It’s not that Dean Swenson is averse to starting out from scratch. The president of The Swenson Group (TSG) in Livermore, California, along with his brother, Jeff (vice president, client services) did exactly that 20 years ago when they converted their 10-year-old, $30 million Xerox sales agency into a single-line independent dealership with zero dollars. Imagine the conversation Swenson had in explaining the rationale to his wife; as they’re still married, perhaps he’s a better salesman than he realized.
But as the Swensons and their 22 team members celebrated the company’s 30th anniversary in 2023, much of their success is predicated on the fact that they took strategic risks, selected valued partners, and have been “aggressively conservative” in their decision making. A good example of this was their approach to managed network services. Separating from Xerox was a strategic move, but Swenson feared a grass-roots managed IT initiative would’ve been a cross too great to bear.
“We’ve been able to have predictable margins because we’re partnered with All Covered as a wholesaler,” Swenson noted. “The much larger dealers who went into managed IT on their own almost universally will tell you how much money they lost when they started out and how many mistakes they’ve made. Once they reach a critical mass, they’ll have better margins than we do. But I wasn’t willing to lose millions of dollars by doing it on our own exclusively. We’re building it internally, but our partnership strategy has been a real positive for us.”
Partnering with All Covered for managed IT is just one aspect of a valuable partnership the $10 million dealer has forged with Konica Minolta. Being a single-line carrier of the OEM’s gear—TSG recently added Epson to fill a customer niche (more on this shortly)—wasn’t easy or fun sledding during the 2021-2022 time frame. While Konica Minolta’s supply chain woes have been well documented, the manufacturer showed compassion (and priority) for its single-line partners as well as for high-value takedowns.
But it’s been MNS that’s really driven TSG’s growth, which will likely hit 11% for 2023 by the time all receipts have been tallied. As 2022 saw the dealer reach pre-pandemic sales volume, Swenson is more than a little optimistic and confident that his dealership can record another double-digit growth year in 2024.
“California is still a tough state in which to do business; we’re lagging behind the rest of the country in coming back to the office,” said Swenson, whose own workers come in twice a week and are remote for the balance. “Working from home doesn’t help us in terms of clicks and conversations. A lot of office parks are completely empty, but schools and health care organizations are back, so we’re trying to focus on those types of verticals.”
City by the Bay
TSG’s target area is a five-county swath in the San Francisco Bay area. In addition to the aforementioned health care and education, non-profit organizations is a strong vertical; these tend to derive value from doing business with locally owned vendors, and a good relationship generally lends itself to referrals and more non-profit business. Professional services (legal, accounting, architecture) is another prime sector, as they make their money selling value and look for the same from their office tech and IT providers.
In hindsight, Swenson would have added another OEM line prior to the pandemic, given the supply chain issues. But the Konica Minolta relationship has been highly rewarding. He’s the president of the manufacturer’s dealer advisory council, which provides valuable behind-the-scenes insight. Swenson appreciated the frankness of communications between the OEM and its dealers during the darkest days, as it enabled him to plan, prioritize and find creative solutions to sustain customers until the machines could be delivered. It’s interesting to note that despite delays of up to two months, TSG didn’t have a single deal canceled by clients.
There’s more than a little loyalty involved that dates back 20 years. When Swenson made the switch from agent to dealer, it was Konica that provided the technical service component for customers while his firm was still getting its footing (the dial-in number was actually to Konica, so it was a white-label service). After Konica and Minolta joined forces, Swenson felt it was important to bring the service in-house. But the unique Konica service agreement allowed TSG to design its own technical service organization, fueled by input and best practices from experienced dealers, manufacturers and other businesses.
“In the process, we were able to avoid the pain others experienced,” Swenson remarked. “We’ve built business and personal relationships with KM over the years, and they have top-notch people. They also realize that when they invest in The Swenson Group, they’re going to get a return on every dollar because we’re using it to grow our All Covered business or Konica Minolta placements.”
Technical Prowess
The dealer has proven to be more than capable of delivering on the promise of high-quality service, as evidenced by its string of 16 consecutive Konica Minolta Pro-Tech Service Awards. TSG, like other certified dealers, was evaluated on its inventory control systems, technical expertise, dispatch systems, management skills and customer satisfaction ratings, among other areas.
This area illustrates the importance of doing business with organizations that appreciate quality technical service. Swenson values his company’s Net Promoter Score (as tallied by CEO Juice) which, in tandem with the Pro-Tech honor, can paint a picture of what “good looks like” for dealers and direct operations. TSG’s 96% retention rate and 100% satisfaction rate for all of 2022 adds more color to that image.
“For us, it validates that we’re doing the right things,” he said. “It shows that we’re investing in our people, which helps with retention. We’ve had new techs come in and say that at their previous job, they were handed a manual and told ‘go at it.’ We invest to get them certified by the manufacturer, which makes them feel valued, confident and competent.”
TSG also has the distinction of being one of only two dealers to achieve a perfect score in Konica Minolta’s Rev’d Up program, which was a reimagining of the old dealer development program, only not customized to each reseller. Digital transformation is a cornerstone component, and TSG’s leveraging of All Covered goes beyond recurring revenue and MNS to include virtual CIOs and cybersecurity projects.
