Q&A: Convert Bar Code Printing Opportunities Into Cash

Are there currently any trends in bar coding that VARs should be aware of?
Gary Krause, director of marketing for SATO America: We’re seeing that an emphasis on green technology in application solutions is winning significantly more of the opportunities out there. Recycling, Star Energy compliance, power management, waste reduction, paperless and linerless technology are not empty words or promises any longer. Customers have made themselves knowledgeable and are watchful of solutions that employ such green components. What are the motivations? Lower energy costs, less waste, and potential future tax credits for energy compliance. And yes, some even cite their “good corporate citizenship” desires.

David Lundeen, VP of sales and marketing for TSC Printers: Of course, the economy is a driving factor this year. Everything slowed down and became more competitive. We’re seeing VARs looking for new opportunities. That is, whereas VARs were happy to go about doing business with the same vendor partners for years, the economy is prompting VARs to search for new products and better margins. Looking back at the last recession, all the large opportunities in our industry dried up ahead of the economy turning. This one came on suddenly. In October 2008, everyone in our industry panicked and cut way back on inventory. However, I’m not sure our sales slowed down at all. In fact, many of our partners had record months in January and February 2009. We’re still not seeing a stop in companies investing in AIDC solutions. The economy is not as bad as the major media is portraying.

Tom Roth, director of marketing and strategy, printers and media for Intermec: Customers are focused more on short- and long-term ROI. We’re seeing an adoption of what we refer to as smart printing, or a printer that can do more than just print labels, but can also be connected to operate with light poles and assembly conveyors or communicate with PLCs (programmable logic controllers) and scales. Our customers have told us they’re able to achieve fast ROI with such solutions because the solutions can eliminate bottlenecks in a process, reduce and eliminate mistakes, and cut down on penalties from vendor partners for incorrect shipping. The advantage for the VAR is they can differentiate their offering with such solutions.

Where should VARs devote their energy to have a successful 2009?
Krause: Life sciences (bioresearch, laboratory), healthcare (in/out-patient services and identification), and government (DoD, energy, transportation) are hot markets right now. These customers may not have as large of a discretionary budget as they once did, but the overall funding of IT (which includes track/trace and other AIDC-based solutions) is well stabilized within the budget. In some recent cases, we’ve seen customers in these spaces escalate their rollouts. One more thing makes these verticals very attractive; you may wait a bit longer for the customer to pay, but you will get paid in full.

Lundeen: Where we’re not seeing any falloff at all is in medical, whether that’s hospitals or pharmacies. There was a short hiccup late last year, but we’re seeing continued growth. Of all applications, patient tracking (e.g. wristbands, file folders, pill bottles, food, etc.) is popular. Driving this growth is the need to limit potential lawsuits (the average court settlement is in the millions). For hospitals to not be investing in patient ID to reduce errors is foolish. A good starting point would be to attend various healthcare-specific shows throughout your state or region.

Roth: We’re still seeing low-hanging fruit in shipping and manufacturing. Traditional labeling methods aren’t cutting it anymore, and manufacturers are looking for a quick ROI. Solutions using an “earn a label concept” are very attractive to this market. Specifically, labels can be generated at the point of application based on a scan of the materials being labeled. This is opposed to sending a print job in the office, bringing the labels to the dock, and then figuring out which label goes where (resulting in errors and misshipments). For example, a large antennae manufacturer was able to reduce compliant-related customer penalties enough to pay back the cost of the solution in about 45 days.

What advice do you have for VARs selling bar code printer solutions?
Krause: Prepare yourselves for a hard sale cycle. Because if only now you are entering into a mature market such as AIDC/barcode printing, you really need their company to bring a great deal of added value to the opportunity or risk being not considered or placed into a margin-robbing position. Your competition definitely will have prepared a solution that is more bundled and interdependent on each facet of the proposal than the newcomer might have considered.

Roth: Stay close to your current customers. In today’s economy, you need to serve them well to maintain their wallet share and spending. Make sure that when they have problems, they think of you first to solve them with your solutions. If customers aren’t spending, think how your business model can extend to other industries, and determine what kind of a business you want to be coming out of the recession.

What are some ways a VAR can distinguish its bar coding solutions from its competitors?
Krause: There are consistently two points that separate winners from non-winners in this field. First, one listens well to the customer; the other does not. Secondly, one jumps to service the customer’s requirements and requests; the other does not do so as effectively. You should remember, this economy may drive down the margin available to you, but the customer has an equal if not heavier responsibility to themselves for reigning in costs and assurances they get what they’ve paid for. You can move on to the next opportunity while the customer must actually use what you installed each day and for years to come.

What are some common pitfalls VARs run into when selling/implementing bar coding solutions?
Krause: The single most neglected piece of the sales tree is securing a full and comprehensive job spec, which the customer signs off on, before a single step of solution design begins. When selling to life science, healthcare, and government, this is most important, as a project team leader may be shuffled to another project (or downsized) just before your project begins. Without a written and signed off job scope, a VAR can easily find itself back to reperforming cost justifications, scopes, and analysis, setting the sale and revenue back months and making the expenses incurred beforehand unrecoverable.

Lundeen: If you’re just trying to make a living selling hardware, it’s a tough market. You have to get involved in being a consultant. You need to bring total solutions to the table, which include software, setup, service, and media sales. Our best dealers are those programming solutions. They’re writing software with customers and, in many cases, creating stand-alone applications that tie a keyboard, scanner, and printer together. It’s good for companies because such solutions remove the need for a PC. It’s a profitable strategy for VARs because they can sell the printers for list price or above due to the added value.