Finding Good Vending Machine Locations ? Perhaps a better question is what areas might you be most effective in by account demographic and account type?
The work force has shrunk and a lot of industries have down sized. How do you get the tactics to get accounts that remain profitable for you in smaller type accounts?
- 50-100 person range with the right demographics
- Be cognizant of your geography to limit drive time between accounts
- What’s your service interval that makes the account profitable?
Examples of good small accounts:
- Small logistics warehouses with lots of truck drivers coming and going
- Knock on all doors in an industrial park for opportunities – get in one facility and you might get into all in the industrial park
What about saving money on the equipment?
Return on investment is important but consider operating costs and turn.
Tom Shivers: Hi, I’m Tom with The Vending Business Show. And I’m here with Larry Towner, who is a vending business consultant and been in the vending industry for closer to three decades. He’s sold the majority share of his vending business in 2012. So thanks for being here, Larry.
Larry Towner,: You’re welcome, Tom. It’s always a pleasure.
Tom Shivers: Yeah. I noticed an interesting question in a vending group. Basically went like this: Finding Good Vending Machine Locations right now? And it was a good question because there’s a lot of people, a lot of vending operators who are struggling to find those. So I thought maybe you could help us figure that one out.
Larry Towner,: Well yeah. It’s a multi-tasking approach. Finding Good Vending Machine Locations. It comprises marketing and sales. Vending is largely a sales effort. So you want to focus in on your sales skills. Basically if you knock on enough doors, you’re going to get accounts. I think what this gentleman’s looking for is what areas might you be most effective in. And so, and meaning by account demographic and account types.
Larry Towner,: There’s a bunch of different ways to go about Finding Good Vending Machine Locations. Traditional vending has always wanted the 150 plus population of account peoples. Meaning that they have at least 150 employees there all of the time for, again, for traditional vending companies. And traditionally, that works for the models that they use for their traditional vending operations where you need larger facilities.
Larry Towner,: But Tom, what’s been happening to the workforce and the workplaces in America?
Tom Shivers: Yeah. Things have shrunk. You know, more people working from home. Things like that.
Larry Towner,: Yeah. So what we’re seeing is we’re seeing workplaces out there, particularly vending always was kind of a smokestack industry. It was done with a lot of industry and a lot of manufacturing and things like that. And a lot of those industries have gone away. And particularly, not so much gone away, but they’ve downsized. Like everything has downsized.
Larry Towner,: And so the number of facilities that have large numbers of people has been steadily declining. So how are we Finding Good Vending Machine Locations I guess the thing is, is how do you, there’s a couple ways to look at it, but how do you get the tactics to get new accounts that remain profitable for you in smaller type accounts?
Larry Towner,: There’s always been a huge market in the 50 to 100 person account range. And if the demographics are right in those accounts, they can be highly profitable. And I say demographics, and that’s age, sex, ethnicity, who actually is working in your account? Are they good vending purchasers?
Larry Towner,: And lots of times on those types of accounts, you’ll get a good mix. You’ll get white collar plus blue collar. Vending is largely a blue collar event. You’re looking for blue collar workers.
Larry Towner,: Examples of these types of accounts. If you, first off, let’s set the stage. If you’re gonna go after smaller accounts, you need to be very cognizant of your geography. And you might ask what do I mean when I say geography. You’re gonna want to limit the amount of drive time you have between your accounts.
Larry Towner,: The other thing in small account vending that you need to be thinking about constantly is what’s your service interval? How long between my stops makes it profitable for these accounts? And that issue sometimes has to be done by trial and error.
Larry Towner,: But in general, you can draw some, there’s some numbers and some equations we can use that’ll give you an idea of what your service interval’s gonna be as per the number of people that are in your account.
Larry Towner,: So between geography and scheduling, those are the two things that’ll keep you profitable in small account vending. You’ve got to have accounts that are close together. Because you don’t want to spend time behind the wheel, you want to spend time in front of the machines, filling machines and dealing with your customers.
