It was only last month that we had the opportunity to see two NFL quarterbacks, Kansas City’s Patrick Mahomes and Tampa Bay’s Tom Brady, square off in Super Bowl LV—the dashing, young defending champion against the grizzled six-time winner. (Not-so-spoiler alert: Brady proved once again that greatness is not defined or limited by age.)
Quarterbacks have much in common with the top executives at office technology dealerships. They devise game plans with the help of their coaches (or in our case, vice presidents and department managers) and base their strategies partly on what the defense (market) is giving them. And every now and then, the quarterback saunters to the line of scrimmage and notes that the opposition has created unfavorable conditions that may wreak havoc on the chosen play. We’ll halt the analogies here; the pandemic and changing needs of end-user clients are rather obvious. So, what’s the next move?
Easy. The quarterback calls an audible. And of all the strategic moves an office dealer can make to address the downturn in volume of normal activity, one such audible is product diversification.
Dealers spent much of 2020 reassessing their product and service strategies, devising work-from-home packages, providing deferments for cash-strapped clients, offering PPE and, in many cases, sourcing temperature-scanning devices for customers to monitor and manage employees and visitors. But as the pandemic plods into 2021, dealers are mindful of their own companies’ need to replace lost revenue, embarking on product adjacencies that offer the opportunity for recurring revenue.
This month’s State of the Industry focus on product diversification includes a sampling of dealers who have taken the plunge into ancillary offerings that can address the needs of clients, are within the realm of their current portfolios, and in most cases can provide that recurring revenue component that is becoming the lifeblood of dealers as print volumes dwindle. Since temperature scanners are so ubiquitous, we’ll look at other, more office-centric solutions that dealers have capitalized on in recent years.
Centriworks
As a testament to the real need for product diversification, a number of dealers we spoke to rolled out new products in 2020 despite the pandemic. That includes Knoxville, Tennessee-based Centriworks, which pivoted to telephony at its sales team’s request, noted Mark DeNicola, CFO/CSO. The product’s synergy with its managed IT offering also played a role in the decision.
According to DeNicola, Centriworks currently has 14 telephony clients and another 10 in various stages of the sales funnel. One pleasant surprise was the average $5,000 project revenue that comes with each implementation, with scant hassle following the installation.
The support requirements after installation are very few. Plus, the recurring revenue [from phones] has very little expense associated with it.
– J. Mark DeNicola, Centriworks
“The support requirements after installation are very few,” DeNicola said. “Plus, the recurring revenue has very little expense associated with it. So, I would say the offering has performed and will perform very well for us.”
While telephony has gotten off to a rousing start for Centriworks, DeNicola points out that in the past, the company wasn’t as comprehensive in evaluating product additions from its equipment vendors as it is now. The product pitches Centriworks received were often based on a provider’s national figures, which does not necessarily equate to success in a given market. That led to certain products underperforming in the dealer’s market.
Centriworks now relies on a formal evaluation process to ascertain whether a new offering, particularly one of an IT nature, will increase its odds of success. Among the criteria DeNicola cited:
- What does the product do? Are there similar ones, and how does they compare? Why opt for this particular product?
- What are the training and support requirements, and who will support it?
- Where does a product fit in Centriworks’ overall portfolio?
- Is there market demand for the product?
- What is the projected revenue and profit potential?
- How will Centriworks take the product to market?
DeNicola added that Centriworks obtained its CompTIA Security Trustmark+ certification during the past year as well, and its director of security/technology earned the CISSP designation. The dealer developed a business plan that includes an entire suite of IT security services evaluated by applying the aforementioned criteria. DeNicola is confident the company will enjoy success during its rollout.
Docugraphics
Historically a Xerox agent mono-branded to sell the manufacturer’s products and services, Docugraphics, headquartered in Charleston, South Carolina, used the pandemic as a period to reevaluate the business opportunities on the market that might make sense to offer its client base. The dealer added software of the document management variety to embark on more of a solutions approach, and also partnered with ePrint to offer an economical web-to-print (W2P) solution. But perhaps the most lucrative opportunity, according to CEO Thomas Fimian, was building out the production print side beyond Xerox machines such as the Versant, Baltoro and Rialto.
