As print volumes trend downwards, think beyond the box.
If diversifying a dealership’s product offerings was easy, then every dealer would do it without hesitation.
But the reality is that taking on a new product, solution, or service is not always plug-and-play. There’s often pain before gain. First, you need to see the opportunity. Then, you need to learn how to market, sell, install, manage, and service it. Maybe you’ll even need to hire a specialist.
Along the way you’ll make some mistakes, maybe a lot of them. Maybe you’ll learn from those mistakes. Maybe you’ll discover this can’t-miss diversification opportunity is not for your dealership after all. So why bother?
Rather than serving up a litany of reasons to diversify, let’s just settle on one, declining print volumes. That’s something every dealer can understand even if that trend has yet to impact their dealership.
These are six ways a dealer can diversify today. Some are easier to do than others, yet all are viable opportunities that could have a positive impact on the future of your dealership.
Managed Services
Managed services make our list because executives with managed services companies—such as All Covered; Continuum, a ConnectWise Company; and GreatAmerica Financial Services’ Collabrance—continue to tell us there are still plenty of opportunities for growth in the independent dealer channel. Our 34th Annual Dealer Survey validates that trend, as only 46% of dealers participating in the Survey reported that they offer managed services.
Managed services is difficult to ignore because so much technology today runs off a network. And there’s still truth to the old mantra: Own the network, own the customer.
There’s a variety of ways to get into the managed services business, including acquiring, building your own, and partnering. Some dealers have taken multiple routes on their managed services journey, with our 2019 Survey confirming 57% of dealers chose to build their own, 45% who partnered, and 19% who acquired.
Many dealers have found that partnering is more economical than starting their own network operation centers (NOCs), which require a sizable investment. The decision to partner also comes down to scale.
“What we deliver to network and security operating centers, no dealer can do on their own,” said John Schweizer, VP, office technology at Continuum.
He contends that dealer profit margins are higher when partnering with a specialist such as ConnectWise, partly because of the people factor.
“We offer elasticity in a very hard-to-hire IT market,” said Schweizer. “It’s a complicated business, but where there’s mystery, there’s margin!”
VoIP
Every business needs a telephone system, and VoIP is the future of voice communication. Voice over internet protocol (VoIP) technology is a combination of hardware and software that enables people to use the internet to make phone calls. It’s a logical addition to your managed services offerings.
Chip Miceli, CEO of Pulse Technology, reports that VoIP represents approximately 5% of the company’s total sales. His team isn’t going it alone, as Crexendo, its VoIP phone provider, handles most of the hard stuff.
“They program the phones, and our IT guys handle the installation and training,” he said. “VoIP is all in the cloud, including voicemail. It’s pretty simple. My sales guys can sell it.”
VoIP services fit squarely into Pulse Technology’s recurring revenue model. Phones are leased, and the fee structure is à la carte depending on what the customer wants. Electronic faxing and a smartphone app are two add-on options.
Dealers that partner with Konica Minolta’s All Covered for managed services can sell VoIP.
“Managed VoIP, anybody can sell that,” said Kevin Kern, SVP, business intelligence services and product planning, Konica Minolta Business Solutions U.S.A. “That’s an easy start and doesn’t require a specialist, because all they have to do is find a lead, connect with us, and we’ll get them hooked up. And they just collect the margin.”
Desktop and High-Speed Scanners
Virtually every business has paper documents that must be converted to a digital format. One method for doing that is the scanning function on an MFP, but that’s not the best way.
If a customer scans more than 1,000 pages per day on his $15,000 MFP, far exceeding the document feeder’s capabilities, wear and tear will surely result in more service costs.
The solution for scanning high volumes of documents is a high-speed scanner. Among the companies offering a full line of scanners from desktop units to high-speed models are Canon, Epson, Fujitsu, Kodak, and Panasonic.
“Some end-users don’t realize the difference between an MFP and a printer with a dedicated scanner,” explained Joe Odore, product manager for Panasonic. “An entry-level document scanner can handle up to 3,000 monthly pages, and rollers can handle 100,000 pages before they need replacing. At a price point under $1,000, it’s pennies on the dollar to incorporate a scanner into a lease over 36 or 48 months.”
