Grow Your Bar-Coding Sales In 2010
2009 was a tough year for many businesses, and now is the time to position your company for better revenues and margins in the upcoming year. Have thermal printers become commoditized? Is healthcare as big a play as you think? Should you be concerned about changes in the supply chain driving up media prices? Our expert panel gives three tips on how to improve your bar code printing sales in 2010.
1. Increase Margins With Solution Selling
If you are looking to earn more margin per sale, our experts encourage VARs to sell more services. "With hardware margins continuing to get squeezed by competitive pressures, VARs need to expand their business models to more solution selling versus hardware sales," admonishes Nicholas Ciarlante, senior marketing manager of Mono/SIDM/Specialty products at OKI Data. The biggest play in services is with stand-alone applications. These applications enable a company to add variable data to labels from a keyboard, scanner, or through a database lookup without the use of a computer. "Since stand-alone applications require special skills, end users need VARs to do this for them," explains Jeff Kennedy, national sales manager for Cab Technology, Inc. "VARs can expect to earn margins of over 50% on professional services."
Kennedy says the driving forces behind standalone applications are the end user's need to free up space and maintain PCs in a shop environment. A typical setup with a PC, printer, and scanner could take up a 3-foot area. By replacing that arrangement with a printer and scanner or keyboard, the equipment takes up half the space. Smaller footprints are especially important in manufacturing and retail. "In a retail environment, one of the key metrics companies use is revenue per square inch," adds Kyle Turner, senior VP of corporate development at CognitiveTPG. "If an end user has to take up counter space for all this equipment instead of a sellable product, that's less potential revenue for them."
Keeping PCs running on a shop floor can be the biggest headache for an end user. VARs selling into this vertical should ask their prospects about these challenges. If the shop is not a clean environment, what problems does that cause with the PCs? Do they have problems with the shop employees deleting files they shouldn't or possibly sabotaging the equipment? What problems do they encounter with Microsoft upgrades or simply maintaining that infrastructure? Then, based on their answers, VARs can show the end users how replacing their old PC, printer, and scanner setup with a stand-alone printer and keyboard or scanner will benefit them.
Turner reminds VARs to charge for the customization on the stand-alone applications. Over the past year, many SMBs reduced or eliminated their IT departments and now rely on a VAR for those functions. "SMBs need the VAR to create and store the label format, then educate the end user on how to enter the data for the labels without a PC," continues Turner. As for VARs, Ciarlante sums it up, "Solutions selling into new applications is key for growth."
2. Earn Healthy Revenues In Healthcare
Our experts all agree that the healthcare market is one you need to pay attention to. That's because the healthcare industry, in general, tends to lag behind manufacturing when it comes to adopting new technologies. "Most organizations in healthcare and pharmaceuticals are still using sheet or laser printers instead of thermal printers," comments Turner. The advantages of switching to thermal printers include lower maintenance costs and more media options. For VARs, not all organizations can unplug their laser printer and just plug in a thermal printer. Many organizations are still printing in printer command language (PCL) format and need VARs to do the formatting work for them.
When talking with healthcare organizations about switching from sheet or laser printing to thermal printing, you may also want to highlight the reduction of paper printed. "Many companies view thermal bar coding as a means to decrease the amount of nonthermal printing that is required in today's eco-friendly world," explains Ciarlante. "Bar codes make a ‘paper-lite' environment possible."
Another reason to target healthcare is the demand for smaller labels. "The market is pushing the envelope on demanding the smallest labels with clear, crisp characters and accurate registration," states Kennedy. Medical devices are getting smaller, and therefore, there is less space to place labels. With smaller labels, the end user saves money because they are not using as much media per label.
The third reason to focus your sales efforts on healthcare concerns all of the regulations in this industry. "Because of the HIPAA [Health Insurance Portability and Accountability Act] rules, healthcare organizations are not using patient names on vials, records, and wristbands," outlines Brian Gale, president of ID Images. "Instead, they are using bar codes or other identifiers." The number of applications where labels can be used is growing dramatically in this market.
According to our panel, VARs that are not already in the healthcare market should familiarize themselves with some key mandates driving major changes in healthcare IT. First, the switch from paper records to electronic medical records (EMRs) means that all this data will need to be bar coded as part of the EMR effort. Gale sees this as a good opportunity for VARs selling data capture systems.
The other two changes go hand in hand: the HIPAA 4010 to 5010 conversion and the switch from ICD-9 (International Statistical Classification of Diseases and Related Health Problems, Version 9) codes to the ICD-10 code system. The HIPAA 5010 version includes more than 850 complex changes to how healthcare claims are processed. This conversion must be completed by Jan. 1, 2012 and before the code system switch. "The change from ICD-9 codes to the ICD-10 code system will increase the number of medical codes from 17,000 to more than 155,000," emphasizes Gale. This effort to standardize medical diagnosis codes globally must be completed by Oct. 1, 2013.
The organizations that will be impacted the most by these changes are the community health centers (CHCs). The CHCs receive a large portion of their revenue from Medicare and Medicaid, and these payers will require timely adoption by their providers.
3. Become A One-Stop Shop
Our expert panel advises VARs to go beyond just the printers and service and add accessories and media to your solutions. Customers are requiring more and more specialized accessories to go with their printers. Some examples include cutters, perforation units, stackers, applicators, and bar code verifiers. "Printer accessories are used to solve customers' problems. When you can solve a problem for a customer, you've added value to the sale," exhorts Kennedy. "About 1/3 of our printers go out the door with an accessory."
Media are the other area to add to your suite of products and services. If you are selling thermal transfer labels to a customer, are you providing value by providing the ribbons as well? Do you have a printhead program? Do you offer laser labels to your customers that use thermal transfer or direct thermal labels? "It's really time to ask what wallet- share you have with your customers and do your best to maximize that share," says Gale.
When evaluating various media, VARs should be aware that there are changes taking place in the supply chain that will impact prices. Paper mills have reduced their capacity, which will increase prices. VARs should look to vendors offering alternative media. For example, ID Images offers a thinner alternative to the 40-pound, 3.2-mil-thick liner. Gale says it's not as robust, but the company has done extensive testing with customers and discovered that it works in 99% of the applications. Other options available in the market include an unbleached label liner which is less expensive and more green.
When looking at these trends, our experts agree VARs must educate themselves if they want to capitalize on them. "The number one mistake I see VARs make is putting a product or solution they don't understand in front of a customer and hoping it will sell itself," cautions Kennedy. In addition to becoming an expert on the solution, our panel urges VARs to explore and understand the end user's pain points, sell consultatively, and continue to add value. In doing so, you should have a bright 2010.