May 2016 Office Technology

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CONTENTS Volume 22 • No. 11

FEATURE ARTICLES 10

Water Systems A new revenue stream to consider?

SERVICE CONNECTIONS Driving Behaviors Comp plan revisions will drive higher profitability

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by Ken Edmonds Service Management Coach

by Brent Hoskins Office Technology Magazine

There may be a variety of issues affecting a dealership that can be caused by the sales compensation plan in use. I will address some of these issues, explain how the comp plan may cause them and suggest changes that would prevent them.

While water sustains human life, it may also sustain life for some office technology dealerships. That is, dealers seeking a new product offering that provides additional residual revenue may want to consider partnering with a water purification systems vendor.

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Cloud Services Becoming a popular offering among dealers

by Brendan Morse InfoTrends

P R I N C I PA L I S S U E S Embracing Managed Print BTA member among ‘most promising’ providers

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by Kyle Summers CIOReview

Cloud services have become a popular offering among independent office technology dealers. Dealers clearly see the cloud as a growth opportunity. Surprisingly, this embrace or interest in the cloud is not something isolated to a particular dealer type.

REFLECTIONS ON 90 YEARS 22

BTA Membership’s Payoff The ROI ‘would be the envy of any financial planner’

CBE’s (Carolina Business Equipment, Columbia, South Carolina) managed print services standardize equipment, supplies and maintenance through intelligent workflow analysis and strategic manufacturer partnerships.

SELLING SOLUTIONS The Sales Rep’s Backdrop Using social media in a successful prospecting effort

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by Bill James 2009-10 BTA president

by Troy Harrison Troy Harrison & Associates

Thinking of the Business Technology Association’s 90th anniversary causes me to reflect on how my own office technology career has been connected to the association. I started my career in 1971 with Olivetti’s branch office in New Orleans, Louisiana.

COURTS & CAPITOLS 25

The Family Business There are several options to treat children fairly

by Robert C. Goldberg BTA General Counsel

Building a successful dealership is a long process requiring significant time, investment and sacrifice. The success achieved by parents may encourage children to participate, but bringing in family members is not always easy.

Is there any part of selling that is more talked about today than social media? “Experts” have been telling salespeople that the magic button they have always sought — the one that would remove the need for prospecting — has finally arrived.

D E PA R T M E N T S Business Technology Association

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• Education Calendar • BTA Highlights

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Executive Director’s Page

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BTA President’s Message

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Advertiser Index

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EXECUTIVE DIRECTOR’S PAGE

Visiting Kansas City for the First Time?

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once saw in a gift shop the “New Yorker’s Map of the United States.”

The middle portion of the country was a wide open space labeled “Those M Places.” You know, Montana, Minnesota, Michigan and, of course, Missouri, home of the Business Technology Association (BTA). I see another funny version of the U.S. map on the Internet as I write this. It labels both Kansas and Missouri as: “One of the states that has a Kansas City.”

For those of you who use one of these or a similar U.S. map, you likely know little, if anything, about the location of the 2016 BTA National Conference, scheduled for June 8-10, and the subsequent BTA at 90: A Celebration event, taking place the evening of June 10. So I thought it might be a good idea to get you (and, OK, everyone else, too) a bit acclimated with the settings of our events.

First, yes, there is a Kansas City, Kansas, and a Kansas City, Missouri, both located in a metropolitan area of two million-plus people. They are separate cities in separate states. They just happen to share the same name (for some reason). Those of you who will be attending the BTA events in June will be in Kansas City, Missouri — home, I am compelled to remind you, of the World Series Champions, the Kansas City Royals.

You will be staying at the InterContinental Kansas City at the Plaza, known as the Alameda Hotel when presidential candidate Ronald Reagan stayed there during the 1976 Republican National Convention (just some near-useless trivia; not any sort of political statement here). The hotel is located at the 15-block Country Club Plaza, the jewel of the city, opened in 1923 and built to reflect the look of Seville, Spain, a

sister city to Kansas City. The Plaza is home to 101 shops and 44 restaurants.

On the evening of June 9, we will be traveling to the nearby National World War I Museum and Memorial. This museum, home to one of the largest World War I collections in the world, is located beneath the Liberty Memorial, a National Historic Landmark opened in 1926 as a memorial to the men and women who fought in the Great War. More presidential trivia: President Calvin Coolidge was on hand at the memorial’s dedication ceremony.

From atop the WWI Museum, at the base of the Liberty Memorial observation tower, one can look north to the Kansas City Union Station, built in 1914, site of our 90th anniversary celebration. In his BTA 90th anniversary congratulatory video, I noticed that Konica Minolta’s Rick Taylor referenced an infamous massacre that took place at the station. On June 17, 1933, convicted mobster Frank Nash, under escort by a team of FBI agents, was shot and killed, along with four law enforcement officers, outside the station during a failed attempt by Charles Arthur “Pretty Boy” Floyd and two accomplices to rescue Nash.

Wow, that’s grim. To quickly lighten the tone here, I’ll note that Kansas City is also home to Worlds of Fun, a great amusement park next door to Oceans of Fun. Actually, there are a variety of attractions in the city or nearby, such as the Harry S. Truman Library and Museum, Nelson-Atkins Museum of Art, Negro Leagues Baseball Museum, American Jazz Museum and the Kansas City Zoo. For those of you planning to stay for the weekend following our 90th anniversary celebration, visit www.bta.org/KC. I look forward to seeing you in the city where your association was established in 1926 — when (final bit of trivia) Kansas City was only 73 years old. n — Brent Hoskins

Executive Director/BTA Editor/Office Technology Brent Hoskins brent@bta.org (816) 303-4040 Associate Editor Elizabeth Marvel elizabeth@bta.org (816) 303-4060 Contributing Writers Ken Edmonds, Service Management Coach ken.edmonds@CKE-Enterprises.biz Robert C. Goldberg, General Counsel Business Technology Association Troy Harrison, Troy Harrison & Associates www.troyharrison.com Bill James, 2009-10 BTA president Brendan Morse, InfoTrends www.infotrends.com Kyle Summers, CIOReview www.cioreview.com

Business Technology Association 12411 Wornall Road Kansas City, MO 64145 (816) 941-3100 www.bta.org Member Services: (800) 505-2821 BTA Legal Hotline: (800) 869-6688 Valerie Briseno Membership Marketing Manager valerie@bta.org Mary Hopkins Database Administrator mary@bta.org Teresa Leerar Bookkeeper teresa@bta.org Brian Smith Membership Sales Representative brian@bta.org Photo Credits: Bigstockphoto. Cover created by Bruce Quade, Brand X Studio. ©2016 by the Business Technology Association. All Rights Reserved. No part of this publication may be reproduced by any means without the written permission of the publisher. Every effort is made to ensure the accuracy of published material. However, the publisher assumes no liability for errors in articles nor are opinions expressed necessarily those of the publisher.

