Thrive In Today's Bar Code Scanning Market
Fearing his 27-year-old company was in jeopardy, this integrator made operational changes resulting in a $3 million revenue boost.
Do you hear alarms going off right now? If you're the type of VAR or integrator who's happy making enough money to do little more than break even and maintain enough work for your handful of employees, Rodger Jenkins thinks you might be in trouble. He believes that in a few years this type of 'lifestyle' VAR will no longer be able to compete in the mature AIDC (automatic identification and data collection) market. He thinks that only those who are more serious about business development and planning will survive. Jenkins didn't get this idea from inside a fortune cookie — the indicators are present. When margins shrink, things happen. Consolidations, buyouts, less-profitable product lines disappear, manufacturers cut the number of SKUs (stock keeping units) they need to manage, and distribution channels start to wake up (i.e. manufacturers get more product to market with less resources). Sound familiar? Then, there's the Internet. Who enjoys working their butt off to get outdone by a random Internet dealer that can afford to undercut you by 5%? Upon seeing those indicators a couple of years ago, Jenkins found his company matching the description of one that wasn't well positioned to adapt and survive.
Excalibur Integrated Systems, Inc., of which Jenkins is the owner, president, and CEO, has been in business for 27 years. In the first 25 of those years, Jenkins was content to act primarily as a salesperson and earn a modest living. Since identifying that Excalibur was in jeopardy, Jenkins has begun reworking almost every aspect of the business. Two changes he's made in the past two years are showing great results. First, he's increased focus on partnerships with his vendors, distributors, and ISVs (independent software vendors). Second, he's become more knowledgeable of best hiring practices to find higher-quality employees. Jenkins credits his company's recent success to the two changes. But what, specifically, has Jenkins done?
Are You Your Vendor's Go-To Bar Code Scanning Integrator?
If you had to judge your level of involvement with your vendor partners on a scale of 1 to 10, how would you score? Due to lack of interest, lack of time, having too many partnerships, or a myriad of other reasons, most of today's integrators fall short. Two years ago, Jenkins would have given Excalibur a score of 2. Today, he's scoring it a 7. "I spend most of my time during the day talking with vendors and their representatives in our region," says Jenkins. "I'm asking them questions about emerging markets, listening to what they see other integrators doing, and I'm working with them on problems they're facing." In addition to helping him increase his AIDC IQ, this type and amount of communication has shown his vendor partners Excalibur's level of commitment to their products. The result is a personal relationship Jenkins believes is priceless. "When your area representatives know that you truly understand their products, you'll find that often you'll get more than your share of leads," he explains. "Today, no one is doing a great job of generating leads, which makes every one you get that much more valuable." Excalibur now receives five to six vendor leads a week. A few years ago, the integrator was getting none.
Jenkins also has fostered his relationships with his distributors. It goes without saying that maintaining a positive payment history is paramount to a good relationship. However, by maintaining consistent communication with his distributors and building relationships, Excalibur has seen its credit lines extended, enabling the integrator to grow. "Over the course of many conversations with ScanSource, we told them that we're going through a lot of growth, but we've got more potential," says Jenkins. "Because we had a positive payment history and they were familiar enough with us to recognize we could be a trusted partner, they adjusted their processes to allow us to sell beyond our usual credit limit and continue to grow."
Finally, Excalibur has developed strategies for working better with its ISV partners. Having that solid relationship begins with selecting the correct partner. Jenkins initially looks at three things when evaluating an ISV partner. Stability is first. Does the ISV have an existing install base? Is its software certified to run on the hardware you're reselling? Is it an established entity and able to pay its bills? Will it be around in the long term to support the product? The second factor Jenkins examines when selecting an ISV is the ISV's support staff. Because software can be easily troubleshot over broadband Internet, Jenkins isn't overly concerned with support being in the same area, only that the company has a department in place to handle issues. Finally, Jenkins looks to ensure that the ISV's business model matches his own business model. How close are your corporate cultures? "Once a partnership has been created, it's important to establish parameters to know what each partner is responsible for," adds Jenkins. "We can have five vendors represented in an installation, and we need to know who is responsible for what in the event of a problem."
Where Do You Look For Bar Code Scanning Talent?
Within the past two years, Jenkins also has improved the quality of Excalibur's staff. He's done this a number of ways. First, he's dismissed the idea that the best candidate for the job has experience in his industry. His most recent hires have some technical background, but no experience in AIDC. What sold him on the candidates was that their history, references, and personalities matched Excalibur's corporate culture.
Furthermore, the length of Excalibur's hiring process and depth of research has been greatly increased. Jenkins explains that, like most small business owners, he used to perform an interview and, if he liked the candidate, would hire him. Today, he's extended the process and delegated two rounds of interviews to other trusted coworkers. He participates in a third and final interview in a social setting, such as dinner, once a candidate makes it that far in the process. By having multiple people interview the candidate, he's improved his ability to ensure the person is a good fit for both the position and company. In addition, Excalibur digs deeper in its research of candidates. Jenkins explains, "If someone comes in and says that they're used to making $100,000 a year, we now ask them for a W-2 to confirm it." In the near future, Jenkins plans on implementing personality profiles for candidates, which he hopes will further ensure a good match. Jenkins has hired eight employees in the past two years using this interview system and has lost only one. In the five years prior, his turnover rate was 80%.
Once he's hired good salespeople, Jenkins has sound advice for maintaining them. "With most good salespeople, their No. 1 motivator is money," he says. "It's very important that the commission structure doesn't change once someone starts being successful. Don't cut territories and rename accounts." Excalibur clearly states in its contracts that the integrity of its commission structure will be maintained.
Hiring and maintaining high-caliber people is well and good, but how has that helped the integrator? Look no further than the company's training lab. Jenkins had his top salesperson and technician come to him with a problem. The two identified an education shortcoming with the company, feeling that both salespeople and technicians would present better and be more knowledgeable if they could work firsthand with the equipment and software in a lab setting. The two employees had devised a plan for the lab, identified the possibility of vendor partner participation in outfitting the lab, and detailed the benefits for Jenkins. "I trust my employees to provide input in the decisions I'm making," says Jenkins. "They were accurate in their assessment of our education shortcoming, so we built the lab." To date, more than $100,000 has been spent on the lab's creation. The results of the lab fall into two categories. First, as his employees surmised, both sales and technical staff have increased knowledge of the products being sold. As Jenkins says, "Selling from conviction always works better than selling from books." Secondly, the integrator has further proven its dedication to learning its vendors' products, thus improving the quality of its vendor partnerships.
Whether or not you agree with Jenkins' assessment that times are changing, you can't refute the fact that Excalibur is seeing impressive growth. Furthermore, this growth can be attributed to two major changes that have taken place — increased attention to partnerships and hiring practices. "For nearly 25 years, I lacked vision," concludes Jenkins. "It's the reason why some companies shut down and why others grow. I believe our partnerships and hiring the right people are allowing us to take the path of growth. If I'd had this attitude 10 years ago, we could be talking about $60 million to $80 million in sales."