The ability to print on uneven surfaces made [the Xanté printer] an extremely interesting niche product.
– Thomas Fimian, Docugraphics
Fimian found rare gems in the Xanté X-16 and X-32 industrial production UV printers. A five-color flatbed printer with a small footprint, the X-32 can handle signage and graphics, and can also raise its print heads 11 ¼” to allow for printing on irregular media and uneven surfaces such as a ceramic, plastic, glass, wood or brick. And while this may be viewed as a heavy iron machine slated for commercial shops or in-plants, it has many applications for marketing and promotional product environments.
“The ability to print on uneven surfaces made it an extremely interesting niche product,” Fimian noted. “Since it uses UV ink, it doesn’t fade, so it can be used on political signage. We sold a lot of them during the pandemic, which was surprising, given that a lot of capital investments were pushed back. Marketing in-plants and creative printers really saw the benefit of it. And while it’s smaller than a typical wide-format flatbed at 24×36”, the ability to print specialty items that are hard to find online has made it a great differentiator for us.”
As an organization, Xanté has been very supportive in Docugraphics’ ramping-up process and helped ferret out opportunities (on the first two sales, Xanté participated in webinar presentations). “A dealer’s staff needs to have a solid production understanding and feel comfortable having conversations about digital printing—knowing production and the industry,” Fimian observed. “If you can sell a digital press, you can sell a Xanté with much less of a learning curve than it takes to become proficient in production workflow.”
Docugraphics’ business model is to seek out products and services that have stickiness, the ability to reap recurring revenue. The dealer eschewed temperature-scanning devices and PPE in order to focus on building upon its production and software competency. Docugraphics also trained and certified its technical team on HP, Lexmark and Brother machines so it could offer MPS to accounts, after previously outsourcing service of these models. In 2021, the dealer is adding managed IT to its solutions portfolio as it looks to bolster its overall managed services value proposition.
Applied Imaging
Another dealer in the process of unveiling a new offering is Applied Imaging of Grand Rapids, Michigan. In January, the company launched a VoIP phone system and carrier services package branded as Blackport Solutions, which falls under its NetSmart Plus IT division. President John Lowery has high expectations for the rollout, given the interest, leads and registrations for the company’s online launch event.
“It’s a good fit for our IT portfolio, and we’ve had customers ask if we sell this type of product and service,” he said. “It was the next natural step in evolving the NetSmart Plus offering.”
In addition to a string of recent acquisitions, Applied Imaging has been busy rolling out other new products to its menu. In the past two years, backfile conversion and facilities management have joined the fold, completing the dealer’s document life cycle offerings—from creation to (paper) destruction, with a wealth of services in between.
Working hand in hand and creating an actual plan with measurable goals for each new offering has helped us generate marketing-qualified leads and ensure the sales reps understand how to have the conversation with the customer/prospect.
– John Lowery, Applied Imaging
Lowery likes providing his sales reps with another tool to offer end-users when they sit down for periodic reviews. Having conversations that extend “beyond the box” is something that’s communicated throughout the company. The proactive approach enables the dealer to eliminate any setbacks that can result during the onboarding process.
“Typically, we are learning for months or years prior to deploying a product to sales and businesses,” Lowery noted. “Marketing generally handles the external deployment to customers (via blogs, social, campaigns, webinars, offers, surveys, etc.) and leadership and training handle the deployment to the sales teams. Working hand in hand and creating an actual plan with measurable goals for each new offering has helped us generate marketing-qualified leads and ensure the sales reps understand how to have the conversation with the customer/prospect.”
Extensive market research also mitigates the possibility of misreading how a product may be received. Applied Imaging engages with customers to become cognizant of their needs, even before they become apparent to the clients themselves. That casts the dealer as a thought leader as opposed to a “me, too” provider.
Lowery also feels it’s important not to discount the role of geography. “As we expand, we are noticing some areas of the country are faster to adopt new technology or have more requirements than other parts,” he said. “So, if we see something new hitting the market in Florida but it hasn’t been a topic of conversation in Michigan or Ohio yet, we know that this is something that can help us to pave the way and bring ideas to our local businesses.”
