Believe it or not it’s more than just quotas.
By Scott Cullen
Whether office equipment manufacturers and dealers want to admit it or not, there is sometimes tension, mistrust and miscommunication in their relationships with each other. As I noted last month when looking at what dealers expect from their manufacturer, after 16 years of covering the office equipment industry, it’s been obvious to me that the state of relations between the two groups is not always at its best. Although many manufacturers and dealers prefer not to express their true feelings on the record, off the record conversations reveal relationships that are sometimes contentious and adversarial with both sides accusing the other of unrealistic expectations, not holding up their end of the bargain or engaging in foolish business practices.
While those aforementioned issues crop up regularly, there are still manufacturers who have excellent relationships with their dealers or at least the majority of their dealer channel. After all, you can’t please everyone all of the time.
Last month we asked dealers what they expect from their manufacturers. To recap, dealers want fair pricing, honesty, to be treated like a customer, listened to, good communication, timely availability of product, not competed with, technically sound product and cutting edge features.
Turning the tables, and in a further effort to bridge the gap between manufacturers and dealers, we’ve asked a number of manufacturers what they expect from their dealers. Here’s what they had to say:
Open Communication and Understanding. This is one of those areas where office equipment manufacturers and dealers are in agreement. “It’s important to have an honest interchange of ideas and communication,” maintains Kevin Reidy, manager, national office products sales, with Panasonic. Jim Coriddi, vice-president of dealer sales for Ricoh agrees, noting that talking honestly and listening to each other are critical in a changing office equipment landscape where dealers are finding themselves up against new competitors.
For Panasonic’s Reidy, open communication and understanding are closely related. “It’s not just hammering us for better pricing,” says Reidy. Equally important, he says, is discussing added value to secure more business. Reidy also feels dealers shouldn’t hesitate to ask manufacturer questions. “We both need to be on the same ground in all aspects of our business,” notes Reidy. “Dealers are our customer and it’s important for us to understand each other. At the same time, we’re also partners, although not in a profit and loss sense but in gaining common ground and in growing both sides of our business. Dealers need to realize that we’re not always the bad guy.”
Don Snowden, vice-president of sales, for Minolta, maintains that dealers and manufacturers aren’t really all that different. “I think we’re both seeking the same things,” says Snowden. “The trick is for both parties to perform at a level of excellence all the time.” Snowden admits both parties fall short in this area from time to time but if you have honest, open communication and look at this as a long-term relationship, it’s not a deal killer for either one.”
Financial Stability. An office equipment dealership on solid financial ground remains an attractive dealership to manufacturers, according to most of the individuals we spoke with. “It costs a lot more to be a dealer these days,” says Steve Jones, senior vice-president, Konica Business Technologies. “You need inventory to support your customer base.” It’s critical that dealers be willing to invest in hardware and software as well as a showroom that demonstrates all the capabilities of digital technology whether it be black & white copier-printers or color products.
A Strong Customer Base. Like financial stability, this one is a no-brainer. Without a strong customer base, dealer’s are fighting an uphill battle in trying to win market share for their manufacturer. Not that it can’t be done.
A Willingness to Change. In an era of converging technologies and a greater emphasis on printing and solutions, office equipment manufacturers expect their dealers to be willing to modify their business models to better compete in the marketplace. “Dealers need to be able to change their business model to leverage opportunities,” says Jim Coriddi, vice-president of dealer sales for Ricoh brand. Through change and expanding their business into new areas, Coriddi says dealers can expand their business with current customers while at the same time offering them new and networkable products.
An Investment in Their Future. “Fifty-one percent of a dealers' resources are human, and you must invest and protect that asset if you expect to survive and succeed, says Steve Rhorer, director, product marketing for Toshiba. According to Rhorer, one of the ways for dealers to invest in their future is by attending a manufacturer’s sales training programs on connectivity and software solutions. “This training and investment gives individuals the foundation to build upon, as well as knowledge to be successful,” explains Rhorer. “Besides investing in human resources, dealers must also invest in technology - things like connectivity, software, scanning, the Internet, etc. By using technology, dealers can accelerate their growth and knowledge. Lack of technology will simply accelerate their decline.”
