5 Ways To Future-Proof Your POS Business

By Matt Pillar, chief editor

With a POS legacy dating back to the 1950s, Skurla’s POS Solutions wasn’t going to let a shift in the market put its business in jeopardy.

By all accounts, 2012 was a rough year for Lynn Skurla. She was in her eighth year at the helm of Skurla’s POS Solutions, the business that her parents, industry veterans John and Phyllis Skurla, had started way back in 1976. After taking the wheel, Skurla navigated the company through the Great Recession and more than a few Anchorage, AK, snow squalls. But by 2012, the changes to the POS sales and delivery models that VARs had been wrestling with in the Lower 48 had crept into even the most remote Alaska towns and villages served by Skurla’s. Margins, revenue, and morale were all in decline at the small, family-oriented company. That’s when Skurla began making changes that, less than two years later, she credits for the turnaround of her company. The following is Skurla’s advice and reflection on the five keys to survival at Skurla’s POS Solutions.

1. Empower Your Staff
In January 2013, Skurla attended a session at the RSPA INSPIRE Conference based on the Brad Hams book Ownership Thinking, which was taught by ProfitWorks Cofounder Tom Bouwer. “I read the book on the way to INSPIRE that year. I was moved by the session, and on the plane ride back to Anchorage, I became convinced that if we applied “Ownership Thinking” principles, we could turn our business around,” says Skurla. Indeed, applying the concepts in the book not only turned the business around, but also accelerated the company’s growth. “The primary contributor to our turnaround was nothing we did in terms of market-facing changes to our product offering. It was the empowerment of employees and financial recognition of their contributions,” says Skurla. That required some significant management change, including a profit-sharing plan that Skurla says has made employees at her company acutely aware of their impact on the bottom line. The commitment to associate success and profit sharing at Skurla’s proved foundational to bigger changes to come.

2. Embrace SaaS, Recurring Revenue
Skurla practically grew up playing with cash drawers and pole displays. Her dad, John, enjoyed a successful career with NCR in the 1950s before launching the family business. “For the majority of our history as a company, resellers were product companies. We were dealers. That model wasn’t working anymore,” says Skurla. She cites competition from banks and card processing companies that turned the small retail and hospitality market on its ear. “We sold primarily into the mom-and-pop segment, until all the major banks and processors began selling ‘free’ POS, or POS-as-a-Service,” she says. “We’ve added some competing products like Harbortouch and NCR Silver to our line card to help us serve small shops and compete with apps like ShopKeep and Square.” What’s more concerning, says Skurla, is that when an entrepreneur launches a new store or restaurant, the bank is often their first stop. They need a loan, they need credit, or both, and if the bank offers them credit card processing and a POS application, the business can conceivably get off the ground before Skurla and her team even know it’s coming. Her response to the competition? “To some degree, we just have to move away from that market. We can’t put all of our resources there when the bank makes it too easy for them to stay and gets them on the hook with a three- to five-year contract,” she says. So Skurla’s is offering “POS lite” applications to those who need them, but it’s also proactively targeting businesses with POS requirements that are a bit more complex than the average mom-and-pop shop. “As time passes, we’re seeing apps like Clover and Square generate awareness, and when businesses try them and discover they need more robust technology tools, we’re in a good position to offer a total solution,” says Skurla. And positioning itself as a total solution provider, she says, is the second major driver of growth at Skurla’s POS. It’s now offering bundled POS, credit card processing, surveillance, help desk, remote monitoring, and off-site backup solutions — many of which are delivered via the new “Solution-as-a- Service” model. “In concert with ‘Ownership Thinking,’ the Solution-as-a-Service model has reinvigorated our employees,” she says. “Each bundled element of the solution generates recurring revenue. Our employees understand and have embraced the value of recurring revenue, and it’s become a new mantra here.” In fact, Skurla says her company holds contests among employees to create more recurring revenue, which further establishes the link between employee and company success.

Adding all the elements necessary to bill it as a total solutions provider was admittedly challenging, says Skurla. “When we broached the idea of offering bundled solutions for a monthly fee, as opposed to collecting money up front, we faced many questions. What’s the price point, how will we go to market, and how will we finance the up-front investment among them?” she says. Those questions were answered by many in the VAR’s vendor community, most notably Mercury and CRS, who stepped forward with financing terms, business advice, and marketing support for Skurla’s as-a-Service bundles. “As long as we do our homework up front, the model has proven profitable,” says Skurla. That “homework” consists of a series of pre-implementation discovery questions and documentation that sets the tone of the engagement. “We listen carefully to what the customer wants to do, and we budget labor accordingly. Then we very carefully document the implementation, which is where things can go south most quickly for the solutions provider’s profitability.” Skurla says this documentation should be jointly reviewed by the customer and the implementation team so that no customer/provider responsibilities are misunderstood. The last thing you want to pay your employees to do, she says, is spend hours inputting menu items. “We might overdocument some things, but leaving as little gray area as possible about responsibilities and coverage results in a better chance of a successful installation,” says Skurla.