LDI Color ToolBox
LDI Color ToolBox of Jericho, New York, found some of its newer offerings—particularly managed IT, Pro AV and cloud services—to be very fortuitous during the pandemic, helping to offset the downturn in print volume. Brian Gertler, senior vice president for LDI, noted that while office devices were largely idle, the requirement for companies to enhance their infrastructure and provide remote working capabilities “increased exponentially” during that time.
“Fortunately, our investments in those categories predated the shutdowns, so that when the need arose, LDI was uniquely positioned to provide the products and services,” Gertler added.
Gertler likened the onboarding of new products to “trying to catch up with a runaway train.” It’s during these times that the “safe office” product categories frequently evolve during installation, causing the dealer’s support teams to learn on the fly.
In this economy, it is hard to say no when you are looking for new revenue streams to support the areas that have been hardest hit by the pandemic.
– Brian Gertler, LDI Color ToolBox
While Gertler doesn’t relish LDI becoming the jack of all trades, the focus remains on selecting products that meet with client demand while leveraging the other integrated technologies the dealership offers. “In this economy, it is hard to say no when you are looking for new revenue streams to support the areas that have been hardest hit by the pandemic,” he noted.
All Copy Products
At Denver-based All Copy Products, hosted phones and security cameras have provided a one-two punch to supplement business, notes President Brad Knepper. Phones have taken off for the dealer in the past year, and the mobile office movement—with the ability to easily transfer technology home—will continue to fuel opportunities in the foreseeable future.
And while cybersecurity has attracted much attention, the ability to address physical security via camera systems—with added opportunities for cabling revenue and licensing fees for the cloud-based cameras—has been equally appealing, not to mention well received by clients.
While camera systems are typically viewed as safeguards against office intrusions, they also enable end-users to monitor and manage staff. “Many clients want that remote access to security cameras, so that they can see what’s going on if they’re working from home,” Knepper said. “They can tell when people come and go, which is important with employees who have flexible schedules. It’s pretty easy to monitor that if necessary.”
While the company has enjoyed many successes with new product introductions, the occasional misfire has helped shape its strategy in assessing what solutions might resonate most with clients. For example, All Copy Products tried its hand at 3D printing. But a tepid reaction from its book of business, coupled with sales reps not having experience in selling this type of product, prevented it from taking flight.
With phones and security cameras, there are lots of options, and we interviewed quite a few companies.
– Brad Knepper, All Copy Products
Phones and security cameras were easier technologies for reps to grasp, and like postage meters—another more recent addition by the dealer, obtained through acquisition—they are more tangible products to sell or lease. Best of all, they check off the recurring revenue/licensing box. In the case of the postage meter business, it also provided All Copy Products with an influx of 1,500 clients, which can now be offered the company’s full product and service line.
Many clients were still eager to meet with the dealer during the pandemic, which fueled the decision to move forward with the additions. Knepper noted that prior to the pandemic, his company decided to put additional focus on maintaining clients while also fostering opportunities for net-new growth. Each sales team was overlaid with an account manager who helped prepare quarterly business review information for each of the reps’ customers. Keeping a close watch on areas where the dealer could go deeper with these existing accounts and cross-selling within them have significantly bolstered customer retention.
Knepper believes it’s important for dealers to ensure that prospective vendors truly understand the office dealer business model before taking on a new offering. In some cases, vendors aren’t willing to bend to the office equipment blueprint, a red flag that dealers need to move on to the next option.
“With phones and security cameras, there are lots of options, and we interviewed quite a few companies,” he said. “Many of those companies sell their products and services like some IT companies, with no focus on leasing, recurring revenue and regular upgrades. We interview them and make sure they at least know how we sell and how our teams sell. And if they don’t, we’ll see if they have a willingness to work with us and adjust their own structure for supporting us. We had some that were unwilling to change their approach, so it doesn’t fit. But a lot of vendors are appreciating the power of the copier companies, and successful ones are changing their models to better fit how we sell.”
