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Hire A Consultant to (Re) Positions Your Dealership

11 Aug, 2009 By: Tom Callinan imageSource

Hire A Consultant to (Re) Positions Your Dealership

The office equipment industry continues to undergo significant changes that
are transforming both customer expectations as well as vendor and channel
delivery capabilities.  What was once an industry grounded in the delivery of
reliable hardware offerings and effective service is now an environment where
these capabilities barely open the door to winning a customer’s business.  So
what has happened?

Hire the Right Consultant to (re)Position Your Business

For some time, imageSource has reported on the explosive need for providers
to transition to the hybrid dealer – aka, becoming the total provider or a
dealership that provides “all things office.” By providing in depth articles to
assist you in redefining your overall business model, including your product
portfolio, services and strategies, we have understood that for dealers to
succeed it is nothing short of a daunting task – but with the proper tools it is
being done, and will continue. The best toolkit starts with industry tradeshows
to highlight trends and to saturate you with good information. Leading shows
like ITEX, including the upcoming 2010 show, spotlight new technologies and
“learn-how” workshops to advance your business model with all the latest
strategies on how to improve your business; grow your company. They understand
what you do and what you need; that in today’s economy, (re)positioning your
business has never been more important – or difficult.

Each support tool has its advantages, and while adopting innovative new tools
from sources to assist in your progress, an additional tier of extended
expertise is still required by some dealers: A direct hands-on approach
methodology to help quantify the changes needed, onsite, over time. Here is
where outsourcing a third-party advisor, consultant or analyst is another power
tool to consider. If you want to grow your company’s revenue after months or
years of flat growth or stagnancy, a qualified consulting firm can assess and
identify why you’ve been unable to execute successfully on your business plan –
and importantly, recommend what changes, solutions, and implementations are
required to change that to move forward.

To help understand the vital services that a good consulting firm brings to
the table to revise your business for the better, imageSource cracks the
consultant code with experts that reveal vital information meant to make a
difference, big time.  It goes without saying that it is critical to learn
and/or select a consultant or firm that has industry experience in the areas
where you are seeking expert advice - be it in managed print services, wide
format, document management, marketing or a host of other areas. 

Read on. The following will help you learn how a consultant can reposition
your dealership or a company’s business to achieve greater profits, and what
type experience or track record you should first look for in a third-party
(outsourced) “consultant for hire” to get the desired results you’re after.

From Tom Callinan Strategy Development, Inc.   

Consultants are professionals much like attorneys, architects, or investment
managers.  That last comparison should serve as a warning since Bernie Madoff
and Warren Buffet both fall within that category.  But the comparison is also
appropriate because finding the right consultant can make you a lot of money—or
more accurately, provide a high return on investment (ROI)—while a bad
consultant will just cost you money. You need to know how to identify the

Providing an ROI is precisely what you want when you make an investment in a
consultant.  Therefore, you want to ensure the consultant you engage is able to
provide expert advice in the area where you need help.  Some engagements are
well defined: Converting data from one software platform to another that’s a
better fit and more affordable.  This work might even be considered an
outsourcing agreement more than an actual consulting agreement.  Other
engagements seem simple on the surface but once you get “under the hood” they’re
a lot more complex than originally thought, i.e., attempting to launch an MPS

The #1 Obstacle

The biggest obstacle dealers have is the lack of an operational business
plan that ties historical results, industry statistics, and actions to actual
figures.  For the most part, dealers either don’t take the time to plan or don’t
put together plans based on known facts.  For example, unit sales are projected
to decrease 15%  this year, and average unit selling price (AUSP) is decreasing
by 10% - yet a dealer that has had three years of low single digit growth shows
me a plan with 20% organic equipment growth.  For the three years that unit
sales were basically flat and AUSP was decreasing by low single digits, this
dealer was growing at 3% and now they are expecting to magically grow by 20%! 
It may be possible but the first thing I would want to see is last year’s
equipment revenue baseline decreased by the 10% AUSP drop, and then see line
item plans on closing that gap in revenue.

