The business community has contingency plans set aside for any number of disruptions—flood, fire, recession, death—that can deviate business from its normal path. Alarmists have pointed out that the nation was and is well past due for a recession, but for the most part, business was booming, the economy healthy and unemployment reached historic lows across the nation. But there was nothing in the BDR playbook that could account for what was about to strike the entire world.
In hindsight, the nation’s biggest challenge was grappling with political division and dealing with the impeachment—and attempted ouster—of the president. Remember quid pro quo, and all of the characters who played into the melodrama? That seems so long ago now.
What this political Super Bowl effectively accomplished was diverting attention away from the news that was coming out of China and other countries regarding a new strain of coronavirus, a.k.a. COVID-19. It had the ability to transmit at a much-higher rate than the common flu, and carried a mortality rate that, even with conflicting statistics being reported overseas, was reason for concern. It wouldn’t be long before “flatten the curve” would enter everyday vocabulary. It was the genesis of a “new normal.”
By mid-March, much of the country shut down from an economic and societal standpoint. The United States marked its 1,000th death from the virus on March 25, and one month later, the toll exceeded 50,000. Social distancing became the norm, and it became impossible to log on to any form of media without being inundated by news surrounding the nationwide hotspots or the demand for ventilators and personal protective equipment (PPE). Millions of Americans entered the ranks of the unemployed, and those fortunate to maintain their jobs, other than people deemed to work in essential occupations, were forced to convert their dining rooms, dens and family rooms into remote workspaces and classrooms.
While wars and other pandemics have claimed more lives, the novel coronavirus has impacted more lives in this country than any single phenomenon since The Great Depression. It took less than eight weeks for the fortunes of an entire nation to sour. When 9/11 struck, the nation had a four-step processing mechanism—absorb, react, reply and recover—that took a psychological and emotional toll, but did not interrupt daily lives. But COVID-19 is an open-ended proposition, with measuring sticks that will trigger a phased-in approach for returning to a normal that might be anything but for the next few months, perhaps longer.
As a supplement to this month’s Difference Makers issue, we spoke with a number of the nation’s leading office technology dealers to learn about how this shared experience has impacted their businesses, customers and employees.
Degrees of Impact
For Impact Networking of Lake Forest, Illinois, clients currently fall into three buckets: the ones who are doing as well (or better) than before; those who have experienced a decline but are getting by; and those who are in distress. Fortunately for the dealer, many of them remained operational by mid-April and still required services, according to President Dan Meyer. While MFP and MPS call volumes are down substantially, managed services such as IT help desk, marketing, cybersecurity and business applications support have been robust.
“We have done whatever we can to assist all three categories of clients from a support standpoint,” Meyer said. “From a financial standpoint, we have been as lenient as possible to help the clients in distress weather the storm.
From a financial standpoint, we have been as lenient as possible to help the clients in distress weather the storm.
– Dan Meyer, Impact
“From an employee standpoint, we’re still very productive and positive. From a vendor standpoint, we have not been spending as much with them over the last month, so I’m certain that it’s been stressful for them. This adversity has revealed which of them are good vendors, which ones have not performed well and which of them are true partners.”
The hardest-hit verticals among Impact Networking’s client list include hospitality, travel, event businesses, food distribution, manufacturing and staffing/employment, a number of which have ceased operations during the shutdown. Financial and legal clients, among other professional services, have fared significantly better, along with manufacturers that have adapted to supply PPE and other critical supplies for front-line personnel, among others involved either from a medical standpoint or supplier vantage point.
“Our success in these verticals was driven by Impact’s ability to offer solutions outside of the typical office dealer,” noted Impact CTO Frank DeGeorge. “Although we supported these customers from a hardware standpoint, a lot of our success in these other verticals was around supporting their business in a time of transformation.”
Up-Close Experience
One dealer that resides 29 miles from the nation’s New York City hotspot, Jericho, New York-based LDI Color ToolBox, has (like many dealers) transitioned virtually its entire employee roster to work from home. And several of the dealer’s offices are in the heart of NYC and other national hot zones: its largest sales office and demo/conference facility is in Times Square, with others in densely populated business hubs in New Jersey, Connecticut and California.
Brian Gertler, senior vice president, points out that as a technology company, LDI has leveraged its expertise in managed IT and Pro AV video conferencing solutions to simplify its own employee transformation, as well as provide the same tools for its incumbent clients and a new prospect base. The dealer has packaged a work-from-home program that entails managed IT services, cloud, scalable devices and communication apps that facilitate business continuity. LDI is also accelerating its entrance into cloud-based communications with UCaaS (unified communications as a service) to help complete the front-to-back digital-office ecosystem.
