Editor's note: The following letters are responses to a posting on DMIA's members-only broadcast email system. The posting was from a distributor who sought comments on the industry's evolving business models. He suggested that inefficiencies exist when end users seek quotes from multiple distributors, who then seek quotes from multiple manufacturers.
Distributors More Valuable than Purchasing Departments
I think you should add the purchasing department to your scenario. An end user is asking purchasing for a quote, purchasing asks multiple vendors, and those vendors ask even more suppliers for a wholesale price. Eventually, all the bidding activity results in diminishing returns for purchasing. In other words, purchasing ends up spending a dollar's worth of time to save a dime of product cost. The next frontier is to save a company on their operating costs by cutting purchasing out of the equation. The end user goes online and requisitions "commodity" items directly from a single-source distributor whose forte is procurement technology. The key is routine standard purchases about which all agree are commodities. Lock in a reasonable price based on historical profit margins, and start cutting out the waste.
Just as human resources departments were outsourced in the 1990s, purchasing functions are next. If a vendor can source like your purchasing department and also bring warehousing service, internet technology, and better paid and skilled employees, why have that redundancy in place? I'm not "like" a purchasing department; I'm far more valuable than any of my customers' purchasing departments. X number of my customers are right there with me, and X number are getting there. We're currently helping to turn the light bulb on for our clients.
Steve Visio
Vice President and COO
Executive Data Control
Springfield, Mo.
Laws of Economics Are Working
Aren't we just watching the laws of economics in progress? As an industry matures and the "pie" begins to shrink, you always see consolidation from the bigger players so they can capitalize on duplicate processes and increase share through acquisitions. Margins begin to erode as decreasing demand is met with excessive capacity.
The industry isn't going away. But as it follows its natural cycle, significant transitions will shake out the fat and inefficient. Those transitions will apply pressure to people who remain to adopt technology that protects margins through lower internal costs and product development (solutions). Supply will decrease to catch up with demand.
The bidding process is an important part of this evolution to push commodity and near-commodity products to the bottom and squeeze more margin out of those products. Despite this prospect, tremendous opportunity exists in the marketplace, and there's a need for both "solution" providers and "low-cost" providers. Some people and businesses buy solely on price, and others based solely on convenience, but most are somewhere in the middle.
Greg Oldaker
Partner
Dynamic Systems
South Park, Pa.
Editor's note: The following letters are responses to a posting from a distributor who sought advice about approaching prospects.
Go Higher Up the Chain
One suggestion that might help you is to develop and maintain relationships with contacts the next two levels above the one doing the buying. One way to accomplish that is to involve those people in meetings when you discuss your new solutions.
Paul R. Edwards, CDC
President
FormStore Incorporated
Fenton, Mo.
Rely on Your Web Site
I carry a portfolio of some of the better jobs we have done, and I take my prospect/customer to my web site and use it for my presentation. I don't carry a notebook computer (I will soon), but I ask in advance if we can meet where a computer is available and it's never a problem. As for the majors: They may have impressive presentations, but when you take your customer to your web site and they notice the pictures include shots of production facilities with you in them, they'll know you're a hands-on guy. Ask a local plant if you can take a digital camera to its facility and take a few shots, put them on your site and you're ready to roll.
Robb Tipton
Owner
Star Business Products
Kemah, Texas
Thanks to DMIA's Active Members
On June 16, celebrated my 21st anniversary at Independent Business Group. This is a milestone for me: I have reached the point when I have spent half of my life in this industry, having entered the "print world" at the threshold of adulthood. (For those who are mathematically challenged, that makes me about 34, give or take.)
Aside from the fuzzy math, I want to acknowledge that I absolutely never would have made it so far in my company or in this industry without making the most of DMIA's many resources throughout the years.
For those readers who are not members, I implore you to join. For those readers who are members, I say to you: participate. It's the only way to reap the benefits of DMIA, and your participation is the only way to keep DMIA relevant to the industry. For those members who already participate, I sincerely thank you. I would not be where I am today without you.
Gail O'Roke
DMIA Immediate Past President
President / CEO
Independent Business Group
Hayward, Calif.
Editor's note: The following letters are responses to a posting from a distributor who sought advice about training a new salesperson. The person, a recent college graduate, has a degree in marketing, but no sales experience.
Expert Columns, Testing Can Help
Sales consultant Jeffery Gitomer includes an excellent column on his web site (www.gitomer.com) titled "Motives to buy are the most powerful motivator to securing a sale." It explains why he has changed from teaching people "how to sell" to teaching them to understand "why people buy."
Interestingly, the column deals with a recent industry discussion about finding the cheapest price: "Dealing with those procurement and purchasing people is not selling, it's bidding. Lowest price gets it, and it requires little or no skills (other than your ability to lose all your profit in a deal). And if my 6-year-old granddaughter Morgan has a lower price than you, she'll get the order."
I also suggest you use the information you gained from your pre-hire testing to guide your new sales rep into a style that fits her personality. If you didn't have her take a test, it's a good idea to do it now. The information is invaluable.
Best of luck in growing your business.
Paul R. Edwards, CDC
President
FormStore Incorporated
Fenton, Mo.
Experience is Best Trainer
My best hiring experience after I started my company 25 years ago was a young man who graduated from college in marketing and accounting. He started selling copy machines and learned rejection with a capital "R." He then went with an accountant and learned detail and dull with a capital "D." He joined me, and I worked with him on some calls and sent him on reorder calls. We also toured a factory, and he read DMIA's Business Forms Handbook. He was young, educated and hungry, and he's still doing great.
I would be apprehensive about hiring someone just out of school, unless you really know them or have a good feeling about them. Good luck--we've all been there.
David Donnelly
President
Suncoast Forms & Systems Inc.
Sarasota, Fla.
Participation Brings Success
A young guy I hired in January recently sat in on some of our planning meetings, and we were quite impressed with his input. In April, we put him into sales training, and he's doing quite well. We started him with only a small amount of sales volume, but the good surprise is he opens about two new accounts each week. He is hungry and has no fear.
Joe Webb
Vice President of Sales and Marketing
Formsystems Inc.
Pensacola, Fla.
Print University Helps
Send them to DMIA's Print University (www.printuniversity.org). It will save you about three years of a sales person's ignorance.
Kathleen Brennan, CDC
OwnerProforma Info Pros Galveston Island, Texas
Editor's Note: The newest module in DMIA's Print University, "Digital Printing Overview," explains how digital printing works and discusses profitable applications. The association now offers eight e-learning modules online that are suplemented with traditional reading assignments, CDs, videos and in-residence training. Participants learn about topics such as forms production and materials, forms construction and specifications, form/label combinations, technologies and their applications, and forms automation and electronic forms. The Print University program also features presentations by marketing strategist Arnold Sanow on retaining customers and sales/sales management experts David Fellman and Jeff Hanlser on prospecting. DMIA's Print University won the 2003 Excellence in Education Award for Innovation in Distance Education and Training in the document communication industry from the Electronic Document Systems Foundation (EDSF).
