Magazine Article | May 14, 2008

POS Sales: Back To Basics

This POS (point of sale) VAR plans to achieve 30% sales growth with its unorthodox
approach to selling POS solutions.

Business Solutions, June 2008

Claudio Mileo, president, Scanning L.A., Inc. I have ridden motorcycles since I was a kid. Over those many years, I’ve learned some fairly advanced riding techniques and have amassed a mental library of safety information. A few years back, I enrolled in a beginner motorcycle safety course with my wife. Even with all my experience, it was amazing how many of the basic fundamentals I forgot over the years. My focus on advancing my skills took my attention away from the critical basics.

What does this have to do with POS? It was a recent conversation with Claudio Mileo, president of POS VAR Scanning L.A., Inc., that reminded me of my motorcycle experience, and just how important it is for all of us to take an occasional course on the importance of getting back to basics. With only five employees, Scanning L.A. is not a big VAR. However, Mileo’s simple approach to selling and servicing all-in-one POS systems might serve as a refresher course for all types of POS VARs.

Understand The POS Market, Solutions, Your Customers’ Needs
It’s time to get excited again over the hospitality POS market opportunity — that is, to remind yourself why you’re in this market in the first place. According to the National Restaurant Association, restaurant sales are forecast to advance 4.4% in 2008, equaling 4% of the U.S. gross domestic product. That’s a $558 billion target-rich sales opportunity for POS VARs.

Are you excited about the products and services you provide? How about refreshing your education on the POS solutions you sell and service? “Some of my colleagues in the POS industry are selling POS equipment that they may not completely understand,” says Mileo. A native of Argentina, Mileo is a mechanical engineer who started selling and servicing cash drawers in 1978. He not only knows his POS products inside out, he’s still excited about selling and servicing them.

“You don’t have to be a mechanical engineer to have a thorough understanding of the POS equipment you sell,” he says. “More importantly, you must be genuinely excited about what those products can do for your customers.” For starters, can you remember the last time you sat down with your POS vendor and/or distributor to discuss the latest advances in POS technology (see sidebar below)? There may be products and services your vendor and distributor offer that you aren’t even aware of.

“I understand what makes a good POS machine,” he continues. “More importantly, I understand how to design a solution that accurately meets my customers’ requirements.” For instance, Scanning L.A. has many examples of customers that thought they needed the most expensive POS solution, when they actually needed something different. By asking open-ended questions, Mileo is able to uncover what the customers’ real needs are.

“I have one customer — a large Mexican-food chain here in Los Angeles — that asked me for a POS system,” he explains. “The customer didn’t know exactly what he needed. He just had ‘POS system’ stuck in his head.” After asking questions such as what problems the restaurant was facing when it’s time to accept payment and what the customer expected from the new POS system, Mileo was able to determine that the customer didn’t need what he thought he did. Mileo was able to design a POS system (without many of the advanced features the customer thought he needed) that served the business need and saved the customer some money. Why short yourself on the potential of a bigger sale? Mileo believes that truly looking out for the customer leads to stronger long-term relationships such as the 18-year relationship he’s enjoyed with customer Rose Café (featured in the photo on page 40). Scanning L.A.’s impressive customer retention rate of 100% would also seem to support that theory.

Mileo also has a unique approach to designing and building POS solutions. For instance, when a customer needs a new POS system, Mileo asks the customer for a restaurant menu. “From the menu, we can customize the POS system to match the customer’s needs,” explains Mileo. “I haven’t run into a single situation where the customer was unhappy with the results. You can tell a lot about a restaurant by looking at its menu.”

Can You Be A Successful POS VAR Without Salespeople?
A major point of differentiation between Scanning L.A. and other VARs is that Mileo has no sales team. It may be more accurate to say that all of Scanning L.A.’s employees are service oriented, technically proficient, and don’t focus on outbound sales. Mileo says, “Our business is based on service, not sales.” But, what does that really mean?

More Info For an alternative view on POS sales techniques, click here.

Mileo’s somewhat unorthodox philosophy is rooted in his general distrust of salespeople. “When I was a technician working for Sweda, I had a lot of difficulty dealing with salespeople’s promises to customers,” explains Mileo. “In many cases, they are just interested in making the sale, when they should be interested in building long-term relationships with customers. It is always up to the technical guys to deliver on those ‘over-promises’ from sales.”

So, how does Scanning L.A. succeed without a sales force? “Thirty percent of our business comes from existing customers,” says Mileo. “The balance comes from new prospects. The majority of those new customers come from referrals.” The VAR also hosts a simple Web site that contains product information with no prices. Mileo’s theory is that by having no prices, customers are more likely to pick up the phone and call his company.

The VAR also sends out informational mailers targeted at non-Scanning L.A. customers and new restaurants. That mailer outlines the benefits of a POS system in terms that restaurant owners can understand. It’s a simple eight-page booklet (printed in-house) that describes Scanning L.A. and the importance of making the right POS system choice. It also outlines the costs of not having a POS system in place. Mileo explains, “Through our research and experience, we have determined that if a restaurant has an average of 300 customers per day, not having a POS system in place can cost the restaurant $15,000 to $16,000 per year in lost income. That is a very compelling argument when the restaurant is trying to estimate the payback of our POS systems.”

Speaking of prices, the lowest-cost, two-terminal POS restaurant system that Mileo sells starts at $3,000. He also offers a midsize system that costs approximately $5,000. On the high end, the sky is the limit, but Mileo says that complete touch screen systems with Maitre’D software rarely exceed $10,000. In the case of the 300-customer-per-day restaurant, that’s a total payback in less than one year — regardless of the system the restaurant needs.

Provide ‘Smart’ 24/7 POS Support
One of the big reasons for Scanning L.A.’s 100% customer retention rate is the 24/7 support the VAR offers. How can a company with only five employees deliver 24/7 technical support? Similar to a doctor’s office, Scanning L.A. contracts with a call service to take incoming support calls after hours. Those calls are forwarded to pagers that each of the employees has. It sounds simple, but that system has its challenges. “The biggest problem has been to find a service that will treat our customers as well as we do,” explains Mileo. “We spend time with the call center to make sure they ask our customers the right questions. The last thing we want is to lose a customer due to a bad customer service experience with a third-party service.”

Let’s be clear. Mileo is certainly not recommending that his fellow POS VARs fire their salespeople. There are other factors, such as his personality, technical proficiency, and industry knowledge, that have contributed to his success. However, his lack of a sales team drives home the point about focusing on the long-term relationship versus the short-term sale. By building a loyal customer base with technical expertise and using common-sense customer service techniques, Scanning L.A. has not only achieved a 100% customer retention rate, but it projects 30% sales growth this year. Sales professionals may disagree with Mileo’s approach, but it’s hard to argue with his ‘back-to-basics’ POS sales success.