Even unsuccessful resellers know that you have to understand the challenges customers face to provide solutions that relieve their pain points. What makes unsuccessful resellers become successful is the actual execution. Encompass Technologies is one successful ISV that’s dedicated itself to understanding the route accounting problems facing beverage distributors, and it’s solving these problems with its own software solution. With all the valuable information the ISV has to share, a couple things are apparent. First, Encompass’ knowledge pertains to more than just beverage distributors. Indeed, Kent O’Neil, co-owner of Encompass, readily admits that the problems are similar for all companies that do sales from a vehicle. Second, you don’t have to create your own software to be successful selling DSD/route accounting solutions. According to O’Neil, VARs can be successful in the DSD market by identifying and relieving four common pain points.
Selling Point #1:
Take Manual Data Entry Out Of The DSD Equation
The second-tier distributors (to offices and small stores, for instance) of chips, coffee, and water still rely on handwritten invoices and lack an effective software-based route accounting solution (i.e. mobile printer, data collection device, and software). The problems with this are obvious. Primarily, handwriting invoices opens a company to errors that can occur when the driver is writing out the invoice or when someone back at the warehouse manually updates the inventory information in the computer system.
Encompass’ GM Darin Spence shares one anecdote about a customer with an inefficient paper-based system. “The salesperson would drive [2 hours in some cases] out in the morning to customer sites and collect orders,” says Spence. “Then, the salesperson would drive back to the warehouse to manually enter the orders. This meant that trucks weren’t being loaded until late morning.” Today’s route accounting solutions make use of the Internet and cellular networks to transfer sales information from the field directly to the warehouse. Not only is sales information sent to the accounting department and other relevant departments, the order can be immediately routed to the warehouse to begin an immediate loading operation.
Selling Point #2:
Route Accounting Software Can Reduce Shrink
Many distributors do not have systems in place to control inventory shrinkage in the warehouse. This is an important metric to distributors. O’Neil points to one customer that had a major problem with accurate inventory visibility. The distributor would print pick tickets (a list of items and quantities to be loaded onto a truck) at the start of the day. However, due to deficiencies in the distributor’s route accounting software, each pick ticket would list everything that was supposed to go onto a truck, regardless of whether or not there was adequate inventory to fulfill the ticket. This resulted in ‘shorted’ pallets of goods, and trucks would go out on deliveries with quantities of product different from what the distributor’s computer reported was available.
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O’Neil says this type of problem is common, and VARs should look for opportunities related to it. “When distributors are running large truckloads of product out to customers, they’ve got a lot of ‘rolling’ stock,” he says. “The tighter control distributors have over that rolling stock, the better chance they have of reducing inventory shrinkage.” O’Neil goes on to say that the goal of his company is to provide a solution that will get inventory shrinkage down to an acceptable level of approximately 3/10 of 1%.
Selling Point #3:
Route Accounting Software Improves Inventory Tracking
Many distributors don’t take full advantage of the software features they currently have due to the complexity of the software. You’ve probably experienced this in some way in your own life, whether as a consumer (how many times have you returned to that board game with the confusing instructions and game play?) or as a VAR listening to a customer complain about how difficult it is to get employees to use a complex solution. Jonathan O’Neil, co-owner of Encompass, says distributors often have one or two people with the expertise needed to make full use (e.g. inventory reports, route efficiency) of the company’s route accounting software. “To limit the burden that would be placed on those few people, the company might settle on receiving valuable reports on a weekly or monthly basis,” he says. “The result is a narrow view of the distributor’s business.” Again, stressing the importance of controlling inventory shrinkage, O’Neil says that VARs should sell route accounting solutions aimed at making information easily accessible to multiple people within an organization. For instance, Encompass’ own self-titled software solution presents inventory information via Web-based reports. This allows more people in a distributorship to use the software and enables them to make business decisions based on timely and accurate data.
Selling Point #4:
Route Accounting Software Makes Sharing Information Easier
Getting information to suppliers and customers often is a time-consuming, costly, and laborious task. If a distributor is using a paper-based inventory system, these pain points can be amplified. “Suppliers often seek updated sales and inventory figures,” says Kent O’Neil. “Customers also commonly seek current accounts receivable information, outstanding balances, current statement information, and invoice histories.” Without an efficient route accounting system, the distributor has to burden employees with the task of gathering this information manually. Some of the latest route accounting software solutions enable suppliers and customers to access the most current and accurate information via a private Web-based portal. Additionally, Spence says that his customers have responded very positively to a recently added feature of Encompass’ own software — the ability to e-mail statements to customers. Now, instead of printing, stuffing, and stamping thousands of invoices, distributors can e-mail invoices automatically and for free.
Encompass has relied heavily on word of mouth to grow its customer base. Despite a relatively passive direct sales philosophy, the ISV has added 20 customers in 2008. Of course, the size of each sale depends on the size of the distributor and number of its routes. “A sale of our route accounting solution can range from $40,000 to $300,000,” reveals O’Neil. He goes on to say that by identifying and solving the common pain points of distributors, Encompass expects to increase sales revenue 75% in 2009. Perhaps now, armed with information pertaining to what this market needs, you too can enjoy similar success.