Every One of Your Customers Has an Account with CDW. Their Goal is to Displace You.
For those dealers that keep saying there is no margin in technology hardware, I give you Exhibit A, and Exhibit B, the most recent financial results of HP and CDW. HPQ, the PC and printer division that was separated from the old HP had an amazing quarter. CDW is also hitting double-digit growth and solid profit growth as well. The common link? A sales team that focuses on small business, e-commerce, and most importantly, does not differentiate between printers and other hardware like PCs.
You can read the numbers here for HP and here for CDW. A quick interpretation is that HP saw sales increase for the printer and PC segments. Increases in print! As the overall industry is in high single-digit decline, an increase means they are taking share away from competitors. Killing it. The PC side is increasing as customers are moving away from low-cost PCs to higher priced, more business-ready, hardware. Put another way, average sale prices are increasing because businesses are moving away from cheap laptops.
CDW then is really the execution side of HP’s strategy. Sure, they have a lot of different categories and services, but they sell a lot of hardware. HP is their biggest vendor. These two companies move up and down together. Currently, HP is benefiting from the trend of higher PC prices, based on higher customer specifications. On the printer side, customers are moving away from A3 copier devices, to smaller more robust A4 desktop devices. When you combine these two trends, HP is further gaining momentum because the decisions are now made by the same person, and the HP brand, from each category, reinforces the choice for the other.
Another important point here is that the sales team for HP and CDW carry more than one line of business. Printers and PCs. Of course, there is much more with CDW and HP would argue they sell services, but these categories are the revenue drivers today. I’ve talked to many print dealers that believe that by adding services, like document management, they are diversifying. I disagree; that’s going deeper and more dependant on one category. The CDW reps do not specialize in one aspect of the industry; their primary role is to onboard customers to become online customers.
As a vendor, your sales reps need to take care of multiple facets of a customer’s IT needs. Don’t waste their time on just printing. What else can you help with? How can you make my job easier today?
IT hardware does not carry the same margin as print, but it carries a much higher revenue. What CDW is showing is that it is possible to leverage their IT relationships to sell print hardware. If CDW can do that, why couldn’t you sell laptops to a print account?
Dealers that continue to go deep into print are not getting where the IT market is headed.
- Vendor and category consolidation is in full swing.
- E-commerce is the gateway into your accounts.
- Without a website, you stand no chance of long-term success.
- The job of your sales team is to manage the relationship between your business and your customers.
- The business relationship between you and your customers is managed by an account manager leveraging an e-commerce and digital workflow.
CDW and HP are further evidence of the change in the market. If you do not have an e-commerce portal, you cannot participate in the new market. We are at the beginning of the SMB online land grab. This land grab will play out over the next 2-3 years. Maybe I’m wrong. (I’m not though.)