{"id":41265,"date":"2020-08-20T17:08:29","date_gmt":"2020-08-21T00:08:29","guid":{"rendered":"https:\/\/www.enxmag.com\/twii\/?p=41265"},"modified":"2020-08-20T17:08:32","modified_gmt":"2020-08-21T00:08:32","slug":"corner-office-issue-dealers-talk-about-margin-management","status":"publish","type":"post","link":"https:\/\/www.enxmag.com\/twii\/feature-articles\/2020\/08\/corner-office-issue-dealers-talk-about-margin-management\/","title":{"rendered":"Corner-Office Issue? Dealers Talk About Margin Management"},"content":{"rendered":"\n
\"\"<\/figure><\/div>\n\n\n\n

Today\u2019s trivia question: When it comes to margin management,\nhow high up the executive tree does this conversation go when deviating from\nthe original marching orders? Does it start from the very top, or is there a\ndirect line through sales\/service managers, COO, vice president of sales, etc.?<\/p>\n\n\n\n

There is no right or wrong answer, obviously. The management\naspect is the most important part, and we canvassed our State of the Industry\ndealer panel to get their views on how pricing is handled.<\/p>\n\n\n\n

\"\"
Susie Woodhull, Woodhull LLC<\/figcaption><\/figure><\/div>\n\n\n\n

\u201cIt\u2019s definitely a top-down situation for us,\u201d noted Susie\nWoodhull, CEO of Woodhull LLC in Springboro, Ohio. \u201cWe manage to the mils.\nWe\u2019ll take advantage of any cash with order opportunity, take advantage of\nwarranties. Once a year, we renegotiate contracts with UPS, our phone\ncarrier\u2014we look at everything. If you\u2019re trying to squeeze as much margin out\nof your business as you can, I don\u2019t think you can leave it to other people.\u201d<\/p>\n\n\n\n

Woodhull adds that the dealership relies on a series of\ncreative bonuses for the management team that is tracked closely. The company\nhas annual goals on service revenue per tech, overall company revenue per\nemployee, days sales outstanding, percent of receivables over 90 days, etc.\nBonus opportunities for the management team on their base salary is obviously a\ntremendous motivating factor.<\/p>\n\n\n\n

\u201cWhen managers see those kinds of numbers, they\u2019re motivated to go for the goals and try to stay within them, because each of the goals is usually worth anywhere from a half a point to a full point on their base salary,\u201d she said.<\/p>\n\n\n\n

\"\"
Chip Miceli, Pulse Technology<\/figcaption><\/figure><\/div>\n\n\n\n

Having skin in the game from a middle management perspective helps ensure margin dollars find their proper place in the dealer\u2019s coffers. \u201cManagement has to be compensated on a percentage of gross profit,\u201d observed Chip Miceli, president and CEO of Pulse Technology. \u201cThe corner office does get its hands dirty to be certain that the business is viable.\u201d<\/p>\n\n\n\n

Setting Price<\/strong><\/p>\n\n\n\n

\"\"
Melissa Confalone, Fraser<\/figcaption><\/figure><\/div>\n\n\n\n

According to Melissa Confalone, vice president of sales for\nFraser Advanced Information Systems in West Reading, Pennsylvania, account\nexecutives and managers are provided pricing for both hardware and aftermarket\nsupplies. Any deviation from that pricing must be approved by sales and service\nmanagement.<\/p>\n\n\n\n

\u201cIf the margin goes below specified levels, approval from\nthe chief operations officer and the vice president of sales are required,\u201d she\nadded.<\/p>\n\n\n\n

\"\"
Brad Yocum, Function4<\/figcaption><\/figure><\/div>\n\n\n\n

Being in lockstep ensures no reps \u201cgo rogue\u201d in an attempt to win business that is ultimately not a victory for the dealership. \u201cOur ownership and sales leadership collaborate on a regular basis for the best interest of all involved,\u201d notes Brad Yocum, market director for Function4 in Sugar Land, Texas. \u201cWe are very fortunate.\u201d <\/p>\n\n\n\n

Off the Record<\/strong><\/p>\n\n\n\n

Every now and then, we get input from a dealer who would\nrather not go on the record due to competitive considerations\/OEM\nrelationships. Here are the thoughts on margin protection strategies from one\nprominent dealer who spoke on the condition of anonymity. <\/p>\n\n\n\n

\u201cSome dealers are taking this opportunity to upgrade their\nbase early, before significant price shopping takes place due to a top-down\npush to reduce all contracted expenses,\u201d the dealer wrote.<\/p>\n\n\n\n