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BTA PRESIDENT’S MESSAGE 2015-2016 Board of Directors

Reasons to Attend National Conference

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n the April issue of Office Technology, I wrote about the 2016 BTA National Conference, to be held June 8-10 at the InterContinental Kansas City at the Plaza in Kansas City, Missouri.

If you have not yet registered to join us in BTA’s hometown, consider my list of the “Top 10 Reasons to Attend”: (10) The conference, as well as BTA’s 90th anniversary celebration, will give you many opportunities to see old friends and make new ones. Many of BTA’s most long-term member dealers, past national presidents and industry luminaries will be present, giving you the opportunity to catch up with old friends and make new ones.

(9) The June 9 networking event will be held at the National World War I Museum and Memorial. Attendees will have time to tour the museum and memorial, as well as network with peers and exhibiting sponsors during a cocktail reception. Liberty Memorial, located above the museum, provides great views of downtown Kansas City from its deck and the 217-foot observation tower.

(8) The three-day event will provide many networking opportunities. Breaks during the conference, as well as special networking events, will allow you to learn from your peers and see the newest products and services from 40-plus exhibitors.

(7) Eight general sessions will provide insight into topics dealers will find interesting. They include: legal issues, managed services, company culture, changes in your buyers, marketing, sales management, digital production and strategic business planning.

(6) The software vendor panel will give you an inside look at new software offerings that can help you diversify your

business. You will have the opportunity to submit questions to the panelists, who represent five software vendors: Access Control Devices Inc., Nuance Document Imaging, PSIGEN, Square 9 Softworks and Umango.

(5) The OEM panel will give you insight into what vendors are expecting for our industry’s future. Panelists from four companies will be featured: Konica Minolta Business Solutions U.S.A. Inc., Samsung Electronics America, Sharp Imaging and Information Company of America and Xerox Corp.

(4) The keynote session will motivate you to reach new heights. Former Navy SEAL Officer Leif Babin will teach the mindset of “Extreme Ownership” and how leaders need to own their failures and successes.

(3) Two-for-one registration is only $199 for BTA member dealers. With all of the education, networking and special events these three days include, this is a fantastic value.

(2) Registration includes entrance to BTA at 90: A Celebration. On June 10, BTA will celebrate its 90th anniversary in grand style at the historic Kansas City Union Station. The evening will include entertainment by political satirist Mark Russell, guitarist Gregory Hyde and the Kansas City Lights Jazz Trio. BTA will also make several special presentations, including announcing the winners of its 2016 BTA Channel’s Choice and 2016 BTA Channel Champion awards.

(1) Support your association. BTA has helped dealers for 90 years, providing many member benefits that allow them to constantly improve their businesses. So join me in Kansas City to celebrate all BTA has done for independent dealers over the last 90 years.

For more information, see the ads on pages 2-3 and 11, or visit www.bta.org/BTA NationalEvent and www.bta.org/BTA90. n — Dave Quint

President Dave Quint Advanced Systems Inc. 2945 Airport Blvd.

P.O. Box 57 Waterloo, IA 50704 dquint@asiowa.com President-Elect Rob Richardson Allied Document Solutions & Services Inc. 200 Church St. Swedesboro, NJ 08085 robr@ads-s.com Vice President Dan Castaneda International Copy Machine Center 1515 Lee Trevino, Ste. EE El Paso, TX 79936 dan@icmc-elp.com BTA East Greg Gondek ACT Group 20 Commerce Drive Cromwell, CT 06416 greg@advancedcopy.com BTA Mid-America Bob Evans DigiTec Office Solutions Inc. 12560 Reed Road, Ste. 200 Sugar Land, TX 77478 bobevans@digiteconline.com BTA Southeast John Eckstrom Carolina Business Equipment Inc. 5123 Bush River Road Columbia, SC 29212 johne@cbesc.com BTA West Cathy Dimon Northern Business Systems 3526 International Fairbanks, AK 99701 cdimon@acsalaska.net Immediate Past President Ron Hulett U.S. Business Systems Inc. 3221 Southview Drive Elkhart, IN 46514 ron.hulett@usbus.com Ex-Officio/General Counsel Robert C. Goldberg Schoenberg Finkel Newman & Rosenberg LLC 222 S. Riverside Plaza, Ste. 2100 Chicago, IL 60606 robert.goldberg@sfnr.com

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Water Systems A new revenue stream to consider? by: Brent Hoskins, Office Technology Magazine

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hile water sustains human life, it may also sustain life for some office technology dealerships. That is, dealers seeking a new product offering that provides additional residual revenue may want to consider partnering with a vendor of point-of-use drinking water purification systems. You know, water coolers.

Every dealer knows at least one dealer who sells water systems. There is a good reason for that. Water systems vendors are quick to point out that “copier dealers” are a particularly good fit for their products for a variety of reasons.

“The copier business has numerous similarities to the way the water business runs today,” says Bob Junk, president of Waterlogic Commercial Products (USA). “The equipment is rented or leased. It requires service and maintenance on an ongoing basis. And [copier/ MFP] dealers know how to effectively manage a sales team.”

In addition, because dealers know how to manage small businesses, “they know how to manage challenges that come up on a daily basis,” Junk says. “The final factor that makes dealers a good fit is that they have customers who use water in a very similar way that they use a copier; these are companies with 10-plus employees that are providing products and services for the convenience of their employees.”