Panasonic’s Reidy also sees the importance of dealer training and education. Unfortunately he says, not every dealer is willing to make that investment. Reidy notes it’s not unusual for some dealerships, including larger, well-heeled organizations to simply send one technician out for training and then hope that person can come back to the company and train 30 other technicians. If dealers are scrimping and saving in this area and service techs aren’t properly trained to correct equipment problems, Reidy contends it could negatively affect not only the dealer’s business but the manufacturer’s business, and in turn the entire brand in the eyes of the customer.
Minolta’s Snowden also expects dealers consider their future by taking advantage of the opportunities the manufacturer provides from sales and service training to marketing programs. “These are expensive to create and manage but not every dealer takes advantage of them,” says Snowden.
A Commitment to Growing Their Business. “Dealers need to understand that their business has to be growing and we need to be growing together,” says Panasonic’s Reidy. “We need to find ways to work jointly to help that business grow or look for alternatives in that market.” Reidy adds that if the business isn’t growing, it’s going down and no one will survive.”
Ricoh’s Coriddi also cites growth as a key attribute that manufacturers look for in their dealers. “Even in a relatively flat economy we require our dealers to continue to grow,” he says. Minolta’s Snowden also expects dealers to be willing to grow their business. “There’s a group that truly wants to do that and some are successful,” notes Snowden. “But there are others who may not be interested in growth. They may be at an age where they feel it is risky investing in change and that is no longer appealing to them.”
A First-Class Support Team. For many manufacturers, this simply means that the dealer has a network savvy technician on staff. This goes hand in hand with an investment in their future. “A dealer needs a network savvy person, they can’t just rely on the manufacturer for connecting the product whether they’re selling one or 100 connected products a month,” says Reidy. “You can’t compete with just an analog team and with the increasing sophistication of these products, you can’t fake it,” adds Jones.
Solutions Selling. Office equipment dealers have been preaching the gospel of solutions selling for a number of years now and many are still adamant that this is the direction their dealers need to be taking. “Some dealers are still interested in getting the sale the easiest and quickest way they can,” opines Reidy.
“Solutions has broadened dealers’ ability to use software to provide for the needs of their customers,” says Coriddi. “However, this requires a knowledge and expertise to understand the customer’s requirements and problems, and then apply the appropriate software application.”
But how does one reconcile the fact that manufacturers are asking dealers to sell solutions, which by nature require a longer sales cycle, while at the same time imposing quotas on these dealers, which continues to encourage them to sell boxes? “From our standpoint quota numbers are revenue driven,” explains Reidy. “By selling solutions, dealers can see their revenues grow.” He adds, “If they’re just selling a box, they can be sure that their competition is out there selling a solution.”
Coriddi adds that in a solution sale, software may only represent 5%-10% of the overall deal to start with but it ultimately opens up the network and the number of pages that will be going through the network. “Dealers need to enhance the capability of boxes and gain access and ownership of the network,” says Coriddi. “That’s the first step for going into solutions. Initially, its enhancing the value dealers bring to the customer and avoiding our products from being commodities.”
Professionalism. “Dealers who are viewed by customers as someone they want to do business with,” says Konica’s Jones. “The days of knocking on a door and saying, ‘Have I got a deal for you’ are over. Dealers need to be taking better care of their customers.”
Dealers Who Don’t Set the Wrong Expectation Levels with Customers. “Don’t over promise,” notes Konica’s Jones, who explains that some dealers will give customer’s the impression that digital equipment will do things for the customer that in reality it can’t just because a customer is looking for a specific application. “Don’t say it makes milkshakes and copies,” adds Jones. He explains that it’s not unusual for dealers to make these promises to customers and then end up calling Konica and asking them to make it work. “Set expectation levels that are reasonable and right,” says Jones.
Community Involvement. Jones feels that dealers need to be viewed as more than a company selling equipment. Sponsorship of community activities, involvement in the local chamber of commerce and other business and community organizations are essential in Jones’s estimation.
A Long-term Relationship. Minolta’s Snowden expects a channel of distribution that wants a long-term relationship and a win-win relationship. “One shouldn’t have an advantage over the other,” says Snowden. “If our actions and strategies are based on anything short term, then we’re making a mistake.”
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