Setting Your Company Apart From The Competition

by Mike Ferguson - VMAC Solutions
Posted On: 7/15/2019

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Mike Ferguson - VMAC Solutions

Are you the copycat of your competitors? Are you a follower instead of a leader? Being a copycat doesn't distinguish you from any competitors -- so why copy when you can create? Below are some issues that I see every single day when I talk to operators across the nation.

Can you offer your customers NEW equipment, GREAT service and CHEAP prices?

If do you all three of these, you are going to have growing pains, but in a negative way. And you won't be able to do this very long before you contact me to sell your business. Not too many buyers of vending and OCS businesses wanting to buy your business want to be the "bad" guy and raise prices. This will make them lose the business that they just bought. Therefore, they will tend to pay you a lower price for your business. If you continue in business, you need to be profitable -- this is not a hobby.

Here are a few ideas on growing your business organically and profitably:

Never sell on price. If you get the account on price, you will lose the account on price when someone beats your prices.

Don't be afraid to go up on prices on selling a new account . There is usually a reason why a contact is talking to you about changing vending and coffee service providers. Explain to them the three above. "I can't provide NEW machines, GREAT service and CHEAP prices, but I can provide new or newer machines, great service, and fair and convenience store prices!"

Remove the price tags from your vending machines. Have a sticker made up that says, "For prices, please press the selection of choice on keypad." Add a logo to it with contact information and make sure the sticker is tasteful and coated with a clear sealer to protect it from wearing off.

Take pictures of the exact products at a nearby convenience store. Show them to the customer -- then say "plus tax" in vending machines.

Convert vending to micromarkets. ALWAYS go up on prices plus sales tax. You have more risk, more capital to invest, and more time to do it right, so sell markets for what they are -- mini convenience stores.

I hear it all the time "I can't raise prices because of my competitors" … you can if you have the relationship with the client, and at least try some of the above advice. If you can't make the right margins, then pull the account and put the machines somewhere else where you can make money. Remember, this isn't a hobby -- make money!

"More" is not always better!

As one could imagine, in my line of work, I come across so many operators whose goals are to grow large and add more accounts. While I can't speak for everyone, just because you may be big, doesn't mean you're the best. Many factors play into this.

I have been to so many operations across this industry -- and to see a large operator with the messiest warehouse, old worn out trucks, ragged drivers, no vending management system (VMS), and no consistency. Does this make them the best?

On the other hand, I have come across a two-route operation with average routes of about $50,000 per month; what helps is that each machine does a minimum of $150 per week, or $600 per month. The company used a popular VMS to manage it all. It was 100% cashless installed and had higher prices than average. There were two route drivers, the owner, and one part-time office person. The owner took advantage of a digital platform that allowed him to get emails directly from the end customer so he could personally handle customer complaints such as broken-down machines, refunds, staled products etc., thus bypassing the contact and more phone calls. He took the time to pull low-volume machines and accounts to maximize his company's profits on assets already owned. I won't mention how much he was able to make off his company in salary, but it's six figures, plus. He had a spotless operation.

It depends on your long-term goals on how large you want to grow your business. Some operators just want to make a good living and are happy running it themselves. Some want to build as big as possible to sell it one day. We are starting to see more and more larger operators buy other larger operators and even equity firms getting into this business to provide the cash for growth.

Most if not all vending and OCS companies struggle with route drivers and service techs. Do you really want to add to your problems in this way by continuing to grow? A good way to grow is internally. Pull the low-volume accounts, raise prices to c-store pricing, add OCS and pantry and consider micromarkets.

Run a clean and organized warehouse. Vendors and visitors to your location all talk to each other and a reputation for a filthy operation is not the word you want spread out there.

Small to medium operators can make a great living, so ask yourself, what do you really want out of this business? This size of operators is also easier to sell when that time has come to a qualified buyer.

Don't "Factor" Commissions

"Factoring" commissions paid to accounts means cheating on the agreed upon amount of commissions to pay to a customer. For example, if you bid to pay a college 25%, but only pay them 10%, you are cheating them in a big way. This is an ugly subject. Just because your competition is doing this doesn't make it right for you to follow suit. Nothing is more frustrating than bidding against a fellow competitor and knowing that they are known for factoring commissions, only to have them win the bid against you.

