It’s Time to Grow Your Equipment Revenue

You survived a tough economic environment; let’s hope the toughest you’ll need to endure in your career. You made the necessary expense cuts and hopefully, you’ve optimized your service operations so you are experiencing returns greater than 52% (if not contact Mike Woodard at Strategy Development) and invested in an MPS program. Stay that course: keep driving down expenses, improving service returns, and growing your MPS program. But add to this growth in your equipment revenue line.

I am not suggesting you take the 1980’s approach and add a tremendous amount of sales headcount to sell equipment. That is an absolute losing proposition. What I am suggesting is that the extremely difficult economy of late 2008 and the entire 2009 has crippled some of your weaker competitors. Those that were too highly leveraged going into the “Great Recession” had to make expense reductions beyond the logical; they weren’t focused on reducing their general and administrative expenses (G&A) with improvements in workflow or automation—they were chopping heads to survive. Same goes for service, they didn’t have the benefit of a Mike Woodard helping them to improve their service returns with logical productivity improvements, recall ratio declines, and parts improvements, they were slashing and burning service payroll. When the unsuccessful sales professional quit—their lack of success probably partially due to poor territory design—they were not replaced to save the expense.

These companies will eventually sellout, and acquiring them is one solid strategy to grow your business. Frankly, they are selling for pennies on the dollar compared to four or five years ago. 5X EBITDA is a thing of the past—a small upfront fee and earn out is today’s benchmark. If you are not talking to the small local competitors you should start immediately.

You’ve read my posts and articles that there are fewer copier units sold year on year in the industry, but that doesn’t mean you need to sell fewer. Focus on market share gains that exceed the industry unit decline ratio. You have competitors that are impaired and will experience unit sales far below the industry decline—they cut too deep in the recession.

How do you achieve this growth? A well structured sales operations approach is the foundation. Start with territory design that uses machines in field (MIF) upgrade value. Without this information you don’t know if your reps are stars or flameouts. You also cannot be certain that your MIF is covered by a sales professional. After you have your territories structured on MIF add in the accounts in your territory that you don’t have as customers but want, and make certain you only add a quantity that can be managed by your reps. If you have six sales professionals it is not logical to add 10,000 accounts for them to target—they can never get to them and will therefore choose which ones to go after on their own. I would rather choose the accounts where I want my reps focused.

Next make certain your sales manager is focused on developing the employees and helping them to drive business into your current accounts and target accounts. Does MPS come into play? MPS can certainly help you sell more equipment but the assumption is that you are deploying MPS as your primary growth strategy; we are talking here about using your territory reps to grow your business as well.

If you want a blueprint to implement a sound sales operations approach attend BTA Sales Management Workshop, or if you are a Konica Minolta dealer the KMBS Sales Management training, both developed and instructed by Strategy Development.

Understanding the Language of Sales

Business acumen, a critical area when selling in complex environments, with complex in this situation defined as multiple decision makers that can span functional areas within your prospect. This article is not about business acumen but I bring up the concept because I am going to be quoting CFO Magazine in this post and you might wonder if I spend my time searching for data; the answer is “No,” I read CFO along with Information Week, CRN, Fortune, Wall Street Journal, and other publications that provide me the insights I need to understand what is occurring in business, technology, and the economy. From past posts you know I stay informed on the imaging industry from reading reports from InfoTrends and publically available data from IDC and Gartner, as well as the day-to-day interaction I have with the scores of Strategy Development’s clients, the Strategy Development team of consultants, and industry players.

In the March issue of CFO (www.cfo.com/technology), David McCann wrote an article titled “A Sense of Agreement, how to bridge the finance-IT perception gap.” You should take the time to read the entire article since it is relevant to anybody selling into IT, whether as a member of the professional services, MPS/MS, or IT team at your dealer/reseller. One of the most profound statements was made by William Miller, CFO of a Nationwide Insurance subsidiary that manages the technology operations for the insurance company. “While the accounting profession is hundreds of years old, ….with a long heritage of very mature, well understood metrics, IT is in comparative infancy ‘still struggling to figure out basic norms and how to measure things with consistency.’” Miller also gives credence to IT’s common view of finance, “Too focused on cost, risk adverse in the extreme, and unwilling or unable to see the potential for a technology initiative to transform the company.”

Another CFO, Don Doherty, states that tightening the budget at MI Windows and Doors, a $200 million manufacturer has—in his opinion—improved the performance of their IT team. Doherty goes on to quote examples, including renegotiating service contracts: Great news for all of the MPS/MS providers in the market!

