One of the oft-repeated phrases dealers recite in discussing the merits of a true managed service contract is the “stickiness” it creates with the customer. The prevailing theory is that the more aspects of a client’s business that fall under the supervision of a dealer, the more difficult it becomes for that customer to be pried away by a competitor.
Still, it’s unwise to underestimate the relentless pursuit a larger retailer can unleash. Chip Miceli, president of Pulse Technology, cautions there is always the threat of such a competitor promising the “next big thing” in a promotion. Further, if a larger entity wants to penetrate a market and sell services at or below cost to pinch the competition, there is a danger of losing market share with those tire-kicking clients who are more apt to try something new.
“Yet, I’ve always found that having a fair price and providing excellent service will win in the end,” Miceli said. “And again, it’s important to communicate this value proposition to customers regularly. We believe in telling our customers that there is a difference between value and price.”
Cause for Concern
One of the chief causes for concern is the sheer buying power a large retailer can offer, notes Kevin Morris, president and CEO of OneDOC MPS. “If you’ve done a good job, there shouldn’t be a concern,” he said. “But if you’re working with the CFO of a company, and that person’s going to retire, the next CFO might decide to look at all new facts. When that happens, (the client) might look at someone like that because their focus is cutting costs and they’re not looking at all the parameters of it.”
A truly strong value proposition, on the other hand, doesn’t necessarily require an all-encompassing service contract to shield a dealer from any competitor, be it online retailer or traditional. Dave Clark, vice president of sales for AIS in Las Vegas, notes that some clients prefer not to engage in a contractual relationship. Yet, they are also confident in AIS’ ability to support them as their needs grow.
Indeed, Clark points out that the typical business owner prefers to maintain a small core of vendors to provide their needs, support their staff and infrastructure. “The value proposition is the economies of scale, because less vendors means less costs and less of their time, which is their most expensive cost,” Clark said. “AIS has customers who started out with us a-la carte, and five years later, they’re still with us. They might decide that they want to expand their relationship because they’re implementing a new call center, and we offer VoIP systems. Or they’ve grown to a point where they need full-time network support. Maybe they’re going to be launching Microsoft Office 365.
“There’s many different changes a business will go through over a three-to-five-year or 10-year period, and they want to be with a partner who can not only help them in the interim with issues or projects that pop up as an a-la carte, but they want to know that if they ever want to have full support, they have a partner behind them who can provide that.”
Transactional Trouble
Kevin DeYoung, president and CEO of Qualpath, believes any account insecurity may stem from the profile of the dealer’s customer base, the level of value-add that they provide that the base actually appreciates. The buy-and-sell relationship may ultimately be doomed to fail.
“If you, as a dealer, cultivate a buy-and-sell relationship, then you have to fight for every order every time,” he said. “If they’re not really adding expertise or value, the (relationship) will be at risk and they will be less sticky, particularly if they’re not communicating with those customers. You can’t just show up at the end of the contract, looking to renew them.”
Rich Brandenburg, senior vice president of sales for Donnellon McCarthy Enterprises, remembers the time in the industry when it was generally acknowledged that when the dealer owned the print room, they owned the account. That honor now falls on IT’s shoulders.
“Nowadays, if you own the server and the network, now you own the account,” he said. “It’s the IT piece, the managed services piece, that pulls the equipment through now. If you just own the equipment and someone else has that managed services aspect, you’re probably going to be dead in the water. Clients trust the dealer who owns that network, server, controls the email, the information and business line applications. It’s that profound experience with the IT people that wins the account.”