The businesses and organizations that we have had continued communications with are the larger enterprise accounts that have lease obligations and are buying time to renegotiate terms.
Brian Gertler, LDI Color ToolBox
The majority of LDI’s client roster has been impacted, and in some cases shuttered, during the pandemic. Quite simply, many customers are not in a position to release or receive equipment. Some customers are deemed essential, but due to the nature of their work, they have no resources to conduct business with their dealer—all of which has delayed many planned technology conversions and installations.
“The businesses and organizations that we have had continued communications with are the larger enterprise accounts that have lease obligations and are buying time to renegotiate terms,” Gertler noted. “The businesses/organizations in health care, education and not-for-profit that have continued to provide essential services and are currently receiving subsidies for pandemic relief.”
Gertler also notes that many forward-thinking businesses are vowing never again to be caught in such a vulnerable position, and are building infrastructures that will give them the additional protections needed in the event of a second wave/flare-up of COVID-19.
Eyes on the Ball
Each week of the quarantine has ushered in a learning experience for Jim Loffler, outside of the usual monitoring of costs and cash flow. The founder and CEO of Loffler Companies in Bloomington, Minnesota, however, has his attention focused on the four cores: customers, employees, partners and communities. He has witnessed many of the aforementioned vertical shutdowns, as well as trucking/logistics. Health care has even suffered; discretionary procedures, which account for a strong level of revenue, are a casualty of the pandemic.
Getting a head start on his own company’s work-from-home transition was critical in enabling Loffler Companies to better serve the needs of its customers. “Five weeks ago (in mid-March), I was watching the news, and told our executive team, ‘I want everybody who has an office that can work from home to be out of here today,’” he said. “After we moved them out, we moved out everybody else who could work from home. Within two weeks, we had more than 80% of our 600 employees working from home.”
Our partners have been great, and they’re trying to help as much as they can. But really, there’s not a whole lot they can do.
Jim Loffler, Loffler Companies
Business was especially brisk leading into the event. Fortunately, the dealer is still writing orders and had a full pipeline when the shutdown occurred. Loffler notes that many of the firm’s clients are down between 30-50%, if not closed. Managed IT is outpacing projections for the year, fueled by clients needing assistance in work-from-home transitions.
Loffler is optimistic that the pace of IT can be maintained. “Our partners have been great, and they’re trying to help as much as they can. But really, there’s not a whole lot they can do,” he observed. “They can help us out with terms, adjust our rebates to make them achievable or make sure they have inventory if we need it. But they’re being impacted the same as we are; I’m guessing they’re down 30-50% in hardware sales.”
Loffler Companies employees have bided their time, in part, by brushing up on technical training and education regarding new products and software. The current environment has also provided the opportunity to tackle other projects that often get delayed by the daily workload during normal times. The dealer’s sales teams have been working hard, writing new business and building a strong pipeline in anticipation of a post-coronavirus push.
On the whole, Loffler is up 6% in the first quarter, but expects a flat year, assuming for a return to normalcy by late summer. IT services are up an impressive 22% year over year. May’s numbers will account for a full month of the COVID-19 impact, with the overall impact primarily a factor of lost imaging revenue.
Addressing Essential Needs
Doing Better Business of Altoona, Pennsylvania, has felt the same pinch as its client base, many of which were forced to either work from home or, in some cases, close their doors. Fortunately, those clients deemed essential businesses have maintained their relationships with the dealer and leveraged Doing Better Business’ service proficiency, notes Joe Dellaposta, chief operating officer.
“Our (key performance indicators) aren’t that much different, given that the staff we didn’t furlough can handle the call volume for those essential businesses still operating,” he said. “It will hurt the vendors from the standpoint that our order volume has decreased significantly. Whether they can recover quickly or not, only the future can tell.”
It will hurt the vendors from the standpoint that our order volume has decreased significantly. Whether they can recover quickly or not, only the future can tell.
Joe Dellaposta, Doing Better Business
Education accounts for 15% of the dealer’s overall business; the first entity of consequence to be shut down in the Keystone State. While Doing Better Business has flourished in the health care vertical and continues to service that space, Dellaposta notes there is not enough net-new business among the essential clients to meaningfully defray the lost work.
That’s not to say Doing Better Business hasn’t made any headway. To the contrary, the dealer has had much success providing many clients with small MFPs, scanners and interactive flat-panel displays with webcams to facilitate work-from-home operations.
RJ Young in Nashville, Tennessee was able to mobilize and transition into a work-at-home environment rather quickly, but the circumstances were decidedly different. One week before the shutdown order was given, a series of tornadoes inflicted damage to the greater Nashville area, leaving the company’s headquarters without power for two weeks. Thus, President and CEO Chip Crunk had already directed accounting, sales and admin to set up shop remotely. Only operations remains on-site.