Travis Nuttall, owner of Wellsys USA Corp., shares a similar perspective. “Facilities managers or purchasing managers generally make the decision on water systems,” he says. “That’s why copier dealers make so much sense for us, because they are typically dealing with these decisionmakers. And when a decision-maker has done business with someone he or she knows, trusts and likes, it’s much easier for that person to decide to deal with one vendor rather than multiple vendors. It is very natural for the incumbent copier dealer to begin talking to the receptive decisionmaker about a water system, too.”

There is another appealing similarity between the sale of copier/MFPs and water systems — the residual revenue. Nuttall notes that, like with copier/MFPs, the office technology dealership placing water systems will make a monthly residual by providing “ongoing maintenance, preventative maintenance, filter changes, etc.”

Brian Pason, vice president of sales at Pure Health Solutions Inc. (PHSI), emphasizes that while the cost of a water system compared to a copier/MFP is low, the residual revenue can add up.

“Let’s say, for the sake of conversation, that you are receiving $50 a month and you have 1,000 units placed,” he says. “That’s $50 times 1,000 units coming in as recurring revenue every single month. At the end of the day, you only service each product once a year or so. It’s a really nice model.”

Once the product is in place “nobody can replace it,” Pason adds, noting that water systems are usually in place for 10-plus years. No competitor will be able to claim a superior alternative to a system offering 100-percent-purified drinking water, he says. “No one can walk in and say, ‘I can get you 101-percent-purified water.’”

As one considers the benefits of selling point-of-use purification systems against more commonplace bottled drinking water coolers, the sales strategies are not difficult to imagine. “We know the inconveniences of plastic bottles and the toll on the environment,” Nuttall says. “The other thing that I think people don’t think about is that it’s a recycled plastic bottle, so the bottles could have been in any number of different places.”

In addition, “there are the storage issues and the lifting and changing of those bottles,” Nuttall says. “Then there are the accounting issues, because with the bottled water vendor, there’s a fluctuating monthly invoice for the customer since, typically, they are using more water in the warmer

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months and not as much in the ‘That’s a small-ticket item. cooler months. You also have I’m selling copiers for a “With the bottled water bacteria issues when people lot more than that, so system, if the user doesn’t handle and change out bottles.” how can I make money?’ clean the holding tank, it’s In contrast, sales reps sellTo me, that reflects a like pouring the water into a ing, for example, Wellsys pointfalse understanding of dirty coffee mug. You could of-use systems can emphasize a the way the water busihave the best water in the nine-stage purification process, ness works. First, you which includes the eliminaare typically selling a world, but if you pour it into tion of contaminates through lot more water systems a dirty ... mug, it’s not going to be the best ... ” reverse osmosis. Wellsys has a than copiers, because

— Brian Pason “purification process that helps they are a ‘micro-ticket’ Pure Health Solutions Inc. you hydrate more efficiently item; the sales cycle is through added electrolytes and a lot shorter. Second, special minerals,” Nuttall says. “We reintroduce minerals there is less service with water systems than with copiers.” back into the water that have been depleted through reverse When talking to dealers, Nuttall says he emphasizes that osmosis or purification; these are all attributed to what our “there is money to be made” and “service is not as difficult bodies need from a health standpoint.” or discouraging as they may be used to with copiers.” He At PHSI, in addition to a filtration process that includes adds that water systems will not only provide a new revenue reverse osmosis for purification, the company’s systems stream, but can open new doors. “Dealers realize, ‘I can get provide an “activated oxygen injection” into the water, to into accounts with water and then maybe sell them copiers get “rid of the bacteria, viruses and parasites in the hold- one day.’” ing tank,” Pason says. “With the bottled water system, if the Pason shares the same observation. “The water system user doesn’t clean the holding tank, it’s like pouring the wa- can actually get a dealership into an account that it couldn’t ter into a dirty coffee mug. You could have the best water in get into with its copiers,” he says. “Now, all of a sudden, dothe world, but if you pour it into a dirty coffee mug, it’s not ing business on the water side, they can squeak in on the going to be the best water in the world anymore.” copier side.”

Continuing with the thought of sales strategies that are As one might expect, water systems vendors are poised “not difficult to imagine,” Junk notes that the timing is par- to support and guide office technology dealers as they enter ticularly good for the sale of water purification systems. “As the water business. At Wellsys, for example, there are four we all read in the newspapers, there are a lot of challenges categories of training, Nuttall says: product training; sales that communities and municipal systems have in terms training; technical training; and operational management. of delivering quality drinking water,” he says. “So I believe “The fourth category encompasses the overall structure of that the demand for our systems will just continue to go up, the business,” he explains. “‘How are you going to set up because people are more educated and want better-quality your business? How is your business set up now?’ We would drinking water.” talk to the dealer about setting goals. ‘Where do you want to Despite the commonalities in the sale and support of wa- go and how are you going to get there?’” ter systems and copier/MFPs, along with the appeal of some It appears that one way dealers are going to “get there,” obvious possible selling strategies, the addition of water sys- is by having a dedicated sales team, if not an entirely septems is clearly a different business and, so, may be met with arate division. “There are minimums we are going to exresistance by many dealers. “They are familiar with copiers, pect,” Pason says. “We aim for at least 180 units a year out service and the idiosyncrasies that go along with that busi- of a dealer. For the best chance at success, you should have ness,” Junk says. “It’s a whole different set of unique factors a dedicated salesforce.” with water. The dealership will have to deal with plumbing Referring to the copier/MFP sales team and the water codes and the challenges of anything related to the water systems sales team, “they have to be totally separate,” Junk hookups. There is also the need for a proper understanding says in agreement. “I have not found a salesperson yet who of local water conditions, and they do vary. So, I think the can manage both. Our experience is that you have to set up hesitation for dealers may be, ‘What are the unique charac- a different operation with a different sales team; the mainteristics of the industry?’” tenance could probably overlap a little bit.”

Many dealers hesitate because they don’t have a “complete Casey Taylor, who remains a traditional copier/MFP dealunderstanding of the business,” Nuttall says. “They think, er as president of Taylor Made Business Systems in Concord, 12 | ­w w w. o f f ic et ec hno lo g y m a g.c om | Ma y 2 0 1 6

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he says. “If you already have California, had a water sysa couple thousand copier tems business that was later “Dealers need to find an customers, it is a relatively sold to Waterlogic, where additional way to make easy sale to go in there and Taylor serves in a dual role money from their customers. tell them, ‘Hey, we are selling as president of the direct If you already have a couple water now.’ It’s a nice add-on operation for the company. thousand copier customers, with existing customers.”

