In a mature market, finding new customers can be difficult. Operators must invest more in maintaining and growing their customer base.
Most veterans agree the OCS industry is mature. To maintain profitability in a market with rising costs and fewer new customer prospects, operators find it pays to minimize account attrition, increase sales to existing accounts and continue finding new customers.
Finding new customers in a saturated market requires a commitment to both human resources and marketing. Because customer attrition is high in OCS compared to many other industries, operators need to continue finding new customers to compensate for those lost to attrition.
Fortunately, the Internet has provided OCS operators a new tool for finding leads and soliciting prospective accounts.
Where operators previously relied on phone directories, business directories or purchased lists for new leads, they can now add Internet search engines — such as Google, Yahoo, MSN and Ask.com — to their arsenal of tools. Operators can use the Internet to get names, addresses and phone numbers of prospective customers. They still need to do some additional research before qualifying a lead. However, assistance for qualifying leads is also available for those willing to pay for it.
"I think it's important to utilize a variety of methods today," said Bob Tullio, vice president of marketing at Gourmet Coffee Service Inc. in Van Nuys, Calif. "It's a little harder to knock on doors because of security issues. Today, you can't walk in the building without an appointment." Tullio's company utilizes telemarketing, direct mail and the Internet, in addition to relying heavily on referrals from existing customers.
Internet becomes a major source for service purchasers
Purchasers of business services are increasingly using the Internet to shop. Search engines are slowly replacing phone directories as the key source for finding business services such as OCS and vending.
There is a variety of services available to operators willing to pay for assistance. Operators can invest in "pay per click" services with Internet search engines that will help them.
Internet search engines are the newest but by no means the only useful tool available to operators that need a steady supply of new customers. The more traditional tools of telemarketing, direct mail, in-person soliciting and in-person networking all play a role in the ongoing quest for account acquisition.
Most critical tool remains salespeople
The most critical sales tool of all, most veterans agree, is the salesperson. Hence, attracting and motivating the best possible salesperson should receive top consideration.
A good salesperson not only converts a lead into a sale, but will also develop high-quality leads on his or her own.
This article will focus on ways an OCS operator can support sales by increasing the supply of prospective customers.
A major benefit that the Internet offers is not only as a forum for buyers and sellers to meet, but as one that allows sellers to gather information from a prospective buyer that enables them to qualify the lead. The Internet allows buyers to shop and provide information on their needs at their own convenience. Sellers can then review this information after it is sent to them via e-mail.
An online shopping forum eliminates much of the person-to-person communication required to qualify a lead.
Internet buying and selling forums emerge OfficeCoffee.com and BuyerZone.com are two Internet shopping forums that allow customers to solicit bids from OCS companies for free. (BuyerZone.com encompasses numerous industries whereas OfficeCoffee.com focuses on vending, OCS and water service.) These websites request information about the size of the work site, the type of service sought, whether or not they already have a service provider, the type of business they are (industrial, educational, professional, etc.,), the zip code, and how soon service is needed.
Once the request is received, the lead is provided to OCS operators in the customer's market. OfficeCoffee.com and BuyerZone.com select OCS operators that participate in their referral programs. The referral services match the customer with the service provider based on information both parties provide.
Operators specify desired population count, geographic area, etc. and are charged based on the type of leads they receive; large locations cost more than small ones.
As a policy, OfficeCoffee.com provides prospective customers up to four OCS operators while BuyerZone.com is not specific about how many operators will respond. Both websites include paid advertisements from OCS companies and/or OCS equipment and product suppliers.
Internet also allows more targeted marketing
Ben Kirshner, owner of OfficeCoffee.com, said he gets about 650 OCS leads a month nationwide. "Search engines are the most targeted form of advertising available," he said.
Kirshner said his lead fees for operators are as follows: 1 to 20 people, $5; 20 to 50, $25; 50 to 100, $30; 100 to 500, $35; and over 500, $40. Operators are given leads on a first-come, first-serve basis.
He said if the decision maker doesn't return an operator's call, there is no charge for the lead. "They (operators) only pay for the qualified leads they are sent," he said.
Kirshner said operators can limit the number of leads they receive if they wish to control their costs. He noted that 90 percent of the leads already have OCS. Most are looking for better service.
Operators who have used these services give them high marks for the quality of the leads, and for their willingness to credit operators for questionable leads.