“It’s a good program, and we appreciate their willingness to take dealer feedback into account with the tweaks they’re making,” Swenson said. “The willingness of Konica Minolta to listen to the dealer advisory council’s ideas, engage in conversation and make changes based on suggestions has never been stronger. That helps us feel more like valued partners. The changes in the Rev’d Up program is a big piece of that.”
Fresh Ideas
It’s interesting to see the impact even a few new hires can have on the overall psyche of a dealership. After a few team members departed in the past year, they were replaced by individuals referred by TSG employees. Swenson believes team referrals are most ideal, since current employees have a strong sense for the types of personalities and tool sets that would best fit the culture of the company.
While the new hires didn’t have industry experience, their unique perspectives provided a novel take for Swenson and company. “I’ve encouraged them to have their eyes wide open and question everything respectfully, to give us a fresh look at things,” he said. “The new hires have brought a host of different ideas to help us be more systemized, productive and efficient. So while it’s never fun to have turnover, it can sometimes turn into a positive.”
TSG also made some investments in its marketing platform, enabling it to do more with less while resisting the temptation to add head count. Swenson partnered with a company called Quantum that has yielded the necessary tech stack to assist with sequential marketing, automating workflows and processes. These include:
- ZoomInfo, a growing go-to option in the dealer community, provides business data that aids in sales prospecting. Swenson believes it’s the best data on the market, albeit an expensive proposition.
- HubSpot, leveraged as a CRM and sequential marketing tool.
- ConnectAndSell, a cloud-based auto dial system that helps sales reps reach more clients faster. Swenson likes how the platform—and really all the tools—gives TSG the touchpoint footprint of a much larger organization.
“For a lot of dealers, in order to grow, they think they need to add more reps, more feet on the street,” he said. “For years, we’ve done that and grown incrementally. Last year, we asked ourselves if there’s a better way to cover and condition the market to grow our business. I think 2024 will be a year when we start getting significant return on investment from this engine we’re building. Our reps can make more money, which will help with retention and allow us to be more profitable.”
Conversation Starters
TSG also embarked on a planned quarterly webinar series in 2023, hosting subject-matter experts to discuss topics such as cybersecurity, VoIP phone systems and AI. The third webinar, slated to be held shortly after this interview was conducted, was a presentation developed by TSG’s marketing partner, In2communications. Swenson likens the AI movement to the cloud; many clients were hesitant to develop a cloud strategy, not realizing they already had applications there. Similarly, many companies are unknowingly leveraging AI tools, regardless of their opinion on the technology.
Certainly, the webinars have a validation function, establishing the dealer as a thought leader on a given topic, which carries clout. But perhaps more importantly, it provides reps with a calling purpose to invite clients to sit in on the presentation and perhaps set up a post-webinar meeting. The follow-up appointment might not have anything to do with the webinar’s subject matter, but rather provides the segue into a conversation regarding the client’s current needs.
Moving forward, Swenson reiterated his belief in managed IT being the catalyst for future growth and a gateway to increased hardware penetration. He’s avoided the sexy new offerings such as electric vehicle (EV) chargers, buoyed by his confidence in IT and cross-selling opportunities. As for the addition of Epson, he doesn’t see it as a second line per se, but a launching point to enter certain vertical markets. For example, TSG serves many private educational institutions, but not K-12 public schools, and the inkjet conversation is well suited in this space.
“We’re getting our minds around where it fits, and I think it fits into certain verticals better than others,” Swenson noted. “If we can leverage the ink technology and sustainability story to get into areas such as public schools, it would add a tremendous amount of clicks and open a host of possibilities.”
As Swenson plans for 2024, much attention will be paid to what a good customer looks like and making the tough calls on prospective partners that don’t quite align with TSG’s values and priorities. While TSG isn’t active in the M&A theater (and the northern California pipeline of sellers is thin), Swenson would consider a small- to mid-sized MNS provider to build upon its own model. Epson will provide the push into new verticals, but his loyalty will always be to Konica Minolta. Double-digit growth should continue, with an emphasis on bottom-line profitability.
“It’s important to protect the top line and bottom line,” he said. “That’s led to our measured growth through the years. It’s kept us healthy and helped us through some tough times. We didn’t lay anyone off during COVID, even though there wasn’t a lot of work for some of them to do. When you run a lean ship with really good people, it allows you to get through those times.”
Switch to Dealer Model Changed TSG’s Cat Persona
Ah, to live the life of a house cat. Food, shelter, security. Perhaps a scratching post. A wide-open schedule. The ability to bathe in place.
While he never thought of it beforehand, Dean Swenson was amused at the comparison of The Swenson Group (TSG), when it operated as a Xerox agent for the first 10 years in business, and a pampered feline. But he took the analogy even further.
“Someone once said that when we were with Xerox, we were kind of those nice little cats that sit on the couch, lounge around and we flipped our own base,” he noted. “When we flipped the switch and started over again as a dealer, we kind of became alley cats—scratching, clawing and building. We had to figure out how to survive.”
The move represented a dramatic mindset change and instilled a tremendous sense of urgency. And as tech service wasn’t part of TSG’s makeup as an agent, it meant creating the infrastructure while on the fly. Fortunately, Konica Minolta served as the dealer’s tech service team, while investments in e-automate and a home-grown service crew could help TSG become self-sustaining.
And that didn’t even factor in the difficulty of generating net-new business as a solo act. “If I had it to do all over again, I would have bought a base of business after we started with Konica Minolta,” Swenson remarked. “It was like running through knee-deep mud for a while.”