He echoes Junk’s recomit is a relatively easy sale to Taylor reiterates the simimendation. “I would agree,” go in there and tell them, larities of the water business he says. “We tried it several to the copier/MFP business. ways. First, we tried to have ‘Hey, we are selling water now.’”

“Again, you’re selling to the reps selling both products.

— Casey Taylor exact same customers with Then we tried to have teams Taylor Made Business Systems/Waterlogic the exact same sales and serworking together. But, realvice model,” he says. “It’s a ly, it only works with a truly separate team, especially on the sales side, though you can model dealers understand well. You know how to get those customers. If you think about it, share a sales manager.”

From his perspective as an individual with a heritage in it’s just another piece of office equipment.” n Brent Hoskins, executive director of the the copier/MFP industry, Taylor encourages other dealers to Business Technology Association, is editor take a look at the water systems business, given the tightenof Office Technology magazine. He can be ing margins in the imaging industry. “Dealers need to find reached at brent@bta.org or (816) 303-4040. an additional way to make money from their customers,”

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Cloud Services Becoming a popular offering among dealers by: Brendan Morse, InfoTrends

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loud services have become a popular offering among independent office technology dealers. In a recent survey of dealers by InfoTrends, 42 percent reported actively selling some sort of cloud-based infrastructure or software, and another 34 percent are planning on or considering selling cloud services.

Dealers clearly see the cloud as a growth opportunity.

Surprisingly, this embrace or interest in the cloud is not something isolated to a particular dealer type. As the chart on this page shows, cloud services offerings tend to be slightly more common among medium and large dealerships. However, given the many challenges small dealerships have — with selling software solutions in particular — 35 percent is actually quite an impressive number.

Yet, despite the number of dealers offering cloud services, these offerings remain a small portion of their overall revenue. Of the dealers we surveyed, those who offer cloud services only receive, on average, 3.5 percent of their total revenue from cloud services. While this overall percentage is not large, there is another, more interesting, way to look at this number. An average office technology dealership does slightly more than $12 million in annual revenue, and assuming that it is on par with its peers (3.5 percent of revenue from cloud services), that would give a dealership selling cloud services $420,000 in cloud revenue per year. Furthermore, a significant portion of this revenue is also likely to be recurring.

These are still the early days of cloud services in the dealer channel, especially considering how large these revenues could quickly become. For example, dealerships that sell managed IT services (MITS) report that they receive 11 percent of their revenue on average from these services. If the average dealership can grow its cloud business to be equal to the average size of its MITS business (11 percent of total revenue), that would equate to more than $1.3 million in yearly revenue. Margins from cloud services can be quite strong, but that, of course, depends on other internal business factors. In any case, given these facts, we should not be surprised that dealers are so interested in cloud services.

So, how do dealers go about offering cloud services? There

are a variety of approaches across all B2B technology channels and the same is true for the independent office technology channel. Among dealers, there are three primary (though not mutually exclusive) approaches that are becoming common in the market.

The most common approach centers on the resale of software as a service (SaaS). In the dealer channel, this is most frequently document-related SaaS. For example, InfoTrends forecasts that the market for document management software going through the dealer channel is growing at 7 percent annually, which is a strong growth rate for the office technology industry.

The second-most-common method is the resale of a wider array of cloud services. By this we generally mean the resale of things such as infrastructure, storage, backup and recovery, and SaaS beyond document solutions. The growth rate here is at least as strong as the 7 percent found in document management, and is likely stronger. We believe that at this point in time, total revenue numbers for this model remain small, but we see this as a major path forward for dealers as more channel-centric cloud programs ramp up in the coming years.

Finally, there is a much smaller set of dealerships that act as cloud services providers themselves. This means

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consider entering or planning on growing that these dealerships may act as cloud For increased their businesses into cloud services, they channel partners, but also have busineed to decide whether they can really nesses being cloud services providers. revenue and profits, commit to and focus on this new offering.

These dealerships are very few in numdealers need to InfoTrends has evolved with the docuber, but because they are so large and consider where they ment technology industry. We have built usually capture 100 percent of the total can find their piece out our own expertise on MITS and cloud sale, they likely could put up impressive of the massive cloud services as part of our channel strategies total cloud revenue numbers. and managed services advisory pracInfoTrends works with dealers and market pie. tices. We have worked with a variety of many other types of channel partners; OEMs, office technology dealers and there are very few one-size-fits-all recommendations. InfoTrends’ Managing Director Jeff Hayes other channel companies seeking to build diversified portfopresented research at ITEX 2016 showing that dealerships lios that include cloud services. Feel free to contact us if you with more diverse revenue streams outperform their peers would like to share your experiences with cloud services. n Brendan Morse is a senior analyst with InfoTrends’ managed in terms of revenue growth and profit margin. This finding services and network document solutions advisory practice generally holds true for dealers who have entered into manareas. Previously, he was a marketing research associate for aged IT and cloud services. For increased revenue and profthe software company Comverse, where he researched the its, dealers need to consider where they can find their piece telecommunications and cloud computing of the massive cloud market pie.

However, there is a really big catch — dealers should also be industries. Morse holds a master’s degree from the University of Chicago and a bachelor’s aware that having a wide portfolio creates risks. Our research degree from the University of Southern Maine. shows that dealerships with the widest portfolios actually unHe can be reached at derperform in terms of revenue and margins when compared brendan.morse@infotrends.com. to their peers. What does this mean? It means there is a real, Visit www.infotrends.com. quantifiable risk when it comes to diversification. As dealers

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REFLECTIONS ON 90 YEARS

BTA Membership’s Payoff The ROI ‘would be the envy of any financial planner’ by: Bill James, 2009-10 BTA president

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hinking of the Business Technology Association’s (BTA’s) 90th anniversary causes me to reflect on how my own office technology career has been connected to the association.

I started my career in 1971 with Olivetti’s branch office in New Orleans, Louisiana, working with the company’s desktop programmable calculators and accounting machines. By the late 1970s, I was the branch software manager, tasked with supporting Olivetti’s dealers and agents in our region.

