For much of our lives, testing for performance standards has been a staple, particularly during our educational cycle. Where does a child rank among his/her peers in math, English, critical thinking skills, etc.? From aptitude tests to college entrance metrics, using numbers to peg one’s standing and abilities has been critical to determining how people stack up against one another, and determine their placement.
The September State of the Industry report on peer groups kicks off with a look at how dealers are using group benchmarking standards to not only evaluate where they stand among members but also interpret the numbers to make possible changes in any number of areas. What do the numbers mean, and are there any variables that may be skewing a given dealer’s performance either above or below the pack?
This week, our dealer panel shares some of the findings that were revealed by the benchmarking that perhaps they didn’t know, or maybe reaffirmed their dealerships are performing to industry/group par. The data culled from financial surveys is extremely valuable in determining possible next steps.
Donnellon McCarthy Enterprises (DME) of Cincinnati has doubled down on its peer group activity, with involvement in both the Independent Copier Dealers Alliance (ICDA) and the PRO Dealer Group. One of the greatest benefits to DME was the data yielded regarding managed network services, particularly during the infancy of its program, notes President Jim George.
Predictably, many early adopters found themselves below the profitability line, and as DME was making substantial investments in personnel as it built the managed IT competency, George was able to put his company’s standing in perspective. “I feel a lot better now, especially after seeing our upward trajectory,” he said. “Even now, I could be super profitable by not investing further in manpower. I’m trying to expand at a very fast rate; we recently hired three new CIOs and obviously, there’s a huge cost associated with it. But it’s a planned, calculated cost to build for the future.”
Frank Discussions
In a sense, Pearson-Kelly Technology of Springfield, Missouri, also double-dips, with membership in both the Copier Dealers Association (CDA) and its offshoot, the Managed Technology Association (MTA). The CDA employs the Johnson-Hey model (Todd Johnson and John Hey of Strategic Business Associates) and MTA has its own comparative metrics. On the latter, instead of sharing individual expenses, the study targets the percentage of expenses in comparison to revenue, which PKT CEO Chelsey Bode prefers.
“Their philosophy is expenses are choices that different owners make for different reasons,” she explained, thus dealers can get a better gauge with the expenses-revenues metric.
Free-wheeling discussions can sometimes be illuminating and force participants to reconcile inconsistencies in performance. Bode recalls one dealer that was lamenting the inability to secure better hardware margins, choosing to blame a competitive market. The consultant “called him out,” according to Bode, pointing out that every dealer is in a contested market.
Ultimately, the consultant canvassed a dealer that was performing above average in IT hardware margins. The main difference? The above-average dealer was purchasing its IT hardware from a distributor, while the laggard was buying it from resellers. Case solved.
“Benchmarking tells only part of the story,” Bode noted. “It allows you to explore more questions to get the full picture of where you can make the best impact within your organization. Sometimes, a dealer can get tunnel vision or make excuses in-house. But when you get exposure to those who are successfully doing something that you haven’t been able to figure out, it allows you to target the direction you need to go without making excuses.”
One of the biggest improvements that emerged from GoodSuite’s involvement in the PRO Dealer Group was insight into shoring up the company’s revenue per employee. The Woodland Hills, California, dealer was concerned to learn that a fellow group member had 20 fewer employees but registered essentially the same revenue total. Even accounting for geography and a different client base, GoodSuite CEO Dan Strull knew there was work to be done.
“We were really strong in terms of revenue per service tech,” he noted. “But having 20 more people was just so unbalanced, and I thought, ‘This is crazy.’ We had too many admin and salespeople. But we’ve been able to raise our revenue, and I haven’t hired a salesperson on the print side in nearly four years. We’re in much better shape now.”