There is also a significant disconnect from perceived actions to results.  I
have seen companies who told me that their service contribution has increased
from 43% to 53% over a six month period.  The most obvious next question is -
what happened to your bottom line?  No change!  How is that possible?  Then you
find out another consultant showed them how they weren’t keeping service whole
and moved revenue from equipment to service.  That’s great but that is a zero
sum game.  You should have the revenue in the correct category but that is
simply the real starting point—you were never at 43%.  They proceed to show me
how their first call effectiveness has increased 30%.  The obvious question is
what happened to your labor expense?  Down 2%!  How is that possible?  You need
to connect perceived results to the bottom line.  Operational scorecards are a
must but their purpose is to drive results that improve top or bottom line

Consider Before Hiring a Consultant

  • Have a well defined scope of work before you sign an
    engagement agreement
  • Ensure the consulting firm has expertise in every
    functional area needed to support the plan
  • Have a clearly defined ROI for the project
  • Don’t underestimate the time required to be successful
  • Don’t delegate the relationship with the consultant
    below the executive level

Like all projects, to ensure success dealers /companies should first have the
project scoped out before interviewing consulting firms. You want to have a good
idea/thumbnail of the project prior to any interviews. To ensure a positive ROI,
it is critical that the chosen consulting firm have the expertise in every area
of the project; without a prior plan you will not be able to make that
assessment.  At some point in time, even if it is the first project you assign
to the firm you hire, you want a plan that clearly will demonstrate how the ROI
will be measured.

Time & money well-spent

A key decision point is, how long should you anticipate the engagement to
last?  You don’t want to underestimate this aspect of the engagement, but it
does vary.  Let’s use an example of redesigning your back office processes with
the goal of reducing your employee count by 10% to get your general and
administrative expenses in line.  The project will include two to four days at
your office to understand and redesign the current flow.  This will be followed
by the consultant documenting out the new processes and working with the vice
president of operations on implementation plans.  Depending on dealership size,
this would be from one to four months of work.  The consultant will return to
your office to help launch the new processes and then there will be two to three
months of follow-up work to ensure the processes are implemented; that any
tweaks are made, and that you truly reduce your staffing. 

My company worked on a similar back office project for FlexPrint, Inc., a
leading national MPS provider who is experiencing year over year growth of
greater than 70%.  Although FlexPrint certainly wasn’t looking to reduce staff,
they were looking to streamline processes to reduce errors, provide a higher
level of customer service, and allow their current staff to handle the
additional processing needs driven by the phenomenal growth.

An entire process can take from three to six months and include four to six
days of “on site” time by the consultant.  A project may require an investment
of up to $20,000 to $30,000 or more.  In a hypothetical example, you could
reduce your staff by two full time equivalents (FTE).  If we assume the fully
burdened cost of an operation’s FTE is $45,000 or $7,500 per month for two FTEs,
the payback period on a $30,000 investment is four months. 

So was the consultant expensive or cheap?   It all depends on whether or not
you realized that $7,500 per month savings.  Was it a realistic goal you and
your consultant determined with the original analysis for the scope of the
project? Was your consultant qualified to do the work? You determined that,
hopefully, in your screening process.  Finally, did your team execute on the
recommendations?  There is almost no chance of that occurring without executive
involvement, which brings us to the next point.

If you are spending your hard earned money on a consultant and want to get a
fair ROI on that investment, then you had better stay engaged in the consulting
project. Weekly update calls are the easiest way to do that and to ensure that
the project is moving forward.  This rhythm keeps the team focused, provides
time to achieve milestones, but does not allow the project to get too far off

You can consider multiple levels of consulting work, including project work,
three month sales or operations mentoring programs, and/or a one year consulting
engagement, etc. 

Investing in MPS

Staying with the MPS launch, you will be making investments in back office
operations, service, technology, and sales.  Can your consulting firm help you
compose the plan to show the investments, cash flow, revenue, and ROI?  Once the
firm puts together the plan, do they have the expertise in each area to help you
execute?  You don’t want to put yourself in a situation where the consultant
supporting the service aspect of your MPS launch is blaming a consultant that
composed the plan,  or that is helping with the sales launch, for the shortfall
in service returns.

