This week we’re presenting a blast from the not-so-distant past in The Week in Imaging with a profile of Marco, a $150-million St. Cloud, Minnesota-based dealership that is setting new standards in growth as it expands into new markets and new product and services. Throughout the rest of the year we’ll continue to present select profiles of our 2013 Elite Dealers.
MARCO, INC.
St. Cloud, MN
CEO: Jeff Gau
Year founded: 1973
Number of employees: 705
Primary hardware vendors: Konica Minolta, Sharp, HP, Canon, M-Files, Microsoft, Cisco, IBM, Citrix, VMware, Mitel
Primary solutions and services offerings: Data networking and security, converged voice applications, print and document management, managed services, audio/video systems, digital signage, and video surveillance.
Approximate/Average yearly revenues: $150 million
Biggest sale/win of the past year: A $2.4 million Cisco voice project with Blue Cross Blue Shield in Fargo, ND. This sale also included a significant Managed Services agreement with additional recurring revenue.
There are dealers who grow and then there are dealers who GROW! That’s Marco, Inc., a dealership that has seen its revenues rise to $150 million from $111.5 million in just one year. You read that right. A nearly $40 million jump in one year.
Some of that growth has been spurred by a focus on acquiring companies that Marco can overlay with Managed Services. In 18 months, its market expanded from Minnesota-centric to becoming a leading player in North Dakota, South Dakota, and Iowa, with a strong presence in Wisconsin too. It also developed Managed Print from the ground up, growing it from $600,000 to $12 million in 5 years.
Marco is a model of excellence for other companies looking to replicate its Managed IT program. In five years, Marco’s Managed IT services’ revenue grew from $2.4 million in 2008 to nearly $13 million today.
Jeff Gau
Customers choose Marco for a lot of reasons, including the many services and solutions they sell, but most of all it’s because it’s focused on giving customers unexpected attention. The dealership even has a full-time employee dedicated to measuring customer satisfaction and identifying opportunities. In the last year, the company provided a Marco staffed 24/7/365 Managed IT support desk, added an operations coordinator and business analyst for Managed Print and Managed IT services and grew to over 20 IT staff augmentation professionals at customer sites to satisfy the needs of its customers. Also innovative is the use of software, designed by Marco, to anticipate customer needs, including proactively replacing toner, fixing devices before customers call, and providing detailed analytic reports on utilization that provide additional sales opportunities. Customers also like Marco’s customer rebate program which donates 1.5 percent of what a customer spends annually with Marco to their foundation. One of Marco’s largest customers received $100,000 last year.
“We support causes that matter to our customers,” says CEO Jeff Gau. “Our involvement in the annual fundraiser for our largest managed services client is a testament to that. We donate at least $50,000 and provide a team of employees to plan, set up and ensure the event is successful.”
Marco also stands out by the way it sets an expectation that it not only fosters new ideas every year, but also hold itself accountable to implementing the ones that really matter. “We’re now focused on offering Managed Services across all products and new markets,” reports Gau. “It challenges us to think differently and create new processes.” This approach has resulted in an average of $51,000 in new contract sales each month.
An example of Marco’s innovation is a first-of-its-kind showroom and client services center that was created at its headquarters last summer for customers to see the inner workings of Managed Services. “Our growth led us to accelerate a building expansion by three years and add 6,000 square feet for Managed Services in 2013,” notes Gau. The dealership’s biggest accomplishment the past year was its intentional effort to build its recurring revenue stream to make the dealership more resilient. Revenue grew from $12.3 million in 2012 to a forecasted $25 million in Managed Services this year. “Overall, our business grew over 30 percent again this year top and bottom line to $150 million,” adds Gau. “Fifty percent of that growth was through acquisitions and 50 percent was organic growth.” Marco has positioned itself as an IT company in the copier business; rather than a copier business trying to get in the IT business. Its revenue distribution is approximately 50 percent IT business and 50 percent copier business.
This is a dealership that is a great place to work. Marco’s 700 employees now span 5 states. In 2012 and 2013, it integrated six companies, added over 300 employees, and had its highest employee satisfaction score since the company started tracking it in 1988. Management routinely engages employees in decisions, pays them above the industry average, pays them to volunteer, supports their charities, gets their input in a 100-question annual survey, and offers benefits that other employers don’t – such as an ESOP that allowed employee owners to receive $2 million in stock last year. This has led to Marco receiving a series of statewide and nationally recognized Best Place to Work awards, corporate citizenship awards and leadership awards for its CIO, CFO, sales director and others. In the last year alone, Marco received the state’s top workplace awards and its highest employee satisfaction score in the wave of its largest employee growth in the company’s history. Marco was named one of the Top 100 Workplaces in Minnesota by the Star Tribune and Minnesota Business this summer and also received the 2013 Best Place to Work by the Minneapolis-St. Paul Business Journal. The company continues to make all the right moves as it has grown and continues to grow. For instance, Marco executed a plan to increase Marco’s bottom line while reducing costs to customers. This allowed Marco to improve profitability by 188 percent in five years and 40 percent in 2012 alone.
“There are a lot of moving parts required to make this equation work,” explains Gau. “To name a few, Marco developed a Lean continuous improvement process to streamline operations, brought in third party consultants to challenge our performance paradigms (i.e. service margins, sales expense, etc.) and focused on expanding the most profitable parts of our business.” Over the past five years, the company has divested some business units, such as cabling and office furniture, to re-define its business model and strategically invest in others, namely Managed Services and geographic expansion through acquisitions.
As Marco winds down the year and heads into another, it remains focused on continued growth through additional acquisitions and an emphasis on Managed Services and recurring revenue.
The numbers, its business strategy, and its reputation with customers, employees, the community, and its peers in the industry, are all testaments as to why we consider Marco a 2013 Elite Dealer.
