Judson Kleinman, owner of Corporate Essentials Inc. in Fairfield, N.J., credits the company's expansion into janitorial and sanitation supplies for recent growth.
Janitorial and sanitation products include paper towels, towel dispenses and cleaning fluids for break rooms and bath rooms.
In the very competitive OCS market, diversification can be critical to growth. But being diverse means much more than offering a wide range of coffee and beverage products and systems. Companies looking to gain a competitive edge need to take a broader approach to meeting the needs of their facilities and office manager customers.
For many OCS companies, the answer just might be in the break room and the washroom. The break room category, which consists of products such as paper and plastic cups and plates, plastic cutlery, straws, lids and stirrers, is expected to reach $12 billion in 2007. The opportunity is even greater in the continually growing janitorial/sanitary category — which includes items ranging from hand sanitizers to cleaners to floor care products — where 2007 estimates place the market at $29 billion.
Yet while corporate refreshment customers are also often involved in the specification and decision-making process for “jan/san” and break room products, many OCS operators are not willing to stray from their core competency and take a leap into these other categories.
This point is even more puzzling when you consider that it is three times more cost-effective to sell additional products to existing customers than to seek out new customers. At the very least, adding break room and “jan/san” products provides another tool for strengthening existing customer relationships.
The bottom line, however, is that if your mix of business is not 25 percent to 30 percent jan/san and break room ancillaries, you are missing out on a profitable opportunity.
As is the case with any new venture, entering these new categories will require an investment of time and monetary resources. However, the investment is minimal when you consider the rewards in terms of customer satisfaction and increased margins. So, the question then becomes, how can you minimize the risks associated with entering into new markets and move quickly to the rewards?
Expansion into ‘jan/san': a multi-step process for OCS
Paradigm Group, a full service supply distribution, facilities products manufacturer, warehouse packaging and marketing consulting company, offers a solution. The company believes the key to successful penetration into the jan/san and break room categories is the implementation of a multi-step process that emphasizes the OCS operator's strengths, yet addresses the overall facilities requirements of current customers.
Simply asking your existing customers to consider you for their jan/san and break room business is the easy part. Securing the business and keeping it long term requires a much more strategic effort.
That is why it is critical to align with a sourcing partner that has industry-specific expertise, can offer an array of facilities products as well as a focused go-to-market and ongoing marketing support program. The Paradigm Group specializes in helping distributors and OCS operators enter the jan/san and break room businesses and navigate the marketing challenges.
Case study: Corporate Essentials, Fairfield, N.J.
Corporate Essentials, Fairfield, N.J., a traditional provider of coffee and beverage products to offices in the New Jersey and New York areas, came to Paradigm Group looking for solutions that would extend its refreshment line and create future growth opportunities.
When Corporate Essentials expanded into jan/san, its mix of product sales was 90 percent coffee and beverage, with the remaining 10 percent split between jan/san paper products and break room items. With the help of a committed supplier partner, which implemented its integrated sales and marketing program, Corporate Essentials was able to grow its business in the jan/san category area alone by 15 percent.
Overall, Corporate Essentials has grown its business by 30 percent over the last three years, landing a spot on the Inc. 5,000 list of the fastest growing companies in America. The company attributes 8 percent to 10 percent of this growth directly to working with the Paradigm Group.
How can an OCS operator achieve the type of success realized by Corporate Essentials? First, your organization needs to make a commitment to positioning the company as a single-source facilities provider. Most facilities are open to having one source that can meet all their refreshment, break room and jan/san needs. In many cases, they just haven't been approached about making the transition.
The next step requires implementing a process like the one that helped Corporate Essentials build its business.
The Corporate Essentials program began with market research and incorporated several marketing elements. These included sales training, hands-on marketing consultation and a joint direct sales effort that involved participation of its supplier partner during the deal-closing process.
Evaluating Organization and Customer Needs
There are more than 50,000 available jan/san facility products from which to choose and there are many distribution organizations that are solely focused on this category. This reinforces the importance of taking inventory of the competition and closely scrutinizing the potential items being added to your product mix.
Operators must survey their customers to better understand their jan/san and break room requirements, and then determine which products best complement the operator's refreshment offerings. Consider products that not only fit customer profiles, but also have the right price points.
A good sourcing partner is constantly evaluating products and can offer insights to help you make the right choices for your customer base and your bottom line.
