The room filled with analysts, press and industry friends had barely settled into its seats at Marco’s new facility in Minnetonka, Minnesota on May 24 when CEO Doug Albregts dropped a bombshell. Fueled by an ambitious new go-to-market strategy that shouldn’t require a single new customer added to its roster of 32,000 clients, Marco has its sights set on reaching the $1 billion mark within the next three and a half to five years.
Nothing like starting the day with a gasp.
Albregts headed a parade of Marco execs that included recently promoted COO Trevor Akervik, CFO James Bainbridge, Vice President of Sales Pat Haney and Cybersecurity Manager Jon Roberts in outlining the bold initiative. That the dealer currently stands closer to $400 million than its aspirational mark was not lost on the team, and during the three-hour unveiling of its roadmap to a billion, Albregts & Co. dug into the granular details of the journey.
The irony of ironies is that none of this may have been possible had Sharp (with Albregts serving as president and CEO of Sharp Imaging and Information Company of America) completed its proposed acquisition of Marco seven years ago. In stepped Northwest Equity Partners, which purchased Marco in 2015, and four years later, Albregts assumed the dealer’s helm.
But this gathering was less about the past and more about the future of Marco. Albregts pointed out the present is still somewhat challenged, especially given that the dealer is sitting on $48 million in product and service backorders ($7 million to $13 million is the normalized run rate). Contracted minimums have eased the pain, but Albregts believes that for a lot of dealers, the backorder situation is going to drive them out of business.
“2022 will be plagued by all of these uncertainties,” Albregts added. “We’ll mitigate the backorders with the things we can sell that aren’t as impacted. We’re also reinforcing our great infrastructure to be the most efficient company we can be as we move forward.”
Bot-tastic
One of the key drivers for efficiency he noted is robotics process automation, the task of training bots to do mundane-type labor, freeing the company’s 1,200-odd workforce to focus on more revenue-driving tasks. Another streamlining effort saw Marco outsource its entire marketing organization to Vye, with offices in northern Minnesota and northern Wisconsin, to reposition its business on the marketing side and bolster its sales process.
On the subject of the manufacturer landscape, Albregts offered another bold forecast: he believes that within five years, the number of OEMs will be cut in half. “There’s just not enough volume in output and not enough differentiation unless they come up with something that changes that dynamic,” he said.
Marco currently has 32,000 customers, of which 24,000 fall in the active category. With 175,000 machines in the field—a majority under five-year contracts—the dealer boasts a retention rate just north of 90%. It claims to be the largest integrated IT solutions provider in the U.S., with a primary focus on the SMB market. Fifty-five percent of its total revenue is on the document side, 45% on the IT services side. Its service-to-product breakdown is 70/30.
Welcome Back Canon
While the dealer has been conspicuously quiet on the M&A front, Albregts expects activity to pick up in the second half of the year, with consideration given to dealers in Indiana and Ohio, and south into Texas and Oklahoma. The preference is for companies that share the same OEMs and leasing partners, which means Konica Minolta, Sharp and Canon carriers will garner attention. Speaking of Canon, the dealer and manufacturer have reunited following a partnership split in order for Marco to have a more diverse product offering, particularly on the production print front (the new digs include the third-largest production print facility in the country).
Akervik took center stage to delve into the nuts and bolts of the new market strategy that will fundamentally transform customer interaction, dovetailing with the evolved buyer’s journey. At the surface, it leverages data to help identify increased opportunities within the current customer base and simultaneously frees up better-fortified sales reps to concentrate on what they do best—selling.
“We’ve been champing at the bit to change the way we act in this industry,” he said. “We have a cool, dynamic group of young people, and they’ve never been more energized than they are now. By leveraging actionable data, we can get to a billion dollars and never add another customer.”
Data Delivers
Beyond RPA, Marco is seeking to bolster its sales acumen via its data intelligence group, which was launched in January of this year. This team is populated with data industry professionals who are analyzing and interpreting the habits of customers—the whats, whens and whys behind their business habits.
“The data intelligence group is using the curated data from all the different systems, using PowerBI and Salesforce to get information that puts together recommendations to our sales team,” Akervik noted. “From a print standpoint, they’re looking at usage, service success rates and profitability. They’re seeing what FMAudit is giving us in terms of data, such as does it need to be A3 in the future or can it go to an A4 device? They’re analyzing all of that data to make suggestions for the rep.
“In the old model, the reps were just searching around in all these areas, pretty much in the dark. We didn’t train them on how to look at data to make a decision. Doug didn’t want (the reps) to do that, anyway; he wanted to remove all the things that get in the way of them setting meetings or selling more things to our customers. That’s what sparked this whole initiative.”