In my work with these dealers, I would often hear them talk about the National Office Machine Dealers Association (NOMDA; now BTA) and I was curious to learn more about the association as I helped man the manufacturer’s booth at the 1980 NOMDA Convention in New Orleans, Louisiana. There was an amazing vibe on the convention floor as dealers from across the country convened to learn, see new products and network with fellow dealers. From an exhibitor’s viewpoint, it was an efficient way to provide our dealers (and prospective dealers) with product information and give them the opportunity to be “hands on” with our new products and programs.

A short time later, I decided to start my own company, which was dedicated to providing custom accounting software and systems. One of the early problems I ran into was finding a good, affordable health insurance plan. I was pointed toward NOMDA by a fellow member dealer and, in 1981, joined the association primarily to obtain the health insurance coverage it offered. Soon after joining, I was invited to attend the local chapter’s dinner meeting, which provided an hour of education and the opportunity to network with fellow dealers.

I became a regular attendee at these meetings, as I found them to be valuable to my business. Some of the topics would come from local speakers regarding local taxes and legal or regulatory issues, but most would come from NOMDA on topics specific to our industry. Not only was I gaining knowledge from the speakers, but I was also gaining new friends and customers thanks to networking. In the late 1980s, I was asked to invest a little of my time and join the local officer team. That investment of time quickly paid off with leadership training and experience that has been useful throughout my career.

In the late 1980s and early 1990s, NOMDA expanded the quantity and delivery of the educational programs it was providing to locals. In 1989, I joined a group of volunteers called “SPRINTERS” and we invested a few days training at NOMDA’s

educational center in Kansas City, Missouri. This training not only included educational content, but also taught us about speaking styles and presentation tactics. We even worked on overcoming the fear of public speaking. Each of the local presentations I made was rewarding in many ways — from honing my presentation skills to making new friends and always learning from the attendees.

In 1991, I joined WJS Enterprises, a fellow NOMDA member dealership, as it was transitioning to color digital copiers. As I look back at my years at WJS, I recall fondly watching as a few of the dealership employees’ children were awarded scholarships from the BTA Scholarship Foundation. The students were grateful for the monetary help, the employees were proud of their children and the dealership for offering the opportunity, and I was proud to be part of an association that placed such a high value on education.

In August 2005, our lives were turned upside down by Hurricane Katrina. We were forced to evacuate our homes and businesses for more than three weeks. Communications were destroyed; it was several days before I had Internet access. When I was finally able to check my email, I was apprehensive as to what I would find, but I was overwhelmed by the offers of housing, money, parts and words of support and comfort from my BTA friends. This truly is the meaning of “dealers helping dealers.”

In 2009-10, it was my honor to serve as BTA’s national president. I was able to watch firsthand as Brent Hoskins and his staff continued to build our association’s image and relevance in the industry. Member volunteers have always been at the heart of our association. They have been essential in developing, promoting and serving at BTA events that bring industry-specific education and networking opportunities to our members.

I joined the association for one reason, but I found so much more. Each investment of time or money I have made in BTA has produced a return on investment that would be the envy of any financial planner. Thanks for the past 90 years; on to 100. n Bill James started in the industry with Olivetti Corp. in 1971, working in sales, and then software development and support. In 1982, he started Micro Systems Inc., a networking VAR specializing in accounting software. For 21 years, he served as systems support manager for WJS Enterprises Inc., New Orleans, Louisiana.

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EDUCATION CALENDAR June

8-10 2016 BTA National Conference Kansas City, Missouri It is the office technology dealer’s “must-attend” event this year, specifically designed with a carefully crafted educational lineup, exhibiting sponsors and outstanding networking opportunities.

Join us in BTA’s hometown to learn from industry leaders, see the latest vendors, network with your fellow dealers and celebrate BTA’s 90th anniversary in grand style. You will leave Kansas City informed, invigorated and inspired! BTA member dealers receive 2-for-1 registration and free entrance to BTA at 90: A Celebration. Visit www.bta.org/BTANationalEvent to register.

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BTA at 90: A Celebration Kansas City, Missouri BTA will celebrate its 90th anniversary from 5:30 to 11 p.m. on Friday, June 10, at the historic Kansas City Union Station in Kansas City, Missouri. The evening will include: 2016 BTA Channel’s Choice and 2016 BTA Channel Champion awards; a cocktail reception, dinner and after-dinner drinks; and entertainment by political satirist Mark Russell, guitarist Gregory Hyde and the Kansas City Lights Jazz Trio. Visit www.bta.org/BTA90 to register.

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FIX: Cost Management for Service 2.0 Kansas City, Missouri FIX teaches you how to compute the cost of your service labor hour (service burden rate) and improve your overall service department profitability. The workshop will cover first-call completion and proven management and customer service programs to improve morale within your service department. FIX attendees receive free registration to the 2016 BTA National Conference and BTA at 90: A Celebration. Visit www.bta.org/FIX to register.

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ProFinance 2.0

Bloomington, Minnesota With color, connectivity, software, managed print services (MPS) and managed network services (MNS), the business has changed — and ProFinance has changed with it. ProFinance 2.0 incorporates these changes into the industry model, including benchmarks for MPS. With more than 30 key benchmarks, this management tool will help you and your team achieve double-digit operating income. Visit www.bta.org/ProFinance to register.

28-29 BTA Managed Services Workshop

Fort Worth, Texas Have you invested in the managed IT services market but have yet to see the results you thought you would? Are you looking for answers on how to execute instead of just hearing about what you should do? The BTA Managed Services Workshop now includes the data within the Managed Services Business Model v4.0. Visit www.bta.org/MS to register.

For more information, visit www.bta.org/Education or call (800) 843-5059.

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BTA HIGHLIGHTS BTA would like to welcome the following new members to the association:

Dealer Members Automated Business Concepts, Shreveport, LA Business Equipment Center, Memphis, TN Conner Business Solutions, Dothan, AL Data-Line Office Systems, Lubbock, TX Harris Technologies, St. Louis, MO United Business Machines, Londonberry, NH Service Associate Member CP Office Solution, Toronto, Ontario, Canada Vendor Associate Members Dynamo Northeast Factory Distribution Center, East Greenbush, NY Static Control Components, Sanford, NC Tiger Drum, San Leandro, CA TTR Shipping, Stow, OH For full contact information of these new members, visit www.bta.org.

