it better every time.
Is there a product or solution that you are looking to provide in the future?
Sarelson: I would like to market the very high-end production print units, the million dollar machines, for the same reasons as production print—low expenses, high profitability. I know Konica Minolta has them, and showed them in Europe at the drupa show. That machine prints on cardboard, even on packages.
What do you look for in your employees? How do you recruit and retain good ones?
Workshop for equipment setup and installation
Sarelson: We pay them, that’s how they stay. And they don’t have to do any of the dirty work. The sales people don’t set any of their own appointments; the telemarketers set all their appointments for them and do the follow up for them. We just want them out in front of the customer. You have to treat people right, like they’re family. We only hired two people in the last 15 years for sales and for admin. We don’t turn people over. Our average tenure for the company is 27 years and our average tenure in telemarketing is 12 years. I don’t hire a whole lot of people, but when I do, the first thing I want to know is–are they a family person? If you don’t care about your family first, you’re not the type of person we want to work here. Everything else we can teach you, but if you’re a rotten S.O.B., that’s not going to change.
What keeps you motivated and excited about the work that you do?
Showroom
Sarelson: This business is like a crossword puzzle. It’s fun putting all the pieces together and working through the challenges. Working through the situations in the economy, like our leasing company, which we didn’t have before the crash of 2008; when we couldn’t get approval for anybody no matter who they were. We had to form our own leasing company by circumstance, but it’s worked out great. All these crazy things come up, but you just adapt and it keeps my brain awake. I like to do it.
What is your least favorite thing about your job?
Sarelson: The commute from my house to work and back. That’s what I hate, two and a half hours on the road a day. It used to be 30 minutes coming in and 30 minutes going home, but traffic is just crazy here in the Washington D.C. metro area. They say after Los Angeles it’s the worst in the country.
Outside of work, what do you do for fun?
Sarelson: I work every single day except for five weeks during the summer. I have a camp in the Canadian Arctic, 150 miles below the Arctic Circle. There’s no Wi-Fi, no phone except satellite phone, no TV, just satellite radio. No one around for 96,000 square miles. I have an Eskimo family that takes care of the camp for me. I have six bedrooms and five people come up with me initially. And every week, I have five come up, five go back. I‘ve had wounded vets, terminally ill people, and all my sales reps and their kids. Next year I have firefighters that have been hurt and police officers. These are people I meet, hit it off with, and I just invite them. Everybody turns out to be great people. For me it’s a blessing. I don’t call the office once in five weeks, and when I get back, everything is perfect.
What are you looking forward to the most for the year ahead?
Sarelson: Doubling our efforts in production print, and improving our IT and document management departments. Other than that, it couldn’t be better. Our MFP sales are through the roof. We’re not looking to add any more expenses. Our sales people are telling me the whole mood of business is better. They’re looking for Trump to do away with regulations and lower business taxes. They feel like it’s going to be a booming economy in 2017 and I’m all for that.