3. Sell On Security
As monetizing PCI security standards and EMV (Europay, MasterCard, and Visa) upgrades goes, Skurla admits her company isn’t getting rich — yet. But the company has embraced its role as an expert source for the alleviation of tier-three retail and hospitality professionals’ payment security concerns. Skurla currently offers merchant payment data protection services from Vendor Safe, and she says the forthcoming POS upgrades and peripheral modifications required by EMV mandates are sure to drive more business. “Because of payment security mandates, we have to put more processes and procedures in place when doing upgrades and installations, so we spend a lot of time educating our employees and our customers,” says Skurla. Where payment security ignorance once prevailed, she said, small retailers are increasingly growing aware and concerned about payment security breaches, the financial implications of which can bring small businesses to their knees. “It’s incumbent on us to help clear up the confusion we’re seeing in the market now,” she says. “Some think EMV will take away PCI requirements, and we have to clarify that they’re separate rules and that EMV and P2PE (point-to-point encryption) don’t guarantee security. Some breaches originate nowhere near the POS and payment environment.” She says the looming EMV liability shift, whereby merchants will bear more financial liability for payment card breaches if they’re not EMV-compliant, will drive business in the near term as retailers scramble to upgrade and replace software and peripheral payment devices. “We’re managing a bit of frustration on the EMV front, as some of the questions our customers are asking simply haven’t been answered yet,” says Skurla, “but we’re following our vendors’ recommendations, and we’re confident we’ll be well-positioned to help our customers become compliant as soon as it’s necessary.”

4. Make The Most Of Mobile Mayhem
While Skurla credits organizational changes — not product changes — with her company’s turnaround, she admits that she has ramped up the number of mobile devices and applications the company offers. Interestingly, the mobile apps it’s selling the most of are not what Skurla expected. “When we adopted mobile, we thought everyone was going to want to displace their traditional POS stations with tablets,” she says. “But practical considerations have slowed the trend.” In fact, Skurla estimates that only about 20 percent of her customers have deployed mobile applications, and about 60 percent of those are not for POS, but back office and HR reporting and surveillance monitoring. “We developed a questionnaire for our customers that covered the store operations and technical specifications they should consider before deploying a mobile POS solution. Then we discuss how mobile can be used to create competitive advantage. Rarely does a 100 percent mobile environment pass muster. As a result, we’re seeing more hybrid approaches, whereby a mobile device or two supplement the fixed workstation, as opposed to a wholesale swap for wireless.” Despite the small sales volume attributed to mobile, Skurla is wise to recognize that wireless technology has to be on its line card now; she says that if Skurla’s isn’t offering it, mobile mania will simply cause customers to look elsewhere whether they need it or not. “Whether you can significantly monetize mobile depends on the product line. We bundle the mobile back office reporting into one of our customer care package levels, so they can buy it. Once a customer has the ability to see their store performance and surveillance footage on their phone, from anywhere, they’re not giving it up.”

5. Bloom Where You’re Planted
Doing business all across the state of Alaska isn’t easy. At more than half a million square miles, it’s the largest state in the country, yet with fewer than 800,000 residents, it’s the least densely populated. That’s primarily because those half a million square miles are inhospitable — and inaccessible — to most. “If we have a sales call, a service call, or an install outside of the Anchorage or South Central Alaska area, we have to fly,” says Skurla. That typically means a series of flights on planes that get progressively smaller as the Skurla’s associate nears their destination. “Servicing these areas is definitely a challenge, so we are very particular about the quality and reliability of systems that go to these destinations,” says Skurla. Minimizing sales, install, and support expenses is important to profit preservation, but that’s tough to do when 60 percent of your sales, install, and support calls require long stays and expensive airfare. In most U.S. geographies, remote Internet support has alleviated these costs. In Alaska, even good satellite Internet connections are often rendered useless by snowpack. “As long as we can keep the snow off the dish, remote managed services have helped us control expenses a lot,” says Skurla. Where in-person meetings and/or installations are necessary, Skurla’s builds the travel time and expenses into the bill. “The cost of living is extremely high in many of these locations,” says Skurla, adding that by “high” she means $10-pergallon milk high. “Many of the rural towns and villages we travel to don’t have motels or even restaurants. We’re going there to sell or service a single-store POS station, and our employees are travelling with a sleeping bag and some food. They’re sleeping on a cot on the store floor after a midnight (yet broad daylight) fishing outing with the store owner,” says Skurla. “Doing business in Alaska isn’t for everyone,” she surmises.

Fortunately for her, a combination of “Ownership Thinking” and the modernization of an old-school POS distributorship have made Alaska just right for Skurla’s eight adventure-loving employees.