Distributors Move Beyond Paper
A panel discusses the advantages, disadvantages and the necessity for value-added services.
For many years the job of distributors in the forms industry was to package, ship and deliver forms. By forms we mean those that are basic, tangible, paper-based and traditional. Today, however, the expectation of the distributor is to provide more than forms. End-users are looking for solutions to help them streamline their forms operations. In addition, as more businesses use the Internet, they're demanding special amenities to ensure the efficiency of electronic services.
In fact, BFL&S recently conducted a survey to find out what distributors are doing these days to maintain or boost revenue. Of the more than 200 distributorships that responded, 69 percent said they offered online ordering, 78 percent forms management software and 59 percent electronic order entry. A high percentage also reported providing direct mail and warehousing services, with 75 percent and 94 percent of distributors offering them respectively.
In order to find out why these value-added services have become a significant part of the forms industry, BFL&S questioned the following panel of distributors for a roundtable discussion:
- Mike Emis, president, Data Forms, Fayetteville, Ark.
- Gordon Peterson, president, Document Resources, Minnetonka, Minn.
- Jack Schachtel, president, CTP Solutions, Agoura Hills, Calif.
- Gary Watson, president and director, Elite Forms Service, Muncie, Ind.
Why do you offer value-added services?
Watson: We offer them primarily because of customer requests. We listen to what our clients say and what their business issues are and then decide if we can offer a solution. We want to broaden our product line to offset any losses that might come with the conventional products we offer. By doing so, we've found that it's an interesting new way to sell forms.
Peterson: It was a way to differentiate ourselves from smaller competitors and to offer one-stop shopping for our clients. As a result, we've been able to increase our sales in traditional products.
Emis: One of the value-added services that we offer is statement processing. We chose to offer it because it is related to the traditional core envelopes forms business we have already established.
We also realized we had to do something different since the traditional forms business has been eroding over the past few years.
Is it beneficial for you to offer value-added services?
Emis: Yes, because almost universally our clients have been ecstatic about utilizing services such as document management, especially in smaller offices. A good example would be doctors' offices, where statements are sent out once a month. Since they don't have staff to handle the extra work, they are glad to have us take care of the distribution for them.
Peterson: Offering special services is definitely beneficial. It builds our revenue and by bundling services such as document management and warehousing with traditional ones, we are able to gain new clients and additional orders.
Watson: Yes, because it allows us to be viewed differently by our customers. We've had a good year and I think the reason is because when times get tough, most businesses are looking for value-added services. As companies have cut back on staff, they've looked for business partners. Therefore, by offering these services, we've been able to align ourselves with their needs. Basically, what we've done is taken some of the more narrow offerings and broadened them by incorporating new programs.
For us, two of those new programs include Statements With a Twist and PrintManage. Statements With a Twist is a statement-rendering and direct mail fulfillment service. PrintManage is an online service that allows us to offer customers online control as well as access to a complete menu of reports.
Schachtel: It's very beneficial. Not only can distributors offer relief to end-users through services like online ordering, direct mail and forms management software services, they can also save the customer time and money, which reflects well on us.
Are these services a main part of your business, or do you offer them to retain clientele?
Schachtel: Actually, both. We offer these services as a regular part of our business because it is essential in the current marketplace. On the same note, we need to offer them in order to retain clientele with increasing demands.
Emis: I am not so sure that we would have lost customers by not offering extra services. It was just necessary for us to provide them in order to grow and be a viable company.
Peterson: These services allow us to maintain our current business as well as gain new clients. While a service such as forms management has been offered for the past 10 years, an electronic document management system is a service more clients—old and new—are beginning to ask for more often.
What are some of the advantages and disadvantages of offering value-added services?
Peterson: An advantage is that distributors gain business. The disadvantage is that there are added investment costs in order to offer these services. Certain services require distributors to add staff members with IT backgrounds and then train them in the forms business. For us, adding special services has also meant creating a separate business from traditional forms.
Schachtel: I agree that the advantage for distributors is that value-added services offer more business, but it is with a larger margin. On the other hand, it takes a lot more effort to support the value-added services we offer the customer. More expertise is required to sell the services and more resources are needed to maintain the business.
Watson: One advantage is that there are many services we offer that other folks do not, which helps us acquire new business. The disadvantage to providing value-added services, however, is that they create more overhead. It's expensive to have warehouses and print and mail centers, in addition to a complete IT staff that develops programs and provides data services.
Do you offer, or plan to offer, new or different value-added services?
Watson: We're starting to do a lot more planning to utilize the Web. In some cases it may just be that we offer a horse of different color, but we're looking to take the client to the Web more.
Schachtel: We are always seeking out and offering new services to meet our customers' needs. By listening to clients, distributors can figure out what customers are looking for and then create a solution for it. That is the beauty of being a distributor.
Peterson: One of the newest services we offer is an electronic signatures package. This is software that allows someone to sign electronic documents with a true, authorized signature. The software comes with security features that prevent documents from being changed. We decided to offer it since the e-signature bill was recently passed during the Clinton administration, which will cause more and more companies to demand it.
Emis: We just purchased a pre-sort mail company, which handles some postal functions like bar coding. Mail is going to be our emphasis as far as the future is concerned. We are also working on Internet bill presentation. We've already got online viewing for customers.
What seems to be the most requested value-added service that you offer?
Peterson: From a frequency standpoint, traditional storage and pick and pack services are the most requested. Direct mail is also popular, considering the statistics. Because these services are less expensive than some of the more modern ones, a lot of end-users can take advantage of them.
Emis: We've found that warehousing is a pretty big deal because of the space and storage limitations of our customers. We're doing a little bit of e-procurement with Four51, an e-solution provider, as well.
Watson: The most popular service for us has been Statements With a Twist, which has been growing about 25 percent annually over the past four or five years. However, we've been able to take our experience in marketing and pull our PrintManage program together so that we can understand how that will go as folks become more Internet savvy.
How important is it that most distributors offer some types of value-added services?
Emis: I believe value-added services are necessary for distributors to be effective in the marketplace. It's not as simple as keeping up with the Joneses, but customers read about these services in their trade magazines and want to utilize them. It's just the way the migration of procurement is heading.
Watson: If a distributor wants to be in business long term then it's the proper thing to do. We are basically here to build partnerships with our clients. In fact, we hired a full-time employee due to a request generated by one of our Fortune 500 clients. Depending on your interests and different opportunities, anything you can do to broaden value-added services will be a benefit.
Schachtel: Distributors have to offer value-added services or their clients will bid out for traditional forms, which have become a commodity market. It's too risky for distributors who don't offer value-added services to rely too heavily on strong relationships with long-term customers, because personnel will always change. It is just too easy these days for distributors to lose traditional orders to lower bidders.
Do you see value-added services being a major part of a distributor's business in the future?
Peterson: Definitely. Value-added services will continue to become a major part of business over the next several years, beginning with larger companies and then trickling down to smaller ones. Eventually, most organizations will complete, distribute and archive their present-day forms in electronic formats.
Schachtel: I believe we need a mix of both value-added services and traditional ones. There are only so many value-added products and services you can offer. Even in the next several years, distributors will need to offer value-added services as a complete package.
Emis: Absolutely, because, in a nutshell, we saw the forms in-dustry change rapidly with the advent of the laser printer, so something had to be done to open up new avenues of opportunity. After all, nobody thought the fax machine was going to be a big deal.
By Sharon R. Cole and Sarah Lerow