Sentry Insurance Data Compromise Coverage Businesses collect and store personal information about customers, employees and others. A breach in security could compromise this information. Data compromise coverage can help you comply with legal requirements regarding notification to those affected. It can also help you retain your customers and protect your reputation because customers worried about identity theft may expect more than notification when their personal information has been compromised.

Visit www.bta.org/DataCompromise for more information.

For information on BTA member benefits, visit www.bta.org/MemberBenefits.

For the benefit of its dealer members, each month BTA features two of its Vendor or Service Associate members in this space.

BTA Vendor Associate member Dynamo designs, engineers and assembles innovative shredders that are not sold under any other label. All models are government TAA Compliant and its high-security models are NSA listed. Some of the company’s technologies and patents have been licensed and have had successful worldwide use for more than 40 years. Dynamo’s Eversharp line of oil-free shredders has become quite popular as businesses continue to focus on “green” solutions. www.dynamoshredder.com

BTA Service Associate member GreatAmerica Financial Services is the Business Technology Association’s preferred financing provider. It is a partner to many office technology dealerships and is dedicated to helping them become more successful. GreatAmerica’s commitment to understanding the industry has positioned it as a leader in single-invoice solutions. The company not only offers financing, but also non-financial services to help its dealers evolve their businesses. They include: Collabrance LLC, a master managed services provider; PathShare HR Services; the FleetView remote monitoring and management platform; and Navigator, a guide to MPS and managed IT success. www.greatamerica.com A full list of BTA Vendor and Service Associate members can be found online at www.bta.org.

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COURTS & CAPITOLS

The Family Business There are several options to treat children fairly by: Robert C. Goldberg, general counsel for the Business Technology Association

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o stay abreast of industry developments, I read a number of publications on a regular basis. Andy Slawetsky’s “The What’s Happenin’ Report” is in my weekly rotation. Within the Report, Slawetsky includes pictures under the heading: “Old Blood New Blood.” Like Slawetsky himself, there are scores of dealerships where second and third generations have entered these businesses and, in many instances, succeeded prior generations. Although the pictures always include smiling faces, bringing in family members is not always easy.

Building a successful dealership is a long process requiring significant time, investment and sacrifice. The success achieved by parents may encourage children to participate.

Parents want to treat all of their children fairly, but participation in the family business may complicate this goal. Let’s consider a family with three children. One child has worked in the business since high school and has been a major factor in its expansion into managed IT services. The second child has experimented in several fields, but has not found happiness in any. He (or she) decides to join the family business, but does not contribute to the level that the long-term child does. The third child has a professional degree and has found success in his own field.

How do the parents treat their three children fairly and have their offspring agree with their method? There are several options that can be implemented to assist. n Independent Board Members — Including outsiders on the company board of directors brings additional perspective and adds independence to the decision-making process. The board can be made responsible for determining compensation, dividends, distributions, and hiring and terminating key positions within the company. Independent board members can include bankers, accountants, attorneys, businesspeople and industry leaders. n Engage a Facilitator — Family discussions can become difficult and cause animosity among members. A facilitator can help move discussions forward and keep them on track.

Eliminating personal issues and concentrating on the business issues can best be accomplished by an outsider. n Job Descriptions — A child who receives a company paycheck but contributes little can be judged, in part, by his job description. A clear job description establishes the requirements of a position and can be used as a guide to evaluate employee performance. A well-written job description includes a brief summary of the job, a list of required skills, education

and experience, and the specific activities the employee in the job is responsible for.

Along with the job description, regular performance evaluations should be conducted. At the beginning of every year, each employee should prepare a list of his responsibilities and goals. In evaluating performance, get input from the employees each individual reports to and those who report to him.

Providing anonymity to respondents often encourages more reliable feedback. In addition to these third-party reviews, each employee should perform a self-assessment. n Compensation Study — Compensation should be determined based on the marketplace, not individual need. There are numerous industry studies and surveys that can be consulted to help establish compensation. Compensation based on a factual study is less likely to cause resentment among family members. Distributions from profits can be used to compensate any children who are not involved. If an employee’s basic compensation is based on industry standards and performance, then a distribution can be equal among all children.

Bringing family members into a dealership is a difficult process for parents, children and existing employees. By establishing roles, evaluating those roles, seeking reviews from all levels and bringing in outsiders, the process can be easier. When attending a BTA event, speak with other dealers who have gone through (or are going through) a family transition. Networking with BTA dealers can be the final piece to a successful integration. n Robert C. Goldberg is general counsel for the Business Technology Association.

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SERVICE CONNECTIONS

Driving Behaviors Comp plan revisions will drive higher profitability by: Ken Edmonds, Service Management Coach

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here may be a variety of issues affecting a dealership that can be caused by the sales compensation plan in use. In this article, I will address some of these issues, explain how the comp plan may cause them and suggest changes that would prevent them.

My article in the April issue of Office Technology (“Stop Devaluing Your Service”) discussed the reasons for not discounting service and the impact it has on profitability. That is one issue — some comp plans reward salespeople for maintaining equipment profitability and discounting service.

Another issue is that senior salespeople may have existing clients providing them a comfortable living and, as such, they have very little motivation to bring in new clients, which are the lifeblood for the growth of the company.

A third issue is the over-placement of equipment. When coupled with discounted service, this is a double threat to the profitability of the service department. Each equipment model has a volume range in which it performs. When equipment is placed outside of that range, it will perform poorly and its cost per copy (CPC) will be higher than when it is correctly placed.

Maintaining Service Profitability During a recent visit to a dealership, I found that the service manager was frustrated because the owner was unhappy that he was not achieving his 50-percent-profit goal in service.

It was not because of the performance of his technicians; it was simply that the sales force constantly discounted service.

I asked the owner for some time to discuss this issue. We talked about the importance of reducing the discounts that were ongoing. He said he was told that his sales reps could not sell the equipment without the ability to discount. I challenged him to change his comp plan so his sales reps made the most money by maintaining service pricing and discounting equipment, if necessary. When I followed up with him some time later, he told me that they were consistently getting book rates for service.

There are several ways to modify your current comp plan and achieve the desired results. One way would be to have the sales rep buy down the service rate. If you know what the client’s volume would be over the period of the lease and how much of a discount the client is requesting, you can calculate the total cost and charge accordingly.

