Thursday, October 14, 2010

When the Going Gets Tough, Somehow or Other Perry Corporation Gets Growing

By Scott Cullen

Forget the doom and gloom and crying about the economy. You’re not going to see any of that at Perry Corporation in Lima, Ohio. No sir, Perry Corporation is rocking and rolling from every conceivable angle. Consider that its traditional MFP and service business is up about six percent over last year. How many dealerships in this day and age can lay claim to that? Meanwhile, the solutions division, which mainly sells archiving and workflow software is up 64 percent over last year. The goal was to grow this segment of the business by 50 percent, so things are even better than expected. And speaking of better than expected, managed print is up 321 percent, well above the 200 percent that was budgeted.

Perry Corporation services a wide variety of customers although they concentrate on certain verticals, notably education, healthcare, manufacturing, and local government.

Why do customers choose Perry Corporation?

“A lot of different reasons, but primarily because we have the cash reserves to fund them internally so there is no third party leasing company or bank involved, which gives us a ton of flexibility,” says Barry Clark, president. “We make it real simple for them. It’s a one-page contract, not 27 pages of terms and conditions. It’s just a simple, easy to understand, straightforward concept that we sell.”

It’s a new business environment and Clark concedes that customer expectations are changing, especially when it comes to dealerships like Perry Corporation who do more than just move boxes.

“If you’re still a box company, customer expectations have pretty much been the same, ‘I want a great price and great response times, etc., etc., etc.,’” he says. “As you broaden your product offerings, the bar keeps getting raised higher and higher.”

That higher bar means that with more complex product offerings, Perry has had to raise the level of competence and skill sets among its employees to better support their customer base.

“When you’re supporting someone’s network infrastructure for example, if that goes down it’s a lot more damaging to a client then when their MFP on the third floor is not working,” he explains. “Not only is a higher degree of care required because you’re getting into more mission critical areas of the organization, but they also looking to get the most out of what you’re providing them. The other big thing is adoption, they all want help in getting their employees to adopt the new technology.”

While some of those competencies and skill sets are home grown, Clark isn’t shy about searching elsewhere to acquire them, including strategic acquisitions that complement their core business.

Perry Corporation has acquired three companies in the past five years, including an IT firm.

“We’re diversifying more and more so we’re not dependent on one revenue stream for our growth,” explains Clark. “That was the reason for the IT acquisition.”

The acquisition of an IT company was a smooth move for an office technology company, particularly one that traditionally connects devices to a customer’s network and is responsible for supporting them as well. What Clark found was a company that designs, implements, and supports the IT infrastructure.

“It made sense to me since that’s a piece of the pie we want to provide,” says Clark. “There’s a lot of synergies and then again there’s not a lot in a sense. For example, in the IT world, the sales cycle is much longer. The due diligence, the surveying, whatever you want to call it, is much longer. Everything is longer and you might win a big deal and it might take you six months to complete the install. There’s really no lease expiration dates on an IT infrastructure.”

Besides the differences from a structural standpoint, there’s a whole different culture in place from a personnel perspective as well and that’s another reason why an IT acquisition fit the bill.

“When you try to meld a copier rep with an IT rep they have different objectives and goals,” notes Clark. “The way we’ve gotten around that is assign a highly specialized team that’s led by the VP of the copier division and VP of the IT division to big name accounts because that’s a more long-view strategy to approach those accounts compared to, ‘they have a lease coming due in three weeks, let’s see if we can go in and talk to them about their IT infrastructure.’

Having an IT element helps sets Perry Corporation apart from its competitors although the big boys like HP and Xerox now have that capability too.

“Ironically, we did that two years before they did,” says Clark.

With all the transitions that have taken place in the office technology business over the past 20 years—analog to digital, connectivity, solutions, MPS—which was the toughest for Perry Corporation?

“I think they’ve all been fairly difficult,” reflects Clark. “I’d be hard pressed to say one was harder than the other because with each one you have to develop a new business model and people have to get out of the box they were in.”

One of the plusses for Clark with any transition, including the most recent into managed print services is he has what he calls a ‘forward-thinking management team and forward-thinking employees.” That’s something not every legacy office technology dealership possesses. He also hasn’t been shy about going out and bringing in extra help, like Strategy Development, to help with not only the transition to MPS, but in identifying acquisition target to grow the business.

Strategy Development has also assisted Perry Corp. in putting management and sales operations processes in place to grow equipment revenue. Clark sought their expertise about a year and a half ago as hardware sales began declining.

“We were fortunate,” says Clark, “I know some dealers who lost, 20, 30, 40 points of percent of revenue. We didn’t decline that much, but we said, ‘most of our folks had never sold in a recession so let’s make sure there’s not a better way we can do this and Strategy Development showed us. It’s a lot of stuff we already knew and were already doing, but they were able to tie it together for us so it made more sense and became more of an executable strategy.”

Without giving away the store, one of the things Perry Corporation did was realign their individual sales territories. That was based on a Strategy Development MIF (Machines In Field) study and the notion that a rep needs a certain percentage of his territory to be existing customers to make a reasonable living and reduce turnover.

“It also helped us identify those reps that needed more help,” explains Clark.

MPS had been on Perry Corporation’s radar screen for some time, but they began taking it seriously in 2006. The acquisition of the IT company was not only part of their acquisition strategy, but their MPS strategy too. MPS is now Perry Corporation’s most profitable area.

“We’re up more than 300 percent from last year, but the net income is phenomenal,” beams Clark.

It’s not like moving into managed print was a walk in the park for Clark. He firmly believes it’s something that needs to be totally supported and communicated from the top down.

“You can’t just hand it off to a lieutenant and say ‘go make this happen,’” he says. “The executive team of the Perry Corporation was behind it 100 percent day in and day out. The second piece was we found the right person to run it. We didn’t think we could take one of our MFP sales managers and quickly get where we wanted to be, so we went out and found some new talent.”

A lot of the success is because Perry Corporation begins with the MPS message at C-level.

“When you start at the C-level, they get interested pretty quickly,” says Clark. “If you could throw around numbers like 25-30 percent savings over what they’re paying today, you can make a pretty compelling argument about the fact that you can reduce their costs without them having to buy anything—at least up front.”

Perry Corporation won’t pursue the engagement if they can’t get to that C-level person.

“We need their buy in, we need them to open the door, we need them to corral the troops to get the information we need to make a good presentation back to them,” says Clark. “We spend a lot of time and money on training how to get to a C-level person.”

Outside help from the likes of Strategy Development has provided Perry Corporation with strategies for reaching C-level executives as well as guidance on compensation plans. Without turning this into an advertorial for Strategy Development, it’s been a big help.

“We would certainly have taken much longer to get where we are today if we had not consulted with them two years ago,” reports Clark. “They’ve seen enough MPS accounts and have enough clients that do MPS, and have been for some time, they can steer you and you don’t have to do so much trial and error.”

Meanwhile, Clark expects MPS to continue to be the company’s fastest growing book of business.

“In the next five years we’d like to have 25 percent of our total revenue coming from MPS contracts.”

Now that his MPS business is booming, what does Clark know now that he wishes he knew when he started?

“I wished we would have started earlier,” he laughs.

Scott Cullen has been covering the office equipment industry since 1986. Scott is Publisher/Editorial Director for Imaging Solutions Reseller; Editorial Director/Managing Editor for OfficeSOLUTIONS and OfficeDEALER; Editor for PC Solutions; and a contributing writer and Editor for Independent Dealer, OFDA, Mercer Business, ENX, BERTL’s iTchat, Repro Report.