Ragans Merge OCS and Office Products
By offering a wide assortment of services, Joe Ragan's Family Of Companies has been able to increase revenues in relation to costs, and at the same time strengthen customer relationships in the nation's capital.
Accounts are offered Keurig, Cafejo, Crane Café System 7 and Newco airpot brewers, the latter of which come in different sizes (17, 23 and 26 inches). In addition, some accounts still request glass pots.
Many accounts opt for a single-cup offering along with a water-soluble dispenser for flavored drinks such as French vanilla and hot chocolate.
The Caféjo brewer can accommodate pods from many roasters, but the Ragans have opted to use Caféjo's own pods. A key reason is that Aquabrew allows operators to acquire free brewers based on the amount of pods they purchase.
When pod brewers expand in the coming years, the Ragans believe that roasters will eventually offer more price competitive pods, making the pod brewers even more cost-effective.
The Ragans have already placed about 700 pod brewers, and they continue to add more Keurigs as well.
As a rule of thumb, the Ragans look to get a payback on a brewer in 14 months. Targeting accounts with a minimum of 20 people, they have not had any problem meeting this target with any of the countertop brewers they carry.
Single-cup is the company's main growth opportunity, Joe Ragan said, but the fractional packs continue to increase as well, thanks to the popularity of specialty coffee. The company continues to sell more and more Starbucks and Godiva fractional packs. As a result, national brand coffee is making a comeback against private label.
Key function: sales training
The development of the sales force has been key to the company's success. Unlike other OCS operations, the Ragans' sales reps are trained first as order takers. This is necessary, due to the need to learn the thousands of office product SKUs. The company has 12 full-time salespeople.
The customer service reps start out taking orders over the phone under the direction of a CSR manager for two months. Those interested in moving into sales work with a veteran salesperson for a while before being sent out on their own. Salespeople are paid 100 percent on commission.
Marketing materials are also an important part of the business. The company sends its customers a 1,400-page catalog from each of its two main office supply wholesalers every year. The cost to the operator for these catalogs is based on the prior year's sales.
Each catalog also includes about 10 pages for Joe Ragan's OCS products which are produced by an advertising agency. The current catalog has the Aquabrew machine as one of the featured products on the cover.
In addition to the catalog, the office supply wholesalers provide 20-page monthly flyers advertising promotional specials, which the Ragans also complement with a few pages on their OCS products.
In 2002, the company launched its website, allowing customers to place orders online. To date, only about 22 percent of the orders are placed online, but the Ragans expect this to grow.
Joe Ragan said he believes the company could utilize the Internet better for marketing. For the time being, they are busy integrating a custom packaging business they acquired less than two years ago.
New addition: custom packaging
The expansion into custom packaging came about by accident. This service has integrated naturally with the other business services the company offers.
The owner of a custom packaging business located near the Ragan facility approached Joe Ragan and told him he wanted to sell him the business. Ragan was doubtful, but the man persisted, pointing out that businesses often need custom packaged crates, bubble-wrap boxes and various other packaging materials. The business consisted of several employees, packaging equipment, a customer base and a warehouse.
The Ragans were eventually persuaded to acquire the company, and they assigned one of their salespeople to learn the new business. They presented the service to their existing customers, and quickly found it a lucrative ancillary business.
Persuading the packaging salespeople to learn office products was a challenge, Joe Ragan noted, but some of them have been retrained.
Diversification has paid off
