Bar-Coding Revenue: Don't Miss A Penny
Business Solutions, November 2009
In many ways, Texas Barcode Systems is like any other VAR. Due to the economy, 2009 was a slow year for sales. Now, as the economy shows signs of improvement, David Edwards, president of Texas Barcode Systems, believes his company is poised for 30% revenue growth. How? He's identified a handful of key issues facing his target market — Fortune 1000-sized manufacturers and distributors with more than 100 employees. Apart from identifying the right issues, the VAR installs the necessary bar-coding solutions to solve those needs.
Mandates Are Forcing 2-D Bar-Coding Upgrades
Edwards says he's been selling more 2-D bar-coding products in the last few months than he has in the last six years. He believes the reason why stems directly from various mandates imposed on suppliers. For instance, many of his clients who perform electronics manufacturing work are required by the telecom industry to use Micro PDF417 and QR codes (data matrix). "Everyone wants more information when they scan a bar code," says Edwards. "To get more information, you need to use 2-D symbology." For that, manufacturers need printers capable of producing high-resolution (600 dpi [dots per inch]) bar codes (as well as bar code scanners capable of reading the codes). "We have one customer that makes telecom equipment used by Verizon and AT&T," he adds. "While it is a major manufacturing operation, this company buys equipment and runs it until it dies. It probably wouldn't have purchased new printers if it wasn't required to print 2-D labels." Edwards continues by explaining that his customers in the food industry also face regulations pertaining to the traceability of food in the event a recall is needed. Therefore, the VAR has seen an increase in sales of 2-D solutions to those customers.
You might be wondering how RFID (radio frequency identification) plays into all this. After all, the information-storing ability and traceability of an RFID tag far surpasses the capabilities of a 2-D label. As you might guess, Edwards says the cost of RFID still is prohibitive. "In manufacturing and distribution, unless they're being mandated, there aren't many companies jumping into RFID," he explains. "If anything, RFID inquiries are diminishing due to the expense and the economy. There are also still some issues concerning the reliability of labels, as most are more delicate than a bar code label and not suited for warehouse environments."
The VAR also sees a trend with products reaching end of life. He says two factors are contributing to this. First, companies that bought new equipment for Y2K now are finding that equipment failing and due for replacement. On top of that, the slumping economy caused many companies to put purchases on hold. Now, as the economy turns and equipment is failing, companies are compelled to make the purchase of new equipment.
When it comes to new equipment, Edwards says his company's goal is to spec out the hardware that will have the lowest cost of ownership over the life of the product for the customer (and obviously, meets their needs). "The consumables for small desktop printers are more expensive because the cost to manufacture the media is higher," he explains. "Even if a customer can save money by purchasing a cheaper printer, over time it might be spending more money." In general, Edwards says if a customer is printing fewer than 20,000 labels a month, he'll recommend a low-tier printer. At 1,000 labels or more a day, he recommends mid- to high-range printers. With mobile computers, the VAR is sure to factor in the cost of replacement batteries over time. By looking at a five-year life span, the consumables savings might pay for an upgrade to the next piece of hardware.
Use The Economy To Sell Bar Coding Services
While external requirements are dictating new technology adoption, internal requirements are also creating a need Texas Barcode looks to fulfill. Indeed, while Texas Barcode's hardware sales slipped a bit in 2009 due to the economy, Edwards says revenue from his professional services has risen 15% during the same time. Specifically, Edwards says that due to the economy, many companies downsized — especially in the IT department — putting additional burden on the existing IT staff. Therefore, during the VAR's more recent installs, customers were willing to pay for Texas Barcode's professional services to lighten the burden on internal resources. "We have customers with multiple locations, but IT staff only at headquarters," explains Edwards. "Therefore, we act as the remote IT staff, performing site surveys, doing configuration work, and training the end users. Some customers give us a list of settings for printers; then we set them up and ship them out." In the past, many of the VAR's customers would shoulder this burden.
As another way to lighten the IT burden on customers, Texas Barcode also provides free technical support. Rather than pass customer problems on to the device manufacturer, the VAR handles problems with its own support team. Edwards says this accomplishes a couple of things. First, it ensures his customers receive prompt service. Second, it keeps his employees educated and in tune with customer issues. The VAR also says the manufacturers of the products he resells appreciate the VAR's efforts to solve problems. "When we eventually call a manufacturer, they know it's a real problem," he says. As you might know, so many support calls are for trivial problems, which is why Edwards feels he's doing the right thing by giving away tech support for free. "We can solve about 90% of printer trouble calls without sending someone on-site. It's usually a calibration issue or a media error." Regardless, the free tech support saves his customers money, which, in turn, leads to happier customers.
Finally, Edwards helps educate his customers. This goes beyond the training involved in an initial rollout. The VAR says another problem its customers face is uneducated users. "A lot of manufacturers have high turnover in the positions that use the technology we install," he says. "For our larger customers, we'll provide a quarterly training session to acclimate new users to the printers. It's sort of a course on bar-coding basics." The benefits are that this helps customers be more productive because users know what they're doing, and the printers work more reliably because users aren't mishandling them. Like technical support, this is a free service Texas Barcode provides.
As the economy continues to improve, Edwards believes the needs of his core market will remain unchanged, creating great opportunity for the VAR in 2010. He concludes, "I think we've seen the economy bottom out. All indications from our customers are that everyone is running really lean. The only direction is up."