"Overall, I'm very happy with it," said Neil O'Brien, sales manager at Puget Sound Beverage Service in Tacoma, Wash.
O'Brien came across OfficeCoffee.com two years ago by entering information into a search engine as if he were a customer looking for an OCS service. When he entered "coffee service Tacoma, Wash.," OfficeCoffee.com was the first listing that came up.
"It's the lendingtree.com of office coffee," O'Brien said. Some of the leads are more serious than others, and it's important to follow up quickly.
O'Brien welcomes these new tools for finding leads since the older ones aren't as effective as they once were. He still has an ad in the phone directory, but it doesn't bring a lot of calls.
O'Brien also does a lot of cold calling, but he noted that receptionists today are less willing to talk with sales people.
Automatic Merchandiser keyed "coffee service" into the Google search engine for 30 different U.S. cities; OfficeCoffee.com popped up as the first listing almost every time.
After keying in "coffee service Cleveland," Automatic Merchandiser filled out a request for bids and received an instant reply from OfficeCoffee.com saying four companies would be in touch. Automatic Merchandiser soon received calls from three nationals and one local.
Operators find Internet generated leads work
The local operator who responded to Automatic Merchandiser's inquiry, Medallion Coffee Service in Warrensville Heights, Ohio, has received a few leads per week from OfficeCoffee.com, noted Randy Pickus, general manager. He said the service paid for itself in a reasonable time period.
Automatic Merchandiser also placed an inquiry in BuyerZone.com for coffee service in Cleveland. An immediate e-mail response included information on three national providers, all of which followed up with phone calls.
Search engines offer pay per click advertising
Internet search engines such as Google and Yahoo also encourage individual OCS operators to participate in "pay per click" (PPC) advertising on their search engine results pages for keywords such as "coffee service." The cost-per-click is the amount an OCS advertiser pays each time a user clicks on his company's OCS ad. A click, sometimes called a "click-through," occurs when a prospective customer sees an ad and clicks on the title of the ad, which then leads them to the OCS advertiser's website.
Paid listings usually appear in a designated section of a search engine's results, usually marked by a background color or under a heading titled, "sponsored results."
For an OCS operator seeking to improve his or her website's rankings in free search engine results, a PPC ad campaign helps significantly.
OCS or vending company can spend as little as $100 to $300 a month on a PPC ad campaign, depending on how competitive their local market is for the service they are offering.
Pay per click pays for vending operator El Venture Vending, based in Houston, Texas, credits PPC advertising for outstanding growth in the last four years, according to Ed Lucas, company owner. The search engine he advertises on allows him to bid for a listing under a key word or phrase. The cost for the listing varies based on whether he wants to be listed first, in the top five or in the top 10 listings.
Lucas said he has never paid more than 30 cents per click-through to be in the top 10 listings. He has averaged 12 to 15 click-throughs per day, of which half are interested in the service. "It's been a fantastic tool," he said.
Choosing the right words and phrases to be listed under is a big challenge in getting placed in search engine results. "You want to be as nongeneral as possible," said Lucas. If you are listed simply under the word "coffee," you'll get a lot of clicks from people not in your market area.
One thing Lucas likes is being able to orchestrate a marketing campaign on his desktop. "It's a relatively simple process to set up," he said. "It's been the main driver of all of my business."
"If you're looking to build your business, it (PPC) is an effective way to do it, but be ready to pay some serious dollars," said Bob Tullio at Gourmet Coffee Service. He said an operator can easily spend $5,000 on it.
Coming up with the right listing phrases, called "meta tags," can quickly become a full-time job, noted Don Rubenstein, owner of Pacoima, Calif.-based Dr Soda Co., which delivers refreshments to offices and workplaces throughout Southern California. The company maximizes its Internet traffic by marketing a variety of products on search engines.
The Internet also allows for more simple marketing projects.
Internet can act as a business directory
Tamar Ragab, general manager at Filterfresh Southern Virginia in Richmond, Va., said he uses the Internet to gather lists of businesses in his area. He enters an industry he wants to target, such as lawyers, into a search engine, then copies the names and addresses of the companies that come up on the list. He then calls the companies to get contact names and the number of employees. "You try to get as much information as you can without pushing them out of their comfort zone," he said.