My firm was able to help Ron Rasberry and his team at Advanced Office Systems
in Baton Rouge, Louisiana, put together a business plan, help guide decisions on
infrastructure, and work with their MPS sales specialist to launch an extremely
successful MPS program.

Today we are seeing that many dealers who have been “in MPS for over a year”
are reaching out for help.  They are looking beyond a quick fix to a complex
issue.  Launching a new sales strategy—or business model—is not simple. 
Partnering with the BTA, our team (Strategy Development) offers BTA Print
Management Workshops to train sales teams on selling MPS.  If these programs
were absolute substitutes then we would only offer one.  What we have found is
that it takes a full year for a dealer to successfully launch an MPS
initiative.  Successful is defined by having two productive MPS specialists on
staff and billing $50 thousand per month in recurring revenue 12 months after
program launch. In the second full year of the program, the dealer will realize
$1 million in 50%+ profit recurring revenue from those same two sales reps.

The full consulting engagement—including planning, operational and service
support, and sales training and support—will require an investment in the $40
thousand range for the year.  Is this the bargain of the decade or an
unnecessary expense?  Well, the dealer already spent 18 months trying to get the
program off the ground on their own.  Usually, they are billing less than $10
thousand per month in recurring revenue and struggling with the operational and
service aspects of MPS.  At this point in time, and by using a good consulting
firm, the dealer would have been billing $90 thousand per month in recurring
revenue.  By “learning on their own,” and making the same mistakes we have seen
a hundred times before, they “saved” $40 thousand - and are foregoing $40
thousand PER MONTH in profit.

We tell prospective clients that given enough time they will be able to
figure out whatever we can teach them.  The dealer is going to spend money one
way or another.  They will either spend it in lost revenue, poor processes, or
poor execution as they learn on their own, or they will make an investment in a
quality consulting firm that will get their initiative off the ground or their
problem fixed quickly and permanently, so they can start to enjoy the benefits
of the profitable revenue and/or the reduced expense. 

Sidebar: Get an Outside Marketing Perspective

Marketing your business correctly today has never been more important. You
need to be able to walk the tight rope of being seen as a great source of
hardware while also properly positioning your new solutions business.  Do this
correctly and you set your business up for success.  Do this incorrectly and you
risk either hurting your legacy business or stunting the growth of your
solutions initiatives. 

The best way to begin a marketing project is with an open discussion with
your consultant on how your business is currently positioned, and where you want
it to go.  This conversation forms the common themes for your dealership’s
unique value proposition that will flow through all of your marketing materials
going forward. Following an exploratory conversation, the consultant/marketing
firm should work together with the dealer to develop a strategy and set

Basic 3 Step Process

Position. Your business must be positioned correctly to take advantage of
new initiatives like Managed Print Services and/or Remote Monitoring &
Automation.  Proper positioning often begins with the website messaging & then
flows through sales tools like brochures, presentations, proposal templates. 

Protect. The next step is to make sure your current clients know about these
new business initiatives.  For example, if they do not know that you are now in
the MPS or automation business, your base is very vulnerable to competitors. 
Protecting your base involves block & tackle communication strategies like
newsletters, invoice inserts and service call leave-behinds.

Promote. Now it is time to promote your business.  This begins by identifying
the best targets in your market.  For example, dealers selling MPS will likely
want to focus on fleets of 10 or more printers.  These can be found in companies
with 25+ employees.  Then, execute direct mail-to-web campaigns followed up with
sales calls.  A good consulting / marketing firm can establish this effort.

By hiring a quality third-party marketing consultant that’s knowledgeable in
the industry, you will develop then accelerate your new business initiatives. 
Make sure to find a company that has credible industry experience so that your
newly developed marketing efforts will support your initiatives.

By Darrell Amy – Dealer Marketing Systems

Tom Callinan is Founding Principal of Strategy Development, Inc., a
management consulting firm for the office technology channel. For more
information visit www.strategydevelopment.org or

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