Don’t Forget the Tax Man
Filling out tax forms is a major drag; selling them is anything but. While technology has brought about the demise of many form products and left others mortally wounded and gasping for air, tax forms remain extremely lucrative, in-demand products.
Consider the fact that a trip to the local post office, library or state building to obtain tax forms simply won’t cut it for most enterprises, given their varied and voluminous needs. “This might be an option for very small companies with no more than three employees, but, local government offices have limited quantities and are not designed for large give-aways,” explained Jim Magdaleno, sales and marketing manager for TFP Data Systems, Oxnard, Calif. “Besides, have you ever tried getting anything from a large government office?”
Quantities aside, Joe Abrams, president of Houston-based Apex Business Systems, noted that software programs and printers are important considerations for end-users, as well. “The government only provides a little unit set that wouldn’t run on their software. It would have to be handwritten or typed, and there wouldn’t be an envelope to mail it,” he explained.
If ever there was a situation requiring the expertise of forms professionals, supplying tax forms is it. Best of all, the products translate into profitable, repeat, seasonal business for conscientious distributors who follow a simple customer-contact schedule (see sidebar on the right). And, as Neville Johnson, vice president for Apex Business Systems noted, tax forms open the door to tremendous cross selling opportunities. “For example, tax forms tie in beautifully with our human resources products,” he said. The line of compliance products that the company came out with last year includes items such as mandatory federal and state labor posters, job applications and software.
Many Happy Returns
Both Abrams and Magdaleno reported distributors make 70 percent to 150 percent profit selling tax forms. “We suggest profit margins of 100 percent on cost,” offered Abrams. “On orders for 10,000 pieces, distributors may make 100 percent. But, 100-piece orders can mean 600 percent and 700 percent margins. Even at the most competitive level, the mark ups on tax forms are big.”
Such high-profit potential warrants cold-canvas marketing. Magdaleno said the point of contact for tax form sales varies within companies, and decision makers may be found in accounting, human resources and purchasing departments. Abrams suggested partnering with software companies, which typically have heavy distribution bases. Distributors can work out deals for customer referrals, and end-users will have the assurance that the tax form products are known to be compatible with the software.
“One of the biggest mistakes distributors make is not selling tax forms to existing customers,” continued Abrams, which leaves money on the table and opens the door for the competition. “Let customers know that you can match the tax form products they use for sure, and can most probably save them some money. We have a six-page, mini catalog that distributors can send out with invoices and statements to show customers that they handle tax forms.”
As in any selling situation, a few basic questions will establish what is needed. Said Magdaleno, “Keep it simple. Start with the type of form, whether W-2s or 1099s,” he advised. “Then, find out how many parts the forms need to be, if laser cut sheets or continuous forms are needed, mailers or non-mailer styles and if envelopes are required.”
Abrams reminded distributors to inquire about end-users’ software when determining the full application. “Find out if the customer has a laser or an impact printer and if the products will be used with pressure-seal equipment. People who have pressure-seal equipment use it for checks, invoices and monthly statements, so it’s a natural fit for their tax form needs,” he observed. Also, avoid problems by ordering envelopes at the same time as tax forms to ensure a proper fit, and check to make sure the correct form number is recorded when placing an order.
Both Apex Business Systems and TFP Data Systems provide very informative catalogs that can get distributors sufficiently up to speed on specific state requirements, tax law changes and filing dates before meeting with customers. “Distributors don’t need to get bogged down learning tax laws. The catalog has all the necessary basics,” said Abrams. “We can provide state-specific catalogs indicating federal filing dates and general guidelines on how to select proper forms, as well as phone numbers for additional information,” said Magdaleno.
TFP Data Systems also offers newsletters and presentations to educate distributors about tax forms. “The IRS Web site can be overwhelming, unless you know what you’re looking for,” added Magdaleno. “I got my tax knowledge by networking with my colleagues, learning a little more each year. A lot of people turn tax business away because they are intimidated. Just keep it simple—what does the customer want, and does he or she have a copy of it. Start with one account and see how it goes.”
Said Abrams, “Value-added customer service options may include offering early bird discounts. Orders can be placed in early August with future shipping and billing dates in mid December.”
TFP Data Systems offers solutions for electronic filing. Distributors can rebrand their Web sites allowing end-users to do their taxes online. At Apex Business Systems, branded distributor Web sites can be rolled out in a couple of days depending on the degree of personalization, and serve as effective marketing tools offered at no cost to distributors. This is of particular benefit to the smaller distributors who wouldn’t otherwise be able to afford such a tool. It also gives them a greater presence in the marketplace when up against large competitors. “Distributors’ customers can view a full-line of products and have ordering capabilities, while distributors can track order entry and shipping,” said Abrams. “We can also limit the product line, so if a distributor is working with a software house and wants to just show 20 products, we can personalize the site for the product line he or she is making an offer on.”
When asked the best markets for distributors to focus on for tax form sales, the contributors agreed that virtually any market can be a haven for tax form business. Magdaleno sees some distributors who like to focus on certain niche markets such as churches. “Even if a distributor has been trying to get into XYZ company for sometime but has been unsuccessful due to the presence of the major directs, tax forms can be a great place to start,” suggested Johnson. “The independent channel can always offer end-users better pricing than the majors are willing to give. Once the customer sees what the independent distributor can do for him or her, the distributor should ask to look at providing another product and build up from there.”
Magdaleno knows of situations where distributors have actually turned down requests to handle tax forms for fear of jeopardizing an account. They often have misconceptions of the products being difficult and not worth the time they take. “The forms are IRS
approved and we are here to guide distributors through the process,” he said. “The profitability of smaller, yet repeating business eventually outweighs single, large orders. Not only are tax forms seasonal products that people don’t think about until they absolutely need them, but the products make terrific door openers, and the once-a-year repeat purchase leads to cross-selling if distributors make the buying experience a good one.”
- Companies:
- Apex Business Systems
- TFP Data Systems