Management Companies Have a Unique Opportunity

One year ago this month, we posed a question on our cover, “Will technology catch the ‘R’ factor?” The story explored the opportunity to eliminate the “R” factor in vending, which is the intentional underreporting of sales to customers. The story underscored an important benefit that technology offers.

The elimination of the “R” factor and other benefits that technology promises will help professionalize the vending industry. The article also noted the role that vending management companies are playing in introducing such technology.

The vending industry is slow to change, and if it takes third party players to help drive change, then these entities are playing a constructive role.

INTEREST GROWS IN TECHNOLOGY

In the past year, technology providers have reported that the level of interest among operators in DEX, cashless transaction capability and remote monitoring has been growing, however slowly, independent of management companies’ influence. This is a good sign in today’s struggling vending environment.

For operators, profit margins continue to get squeezed and growth opportunities are rare. This challenging situation is slowly pushing operators to recognize the need to invest in tools that will improve their profitability. More operators are realizing that the days when profit margins were high enough to allow for sloppy business practices are forever gone.

Technology providers further note that vending management companies are placing some of the biggest orders for remote monitoring systems, in the interest of improving the accuracy and transparency of sales reporting.

A UNIQUE OPPORTUNITY TO LEAD

The management companies have an opportunity to show the industry some of the important benefits that technology can provide. If management companies can prove that these tools deliver more accurate sales reporting (in addition to other benefits), they will be performing a valuable service.

One sign of improvement will be more realistic commissions in the accounts that management companies control. Excessive commissions and bogus sales reporting are twin evils in our industry; without getting rid of false reporting, excessive commissions can’t be stopped, and vice versa.

Accurate sales reporting has been shown to improve earnings, even at a lower commission rate. Hence, a tool that gives clarity to sales reporting can be expected to deliver higher earnings at lower commissions.

TOOLS CAN IMPROVE EARNINGS

To date, I am told, this has not happened, not even in accounts where management companies have implemented improved reporting systems.

Hopefully, this will change. Management companies have an opportunity to take a pioneering role by showcasing technology’s benefits – to operators and customers alike.

The president of Best Vendors points out in this month’s cover story (beginning on page 84) that the industry still needs time to determine how to allocate the cost of the technology equitably among the parties involved. He is correct in noting that this isn’t a simple matter.

The management companies shouldn’t miss this opportunity to promote positive change.

As technology rollouts continue, we’ll be looking for signs of badly needed improvement in these areas.

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