Ragan is among many OCS operators who has recognized the need to train his sales people so that they are aware of the options to offer customers. Because his sales people are paid fully on a commission basis, it isn’t hard to encourage them to take the time to offer allied products.
Customer ordering methods differ
Maintaining allied sales is especially difficult for customers who prefer to call in their orders rather than allowing the OCS delivery person or an in-house sales rep place the order. These accounts are more likely to place orders with whichever provider will offer the best price.
If an office supply retailer is providing products that the OCS operator doesn’t carry to begin with, such as office furniture, the customer might find it easier to get their break room supplies from this supplier, especially if the pricing is competitive.
In such situations, sometimes referred to as “free call,” the OCS operator is not providing the same level of service as a route sale or pre-call system to begin with. This puts the OCS operator in more of a price war, since office supply retailers operate with different profit margins than OCS operators.
“We are like an office supply company in that (free call) work place,” said an operator who did not want to be identified in print. “Anything that we do that lowers our level of service makes us vulnerable to anybody who delivers.”
One operator estimated that profit margins on products that are ordered in this “free call” manner are typically 6 to 8 percentage points lower than those sold using a route sale or pre-call system.
OCS operators indicated that these “free call” accounts are not common, but they are more prevalent in certain geographic markets.
“There’s a service element missing in that delivery process,” said Peter Tullio, president of Gourmet Coffee Service Inc. in Van Nuys, Calif. “There’s work involved on the part of the location once that product is dropped off.”
“They (the customer) think they can control the cost better,” he noted. “In reality, they can’t. They don’t want to accept the fact that we can tell what they buy. Once they see that what we sell them is geared to their usage, they accept it.”
Tullio said rising costs for allied products have heightened the need to continue to seek higher prices. He said it isn’t difficult to get customers to accept higher prices when they realize the increase is coming from the manufacturer. However, it is up to the operator to ask for the increase.
Training must be ongoing
Ollie Thomas, owner of Thomas House Coffee Service in Silver Spring, Md., a market where most OCS deliveries are ordered on a pre-call basis, agreed that constant training is important to maintain allied products sales. This is especially important for companies such as his that are always looking for new items to carry.
For instance, Thomas recently began selling dishwasher detergent. “Each one of these things takes time to get the customer instructed in the fact that you provide that thing,” he said.
Thomas has found it important to be able to special order for customers when necessary.
Neighbors at Executive Coffee Service agree that training the sales people is critical. Allied sales as a percent of total ranges from 35 percent to 50 percent at his company, depending on the route.
Neighbors holds contests to see which driver can sell the most allied products.
Equipping sales people with customer sales software is also important in maximizing allied product sales. Royal Cup Coffee Inc., based in Birmingham, Ala. provides drivers with handheld computers that can run inventory reports on individual accounts. The trucks are loaded prior to delivery based on these reports.
Howard Chapman, vice president and division manager for office beverages at Royal Cup Coffee, noted sales people can win allied sales by emphasizing the environmental and safety features of many products. Biodegradable utensils can fetch higher price points than plastic ones because they’re environmentally friendly. “We’re going to have to be sophisticated because our customer is,” he said.
Chapman also cited hand sanitizers that kill germs on hands when there is no access to water. These are popular on peoples’ desks.