How Sam Errigo is reconfiguring the go-to-market approach to tap into growth markets and drive recurring revenues
Our team of experts from the Revenue Enablement Institute studies and profiles growth leaders – CXOs – who are at the forefront of defining, enabling, and leading the execution of the 21st Century Commercial Model.
Sam Errigo is Chief Operating Officer at Konica Minolta Business Solutions, U.S.A, a business that is reshaping and revolutionizing the workplace to achieve true connectivity through the Intelligent Connected Workplace. The company guides and supports its clients’ digital transformation (DX) through its expansive office technology portfolio, including IT Services (All Covered), intelligent information management (IIM), managed print services and industrial and commercial print solutions.
Over the past 12 years since rejoining the business, Sam has been part of a long transformation journey that has the business profitable and poised for faster growth. In that time, Konica Minolta has grown market share in its core markets to 17% despite the secular decline in demand for printing and document management equipment. In parallel, the company has expanded its product portfolio and leveraged their world class service and sales infrastructure to tap into rapidly growing markets for information technology services, business process automation and analytics that support the digital workforce.
Sam shared how he and his team have been able to transform Konica Minolta’s go-to-market approach to pivot to high-growth markets while still growing share in the core business.
“We have a 150 year history in imaging technology and a large world-class infrastructure in place to serve our core markets in office and professional printing system networks,” Errigo explains. “We’ve been able to leverage those assets to develop growing markets we are targeting in the managed IT services, business process outsourcing, robotic process automation (RPA), and data analytics segments of the market. Essentially we went from being good at connecting things, to being great at integrating things. For example, in manufacturing, we are integrating imaging technology into the production system to improve the quality control process. In healthcare we are using our imaging innovations to improve core diagnostic processes. This opens up large new markets and a whole new level of value to clients.”
To enter these new markets, the company had to expand its product and innovation portfolio. They acquired over 30 businesses to bring in innovations in growing fields such as intelligent information management, advanced imaging, help desk, RPA and security.
According to Errigo, the big keys to success were long-term planning and a focus on being smart about how they brought new innovations into the business.
“As we’ve transformed our business, we’re taking share from our competitors across the board in the core business,” says Errigo. “One of the biggest differences that I can point to goes back to our acquisition strategy, and specifically how we targeted businesses to acquire and integrated them. That’s an area where other companies in our industry have faltered. We’ve acquired 30+ businesses to expand our product and services portfolio in this new direction. I’m not saying we’re perfect, but so far we’re getting pretty good results. Acquisitions can be difficult. But we really did our homework to understand how to integrate the businesses we acquired into our go-to-market system. So we’ve avoided a lot of the mistakes that lead to the attrition of sales reps from the acquired business and the failure of existing reps to understand, sell and support the products these businesses bring to our portfolio.”
To effectively introduce these new solutions to customers, Errigo has had to reconfigure the entire commercial architecture. In the last several years, his team has shifted the structure and focus of their selling channels, changed the emphasis of selling to cross selling profitable and recurring revenue streams, and refocused selling incentives to motivate the sales channels to sell both old and new solutions.
A major part of that focus has been to verticalize the sales team and build expertise in the core growth markets like healthcare and manufacturing. “We’ve verticalized around healthcare, education, government, legal and commercial customers over the last 24 months,” says Errigo. “We shifted to a vertical approach for a very specific reason. We need to demonstrate expertise. We like to say knowledge is the new currency because you have to be an expert to go in and have credibility at any level with your customer. It’s impossible for a rep to be an expert in every vertical market, so we had to verticalize.”
“To execute that strategy, we’ve built a team of specialists that support our sales channel in North America,” he continues. “We have vertical market expertise with dedicated management that focuses on our core verticals. We also have support staff with subject matter expertise in our core capabilities like security, RPA, cloud migration, or content management that are important within those vertical markets.”
Other changes Errigo made to the commercial architecture include changing coverage, assignments and incentives to get reps more focused on cross selling IT services and shifting from selling individual products to monthly recurring revenue contracts.
“If all we did for the next five years was sell a small percentage of our new services to our existing accounts, our business would explode,” says Errigo. “So cross selling is a key focus for us.”
Errigo is changing the structure and focus of selling channels to facilitate cross sell. “From a channel perspective, one thing we are doing to better support cross sell is we’ve taken micro customers, and we are now covering them through inside sales,” says Errigo. “The reason that we’re doing this is we are getting more quality touches with our customers and can better engage other areas in their business. To penetrate existing accounts, Errigo has his reps making “off cycle” sales calls to clients they have sold equipment to. This lets them explore ways they can help with software licenses, cloud migration, help desk support, and networking services associated with a piece of equipment – rather than waiting until six months before the renewal for that machine and just offering them a new one at a discount.”