Another possible method would be to change the commission rate for sales reps when they discount service. If they

earn the most when they hold service pricing, they will work toward that goal.

Driving New Business Another challenge that all dealers face is growing the business at a rate that meets expectations. In many cases, the sales comp plan is a factor in that challenge.

Sales reps tend to have an income threshold where they feel comfortable. Once they reach that threshold, their drive may diminish along with their urgency to prospect. They may go through the motions, but it will not be with the same enthusiasm as when they started.

One additional factor associated with replacing existing equipment is that this is usually associated with a reduction in service pricing. If a customer is three years into a lease, in most cases, that customer’s service pricing has gone up 20 percent or so. If the sales rep uses that 20 percent to help justify

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replacing the equipment, that reduces the service revenue.

Repeat sales to an existing customer are much less driven by the salesperson than they are by the service the client receives.

The comp plan should recognize that fact and adjust accordingly. If the salesperson receives diminishing compensation for existing customers, he (or she) will have a much stronger incentive to constantly attract new clients.

that are best for your company. The result will be higher profitability, more growth and a bright future for your company. n Ken Edmonds is currently employed as a district service manager for a major copier/ MFP manufacturer. He has an extensive background in the imaging business, having owned a successful dealership, served as service manager for multiple dealerships and as a document solutions specialist for Sharp Electronics. Additionally, Edmonds has more than 40 years of experience in the electronics and computer fields. He has attended BTA’s FIX: Cost Management for Service workshop, Pros Elite service manager training and the Service Managers Achieve Results training conducted by John Hey and John Hanson for Sharp Electronics. Edmonds also completed the University of Wisconsin training program for technical trainers.

He can be reached at ken.edmonds@CKE-Enterprises.biz.

When a customer acquires a device that is faster than necessary, the machine will typically not perform well. This will hurt the customer’s perception ...

Correctly Placing Equipment Many comp plans reward placing the largest piece of equipment that a client will accept into the account. The larger the item, the more the revenue and, possibly, more profit on the original sale means a larger commission. To do this and keep the total cost of ownership (TCO) the same for the client, discounting service becomes an attractive option.

This will hurt both the company and the customer. When a customer acquires a device that is faster than necessary, the machine will typically not perform well. This will hurt the customer’s perception of the equipment and the service department. You can protect the service department by imposing rigidly enforced minimums, but that will not help the customer.

In the chart and graph on page 26, you can see the relative volume versus the cost of a 50 page-per-minute (ppm) device.

The chart also shows the equipment dispersion in various bands. Note that of the 3,055 total machines in the field, almost 56 percent of the machines are in the volume band where the equipment performs the worst. Only 2 percent of the machines are where the machine operates best. This pattern exists for most equipment, no matter which manufacturer.

Often, the excuse is “this is what the customer wants” or “this is what the competition proposed.” Well, the salesperson’s responsibility is to educate the customer. A good car salesperson would not sell a customer a Ferrari to drive on a go-cart track, but in our industry, it happens constantly.

I was involved in a situation where a salesperson sold a county records department a fully loaded 100-ppm device to use as a walk-up copier for the public. I was asked to come evaluate its performance because the service group was having nothing but problems. There was nothing wrong with their service or the device; the problem was the placement.

If the comp plan rewards a salesperson for placing equipment in the proper place, then he will work toward that goal. If he is selling for a specific TCO, reducing the cost of the equipment allows him to protect the service rate and allows him to maintain higher equipment margins — both of which help the dealership.

After reviewing your existing sales comp plans, you may find areas where making a change will drive the behaviors

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PRINCIPAL ISSUES

Embracing Managed Print BTA member among ‘most promising’ providers by: Kyle Summers, CIOReview

Editor’s Note: This company profile originally appeared in CIOReview magazine in a special feature highlighting the 20 “most promising” managed print services providers. John Eckstrom, whose dealership was among those profiled, serves as the current chair of the OKI Data Dealer Council. He is also the BTA Southeast representative on the BTA Board of Directors. valuating the printing solutions space John Eckstrom is enormously complex, as manufacturers bring out new models and features on a quarterly basis. Comprehensive evaluation of functionality and operating costs across so many options is simply not possible without neglecting more urgent organizational priorities.

“Most of the time, the CIOs don’t want to know where the printers are and what they’re doing; they have more exciting things to deal with,” says John Eckstrom, president and CEO of Carolina Business Equipment (CBE), Columbia, South Carolina.

While this is certainly true, the cumulative result is a tangle of inefficiency. Organizations gradually come to rely on dozens of different models, each with unique supply requirements, maintenance costs and suitability for their daily tasks. What seemed like a trivial element — putting printed material on a page — has become a source of daily waste and frustration.

CBE’s managed print services standardize equipment, supplies and maintenance through intelligent workflow analysis and strategic manufacturer partnerships. “It’s our job to understand what options are out there and how they fit into a customer’s particular marketplace,” Eckstrom says. CBE performs a full review of its clients’ equipment, develops a streamlined and robust managed print solution to meet their needs, and provides maintenance, often at a fraction of existing costs.

Hawthorne Pharmacy, an independent pharmacy with five locations, cut its printing and copying costs by two-thirds after partnering with CBE. “Two representatives from CBE came in and assessed our entire fleet of copiers and printers,” says Kristie Cassidy, Hawthorne’s office manager. Hawthorne was using 20 different printer models, each with its own supply requirements, and had maintenance contracts with three different companies. CBE standardized Hawthorne’s print fleet with modern equipment, simplified the company’s supply chain and extended full maintenance coverage. If anything goes wrong with a unit, CBE repairs or replaces it immediately. “All of this was done for essentially the same amount of

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money we were spending on our equipment supply cost and maintenance for a third of our fleet prior to their involvement,” Cassidy adds.

CBE’s operations extend beyond Hawthorne’s usage case, however. As the business world evolved over the last 20 years, Eckstrom expanded CBE’s capabilities to match. Managed print solutions grew into document management, then network design and management, IT solutions and cloud services. CBE was one of the first managed print providers to take data security seriously, offering certifications that used equipment had been purged of sensitive information.

