Uncover New Retail POS Markets
By opening 32 branch locations and targeting new retailers, this VAR expects to increase sales by more than 100% over the next three years.
POSitive Technology.com is a POS (point of sale) VAR that, over the span of 10 years, has seen significant growth by catering to retail chains with 15 to 50 stores. The $8 million company specializes in retail POS solutions, but also offers hospitality, loss prevention, mobile computing, wireless networking, and even VoIP (voice over Internet Protocol) solutions to its customers. Today, the VAR has identified a new opportunity — selling to small retail chains of fewer than five stores (what POSitive labels the SMB market). In fact, the owners of POSitive have identified a number of cities across the United States where this new opportunity is strongest. Today, the 43-employee VAR has embarked on a crusade to open an imposing 32 SMB-focused branch locations within just a three-year period. The goal is a hefty 100% revenue growth. With significant amounts of time and resources being dedicated to this venture, POSitive has created a detailed and thorough plan to ensure success. Now, all that remains is proper execution.
How To Find And Fill Your Retail POS Office Space
To begin its expansion, POSitive first identified areas ripe for retail growth. Owners Brett Bennett, CEO, and J. Michael Nicholson, COO, began studying data from sources such as the U.S. census. In addition, the VAR took advantage of its membership in the NRF (National Retail Federation) to obtain retail growth metrics. In the end, the duo identified 32 locations where there was marked retail growth. The first two branch offices that POSitive launched (greater Washington, D.C. and Phoenix) were selected due to the close proximity to two of the VAR's existing locations.
So, what comes first, the employees or the office? Bennett says that once the first salesperson is found, the branch location can be started. "We use traditional methods of finding employees such as careerbuilder.com and the newspaper," he says. The VAR also uses nontraditional means. For example, POSitive sent a 'looking for employees' e-mail blast to Scottsdale, AZ Chamber of Commerce members. Bennett says that the list of members was free to obtain and resulted in immediate, high-quality responses from the blast — better than any newspaper ad ever produced.
As employees are found, the task of finding suitable office space becomes imperative. Bennett feels that the greatest key to succeeding in the SMB market is getting close to the retailers. Therefore, having a visible presence in the community is integral to establishing legitimacy and stability. For these new branch offices, POSitive opts to lease shared office space, where a conference room and receptionist are available to all tenants. Ideally, POSitive wants a space containing two or three offices and located in an upscale area of a city. Bennett says leasing shared office space is less expensive than purchasing real estate or leasing a storefront. Of course, cost varies depending on the city, but Bennett says that $15 to $20 per square foot is the rate for shared office space at which the VAR has looked. Aside from lower cost, another benefit of leasing these shared spaces is that lease terms often can be as short as three months, diminishing the risk associated with opening a new branch office.
In the entry area of each branch office, customers will find a mock storefront with three or four complete retail solutions ready to be tested. Not only can customers simulate ringing up items and taking inventory, but they also can buy their consumables (e.g. ribbons, paper, labels, theft prevention tags) at the offices. "If there's one reason to have a storefront and not have branch employees work from home, this is it," says Bennett. "Sales of retail POS consumables amount to a whopping 15% of our annual revenue — that is, over $1 million."
How Do You Hire, Manage Your POS Salespeople & Techs?
Of course, running new offices that are spread across the United States is no easy task. Bennett says that one of the most significant concerns he and his partner faced when building the branch office model was determining how to train and manage the people who would be working in the offices. First, every branch employee is required to spend their first two weeks at one of the VAR's existing offices to learn how the company conducts business. In addition, each employee receives a field manual composed of policies and procedures that the VAR has developed over the years. The field manual includes such information as office design and structure, a responsibility list for each employee type (POSitive's SMB branches are staffed only by salespeople and technicians, one of whom doubles as the branch manager), sales best practices, and policies on customer interaction. "We've always thought documentation was important," says Bennett. "Particularly with branch locations, you need to ensure all employees are focused on the same goals and doing business the same way."
Bennett and Nicholson also created a new SMB VP position charged with managing the new market segment. They filled the position with a qualified employee who'd been with the company since its inception. Currently, the SMB VP is stationed at POSitive's Scottsdale, AZ office and is closely managed via daily contact by Bennett and Nicholson, who push to ensure the company vision is being maintained. The SMB VP receives weekly reports from regional managers, who receive weekly reports from each branch office manager. Managerial meetings between branch and regional managers are designed to give transparency to every aspect of the new locations. Topics include reports on all current prospects, progress reports on current goals, and the status of installations taking place that week. In addition to these oversight duties, the SMB VP also is charged with hiring personnel and procuring office space as new locations open.
To see how another VAR is growing revenue by targeting new markets, go to BSMinfo.com/jp/3165.
From a business infrastructure perspective, Bennett wants salespeople and technicians worrying about only two things — selling and installing POS systems. Other business functions such as accounting, purchasing, system preparation, and even support are managed from POSitive headquarters. Having these resources centralized allows POSitive to minimize overhead at the branch locations and keep the cost of POS systems as low as possible.
Maximize SMB Leads Via Partner Relationships
As branch offices are opened and infrastructure is put in place, the task for salespeople shifts to finding customers. Bennett says that he wants his salespeople on the streets every day looking for new and future retailers. As the VAR is quick to point out, selling POS solutions to small retailers takes a much different approach from selling to large chains. "Small retailers might be owned by one person who also occasionally works the counter," he says. "To be successful, we need our salespeople to foster almost a familylike feeling to make them comfortable with us." For that reason, POSitive enforces a 100-mile radius territory limit on its SMB salespeople to maximize their ability to become part of the community. In addition, salespeople are urged to strike partnerships with commercial contractors, chambers of commerce, realtors, and suppliers of retail fixtures to increase sales opportunities. POSitive gives finder's fees or percentages (typically 1% to 3%) of the total sale as incentives to partners who pass the VAR leads that result in sales.
New business leads also come from POSitive's vendor partners. Having offices in new territories and targeting a new market, it was imperative for Bennett and Nicholson to meet with POSitive's vendor partners to let them know that the VAR has a new profile for its ideal lead. "It's important not to underestimate the amount of time needed to foster partner relationships," says Bennett. "Since opening our new branches, I've been spending 10 to 15 days per month with vendors, promoting our overall business and the new SMB division." It's Bennett's hope that POSitive's vendor partners will see that they can increase sales by helping the VAR market to new areas. According to Bennett, most vendors have been happy to help. Some even have committed to help defray costs associated with marketing to the new areas. All this should lead to increased sales for the SMB branches. In fact, it's already happening. "We're finding that for the first two months of being open, most of the focus is on establishing these contacts and teaching some partners what a good lead is to us," says Bennett. "It's in months three and four where we see a payback from our effort." Indeed, during the first two months, one of the new branch offices issued 30 proposals. Once relationships began fostering in month four, the number of proposals jumped to 150, due in large part to leads from partners.
Bennett estimates that POSitive will reach $10 million in sales in 2009, an 18% increase over 2008, due in large part to SMB sales coming from the branch locations. Indeed, POSitive's SMB branch office initiative seems to be paying off, as does Bennett and Nicholson's model for building successful satellite offices. While opening another 32 locations might not be in your immediate future, if nothing else, the duo's plan might give you some insight on what it takes to open just a single new office.