Competing with the Big Guys11 May, 2007 By: Tom Callinan imageSource
Competing with the Big Guys
Many of us learned about the product lifecycle in a
first or second year marketing class. In essence, some companies spend
substantial sums on research and development to introduce a new product then
they invest even more money to define a market. Eventually, the technology is
adopted and the manufacturer can rely on a distribution channel, thus reducing
their own sales and marketing costs. As the product and channel matures—and
begins to exhibit the characteristics of maturity such as consolidation and
attraction to newer technologies—the remaining manufacturers shore up their
distribution by again selling direct. If you have been in the copier channel
for more than 25 years, this scenario must seem eerily familiar.
There is no denying that the distribution channel for
copier manufacturers has contracted. There are different statistics on the
number of independent dealers, but it seems fairly safe to say that there were
more dealers when we entered the nineties and that there are less dealers today.
I think anyway you measure the dealer community, much in the channel has been
Level the playing field
From a technology perspective, the standard fax—which was a significant
revenue stream for the copier manufacturer in the eighties and nineties—has been
replaced by email and fax servers and the long discussed convergence of copiers
and printers is building strength like a hurricane in the Gulf Stream. Although
none of us in the independent channel like the manufacturers’ shift to a direct
channel, the reasoning of many OEMs is understandable, to some extent.
Dealers cannot control the movement to direct so the key is
how to compete with this channel. IKON and Danka share many of the same
characteristics of original equipment manufacturers (OEMs) but they clearly are
not an OEM, so I will limit my discussion to true OEMs. There is one constant
with the OEM channel—they will be proposing their own products.
Although not always possible, one differentiator would be
for you to be proposing a different product, and highlighting the advantages of
that product. Therefore, it is almost a requirement for a dealer to carry two
Being different—or in marketing jargon, differentiating
your company, it’s product, or service—is always a key to winning in a
competitive sales environment. As the two output channels have converged,
copier based MFPs have positioned you well against printers, and I believe that
printers are one approach to differentiating yourself against a direct copier
branch. I would seriously consider a major printer manufacturer as your second or third product line.
Regardless of how seriously you get into printers, get into
print management. One easy entry point into print management is to capture
printer output in your customer base. HP has 70 percent plus market share, so
gain competence on pricing an aftermarket agreement on these products and
fulfilling that agreement with cartridges and service support. Then hire a
specialist and go after that printer business.
Understand What it Takes
You have local roots that the manufacturer will not have. Leverage those
roots. Get involved with the United Way, Junior Achievement, Food Bank, city or
county development authority, or any other worthy local cause that attracts so
many other local business executives. One of the foundations of business
development is who you know, so get to know your local business executives.
These organizations can use your business expertise, time, and fundraising
ability, and you will develop relationships that will benefit your business.
Big companies transfer management in and out so they do not grow roots as
easily, and many direct operations are simply branches of a larger region
organization, and these branches have a front line manager as the top-level
local executive. They will not have the ability or desire to crack into these
Do not employ a frontal assault as your primary strategy.
I recommend a tangent approach with whoever you compete against; as most sales
reps will tell you that direct organizations can usually win on price, the
tangent approach becomes even more important. The previously mentioned print
management is one tangent strategy. Leveraging the contacts you developed in
the local organizations, and coming from the top down, is another strategy.
Solving business problems and understanding applications is
a strategy that can be used for any account. To consistently employ a business
solution strategy, you will need a process that identifies opportunities;
account reviews, an area I spend many hours writing and speaking about, is the
single best process I have ever experienced to identify opportunities to solve
business issues—and to leverage those relationships you have developed.
Nevertheless, if you do not have competency, identification will not help.
Other than print management, if there are three areas I would recommend you
develop competency in, it would be in capture, fax servers, and variable data.
Throw a Tangent
Moving your sales territories toward a vertical focus will definitely help
leverage your capture, fax server, and variable data competence. You will be
able to take what you learned from one account within the vertical to others,
without depending on an informal knowledge sharing this across your sales team.
You will also identify color applications and be able to leverage that knowledge
into other prospects. The key is to identify the business problem that the
prospect does not even realize they have, then solve that problem, and close the
sale without ever putting the prospect into the buying cycle. This may require
you to sell a print management contract without following your urge to replace
the copiers. I am not suggesting that you ignore those competitively placed
copiers long-term; I am suggesting you stay under the incumbent’s radar screen
until you have a contract in place. Stay on that tangent! If you have
identified a fax server application, get the fax server sale and then go after a
capture solution that uses an MFP as the on ramp for the fax server.
Having a process with strategies and tactics to gain new
market share is always an important aspect of a growth strategy. Keeping those
direct branches out of your current accounts is just as important. Make certain
you are focused to more share of wallet in your own accounts. Use account
reviews to look for the exact same print management, capture, and fax server
opportunities inside of your accounts. If you do not look to expand your share
of wallet, your competitors will leverage these opportunities as entry points.
Retention is an important aspect of competing against
OEMs. Make certain you build switching costs into your customer relationships
by using CPP leasing. This is the easiest way to make it prohibitive for your
competitor to buy out your lease. Make certain that you build relationships
inside of your largest customers at all levels. This does not mean that your
sales rep should build those relationships; use your entire team to build
relationships at multiple levels.
The industry has consolidated but, the imaging business is
still strong. The “good old days” of primarily competing against other dealers
in town is fading fast. Understand your new competitors, leverage your unique
strength as a local business, then adopt a more sophisticated sales approach,