Typical products that can be added to OCS provider offerings include: cleaning products, dispensing systems, soaps, air fresheners, roll towels, hand towels, seat liners, toilet papers, paper cups and plates as well as plastic utensils and a variety of other break room products.
A knowledgeable sourcing partner also should be able to help identify evolving industry trends. For instance, many of today's corporate office buyers, looking to uphold environmentally responsible corporate images, are seeking out “green” products for break rooms and jan/san needs.
The break room environment is one of the most used and yet deficient areas in communicating alternative products and “green” solutions for the working space.
An average office of 50 employees will drink 75 to 100 cups of coffee per day. By utilizing a foam cup recycling program or by using paperboard cups, a 100-percent reduction in rotable energy can be realized.
The addition of yield-reducing automatic towel dispensing systems can lead to a 32-percent reduction in paper towel usage. And bringing in napkins, towels and other paper goods with high (50 percent or better) post-consumer content, greatly reduces the usage of virgin material.
That being said, it's important to align with a sourcing partner that not only can offer a collection of environmentally responsible products that address this trend, but also understands the benefits of being “green” and how to effectively market “green” products. Some partners even help design targeted Websites, catalogs and other marketing support materials.
Selling for Success
Tap into your sourcing and marketing partner to strengthen your position in the jan/san and break room categories. Request competitive selling suggestions and tips for targeting these opportunistic audiences.
Some partners will even send representatives to your site to train relevant sales people. For example, Paradigm Group representatives trained Corporate Essentials on the intricacies of “selling green.”
Paradigm Group also helped educate Corporate Essentials on competitive threats and identified business opportunities. The supplier partner even pinpointed prospective contacts and offered insights on points that needed to be emphasized to secure the sale.
Armed with this critical information, sales representatives customized presentations to prospective customers. The presentations clearly defined Corporate Essentials' competitive edge and effectively addressed the targeted needs of the prospective customers.
Closing the Deal
How do you know when you are ready to make the plunge? If you have growth aspirations and the means (warehouse space) to accommodate product, you are ready to go. However, research and training are key, so make sure all your homework is done and the staff properly trained before deploying the troops.
Make appointments with customers that fit the profile of products you have added. Remember to emphasize the benefits of using a singe-source provider and use the meeting to demonstrate broadline expertise. Look to emphasize timely trends and issues and create selling themes. For instance, with prospects that have a demonstrated environmental commitment, offer to help them create a “green office.”
Once in the door, ask for samples and invoices. Analyze the prospect's current mix of products as well as its pricing requirements. Then come back with items that will positively impact the prospect's bottom line.
The washroom is typically the number one source of complaints, making it the perfect place to start. Identify the source of the complaints and offer solutions.
Communicate how your items can save energy, reduce waste or provide additional benefits beyond price point. Look for every edge to close the deal.
Adding New Levels of Value
This emphasis on customer benefits has been very successful for Corporate Essentials and working with the Paradigm Group has added a new level of value for the customer. Corporate Essentials' expertise in the coffee category was already well established with its customers before it partnered with Paradigm.
By leveraging the expertise of its supplier partner, Corporate Essentials now offers customers a targeted mix of quality products that complement its coffee items and address specific customer needs.
In addition to specialty coffees and teas and other refreshment products, the company's expanded line now includes snacks, various paper goods, plastic utensils and janitorial supplies, among others. Corporate Essentials also has been able to increase its margins and expand the number of items purchased per customer.
This unique turnkey approach, which combines the supplier partner's product depth (more than 35,000 items) and supply and distribution capabilities with its marketing and training expertise, is an ideal solution for OCS companies looking to grow.
Professional distribution and marketing organizations work hand-in-hand with a partner's management team throughout the research, training and sales phases and will even accompany partner sales representatives during initial sales calls. No matter what sales strategy is employed however, success starts with a simple request. “Can I talk to you about your jan/san and break room needs?” And that's when you immediately begin to lay the groundwork for future growth and even greater success.
About the Author
Ralph Bianculli is a 20-year veteran of the service management industry. Before founding Paradigm Group, a full service supply distribution, facilities products manufacturing, warehouse packaging and marketing consulting firm, he was vice president and chairperson of the regional purchasing council at the food service division of Spiro Wallach/Unisource.