You’ve probably read some of my other posts in this blog on CFO-CIO alignment or reporting, and the May issue of CFO (I am on a long flight as I write this so I am catching up on my reading!) there is a box titled “Who’s The Boss? in the article “An Action Plan for IT.” Similar to the data found in Information Week’s annual survey, according to Gartner, the CIO reports to the CFO only 25% of the time. 38% of the time they report to the CEO and 19% to the COO; therefore, at least 57% of the time the CIO reports to the top operational officer (18% to other, which could include the Board).

Reading articles like this provides you great insight when you get into that meeting with both the CIO and CFO. You will gain a better understanding of reporting structures, executive interaction, key motivators of different functional leaders, all leading to more robust business discussions about your product or service. As Strategy Development teaches in our training, you need to be able to “speak the language” of those that you want to help acquire your product or service, and when there are multiple decision makers you need to be bilingual!

MPSA Board would Benefit from a Service Perspective

The ability to market and sell managed print services (MPS) is clearly important; but it is the service operations that holds the key to a successful and ongoing MPS program.

Are you a member of the MPSA?

If so, our own Mike Woodard has been nominated to run for the Managed Print Services Association board. Please take a moment to vote for Mike.

Please hurry! Your vote must be in by June 11th.

BIO

Mike Woodard, a service consultant with Strategy Development, has 30+ years experience in all aspects of field service operations and service strategy development. Mike developed and leads a Service Management University workshop, which was part of the reason that Strategy Development was recently recognized with a leadership award for education & training from the MPSA. When he is not training MPS providers, Mike is a service consultant for Strategy Development, leading client engagements to a high quality, efficient, and productive service operations.

Throughout his career, Mike has led the implementations for a wide variety of strategic service initiatives that resulted in increased customer satisfaction, improved employee retention and morale, and a specific record of accomplishment including a 25% improvement in service productivity resulting in a 5-point increase in service profitability. Mike has developed and implemented strategic service initiatives aimed at enhancing the customer experience, advancing market differentiation, and improving service productivity:

• National service compensation program and career path
• International service recognition program
• Service specific performance management and appraisal process
• Customer feedback process
• Aftermarket pricing
• Technical support center deployment including help desk
• Call center dispatch automation
• National field service mobile wireless communication solution
• Service route optimization
• Remote equipment communication
• Knowledge management
• Customer retention

Mike has been responsible for operational leadership, P&L management and strategic direction of a $1.2B field service operation throughout the US and Canada. He was accountable for the quality of field service delivery provided by 5,000-field service professionals involved in 20,000 customer-facing events per day.
Mike is a recognized team player and consensus builder and has championed multiple Six Sigma projects, has extensive merger experience, and has served on corporate compensation and human resources review boards.

Companies & Titles

Strategy Development – 2 years
Service Consultant

IKON Office Solutions - 20 years
National VP, Field Service Strategy
National VP, Field Services
National VP, Field Service Operations
Regional VP, Field Services
Marketplace VP, Field Services

Xerox Corporation - 18 years
District Service Manager
Region Service Financial Planning & Analysis Manager
Region Quality Assurance Manager
Field Service Manager
Field Service Technician

Owner, Xerox Agency

On a personal note, Mike attended the University of Colorado and San Diego City College with a focus on Business Management. He also served with the United States Marine Corps, is a Vietnam Veteran, and a recipient of the Navy Achievement Medal.

Why CIOs Are Last Among Equals

A fairly sensational title but not one that I penned; The Wall Street Journal, on May, 24, 2010, published an article under this title with the subtitle: Their perceived shortcomings are often real.

The title of the article wasn’t a surprise to me as the Strategy Development team has to spend time with most of our clients, and in all of our training programs, educating participants that the CIO is an executive of the company, just like the CFO or senior vice president of sales and marketing. Part of the confusion comes from “consultants” and “trainers” that are simply unqualified to be speaking about complex sales like MPS out speaking to dealers/resellers, and as the article subtitle indicates part of the confusion comes from the CIOs themselves.

The article’s authors—all academics—seem to lead an IT Leadership Program at Santa Clara University so they have deep insight, having exposure to hundreds of IT managers getting educated on leadership. Below are the skills they say are lacking in CIOs:

• Leadership
• Strategic Thinking
• Synthesis Skills—ability to pull together all the available information to solve a business problem or achieve a business goal
• Communication Skills
• Influence Skills
• Relationship Skills

The first three bullets would make it difficult for a CIO to sell a large scale strategic project to the rest of the senior team; a requirement in Corporate America. The last three bullets may provide barriers in smaller projects, like MPS, and are areas that your sales team needs to be able to overcome to close the sale and help the company realize the benefits of MPS.

To be effective in sales you need to understand the sales cycle and your prospect. The team at Strategy Development understands complex sales and takes the time to define the sales process in every space where we train and consult. If you truly want to be successful in MPS contact Strategy Development.