Ragab typically spends an hour a day gathering contact information. "Even if it takes two hours a day, if you get a couple of good leads, it's worth it," he said.
Ragab then sends the contact a free coffee sample, follows up to see that they received it, and searches for a sign of interest.
Several coffee and OCS equipment suppliers gather leads on their websites and forward them to their preferred OCS operator customers. For this reason, one operator noted that it pays to have good relationships with suppliers.
Telemarketing still plays a big role for OCS
Telemarketing, meanwhile, remains an important tool for OCS operators. Veteran operators continue to debate the merits of outsourcing their telemarketing or doing it in-house.
Sean Curtis, a partner in Coffee Ambassador in San Diego, Calif., considers telemarketing one of his most important tools. He thinks doing it in-house provides more control over the process and allows him to involve his entire team in the marketing effort.
Curtis also sends out direct mail flyers to his prospects every month. In addition, the company exhibits at a trade show every month.
Coffee Break Co., based in East Granby, Conn., has opted to outsource its telemarketing, said Lee Glassman, vice president. He said telemarketing is a specialty that requires experience, and it is easy for him to simply hire a telemarketing firm to call the accounts he wants in his geographic area.
Costs for outside telemarketing services vary considerably. Some telemarketing firms offer to market on a test basis, then evaluate the results before continuing. This way, if a pitch isn't working, the client can change it.
Steve Lavendier, president of the telemarketing firm Direct Teleservices Inc. in Lancaster, Calif., said professional telemarketers provide leads that include the name, address, phone number, location, SIC code and number of employees. He said the cost for this will range from $500 to $800 for 4,000 to 5,000 leads.
Lavendier said there are telemarketers who charge as little as 5 and 6 cents per lead, but their data is questionable. Professionals, on the other hand, compile current, accurate, detailed information on the leads.
Veteran OCS operators note the importance of shopping for a good telemarketer. Elliott Slutzky, owner of Coffee Unlimited in Chicago, said he worked with one telemarketer for more than 10 years. After this individual passed away, he was never satisfied with other companies.
Some operators find it makes more sense to come up with the prospect list themselves, then assign a professional telemarketer to make the calls. Tullio at Gourmet Coffee Service said telemarketing is a specialty, and he wants a specialist to handle that function. Getting the list is not a big deal, Tullio said. He normally expects to pay about $750 for 7,500 names.
Some telemarketing companies focus on setting appointments but don't pay enough attention to the quality of the appointment, Tullio said. "You end up spending a lot of time determining what you should and shouldn't pay for," he said.
Direct mail still has its place
Direct mail has become less popular as the Internet has evolved and postal rates have climbed. However, some OCS operators still find it useful. Direct mail gives a business more control over what information it communicates with a customer, and in a format that allows the customer to review it at his or her leisure.
Direct mail can complement telemarketing. One sales rep for a national OCS company said direct mail helps reach a prospect that is hard to reach by phone.
OCS operators have reported mixed results with direct mail. A successful direct mail campaign requires three critical elements: 1) The address list must be clean; the direct mail piece must hit the right decision maker; 2) It must be visually appealing and capture the prospect's eye, and 3) There must be a clear, compelling offer such as, "Try our new single-cup brewer by Sept. 1 and receive free coffee for a week."
Tullio at Gourmet Coffee Service said direct mail is most effective when done in conjunction with telemarketing. Oftentimes, his company sends out a mailer and follows up with a phone call. He prefers to send the mailers first class to make sure they have a better chance of getting seen. Working in quantities of 5,000 pieces, he normally expects to spend 50 cents to 75 cents per piece, depending on the quality.
Operators offered mixed views on the usefulness of civic groups and formal network groups where businesses in different industries meet regularly and swap leads.
Civic involvement can raise visibility with customers Alan Aerts, owner of Custom Vending Systems and Wholesale Coffee Co., has reaped great visibility through community activism. He has been involved in political fund raising and civic causes, has won numerous civic awards, and has been on national television. He is currently the planning commissioner for Monte Sereno, Calif., and is going to run for mayor.
As the market has become saturated and competition has increased, OCS operators must market more aggressively to maximize their chances for building their customer base. Fortunately, the Internet has introduced new options that allow operators to communicate to more potential customers in a more cost-effective manner.
To find an adequate supply of new customers on an ongoing basis, OCS operators must use a variety of tools, which requires a higher investment than previously required.