In my line of work, this factoring will come back to haunt you should you sell your business. There have been numerous lawsuits from companies that have bought operators who have been cheating their customers. Generally, the buyer is not going to put themselves at risk and cheat the customers moving forward. Then, if you come clean and explain to the buyer of your company that you have been cheating the customers ahead of time, don't expect them to buy you and neither will any other vending operators. If you don't tell the buyer, then you are open now for a lawsuit and could even spend time in jail if you are cheating any government locations or colleges, etc.

So how do you beat this?

The first way to separate yourself from what your cheating competitor may be doing is to guarantee that your smaller percent of commissions will be higher than the current provider's commission check. If your true commission check is lower, offer to write a check for the difference.

For example, tell the customer "My 10% commission check will be higher than the 25% from your current provider." You can look at the customer's pricing and be able to tell pretty quick if they are factoring the sales. If the prices are high enough to cover the higher commissions, then maybe they are not factoring. But if you see unusually low prices with a high commission rate, then there could be some factoring going on.

The customer generally will "get" what you are talking about. Most VMS systems won't allow you to factor, but everyone knows a workaround typically using Excel or some other method. In my many years in business, I never once got called out when going up against a known cheating competitor. When you do a proposal, don't bid a commission that you can't live with and make money.

Having An Updated Website And Public Image

E-mail address:

The days of AOL are long gone. Dialup is way gone! Don't run your business under an AOL e-mail address. The 1990s are HISTORY! It is very easy to have your company name (domain name) after your @ sign to give you a professional look. If you own the domain name, then you can create your email address using the domain through providers like Go Daddy, Google, Wix and many others.

The first thing you should buy is the domain name. For example, if your company name is Custom Breakroom Supply; buy the domain name CustomBreakroomSupply.com. Then you own that name to use in your email address, not stick with @aol.com or @Yahoo.com, etc. If it is already taken, you can always buy the .net name or use a different variation of your name. Search YouTube for ways to do this yourself or ask your website provider. Bob@CustomerBreakroomSupply.com looks better than Bob1994@aol.com or Bobloves1994@gmail.com any day and way more professional.

Website:

This is a direct correlation to your company image. While you may not want to spend a few thousand on a website, at least shop around and have someone build you a nice one or two-page website until you can afford to build it further. Many operators cut corners on this. Most don't know that Google "crawls" your Web pages -- so if your Web page never changes and gets updated, your Google ranking goes way down to the point where new customers won't find you when doing a search. Face it, nobody uses Yellow Pages anymore; they Google everything these days and if you invest into a great-looking website, and have that website professionally managed, updated and changed, your Google results will go way up and will help you get found by new customers looking to change vending, markets and OCS providers. This is WAY cheaper than hiring a salesperson to go old school and cold call.

Use Social Media

It's FREE! It costs absolutely nothing to create your own LinkedIn and Facebook page. LinkedIn and Facebook get crawled by Google as well and will help you get found when a potential customer is searching Google to find you. To make it look professional, there are numerous YouTube pages that can help you set up this LinkedIn page or ask your website provider to set it up for you. Most will include it with the build of your website.

Be Unique

Making your company unique will help separate yourself from the competition. It doesn't cost that much and could be the determining factor if a prospect calls you or not. Don't be that copycat -- make your company the leader and be better than -- not the same as -- everyone else.

MIKE FERGUSON is a 30-year veteran of the vending/micromarket and office refreshment services industry. He founded VMAC Solutions (Vending, Markets & Coffee) to provide intermediary services to companies exploring mergers or acquisitions, and to serve as a consultant and coach to operators dealing with technology challenges such as the addition of VMS software, automated warehouse fulfillment, including prekitting, and expansion into or upgrading of office coffee services and micromarket operations. He can be reached at Mike@VMACsolutions.com or (713) 569-6463 and is online at vmacsolutions.com.