Beyond Just AIDC Sales
This VAR may experience its biggest year ever in 2006 by expanding its product line with some technologies you would suspect and some that may surprise you.
As a VAR, what was the last big change you made to your business? Maybe you dropped a product line for a
different one you felt would be more profitable. Maybe you decided to enter a new market or add more employees. Whatever the case, it’s likely these decisions became milestones for your business, benchmarks for your success or failure.
Like most VARs, Dane Rohm began his business in the humble confines of his own home. His business partner, Rick Woodward, joined the company four years later in 1990. Since then, they have experienced their share of good and bad milestones, and together they have gone from a broker of used AIDC (automatic identification and data collection) equipment into a full-fledged VAR with 14 employees.
In 2005, the company managed a respectable 15% sales growth, much of it coming from the retail distribution market. Rohm says the growth in this market was serendipitous. A strong economy spurred retailers to build more locations with more personnel needing the data collection devices and services DK Data Sales, Inc. supplies. Many companies were evaluating if their data collection systems were in need of upgrading. Some were even considering or were required to implement RFID (radio frequency identification) technology to work in conjunction with their current applications. The prospect of having to delve into RFID, a technology his company had no experience with, caused Rohm to evaluate how he would grow his company’s sales in future years. Would it be with RFID or some other technology or vertical market? Again, serendipity would step in and create another milestone in DK Data’s history.
Determine When POS Is A Good Fit
Several years ago, Rohm and Woodward hired a new salesperson and tasked him with investigating new growth opportunities for the company. One technology they wanted to explore was point of sale (POS). “It made the most sense for us to expand into selling POS because of the synergies with our AIDC products,” explains Rohm. “Honestly, we always had been so busy selling bar code scanners, handheld data terminals, and bar code printers for back office inventory management applications we never seriously considered selling the front end POS equipment.”
Despite the obvious tie-in with their AIDC products, Rohm and Woodward didn’t jump into this new technology headfirst. Instead, they spent a few months researching the industry, products, vendors, and channel programs. Then, in early 2006, just as they were making their final decision to move forward with their POS strategy, a customer called. It was a liquor retail distributor that DK Data was working with for a back end receiving and inventory data collections system (see sidebar below). The customer wanted to know if DK Data could also help with overhauling its POS equipment. Perfect timing. Now, DK Data uses this client — which has nearly 1,000 locations — as a reference account for its POS business. “We aren’t looking at providing large POS systems,” states Rohm. “We plan to service smaller mom-and-pop stores and small retail chains with fewer than 150 stores.” DK Data’s sales staff is currently busy contacting the company’s existing clients about their POS needs.
Can Adding Telecom Services Foster AIDC Sales?
The addition of POS equipment to DK Data’s line card is sure to contribute to the company’s expected 50% sales growth this year. But there’s a bigger contributor, and unlike POS, it’s one Rohm and Woodward hadn’t anticipated. During the time the company was researching new avenues for growth, Kevin Lawson, DK Data’s sales director, received a call from a friend who worked for SBC Communications. SBC was the telecom company that merged with AT&T in November 2005, and Lawson’s friend was one of SBC’s top salesmen. He explained that AT&T wanted to develop a network of solution providers who could provide a whole gamut of AT&T services to nonenterprise clients. Some of those services included long distance, Internet/DSL, MPLS (multiprotocol label switching), VoIP (voice over Internet Protocol), frame relay, data networks, and data center services. Lawson’s friend, Tarpley McColl (now DK Data’s director of technical development), wanted to join DK Data’s staff, help the company become an AT&T Solution Provider, and then grow the business by leveraging his contacts in the industry. Like adding POS products, Rohm saw the addition of these AT&T services as a logical add-on to his existing business, so he agreed to become one of the first AT&T Solution Providers in the Southwest.
The company had to complete an extensive certification process involving many hours of study, training, and testing. Continuing education is also required to stay abreast of the ever-changing telecom technology. As a solution provider, DK Data receives revenue from AT&T akin to a commission. All of the integration and technical aspects of the jobs are orchestrated by DK Data with the support of the AT&T Solution Provider Channel.
Rohm says DK Data’s 20-year track record in the data collection business, coupled with the credibility and recognition of the AT&T name, have helped build customer confidence and interest in this new product offering. In fact, after its first month of offering these new services, the company landed seven new customers. “Often, we determine how to save a customer money by consolidating phone lines, configuring new data networks to be more efficient, or simply being a resource for staying current with AT&T’s technologies,” Rohm says. “It’s amazing how many companies don’t know what they have or don’t have regarding their systems/data networks and are often paying more than they need to. We act as their consultant, providing a total solution starting with the data network, long distance voice, and Internet services all the way up to their data collection software and hardware.”
Take It Slow With RFID
Besides learning how to sell AT&T services and POS equipment, Rohm and Woodward have not forgotten about the technology that spurred them to think about expanding their line card — RFID. Their staff has spent the past year learning about the technology and how best to market it. The company has spent about $2,000 in RFID training thus far, but Rohm expects that amount to increase as more industry certifications (e.g. CompTIA RFID+ certification) are announced. “We are at the beginning stages of adding RFID right now,” he admits. “We just developed a relationship with Intermec for its RFID products, and we actually have an existing customer that needs an RFID solution by June. We plan to work with Intermec on completing that project.”
It’s a conundrum many VARs face: continue selling the same old technology to the same old verticals or try something new. Usually you try adding one new product or technology at a time, not three like DK Data has done in the past year. Nevertheless, the company’s early success with its new additions suggests 2006 may become its most memorable milestone — the year with the highest sales revenue.