Beat Slow Moving POS Tech Adoption
Like many small-town VARs, Business Machines Systems, Inc. sells POS technology into a market that's sometimes resistant to its adoption. How does it find sales success?
Mike Dougherty has a vision for his restaurant POS (point of sale) customers. Unfortunately, given the pace of new restaurant technology adoption in and around Little Rock, AR, the near-future fruition of that vision is questionable. Dougherty is retail systems manager at Business Machines Systems, Inc. (BMS), a restaurant and retail POS hardware and software reseller headquartered in Little Rock. He and his company are veterans of the industry, with Dougherty on board for 20 of BMS' 28-year history. Over the years, the company has gained a corner on its region's table service restaurant market. But for all its history and market penetration, Dougherty admits his company isn't installing leading-edge POS technology. Additionally, his sales of complementary back office products like inventory control and customer loyalty software programs are few and far between. Why? Because his customers are focused on the customer-facing aspects of their businesses, a mentality that can seem an impassable barrier to back office solution sales for any VAR.
Understand The Barrier
BMS' average customer does roughly $1 million a year in sales and is typically an owner/operator. Like many rural restaurateurs, they are operations-oriented: cooks and wait staff first, business people second. "My customers are at the front of the house, not in the back crunching numbers," Dougherty says. This is both his blessing and his curse. The blessing is that he can provide customers a POS system that helps manage the monetary and mathematical aspects of the business they might otherwise struggle with when servicing customers. "That's one of the de facto benefits of a restaurant POS system; most of the savings and benefits that it gives you happen by virtue of the fact that you use it," he says. In other words, it eliminates manual number crunching, making daily operations more efficient and hassle-free. Once Dougherty gets that point across to a potential customer, a sale usually follows.
The fact that Dougherty's clients are often not back office oriented is his curse, too. "It's hard to convince my customers they need to do something they're not already doing on the back end," Dougherty explains. "Selling inventory and customer loyalty systems is tough, for example, because I'm asking someone to change the way they're doing business." Solutions that don't require the customer to change behaviors are the only ones to pitch in markets like his. "The POS system doesn't require the data entry and analysis that inventory and customer loyalty programs do. My customers are resistant to that," he says. In fact, the POS system is a relief to his clientele, allowing them to concentrate on the part of the business they enjoy - serving customers - instead of toiling for hours in the back office adding up sales and worrying about undercharges.
Beyond the front end mindset, Dougherty explains that POS technology is generally not as pervasive in rural areas as it is in urban centers. "Our customers are not that sophisticated," Dougherty explains. "It's to some degree a product of the area we're in - Arkansas is a rural state and slow to adopt new technology."
Building Confidence In The Internet
The tools enabled by the Internet revolution have been slow to take root in Arkansas restaurants, but Dougherty is working to change that. "It's a goal of mine to introduce the Internet to some of our customers," he says. "Unfortunately, I would say 70% of my customers don't use, or want, the Internet at their place of business right now." The perception among many rural restaurateurs is that if a technology does not directly serve customers, it's frivolous. But with Internet-based applications like online ordering and reporting permeating POS software these days, Dougherty feels its adoption in his market is inevitable. "The Internet is kind of getting shoved down their throats by vendors to some degree. My customers are not progressively seeking Internet solutions, but it's the kind of thing that will be forced on them," he says. Dougherty's starting point is minimal - a couple of his customers have "yellow pages-style" Web sites, and a handful have done some online ordering of supplies. But, as his market slowly accepts the Internet as a useful tool for performing business functions, Dougherty will be thankful his company put pieces like Aloha Enterprise (an ASP [application service provider]-based POS system) in place to support it in advance. While a blistering pace of adoption might be too much for him to ask, the Aloha dealer points to two upcoming ASP integrations and an Internet-based gift card implementation as signs that the tide is changing.
His market's slow adoption of Internet connectivity has also sheltered BMS from competition in at least one sense. BMS has yet to encounter the issues that many resellers have seen with customers buying products from online catalogs, then asking VARs to install, service, and support them. "As our customers accept the Web, it's going to change the providers we compete with, and how we compete with them," Dougherty says. The availability of POS hardware and software at deeply discounted prices on the Internet has reinforced service and support as the key revenue generation opportunities for VARs.
Measure Your Expectations
Dougherty says the biggest mistake a VAR like BMS can make is to not understand what the market potential is for a product. "A lot of times, salespeople get hung up because it's hard to walk away from a deal. They'll end up taking on a new product to sell a particular customer, but the market really won't provide enough opportunities for that product to make selling and servicing it a profitable investment for their company," he explains. "Any time you add a new product, you've got a whole new animal to support. Whether you've got one installation or a hundred, you've still got to employ people that know the product and can help the customer." VARs in markets like BMS' must carefully consider the overhead involved with taking on new products before offering them to potential customers. Adding a product that you can't adequately sell, service, and support not only hurts your profitability, it hurts your credibility. Most of BMS' business is generated by referrals from its large customer base, which could erode if customers are left unsatisfied. "You've got to divorce yourself from the specific deal and let your knowledge of the market's needs and what it will accept drive your decisions," says Dougherty. "Deals that pull you out of that direction are the ones that aren't profitable."
When it comes to the future, Dougherty keeps an optimistic outlook. Asked about Internet-based software and support and other new technologies like wireless, his response is confident. "We'll get there," he says. "It might be five years after everybody else, but we'll get there."