Competing Against the BIG BOYS15 Apr, 2005 By: Dick Norton imageSource
Competing Against the BIG BOYS
An ongoing and seemingly never ending challenge for
independent dealers is the constant need to compete against large national and
multinational corporations such as Xerox, IKON and Global Imaging Systems.
Compounding that challenge is the spread of manufacturer-owned branches that
carry the same products as the independents.
It seems that, especially in the case of manufacturer-owned
branches, cost becomes the issue in a competitive situation. In other words, who
can offer the lowest price to a customer? This seems to be happening more often,
and is typically prompted by the branches that seem to have a cost advantage
over the dealers.
To face this growing issue, I headed a roundtable at
February’s ITEX tradeshow, which featured successful dealers addressing this
dilemma of competing against the “Big Boys.” These dealers’ business practices
were terrific and I think that some might help you in your dealership.
Service, Service & more Service
Not surprisingly, most of the dealers said they differentiate themselves by
the service they perform. Here are five service suggestions made by these
dealers that should be extremely helpful.
1. Customer Service Representatives--This is basically
an administration position that the dealer can use as an extra customer contact
point. A customer service representative typically visits clients periodically
just to make sure they are not having any problems and are satisfied with the
service from the dealer. With this additional administrative person, a dealer
can potentially unearth problems and correct them before they fester and become
grounds for customers to stop doing business with the dealership.
A similar position would be an account representative. A dealer can appoint a
representative to interface with a customer. The customer is told to contact the
account representative to resolve any problem—machine, sales, service, etc.—that
is being experienced. The account representative is empowered to make any change
necessary and is trained in keeping a customer satisfied. Most importantly, the
dealer publicizes this as a differentiator.
2. Compile Statistics--In order to measure the
effectiveness of your service organization, compile extensive statistics. Gather
the most relevant types of numbers such as net service calls, which can be
calculated by the number of calls a service tech makes minus re-calls within a
Copy volume quotas are another useful statistic. These numbers can be based on
page volume rather than the number of machines. A technician can handle more
low-volume machines, but fewer high-volume machines. Page volume is a more fair
way to allocate assignments of technicians and measure their success.
3. Surveys--Regularly survey your customers to get
feedback. Remember, however, a survey is not effective without a follow-up
mechanism if the customer expresses some dissatisfaction. You must have a policy
of follow-up within a day of receiving any negative feedback.
4. Hot Lists--Track customers who get more than two
service calls in a month. This is an indicator of a problem. It may be a problem
with the machine, service or the way the customer is using the machine. It
doesn’t matter because it needs to be fixed. Be proactive and head off customer
relation problems before they get severe.
5. Compensation--There are a variety of methods for
compensating the service force for good work. The message is that some sort of
extra or bonus is probably a good policy for managing the service technicians.
Here’s how some of the dealers calculate bonuses: net service calls, calls per
day, highest copy volume managed, or attendance.
A Potpourri of Policies
Although service was mentioned most frequently, there were a number of other
tactics and policies that dealers employed in order to differentiate themselves
from the Big Boys. The following are examples:
1. Brand Yourself--Dealers can spend a considerable
amount of their budget in advertising themselves and creating brand awareness in
the local market. Dealers, however, do not necessarily advertise the brand of
machine they carry. In fact, some of the advertising revolves around the items
mentioned above—quality service, proactive service, etc. These things can
establish you as a brand in the community.
In some of the market research work I have performed, I have been told by end
users that they will only buy their products from a certain dealer or will only
purchase what a certain dealer has to recommend with little interest in the
brand. The dealer’s service is so well trusted that the customer believes any
recommendation that is given.
This is simply taking advantage of the commodity nature of the copier/printer
business. Machines are basically all the same. Customers buy from sales outfits
that they trust to keep the machine running. Service is the most important value
in the buying process, not the machine. As far as making yourself a brand, one
dealer advised, “Don’t live off the manufacturer, make the manufacturer live off
2. Sales and Software--Dealers are trying to
transition their sales forces into software sales because that’s the added value
the Big Boys bring to the competitive market. Companies like Xerox and IKON will
bid an entire package of hardware and software to a potential customer. In order
to be perceived as being able to deliver a complete package, a dealer needs to
have all these products as well.
The biggest challenge is not adding software to your product portfolio, but
having your sales force pitch it to clients. Dealers need to make a concerted
effort to train their sales reps in the solutions they offer, provide incentives
to them for solutions business. Some dealers provide a higher commission rate
for solutions sales than for hardware sales.
3. Printers--Some dealers make a point of carrying
printers in order to be able to sell an entire package of imaging devices to
meet all of a customer’s needs. Many of these dealers concentrate on color
because that’s the growth segment for departmental printers and it brings in the
best profits. After all, every color page brings in about four times the revenue
of a monochrome page.
4. Buy Smart--With all the pressure on price in the
market, you need to get the best price you can. Some dealers make a point of
never accepting the assigned quota when it’s issued. They believe in negotiating
quotas because it will determine the discounts and rebates you get. Don’t start
at the back end by negotiating rebates. Start at the front end by negotiating
Some dealers are advocates of carrying multiple product lines because it gives
them the opportunity to compare and contrast policies among manufacturers and it
allows the dealers to play one manufacturer off against the other.
These dealers also know what has been documented by Industry Analysts, a market
research firm based in Rochester, New York. Industry Analysts publishes an
annual survey called, Imaging Systems Dealers Distribution Strategies Report. In
the 2004 report, the data showed no significant differences between single-line
and multiple-line dealers when it came to performance and profitability metrics.
In other words, even though manufacturers would like you to think you would be
more profitable by being a single-line dealer, this is not borne out by this
5. Benchmark--In these times of price pressure,
dealers must be more efficient. Give monthly feedback on sales and service
performance, usually by stack ranking sales reps and service technicians on the
metrics you’ve established for them. In order to stay above water during a time
of falling prices, you’ve got to continuously get better at what you do.
6. Flexibility--You have to let your customers know
that they are not dealing with an impersonal conglomerate. You have to let your
customers know that you personally value their business and will do whatever
possible to accommodate their needs. Try getting that from a conglomerate
headquartered across the country!
7. The Personal Touch--One dealer at the roundtable
said that he gives customers his cell phone number. He tells customers that, if
things are not working out to their satisfaction, all they need to do is call
the head man. He challenges the Big Boys to match that promise. He might even
ask customers, “When was the last time they spoke with the president of Xerox?”