An Evolving Channel Model

With the ability to hit the road once again, I’ve had the pleasure of speaking with a fair number of dealer principles at recent events. The news I’ve heard is mixed, with many dealers clearly feeling the impact of COVID-19 and others who seemingly brushed it off completely. Which side of the coin you landed on appeared to be largely dependent on how you had positioned yourself long before the pandemic ever hit and not how well you reacted to it. Fortunately, it’s not too late to begin the evolution to a more balanced portfolio that, like your 401k, spreads the risk evenly should one area of your investments begin to underperform.

Over the years I have heard the call for diversification several times, and the message has always been compelling. At virtually every industry meeting I heard experts advise dealers to become less print dependent and to expand their horizons to include other solutions like managed IT, telephony, and content services. From my perspective, it seemed like sound advice given that each generation of office workers seems to become slightly more digitized than the last , and far more likely to reference their phone for information than print it to paper.

The Hunt for Recurring Revenue

The more urgent message I’ve heard recently has been focused on building new streams of recurring revenue. There’s no denying that there has been a slow erosion in the number of click charges the print industry has seen in recent years. Sometimes it was dramatic (think 2007) and usually it bounced back — but never quite back to where it was before. To counter this reduction in printing and earnings, dealers sought out other products that were also consumption based. In many cases, this meant cloud services that could be billed in small increments, much like the monthly print charge.

Whether we like it or not, however, necessity is the mother of invention. Despite warnings by experts or even the evidence of reduced demand, why would any dealer pivot away from print when the return was still so profitable? Taking on another product line meant making an investment, assuming new risk, and possibly not seeing any type of near-term return. Many dealers instead explored alternative product offerings tepidly by dipping a toe or two in the water to see what it felt like. As everyone knows, the only way to get past that initial shock of cold is to jump in with both feet. Simply put, you can’t dabble and expect to be successful.

Build or Buy?

For dealers with the resources, the quickest way to get into any managed service business practice is to buy an existing practice. Whether it’s an IT provider or a content management integrator, the result is that you’re instantly a player in the game.

Based on a survey I read in a recent publication, however, acquisition is the dealer’s least favorite means for entering a new practice area. It’s an uncomfortable transition for many. And in most cases what you’re paying for, in addition to their base of customers, is their pool of talent. Should that talent not be committed to the direction of a new employer, much of your investment’s value quickly fades due to turnover. Even worse, you could be left with a base of customers in an industry you know little about and not have the resources to support them.

So, the only other alternative is to build it from scratch, and that takes commitment. Again, you can’t dabble if the goal is to build something meaningful. You didn’t create a stream of recurring click revenue by selling a handful of printers a year, and you can’t do it with other forms of office technology either. Equally important, you’re never going to really get any good as a solutions provider when you only sell a deal every other month.

The Case for Content Management

In this brave new post-pandemic world we now live in, the case for selling content management services is stronger than ever. Home-based workers now require remote access to information. And with companies rebuilding their business processes so they don’t break when working with remote teams, digital transformation is the hot topic for many organizations.
Unfortunately, many channel partners that tried selling ECM and digital transformation services in the past struggled with profitability, delivery, and customer satisfaction. Sometimes this was due to a fading level of commitment but in many cases, it was for reasons outside of their control, such as a model that did not work for them.

Often, ECM simply didn’t align with the sales model of the print industry. Sales cycles were longer and pre-sales discovery and workflow design required extensive scoping to be done correctly. None of this fit within the 30-days sales cycle most reps were accustomed to when selling print. The good news is that in recent years, the ECM industry has responded to these shortcomings by making solutions easier to sell, easier to deploy and easier to use.

Enter the Cloud

With the introduction of cloud-based solutions strategies, deploying ECM solutions has become easier than ever. Having an appropriate server infrastructure in place or making sure the customer’s environment has the requisite database or web architecture in place are no longer concerns. Life is much better when you just get a link and a username, and you can share to provide almost immediate access to your customers.

Now, if you’re an IT server provider, you might ask why you wouldn’t just put it up on your own cloud. The answer is you could; but why would you if you can make 40 points with nothing to maintain, nothing to support and nothing to upgrade? Many feel it’s a much better business model if you can make that type of gross profit and not have to worry about managing anything from a technical perspective.

Aligning Expectations

For its first 30 years, ECM was sold as a “blank canvas” — an incredibly flexible medium where you could create whatever design and workflows the customer requested through general configuration. It sounds great in theory, but the truth is that most dealers don’t have the insight into what every customer in every vertical market wants to accomplish. One day you’re talking to an importer about managing their bills of lading, the next a school system regarding student records, and the day after that an archdiocese about their marriage tribunals. Without years of experience, it’s impossible to become well-versed in every use case for ECM.

So, the dealer sold the solution based on what the customer told them and did their best to scope the project and build it according to the customer’s wishes. Unfortunately, in many cases, the services were underestimated and any profits began to evaporate. Even worse was when the dealer swung and missed completely, only to end up refunding the customer because they couldn’t deliver on what they promised. This really is the worst-case scenario because many times, that customer the dealer just upset was someone they’d worked with for years and now the relationship was irreparably damaged.

Leveraging Best Practices

Fortunately, the days of misaligning expectations with your customer are over. Many of the major ECM manufacturers are now delivering pre-configured solutions that are available to drop right into your customer’s cloud instance for immediate deployment, such as process designs for accounts payable, accounts receivable, contracts management and human resources. These solutions can certainly be tweaked if needed but because they’re built using industry best practices, you typically have what the customer needs to get started down the path of digital transformation.

With this model you can demonstrate to the customer exactly what they’re getting and then deliver the cloud solution right along with the printer. This allows your rep to get delivery and acceptance sign off on the entire project the very same day and both you and your reps paid quickly. Then, once the customer has been up and running a few weeks, you could always offer them a post-delivery consultation to see if there are additional services they require.

In the End It’s Really All About Sales

With the recent changes to ECM product sales and delivery, alignment with the print industry is stronger than ever before. Cloud-hosted products and pre-configured solutions make ECM a product that every dealer can now embrace. But once again, any successful sales model requires volume to achieve the desired results.
Fortunately, while the channel might be evolving, it still all comes down to sales, which is something every dealer understands. Ultimately, the goal is to get reps combining ECM sales with equipment sales to drive up recurring revenue and profitability while adding value to the customer. So, there must be an expectation set for every salesperson and a regular inspection of the solutions opportunities in their forecasted pipeline.

It’s a new world of solutions and services out there but with the right products and partners, there’s also great opportunity. While the world of print continues to change it remains an integral part of doing business. The key is to build off the existing skill set and complement it with the tools and the talent to address the needs of the ever-changing world of business.