Whenever I speak with Andrew Ritschel, president of Electronic Office Systems (EOS) in Fairfield, NJ, I can count on him to share his concerns about the latest goings on in the office technology industry. This time at the end of our conversation, Ritschel made one thing perfectly clear so that I or readers don’t get the wrong impression.
“I don’t want to be the chronic complainer and moaner becomes I’m an optimist not a pessimist,” he told me. “I’m not a realist either, which is a pessimist in disguise. “I look at things and try to come up with solutions and ideas and try and alter or change the course of my business and how we’re doing things.”
Ritschel is on the front lines every day, selling alongside his nine sales people. “I see prospects and customers and I’m very in touch with the marketplace and not in some tower having things filtered up to me,” he says.
His main concerns of late is what he calls the industry’s race to zero and the new reality for today’s copier sales reps.
Rewind to a recent EOS sales meeting where Ritschel, who is turning 55 in June, told his reps that 55 is the new 40. That comment elicited some snickers, but then he went on to say that if today’s reps aren’t working 55 hours a week, they’re not getting done what reps were able to get done in 40 hours 15 years ago. “The need to work 55 hours is critical,” he emphasized. “If you’re working 40 hours or cheating and only working 35 hours or 32, your income level will be dramatically less than it’s ever been.”
His solution is working harder and smarter. That’s only the beginning as Ritschel explained to me the challenges sales reps face day in and day out in today’s marketplace. Let’s examine a few of those:
Providing a quote without looking like a thief and still making a profit – Ritschel recommends exploiting special group pricing from manufacturers. “Meaning I can’t use our normal acquisition costs based on low dealer cost,” explains Ritschel. “I’ll probably need to do some program cheating because I’m up against other people in the market who are cheating on the programs available from the manufacturer whether it’s medical account pricing, national account pricing, or pricing for US Communities.”
He contends that program cheating is rampant in the marketplace right now. “If you quote at normal wholesale pricing with your markup for shipping, setup, and delivery you’re dead,” he warns.
Proposals that disappear into black holes - “Many times once you get a proposal into a customer’s or prospect’s hands you get no response; you can’t get people on the phone, or you can’t get them to answer e-mails,” laments Ritschel.
Prospects who don’t want to meet face to face, or to qualify, or to review their proposal with them – “They just want you to e-mail them,” says Ritschel. “That’s a pervasive attitude in the marketplace. No one wants to build relationships, no one wants to make it personal, no one wants to deal with loyalty. They just want your expertise and prices for free like they get on the Internet.”
The current marketplace is another frustration as Ritschel is witnessing single-unit sales down the street being sold at best major account pricing levels. Add to that maintenance agreement rates being sold at record lows and fixed for 48-month or 60-month terms, and manufacturer branches selling down the street to end users at or below dealership wholesale. At the same time he’s seeing leasing companies make end-of-term buyout deals with their dealer’s customers, manufacturers acquiring their own dealers, and MPS service going sub penny. “We just had a competitor offer .0072 on a fleet of new desktops fixed for 60 months,” reports Ritschel. “It’s beyond insanity.”
This is an environment that Ritschel says dealers and sales reps have to accept. The solution, or at least his solution for dealing with this new reality, is to be all things to all customers. He uses the example of a general contractor and the various trades he uses when constructing a home. As far as the home owner is concerned, they’re only dealing with the contractor not the individual trades for services like plumbing, flooring, HVAC, etc.
“The independent dealer needs to become a general contractor for their customers and the sales rep must become the site manager,” opines Ritschel. “So instead of just selling them their office equipment, managed print services, managed services, they’re looking to also capture anything else in that office that they can have a trusted affiliate or associate company do the work and them getting a percentage of the revenue.”
That way they’re remaining sticky with their customer and have become a valuable resource for them while the dealer is making a profit on a lot of different things (color MFPs, document management, graphic art works, electronic medical records, IT, phone systems, postage equipment, bass back-file scanning, etc.). “You’re able to touch the customer on a regular basis and sell them something, and also go into new prospects and convert them into a new customer by selling one of your laundry list of goods or services,” states Ritschel.
The bottom line he says is making a profit, what some dealers and manufacturers have lost sight of in Ritschel’s estimation. “You cannot work every day, gain knowledge, give your knowledge away, and sell, and when you do sell, make nothing. If our margins are coming down, we’re going to have to sell a whole lot more of a whole lot of different things maybe with a lot less competition and through third parties to make profits so we can add value again. This is the future of our business. It’s not something we can control, it’s where things are going and we need to come up with strategies to live with this new reality.”
About the Author
Scott Cullen is the president/owner Sustainable Publishing Group and the editor of The Week in Imaging. He's been writing about the office technology industry since 1986.
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