Digital Label Printers
There are two companies to focus on in the digital label printer or specialized printer space, Muratec (Konica Minolta) and Toshiba. Muratec offers lower-end, lower-volume models such as the PLS-175i and PLS-475i, as well as industrial-strength digital label printers such as the PKG-675i and PLS-875i. Toshiba America Business Solutions (TABS) offers an array of digital printers, including portable, desktop, industrial, and receipt models for printing shipping labels, tags, barcodes, and receipts.
Target markets for digital label printers encompass manufacturers, marketers, private labelers, and professional print shops that require high-quality labels.
TABS Product Manager Theresa Lee sees tremendous opportunity on the barcode front. “Online shopping and e-commerce are growing at rates of 12% to 13% annually,” she noted. “Barcode technology moves products through shipping and into fulfillment at distribution centers at a low operating cost. Labels are all about tracking.”
Dealers can test the barcode waters by identifying existing customers that have shipping functions.
The price point for industrial label printers is relatively low. TABS’ entry-level desktop models sell for less than $500, so these machines typically are not leased. There usually aren’t service contracts either, so the money for dealers is in consumables such as ribbons, labels, and paper rolls for the receipts.
POS Printers & Other Technology for the Retail Market
We might not have viewed POS printers as a diversification opportunity if we hadn’t attended the National Retail Federation show, NRF 2020, in New York City earlier this year. TABS had a big presence at this event and showcased its POS printers, as well as the Self Checkout System 7 and its Frictionless Store, which uses cameras and sensors for customer tracking, inventory monitoring, store zone monitoring, and loss prevention. It’s the latest example of how “Big Brother” is watching you.
Realistically, is this a diversification opportunity for the independent dealer channel? TABS thinks so. In the past, we might have been initially skeptical of AV services, digital signage, and physical security as diversification opportunities, but dealers who are successfully selling those products and services are proving us wrong. Anything is possible in 2020 and beyond as a diversification opportunity, especially if a dealer is already partnering with an OEM such as TABS, which has the technology and the expertise to help them sell it into retail establishments.
Audiovisual Services
For Marco Technologies, AV services encompass technology for conference rooms, teleconferencing, and private meeting areas. Marco coordinates everything from room controls, amplifiers, microphones, and screen monitors to conference room phones that integrate with video-conferencing software such as GoToMeeting, Zoom, or Webex. Marco clients pay a monthly subscription charge for cloud storage services and maintenance support.
Marco has been selling AV services for 18 years. It currently represents about 5% of Marco’s total revenue, which was $400 million in 2019.
What has changed since 2002 when Marco first got into the AV services business?
For one thing, “there’s a much higher adoption of video [technology] these days,” reported Todd Erne, Marco’s president of IT solutions. “There are some two-billion YouTube users worldwide. Look at the ways the workplace has evolved and the higher employer tolerance for telecommuters working from home offices over the past decade.”
“Video used to be really complicated,” he added. “Now, it’s a phone call. In the past, conferences took place in rooms. Today, people can collaborate ‘face-to-face’ using technology to connect them wherever they are.”
The 21st-century workflow has become increasingly mobile from multiple suppliers to global business locations. Most customers seek to “professionalize” their AV presence, according to Matt Kanaskie, Marco’s vice president of IT sales operations.
Such entry-level installations represent approximately 75% of the market. Marco leverages its long-term IT relationships to integrate with Cisco, Dell, HP, or whatever platform a customer may use.
Sitting in the mid-range are clients who want to build their own hybrid environments. “They may have a small room, or it might be a home-user set up,” Erne said. “For example, Webex is their software of choice; we build around it,” via an à la carte pricing model.
Conference rooms still are used, of course, and they are more high-tech than ever. So-called corporate amphitheaters may feature large-scale audio speakers, digital signage, and even LED walls with company messaging.
“Many of these rooms are show-pieces for image-conscious clients such as law firms that want to look top-notch during presentations,” said Erne. “We might do eight $10,000 rooms or two $50,000 rooms for one client.”
Such higher-end builds entail fully consultative, custom scopes of design and engineering. Options could include furniture, robotics, and even facial recognition technology.
Why would clients invest in such audiovisual luxuries? Kanaskie said it’s because they’ve done the math.
“They are saving time and money and increasing profits and customer satisfaction,” he commented. “It’s all about adding value.”
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