\u201cSome are using very low meter, off-lease equipment to save\ntheir customers significant amounts on their copier leases, (thus) stopping the\nneed to shop. By offering these solutions, some dealers can maintain good\nmargins while saving their customers money at a time when monthly spend\nreduction is in the air and employees\u2019 jobs may depend on this.\u201d<\/p>\n\n\n\n

The dealer continued, \u201cAnd some dealers are building their\nown flat-rate programs that maintain pre-pandemic page volumes, allowing their\ncustomers to print as much as they want, similar to the Konica Minolta One Rate\nplan. This enables dealers to have a stream of known page volume income no\nmatter what else happens in the economy, and keeps the competitors at bay.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Today\u2019s trivia question: When it comes to margin management, how high up the executive tree does this conversation go when deviating from the original marching orders? Does it start from the very top, or is there a direct line through sales\/service managers, COO, vice president of sales, etc.? There is no right or wrong answer, obviously. The management aspect is the most important part, and we canvassed our State of the Industry dealer panel to get their views on how pricing is handled. \u201cIt\u2019s definitely a top-down situation for us,\u201d noted Susie Woodhull, CEO of Woodhull LLC in Springboro, Ohio. \u201cWe manage to the mils. We\u2019ll take advantage of any cash with order opportunity, take advantage of warranties. Once a year, we renegotiate contracts with UPS, our phone carrier\u2014we look at everything. If you\u2019re trying to squeeze as much margin out of your business as you can, I don\u2019t think you can leave it to other people.\u201d Woodhull adds that the dealership relies on a series of creative bonuses for the management team that is tracked closely. The company has annual goals on service revenue per tech, overall company revenue per employee, days sales outstanding, percent of receivables over 90 days, etc. Bonus opportunities for the management team on their base salary is obviously a tremendous motivating factor. \u201cWhen managers see those kinds of numbers, they\u2019re motivated to go for the goals and try to stay within them, because each of the goals is usually worth anywhere from a half a point to a full point on their base salary,\u201d she said. Having skin in the game from a middle management perspective helps ensure margin dollars find their proper place in the dealer\u2019s coffers. \u201cManagement has to be compensated on a percentage of gross profit,\u201d observed Chip Miceli, president and CEO of Pulse Technology. \u201cThe corner office does get its hands dirty to be certain that the business is viable.\u201d Setting Price According to Melissa Confalone, vice president of sales for Fraser Advanced Information Systems in West Reading, Pennsylvania, account executives and managers are provided pricing for both hardware and aftermarket supplies. Any deviation from that pricing must be approved by sales and service management. \u201cIf the margin goes below specified levels, approval from the chief operations officer and the vice president of sales are required,\u201d she added. Being in lockstep ensures no reps \u201cgo rogue\u201d in an attempt to win business that is ultimately not a victory for the dealership. \u201cOur ownership and sales leadership collaborate on a regular basis for the best interest of all involved,\u201d notes Brad Yocum, market director for Function4 in Sugar Land, Texas. \u201cWe are very fortunate.\u201d Off the Record Every now and then, we get input from a dealer who would rather not go on the record due to competitive considerations\/OEM relationships. Here are the thoughts on margin protection strategies from one prominent dealer who spoke on the condition of anonymity. \u201cSome dealers are taking this opportunity to upgrade their base early, before significant price shopping takes place due to a top-down push to reduce all contracted expenses,\u201d the dealer wrote. \u201cSome are using very low meter, off-lease equipment to save their customers significant amounts on their copier leases, (thus) stopping the need to shop. By offering these solutions, some dealers can maintain good margins while saving their customers money at a time when monthly spend reduction is in the air and employees\u2019 jobs may depend on this.\u201d The dealer continued, \u201cAnd some dealers are building their own flat-rate programs that maintain pre-pandemic page volumes, allowing their customers to print as much as they want, similar to the Konica Minolta One Rate plan. This enables dealers to have a stream of known page volume income no matter what else happens in the economy, and keeps the competitors at bay.\u201d<\/p>\n","protected":false},"author":166,"featured_media":41266,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1650,82,87,1638],"tags":[2738,3588,3521,359],"_links":{"self":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/41265"}],"collection":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/users\/166"}],"replies":[{"embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/comments?post=41265"}],"version-history":[{"count":1,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/41265\/revisions"}],"predecessor-version":[{"id":41267,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/41265\/revisions\/41267"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/media\/41266"}],"wp:attachment":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/media?parent=41265"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/categories?post=41265"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/tags?post=41265"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}