Deliver Profits With A Vertical Market Focus
Scrapping a horizontal market approach in favor of the trucking vertical has helped a document imaging integrator increase gross sales by 400% in 1998.
The document and image management installation was for national trucking company Landstar Ranger, but that made little difference to Pegasus Imaging Corporation. The Tampa, FL-based integrator had done previous document imaging installations in healthcare, retail, and insurance markets. Why not add the trucking market to the list? "At the time, we considered it to be just another account for us," recalls Leslie Berlin, president of Pegasus. She could not have predicted that the Landstar installation would change the direction of her company.
Shortly after completing the document imaging installation for Landstar in 1995, Pegasus secured another trucking company account - this time with Alterman Transport Lines. "The trucking industry is pretty conservative; companies seem to follow what their competitors are doing," comments Berlin. After two successful installations in the trucking market, Berlin decided it was time to scrap her company's horizontal market approach. Since 1995, Pegasus has only done installations for the trucking market.
This vertical market strategy has paid off. According to Berlin, Pegasus now has 40 document imaging installations in the trucking vertical - more than any other integration company. Berlin's husband, Jack, founded the company in 1991 to develop image compression software. Leslie, a former IBM integrator, joined the company in 1993 to offer document imaging solutions. The company employs 51 people in total. 31 employees work on imaging integration and the remaining 20 on compression technology. The imaging side of the business quadrupled its gross sales in 1997 and has already matched last year's gross sales in the first quarter of 1998.
Breaking Into A Vertical Market
Pegasus' first installation in the trucking vertical was for an existing customer. In 1993, Landstar worked with Pegasus for two years to find and implement a COLD (computer output to laser disk) solution. The COLD solution allowed the Landstar employees to view and print reports by extracting information stored on the company's mainframe computer. "Landstar is based in Jacksonville, FL, but it is one of the largest trucking companies in the country. The company generates reports from the COLD system that are sometimes 100,000 pages long," says Berlin. "Landstar spent two years looking for a COLD solution and spent about $30,000 on the installation."
When Landstar decided to implement a document imaging system in 1995, Pegasus was contacted. The same Landstar official in charge of finding a COLD solution was also heading the company's document imaging project. Despite proposals from large document imaging vendors, the Landstar official contacted Berlin at Pegasus. "I am about to spend more money than I have ever spent in my entire life - even in buying my house. If this project doesn't go well, it will cost me my job," the official relayed to Berlin. "I trust you and I want you to do the installation." Following the successful installation at Landstar, Pegasus leveraged what it had learned to tackle the Alterman Transport Lines account.
"After the second trucking company installation, we realized this was a market we knew and we were good at it," states Berlin. "Also, no other integrators had stepped up to the plate and delivered document imaging solutions specific to trucking. There was a lot of potential work out there." Berlin says there are about 30,000 trucking companies in the U.S. and about 15,000 trucking companies have six trucks or more.
Providing A Vertical Solution
During its installations at Landstar and Alterman, Pegasus had developed customized software modules for use in the trucking industry. When the company chose a vertical focus, it began to market these modules as a product called TRANSFLO™. The modules are integrated with Fujitsu's Flow 2.0 workflow product and Docubase document management software. The result is a document imaging solution tailored to the trucking industry.
For example, when a trucking company sends out invoices to its customers, different customers require different supporting documentation. One customer might only want to receive the invoice, another may want the invoice and delivery receipt, still another customer may want the invoice, delivery receipt, and bill of lading (document confirming delivery and transfer of goods). While the invoices are generated off a mainframe, the delivery receipts and bills of lading are given to the trucking company by truck drivers after a delivery. "The employees at the trucking company had to determine what documents a customer wanted to receive and then make copies of those document," explains Berlin. "Eliminating this procedure saves money in the form of copying expenses and time." To eliminate the procedure, trucking companies now scan all delivery receipts and bills of lading. When an invoice needs to be sent to a customer, TRANSFLO software identifies what supporting documents are required by the customer. The invoice and the supporting documents are then printed and sent to the customer.
Understanding Your Market
Every vertical market has terminology and business processes that are unique to it. The trucking industry is no exception. "Trucking companies are complicated organizations and they need specialized solutions," says Berlin.
For example, transporting goods by truck can be separated into two different categories. The first is less than truckload (LTL). LTL means a driver's truck will not be filled by one customer's order. Instead, the truck will contain orders from several different customers. The driver picks up the orders at a warehouse and delivers the goods to each customer throughout the day. Typically, the deliveries are regional and drivers will return to a dispatch center after the last delivery.
Unlike LTL, truckload shipments require drivers to fill their trucks with goods for only one customer. A driver may pick up goods at a warehouse in Ohio and then drive to Texas to make the delivery. Truckload shipments are usually national in scope and can take several days to complete. Each delivery method creates unique billing challenges and Pegasus has developed document imaging solutions which reduce billing time and allow drivers and trucking companies to be paid more quickly.
Solving A Market Problem
- LTL - Large trucking companies have smaller independent trucking agents scattered across the country. The large company may send an order to an agent where a driver is dispatched to pick up a shipment for three deliveries. Before leaving, the dispatcher gives the driver three delivery receipts which must be signed by each customer upon delivery and returned to the dispatch center. Each delivery receipt contains a unique bar code that identifies the order number and document type. After making the three deliveries, the driver returns to the dispatch center with the three signed delivery receipts. "The trucker and agent do not get paid until the trucking company receives the delivery receipts. So, it is in their best interest to get the delivery receipts to the trucking company as quickly as possible," states Berlin. These receipts used to be sent by overnight or regular mail. Of course, the agent and trucker made copies of the receipts before mailing the documents. Pegasus uses the Internet to expedite the billing process and eliminate copying and mailing charges. Independent agents are enrolled with an Internet provider. After the receipts are scanned, Pegasus software transmits the images to a corporate office where they are indexed using the bar code on each receipt.
Truckload - Truckload shipments can take days to deliver, which extends the billing process. After making a delivery, drivers usually go to a truck stop where they make a copy of the delivery receipt and mail the original receipt to a corporate office. By implementing scan kiosks at truck stops, Pegasus has reduced billing time from more than a week to about one day. By the end of 1998, Pegasus will have 400 kiosks at truck stops. Drivers swipe a magnetic stripe card at the kiosk which identifies the driver and company. The driver enters the order number on the kiosk's touch screen and scans the receipt on a flatbed scanner. Through a frame relay, the scanned image is transmitted to a trucker's corporate office and the billing process can begin immediately. "A driver can make a delivery in the morning, go to a truck stop, scan all documents and an invoice can be produced that same day," says Berlin. "If a company is billing $1 million per day, it can shorten its accounts receivables by three days."
Focus, Focus, Focus
Concentrating on the trucking market has been so successful for Pegasus that the company has not taken a job outside its niche market in three years. Berlin was reading Crossing The Chasm at roughly the same time she was thinking about taking a vertical approach in her company. "Once you are successful with a couple of installations in a vertical market, more jobs in the same market just seem to follow," comments Berlin. "Crossing The Chasm seemed to reinforce what I was thinking - focus, focus, focus. That's what we did and it absolutely worked."