Mark Kehoe of GFI Digital Discusses How He Transitioned His Dealership to a Managed Print Services Organization It’s not easy reinventing yourself, especially if you’ve been known as one of St. Louis’ most successful office technology dealerships, but with the industry changing to a services model, more dealers like GFI Digital are recognizing that the old model isn’t the model for long-term success anymore. GFI Digital is an independent office technology dealership that’s grown into a $50-million business in 11 years. Most of that revenue was the result of hardware sales, but with a new business model, that’s about to change. The GFI Digital team serves a significant portion of Missouri as well as western Illinois. Its customers appreciate the dealership’s top-notch customer service and support, and its ability to meet their varied office technology and solutions needs. Many are just now beginning to appreciate what the company can do in the realm of managing their printed output. To get a better understanding of the company and how it’s making a transition into the world of managed print services we spoke with Mark Kehoe, Vice President of print management and one of GFI Digital’s owners: Your business was up 22 percent last year, how’d that happen? Kehoe: We’re protecting the base and pumping for net new business. The economy has opened up accounts that we normally wouldn’t get a chance at because they were happy with their current vendor. Now the higher ups are asking them to shop a little bit and it’s creating opportunities. You do well with what you call ‘B-size’ and larger accounts, including heavy hitters such as Emerson and United Van Lines, but you tend to avoid smaller ones. Why’s that? Kehoe: We don’t need the practice. Why do customers like doing business with GFI Digital? Kehoe: Reliable, prompt, and excellent service. St. Louis is a big ‘show me’ state, and once you start getting traction in these accounts and you’re doing business with this person, that other person is going to look at you. Five years ago you made a strategic decision to move into managed print, but things didn’t start out as well as you would have liked, did they? Kehoe: We were doing it the wrong way by selling equipment into the accounts and we were doing it with our general sales staff. In November 2009 we hired a dedicated sales staff to focus exclusively on MPS. How did you find the right talent to sell MPS? Kehoe: I made this an upward career path for some of my higher-end equipment sales reps and then brought back a former employee who had been working in Minneapolis for IKON and was looking to return. How are these folks approaching customers about MPS? Kehoe: The MPS reps are coming behind the copier reps in current bigger accounts and trying to grab the maintenance on the printers as well. We have our telemarketing people banging away at it, working their account list, and coming behind on the bigger accounts and making sure we pick up all the maintenance on the current accounts and not leaving anything on the table. What were some of the challenges of selling managed print services and what have you learned from past mistakes? Kehoe: Longer sales cycles and the danger of getting bogged down with customers who are not going to make a decision, leaving us holding the bag after doing a lot of work for nothing. We’ve gotten a lot better at identifying where we need to focus. If it’s not a go, we’re not wasting our time doing a bunch of work for someone who’s not making a decision. It’s not unusual for some dealers to approach MPS as a way to move more hardware, which is not how traditional sales reps are trained. As you mentioned, even your organization made that mistake initially. Kehoe: That wasn’t the right way to do it. First you pick up the maintenance contract and then you get the equipment, so it’s a totally different mindset. There’s a lot of competition and mixed messages being sent to prospective clients about MPS, isn’t there? Kehoe: Everybody’s heard of MPS but we educate them on what MPS really is. You’ve got manufacturers coming in with solutions, but those are equipment solutions. You’ve got toner people that are basically offering break-fix. We don’t care about the equipment; it’s about management of their fleet more than selling hardware into the account. The hardware comes—you don’t sell it [up front]. Who are the best candidates for an MPS engagement? Kehoe: An organization with 40 machines or 100,000 minimum clicks. Our dedicated MPS staff focuses on the higher end customer. GFI Digital is now billing more than $195,000 a month for services, how do you see that growing from here? Kehoe: We expect our MPS business to reach $8 million annually in three years. We have a three-year plan. Our plan is to add $15,000 a month in additional billings. What’s the biggest obstacle to making that happen and how do you avoid doing that? Kehoe: Losing focus. It’s really not that hard if you focus on true MPS and only MPS and you’ve got six reps and all you’re looking for is $15,000 additional billings per month. If you get off the focus of what you’re supposed to be doing—driving printer service—you’re not going to reach it. If you’re not focused on true MPS and MPS accounts, you’ll never get there. Have you received any help from your manufacturer in developing your MPS strategy? Kehoe: None. Ricoh at least has a printer line, but all they want to do is sell hardware. Everybody tells me the C-level executive is the prime target in most organizations, and that’s your target too, but you continue to acknowledge the IT folks too. Kehoe: You’ve got to be careful with the CFO or CIO because all of a sudden you’re alienating the director of IT so you have to quickly bring them into the fold, explaining to them, ‘No, we’re going to make you look good, not make you look bad in this process.’ Sometimes the CIO is too high, so then the focus should be on the director of IT or the person responsible for the organization’s help desk. It’s still not easy getting in front of those C-level folks, but once you do, you seem to do a pretty good job of closing don’t you? Kehoe: Once we get in front of them, 70 percent of the time we’re going to at least get something moving forward. Many dealers are hesitant to make the necessary investments required to change their traditional business model and make that more of an MPS model. You did that while acknowledging there is some financial pain on the road to success. Why? Kehoe: You have to have the staying power. It’s scary when you’re losing the kind of money you have to lose to put it together the correct way. But it’s the future. At the end of the first year we realized we were probably going to lose $63,000, but by the second year we were making $1 million, and then it went crazy from there. What would you tell those dealers who are still lagging behind in making a decision about changing their business model from one that is hardware centric to one that is MPS centric? Kehoe: Don’t do it unless you’re going to commit to it, hire a dedicated staff, and then manage according to a plan and stick with the plan. If you don’t, don’t even get involved with it because you’ll get frustrated quick. Scott Cullen is a regular contributor to ENX.