Another way Errigo’s team is helping his seller become more effective is streamlining the product portfolio to make it easier for our sales channels to master new products/services and give customers access to a broader range of technology. “We’ve focused our product portfolio for the very reason we verticalized – you cannot be experts on everything,” says Errigo. “You cannot sell value and be credible without being an expert, and it’s difficult to be an expert in 300 different solutions.”
“We’ve segmented our software product portfolio into three areas – core products, supported and emerging products/services,” he continues. “We’ve aligned and allocated our resources, effort, and compensation with each of those categories. We define core as products that are supported by Konica Minolta from cradle to grave. They represent 80% of our professional services revenue across all lines of business. And they leverage our support infrastructure, delivering predictable service metrics for our customers.” The company sells and integrates solutions and emerging products outside the core portfolio through their strategic partners who assist with installation and support. If a promising new idea or service meets a customer need and has broad customer adoption, they will migrate the offering into the core category. for revenue/profit expansion.”
Rationalizing and focusing the product portfolio and aligning it with the go-to-market approach is difficult. It takes discipline and teamwork across sales, marketing, success and product organizations. “We’ve set up a portfolio committee, which I sit on,” says Errigo. “Every month we review the performance of our portfolio, and we evaluate all business cases to add new software.” New products must be justified with a business case and validated through proof of concept and customer feedback to make it into the core product portfolio.”
Sam expects account sales reps in the core and direct channels to understand enough about the entire product portfolio to demonstrate that a solution exists within Konica Minolta and how to find the right expert to continue the conversation with the client. “From the perspective of the sales rep – if the question is about our core expertise in applying imaging technology to their business processes and problems, then we expect our front line reps to be knowledgeable,” he continues. “They’re going to be able to get you going in the right direction and if they have to do follow-up, they can certainly do that.
“For example, we’re working with a company that called us in because of our video security services offering, specifically security cameras. They have identified about 40 different touch points in their manufacturing process that required human intervention. They want to know how we can help streamline and better automate that process with our cameras. Our rep was able to say we know what our cameras can do, but let’s look at those processes. Once we started down that path we reached out to our AI team and subsequently our Business Innovation Center (BIC) that evaluates emerging business trends and conducts research collectively with the customer to come up with a solution to solve the problem. This supports our desire to be known as an “integrator of things” in the intelligent connected workplace.
Errigo regards the professional service infrastructure Konica Minolta has built over 150 years to support sales, service and delivery as one of the biggest growth assets the business has. This infrastructure is a big reason why Konica Minolta has led their industry in brand loyalty for years. “The crown jewel of our business is the back-end infrastructure,” says Errigo. “We have tremendous service and support capabilities both domestically and globally. We believe how we do things is as important as what we do. Sam wants to use this key asset as a platform to open up larger and more profitable markets. So the company is investing heavily to enhance that capability by consolidating their levels 1, 2 and 3 service centers, help desks and call centers and investing in streamlining the front and back end systems that support our customers.”
A big emphasis of this selling infrastructure is to simplify selling complex solutions bundles and subscription services that are driving margin and monthly recurring revenues. “We need to think more holistically and bundle solutions, professional services, hardware and support under a subscription service program,” says Errigo. “Recurring service revenues in our direct sales channel increased to 43% for new contracts this year,” says Errigo. “We have completely automated the workflow process and upgraded our existing SAP infrastructure to SAP Hana. This will allow us to combine many solutions into bundles and subscription services using any basis for billing a service, from the amount of storage used to usage, per employee fee, flat rate or variable based on customer requirements. We’ve made it easier for our sales organization to execute the quote to order – from configuring solutions, quoting prices, delivering proposals, to providing subscription-based billing for our business. Customers get one common invoice for all these different services and finance has the ability to pull it out of the billing system and use our P&L system so that we measure profitability.”
Moving forward, Errigo sees finding faster and better ways to access that expertise from across the company as the next frontier of sales performance improvement as the pace of innovation in the market increases and the product portfolio evolves. “Our reps may not have all the answers to every customer challenge,” he reiterates. “But having access and the ability to pull in well versed resources that can help solve problems quickly will be the key to success. So we are developing better systems and processes to support global collaboration and access to better serve our customers.”
“Business transformation is not a single event or a moment in time but rather a series of well thought out strategies that are adopted and executed across the company. It comprised of daily wins that push toward the common goal of change and desire for a new future filled with opportunity,” concluded Errigo.
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Sam Errigo is the Chief Operating Officer at Konica Minolta Business Solutions, U.S.A., Inc.
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