Charting A Course To 50% Business Growth
Resellers should be growing 50% a year as the digital ID card industry's growth surges, one observer contends. Here's what to do if your growth isn't keeping pace.
Auto ID resellers: is your company's annual growth rate at least 50%? If not, then you should evaluate your business goals, according to Gary Holland, general manager of FARGO Electronics, Inc. FARGO (Eden Prairie, MN), manufactures identification card printers.
"With the recent growth of digital ID card printing, resellers that aren't growing at least 50% annually need to determine why," Holland says. "The most successful resellers are those that have adopted a specific business strategy and focused on it."
Digital ID card printing systems - which include a digital camera, printer, PC and software - have slowly started to replace the practice of laminating photos to make ID cards. Digital systems, which cost $10,000-$15,000 five years ago, now cost as little as $5,000. As these systems have become more affordable, their adoption has increased steadily.
VAR Business Strategies
Holland says VARs have three options for selling card printing systems:
- Software development - VARs and resellers can focus on developing software for ID card printing systems. Software is needed to design the format of identification cards and badges.
- End user sales - Many resellers sell systems to end users in healthcare, government or other markets.
Distribution - Distributors buy products and systems from manufacturers and sell them to resellers, as opposed to end users.
Which Business Approach Is Right?
In deciding on a strategy, Holland says VARs have to ask themselves:
- Will the strategy be viable in three to five years?
- What kind of steps will the company have to take in order to reach its goals?
- What kind of financial and personnel-related investments are required? According to Holland, software development typically requires resellers to have access to more capital than the other approaches. "Resellers typically don't have revenue coming in while their software is under development," he says.
- What are the reseller's strengths and weaknesses - e.g., sales expertise versus technical knowledge?
Business Systems Magazine (BSM) also asked Shyla Allard, a senior product manager for DataCard Corporation, what VARs can do to achieve 50% annual growth. DataCard (Minnetonka, MN), a manufacturer of photo ID printers and integrated systems, had 1997 gross sales of $350 million and employs more than 2,000 people. According to Allard, pre- and post-sale services are important. Pre-sale service can include helping end users determine exactly how to use a digital photo ID system and maximize its benefits. "Resellers first need to help customers decide how the ID cards will be used," Allard says.
"For example, does a school want students to use their ID cards to pay for lunches? That's an important consideration because it will influence the design of the cards. If the cards will be used to pay for lunches, they need to incorporate a mag stripe or bar code."
In terms of post-sale services, VARs should offer technical support for system problems. VARs also should help customers change the format and design of their badges.
Trends You Need To Know
Resellers also have to stay current on trends if they want to grow at the same rate as the ID card industry, Allard and Holland say. The two agree that the main trend impacting the industry is the forecasted growth for smart cards in the United States. (Smart cards have been used in Europe for years and are more popular there than in the United States).
Smart cards offer better security than mag stripe cards, Allard and Holland say. Smart card data is stored on micro computer chips and can be encrypted for security. Data on mag stripe cards is stored magnetically, which makes it easier for data to be manipulated. Government and education - primarily at the college level - are among the U.S. markets showing more interest in smart cards, Allard says.