The two vertical markets that seem to be most concerned with absolute security are financial and health care. While manufacturers have done a great job to incorporate hard-disk security measures on MFPs, there are other areas where information can be compromised. “When the different industries do figure out the right questions to ask concerning security, we will be the company that has been answering those questions for more than 10 years,” Eckstrom says. “Over the course of six months, we put together a program that certifies to the owner that there will be no breach of confidential information and, one day, industries concerned with internal controls will make that an issue. For right now, businesses in certain verticals seem fine with hard-disk erase, but that will change and the requirements will become more stringent. When that time comes, we will be the ones with a proven track record in it.

“We dedicate ourselves to providing solutions for the way business is going to be conducted,” Eckstrom continues. “That takes getting on the edge and looking to see what’s around the corner out there.” This manifests as an ongoing commitment to internal business process optimization, talent development and technological refinement. “There are a lot of providers out there who appear to be quite comfortable just to follow,” he adds. “We don’t happen to be one of them.”

Eckstrom’s dedication to continuing evolution and optimization helped fuel CBE’s expansion from a single-office copy shop to a national, award-winning presence in the industry.

“That gives us something we think we need to earn, every day,” he says. “Being on top means if we ever take our eye off the ball, we could lose that distinction. We’ve dedicated ourselves to making sure that doesn’t happen.” n Kyle Summers is editor of CIOReview magazine.

Visit www.cioreview.com.

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SELLING SOLUTIONS

The Sales Rep’s Backdrop Using social media in a successful prospecting effort by: Troy Harrison, Troy Harrison & Associates

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s there any part of selling that is more talked about these days — or less understood — than social media? Ever since LinkedIn came on the scene, various trainers, consultants and other assorted “experts” have been telling salespeople that the magic button they have always sought — the one that would remove the need for prospecting — has finally arrived. Simply put: Improve your profile on LinkedIn, make some posts and, while you are at it, tweet a bit and post on Facebook a lot. Then say “come to Papa” and all the prospects you will ever need will come to you.

Some salespeople are still waiting for that to happen. How do I know? Because I was one of those salespeople. You see, I have been building my speaking career for about five years now. I read and heard the advice of the top people in my profession, and they all said: “It doesn’t matter what you’ve done or where you’ve done it — this is the one place where cold calling doesn’t work. You will not get booked off a cold call.”

Since they were the experts, I believed them. So, I posted on LinkedIn. I tweeted. I posted on Facebook. I put up videos on YouTube. And I said: “Come to Papa.” Well, to be totally honest, I did get a few speaking engagements from word of mouth, and my “rebook rate” (the rate at which past clients bring me back) is very high for the industry. Still, I looked at my business last year and realized that I did not have as many national-level engagements as I wanted.

So, I decided to take matters into my own hands. I would do what did not work — based on what the experts were telling me. And I found out something. In the industry of professional speaking, cold calling does not work — except when it does.

Yes, I have booked several well-paying engagements at quality conferences by cold calling.

But this article is not about me or what I have been able to do. It is about you and what you can do. You see, I discovered something very important about social media in this process.

I made cold calls, I set appointments and I had good conversations. After that, do you know what my prospects did? They went to my social media and looked at all of my posts, those YouTube videos, the testimonials, etc. Social media was their tool for establishing my bona fides. Once they did that, we re-engaged and they booked me to speak.

You see, in today’s world, it is not enough to just do conventional prospecting. Nor is it enough to do social media. You must do both.

Think about the last time you exhibited at a trade show. You

had your display, samples and people assigned to the booth for the purpose of prospecting (new lead generation). Now imagine that you had done it two different ways.

First, imagine that you had only put up your display. You did not put any people in the booth, but perhaps you just put a bowl on the table with a sign saying, “If you are interested, drop your card into this bowl.” Throughout the show, the booth sat empty with no people in it. How many cards do you think you would have had at the end of the show? Not many, if any.

Now, imagine the opposite. Instead of putting up a display, you put up a simple sign with your company’s name and had two of your people in the booth. How do you think you would have done then? My guess is that you probably would have done a little better than by using the display, but no people.

That is because your people could engage visitors as they came by. But, either way, you probably would not get the results that you would get with a display and your people.

In prospecting, your social media is your trade show display. It is your backdrop, your brand and your samples — and it provides you with an air of legitimacy and the bona fides that your display does at a trade show. It is a way for buyers to check you out and to discover more about you. Nowadays, you will find out that many of your potential customers — even ones who you cold call — will check you out on social media.

This is a switch in paradigm from how most salespeople are attempting to use social media (in most cases, unsuccessfully). When we recognize that social media is not our primary, www.offi cetechnol ogymag. c om | M a y 2016 | 29

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mechanism for your customers also has but a supplementary prospecting mechaimplications about what you should not nism, it changes our approach to our social Everything you post on post. Everything you post on any of your media posts. any of your social media social media pages needs to be carefully Instead of posting with constant calls to pages needs to be vetted with an eye toward what you might action in an attempt to get a cold response carefully vetted with not want your customers to see. When in from your readers and followers, focus on an eye toward what doubt, do not post it. posts that build your brand, your name recSocial media may someday replace ognition and your professional reputation. you might not want conventional prospecting, but the mediOne particular mechanism you should your customers to see. um for that has not been invented yet. For focus on is the “recommendations” tool on now, keep prospecting and use social meLinkedIn. There has never been an easier way to get testimonials from your happy customers than by dia as your backdrop. n Troy Harrison is the author of “Sell Like You Mean It!” and requesting recommendations through LinkedIn. Those rec“The Pocket Sales Manager.” He is a speaker, consultant and ommendations can be in context (since LinkedIn specifically sales navigator who helps companies build more profitable and refers to the job you are requesting the recommendation for) and allows you to review the recommendation before posting. productive sales forces with his cutting-edge sales training and methodologies. For information on Once you have a recommendation, it is time to fire up Twitter booking speaking/training engagements, and link to your new recommendation. It is easy. consulting or to sign up for Harrison’s weekly YouTube videos can be great for posting product demone-zine, call (913) 645-3603 or strations, case studies, etc., and if you link to those, your cusemail troy@troyharrison.com. tomers can use them to check you out.

That said, the knowledge that social media is a “due diligence” Visit www.troyharrison.com.

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