Education represents a large chunk of RJ Young’s business, which has been mildly offset by an uptick in managed network services and software sales. Crunk directed his sales staff to contact clients to see how the dealer can be of help, as opposed to pitching products or services. The dealer has been able to assist with AV-related solutions for the work-from-home environment.
It’s times like these that show the importance of technology to your customers.
Chip Crunk, RJ Young
Crunk is skeptical about a return to “normal” and anticipates a 25-30% loss in volumes when all businesses are back at full capacity. He’s prepared to reconcile this possible “new normal.”
“You have to use your technology—after all, we’re a technology company,” he said. “It’s times like these that show the importance of technology to your customers. It’s important for dealers to be in the foreground of that.”
Copiers Absorb Brunt
As watershed events go, the coronavirus has impacted the industry differently than an economic downturn. Jeff Gau, CEO of St. Cloud, Minnesota-based Marco, points out that copiers generally handle stress to the economy and maintain their position, but in this case “it got impacted the most.” As such, the most-predictable portion of Marco’s business—service calls—absorbed the brunt of the slowdown. Daily service calls dropped from 700 to 300. New hardware sales are at roughly 60% of the norm.
Fortunately for Marco, the IT division (which makes up for about half of its business) is off only 5% since the quarantine took hold. IT hardware is down, but Gau notes it generally fluctuates in normal times. The real impact to IT will be seen in May’s numbers, but on the whole, Marco’s receivables remain strong, as does its cash position.
We’re monitoring different things now. It used to be you looked at new sales and new accounts. Now, we’re looking at cash and collections.
– Jeff Gau, Marco
Being rooted in the Midwest while also having national holdings helps provide a wide-ranging overview of the business climate for Marco, given the variability in the degree of phased openings for states, particularly those in the Northeast. “The combination of having a little bit of windshield view, and being in the center of the country in more rural areas, gives us a little advantage in some of our core markets,” Gau said. “We serve the upper Midwest pretty extensively, we have our roots in the Dakotas, Minnesota and Wisconsin. Then we have lines of sight across the east coast. Some things are opening up a little bit. Certain areas have different phases of operations opening up. I feel like we’re on the other half of this; I have nothing to base it on other than feelings.”
Gau notes that certain essential businesses have remained viable, such as legal, banking, government, municipalities and manufacturing. Health care facility access is restricted, and Marco doesn’t have a lot of client representation in some of the harder hit verticals such as retail, airlines, or health and fitness. The common denominator for many of Marco’s clients is their ability to recover and pay.
“That’s important nowadays,” he said. “We’re monitoring different things now. It used to be you looked at new sales and new accounts. Now, we’re looking at cash and collections.”
Work-from-home sales have been brisk for Marco, which has supplied IT-focused elements ranging from phones and printers to virtual private networks. In a 30-day span, the dealer recorded $700,000 in new volume through IT bundles, and now offers a web storefront for simplified home office needs. Device-as-a-service has also accelerated.
Position of Strength
In Washington, the first state to experience a COVID-19 fatality, Copiers Northwest has managed to leverage its strong financial position to offset the overall loss in volume. CEO Mark Petrie notes the company has implemented rotating furloughs for its technical service team, as service call volumes have dwindled to 30%, which represents the core of essential business clients still in operation (cities, states, hospitals/clinics and energy companies). Sales reps are relying on the states’ shared work program to supplement their incomes.
With the closure of schools and high-end restaurants negating many active customers, Copiers Northwest pounced early on an opportunity to offset some losses by creating a work-from-home promotion for customers, offering four different printers (two color, two monochrome) for between $300 and $470. One client put in an order for 20 printers, and the economical price point enabled the program to enjoy moderate success, according to President Gregg Petrie.
I don’t think we’ll get totally back to normal for 12-18 months, until there’s a proven vaccine available
– Mark Petrie, Copiers Northwest
The dealer also benefitted from an April promotion for essential businesses to make use of Copiers Northwest’s in-house print center for the production of signs, banners and posters. A majority of the signage covers federal and state guidelines regarding social distancing, hygiene and other safety recommendations.
Copiers Northwest also sent out an email blast to all active customers, outlining the measures it takes for the safe servicing of devices. A help-desk promotion stressed the importance of leveraging the dealer’s remote mediation services, which previously cleared 15% of all requests, and led to an uptick in call resolution.
While the state was tentatively slated to phase in its reopening around mid-May, Mark Petrie believes the social distancing guidelines will be a fact of life and face-to-face meetings will not return for a while longer.
“I don’t think we’ll get totally back to normal for 12-18 months, until there’s a proven vaccine available,” he said.
