Are You Thriving Or Merely Surviving?
Efficient marketing, careful product selection, and ROI training for customers have POS (point of sale) VAR Retail Information Systems poised for a multimillion-dollar growth spurt.
Being profitable is a great thing. Unfortunately, being content with profitability alone might not ensure your business' survival. Your company might be profitable, but are you winning new customers and growing business with existing ones? You're making money, but are you viewed as a leader in the adoption of new technology in your space? Your customers are paying their bills, but do they see you as their technology savior, their teacher of ROI? You're surviving, but are you thriving? POS (point of sale) VARs can ensure their profitability and longevity by focusing on new business growth, staying on top of technology trends, and helping end users achieve ROI through training.
No Marketing Plan? You're Doomed
Houston-based Retail Information Systems (RIS) was founded in 1995 and spent its first three years simply surviving. In the beginning, it serviced customers whose service providers hadn't taken care of them, and only gradually began selling new installations of its own. "Our early customers were running the product we were licensed to support, but they weren't trained well, so they weren't using the system right," says Madhu Bontha, partner at RIS. While Bontha and partner David Alston were making an effort to increase their installation base, the effort simply wasn't effective. RIS spun its wheels on direct mail and cold calling initiatives that just didn't produce. "We had issues with the U.S. Postal Service," says Alston. "We would spend all kinds of money sending out thousands and thousands of mailers, and then the U.S. Postal Service would hold on to our business reply mail. Sometimes it would be held up for months," he says.
The company took control of its marketing effort by investing more in focused telemarketing, purchasing call lists designed with specific market criteria that helped them identify leads. They further qualified these leads prior to spending more money on a sales pitch. "Our marketing approach is telephone-centric. We now have a telemarketing staff of four people, who are pretty much on the phones all day, processing leads," says Alston. This refined sales call process has emboldened RIS to challenge its sales force to close 2/3 of their qualified leads. While aggressive, this goal is not unachievable, because potential customers on RIS' purchased list that become leads are very qualified. "If a lead reaches a salesperson's desk, our marketing people have thoroughly qualified it through multiple phone conversations and needs analyses," says Bontha.
This thorough lead generation and sales process not only yields customers who are ready to buy, it also educates salespeople prior to the pitch. "Our salespeople go into demonstrations with intimate knowledge of the potential customer's business problems and a laptop presentation tailored to the customer's needs," says Alston. After every successful sale, RIS holds a conference call among the salesperson, the technical support team, the training department, and the customer. On this call, the baton is passed to technical support and training, and the salesperson is no longer involved with the customer. "In this call, we review the quote with the customer and make sure they know what they're getting. It's at this point that customers often bring up issues that weren't covered in our proposal," says Bontha. "It's also in this call that we set the expectations regarding when the install will take place, how training will proceed, and when they can expect to be up and running with the system," he says.
Scalable Retail Software Fuels Growth
RIS began to grow its installation base in 1998, and Alston says the company's growth coincided with the maturation of the RetailPro software product it was selling. "We switched to Windows long ago, and we're moving up tier because of it," says Alston.
"Our product has become quite well-known in the market, to the point that we're an option in just about everyone's buying process at some point," says Alston. "The biggest mistake our competition made was to not rapidly upgrade their offerings to complete 32-bit Windows. POS software providers who haven't made this transition really hamstrung themselves," he says. RIS believes the scalability of its product is what best facilitated its growth. Its competitors that were slapping a GUI (graphical user interface) on their products and calling them Windows-based were realizing that pseudo-Windows only took the product so far. "Because of our move to Windows, we have bigger chains now. We have a 240-store customer, and we're now targeting chains with 200-plus locations," says Alston. In fact, RIS has recently found its product competing with tier-one retail software providers like Retek and STS. Now, it has expanded its geographic presence with sales and marketing offices in Dallas and Atlanta, lucrative markets where RetailPro's presence hadn't previously been felt.
One reason for its ability to compete with larger retail enterprise software providers is that RetailPro is moving to an Oracle-based solution. "It's embedded Oracle, which is what allows us to offer the stability and data integrity that puts us on a par with the tier-one solution providers," says Bontha. Alston maintains that while RIS will continue to focus on specialty retail, the Oracle back end allows RetailPro to fit into any business. "You can't do this without Windows," he says. The Oracle solution has a complete data warehouse on the back end for data mining. This functionality allows RIS to compete with bigger players while maintaining a VAR's price point advantage. "Our price has not gone up at all, even though it's an Oracle-based solution," says Bontha.
Use Technical Training To Teach ROI
If there's one message Alston and Bontha could get across to end users, it's that 32-bit Windows software running on a PC is anything but a cash register. "The system we sell isn't just a POS application. It includes merchandise management and inventory functionality. That's why we need to train people who are used to working on cash registers," says Bontha. "It's frustrating to see people spend this kind of money and still use the system like a cash register," adds Alston.
This is where RIS' training program comes in. RIS' happiest customers are those who understand how to make the system pay for itself in a short period of time (around six months, according to Alston), and training is imperative for that to happen. The VAR's three-person training department is composed entirely of trainers with retail management experience. "It's very difficult to recruit people with lots of retail management experience to our training department, but we are very particular about who we hire as a trainer," says Alston.
To combat end user ignorance, RIS provides free training every six weeks for its clients to review system features and functions. These sessions, usually held in Dallas, are separate from the minimum 20 hours of paid training the VAR requires with the sale of any system.
"If a potential client will not pay for training up front, we either shy away from the deal or require a disclaimer that they will buy training as soon as the system is installed," says Bontha. In the free sessions, RIS generally covers four topics per session, highlighting specific functions of the program. The topics change every six weeks and are designed to show customers they should use the system to achieve a payback period of six months or less.
For instance, Alston asserts that the automated PO (purchase order) function of RetailPro is one of the most overlooked, yet valuable functions in the system. This is often one of the topics included in the training. "With automated POs, a customer can keep a minimal amount of inventory in stock, yet still never be sold out because the system will automatically reorder for them," he explains. The system will also evaluate and report on sales and sell-through, which Alston calls another simple tool that his customers love, once they use. "This enables better buying decisions. It also empowers retailers to work their vendors over. You can show them a report that says, 'Here's your stuff; I bought it from you last season, and I still have 30% of it. How am I going to get rid of it?'"
Alston says another topic covered in training that helps customers achieve ROI is CRM (customer relationship management). RIS shows its customers how to collect consumer information for CRM initiatives, allowing it to see good patrons and capitalize on them, while managing the attention paid to poor patrons. He also points out that session attendance isn't limited to customers. "We welcome prospects to these sessions as well," says Alston.
Remote Service Saves Money
RIS keeps its service costs down by tending to customers remotely. "We have customers in the Carolinas, Oklahoma, Arkansas, and other states, yet our service people rarely travel," says Bontha. "If the customer is savvy enough to hook up their own computers, or if they can work with someone to do this for them, we simply ship everything to them, then do most of our training and support through PCAnywhere." After sales calls, RIS travels only when the customer demands it or if it's a complicated installation. "We try not to encourage physical travel, because it costs us more money and it's strenuous on our technicians," he says.
As it plans its biggest growth spurt yet, RIS is sticking with the survival and growth skills it has honed since 1995. Alston and Bontha both recognize that their partnership is just one more "best practice" that's central to the success of their business. "Our division of expertise works out very well for us," says the technology-centric Bontha. "David can be out of the office for two or three weeks at a time selling without concerning himself with what goes on here." It's a sentiment that marketing-centric Alston shares. "I could never do this by myself, and neither could Madhu. The fact that we each keep our particular ends of the business going allows us to focus on what's important to each of us," he says.