Larry Towner,: So those two issues are biggies, but after that, the industries that are smaller that are increasing are things like small logistics warehouses where they have a lot of truck drivers that come in and out. And they might have 20 to 50 employees that work there. They might have another 20 to 50 truck drivers that are dropping product off and getting it ready for their distribution. Or they have 20 truck drivers that are out on locations.
Larry Towner,: We had a bunch of these actually in retail stores. There were some retail furniture stores that gosh, you look at the furniture store and you say, “Boy that’s not much of a vending account.” And if you looked at the number of people that actually worked in the retail side of it, it wasn’t much of a vending account.
Larry Towner,: But they also had about 12 trucks on the road every morning with three guys on each truck. So what happened was is you didn’t really realize that unless you were out doing your sales prospecting at 6:00 in the morning like I often did. Where I’d be driving through industrial parks or I’d be driving around and I’d see all these trucks parked there.
Larry Towner,: Well if I saw all these trucks parked there, I would stop in just to see what was up with all those trucks. So that’s one of the tactics that I used. But that is the kind of accounts that are out there. They’re somewhat plentiful. And they’re generally very close together.
Larry Towner,: I had a habit of when I would go out and I would go selling, I would knock on every single door in an industrial park. I would go door to door. Do what I call walking and talking. And I would hand out business cards. And I would just be looking for any opportunity.
Larry Towner,: And sometimes you would get into one facility in a small industrial park, and by the end of the year, you end up with ’em all. Because they’re having terrible service, and then they start to see your trucks and then employees talk to employees. And the next thing you know, you’re getting an opportunity to service a different company. And you end up with a really nice little piece of business where you go spend one day every two weeks in that industrial park and you walk away with decent profit.
Larry Towner,: The converse of that is you’ve got one on this side of town and one on that side of town and you spend all your time driving back and forth and you don’t make any money doing anything.
Larry Towner,: So a couple of quick tactics there on how to go out after small account. Traditionally what they call small account vending.
Tom Shivers: One other question.
Larry Towner,: What other questions, Tom?
Tom Shivers: About that. There’s sometimes. So like this one fellow responded to this question with he’d located 20 Sega Office Deli Two’s on small locations. And I guess he was saving money on the machine. What is your take on that?
Larry Towner,: Well it’s like anything. It’s all relative. If you’re looking for return on investment, which is a financial concept, but you have this amount of equipment that you’re gonna put into a location. And you’re gonna spend whatever it is you spend on that equipment. And you expect to get a return on your investment. Meaning if you put 1,000 dollars out there in the field as a tool, it needs to be generating whatever it is you deemed to be profitable every single day so that you get a return on investment. If you get a machine for free and it works. Key phrase being that it works. And you can place it, your initial investment is zero so your return on investment is unlimited.
Larry Towner,: Now that’s hard to get. You know, you won’t get ones that are free. But then you also have your operating costs, meaning for every piece of product that you end up throwing, you lose your profitability if you have to throw product away. So you have to look at it more as, it’s not just placement, it’s also turn. Turn is sometimes more important than actual placement. How many times you roll your inventory over in a year determines your actual profitability in the end. And also determines your profitability on that particular set of machines.
Tom Shivers: Okay. Yeah. So.
Larry Towner,: Did that make sense? Did you understand what I said there?
Tom Shivers: Yeah. I think so. And the equipment is, sometimes can be a hazard if you don’t get the right stuff up front.
Larry Towner,: Correct.
Tom Shivers: So tell us a little more about what you –
Larry Towner,: And it can cost you the wrong equipment placement. Well I’m in the consulting business. What I do is I take questions like these and I help people solve these types of problems. How do you go about getting new accounts? How do you maintain the accounts that you have? How do you stay profitable? How do you deal with other issues? These are all things that I work on. I’m available at servicegroupinternational.com. Just drop us an email.
Tom Shivers: Thanks, Larry. And you’ve been watching Finding Good Vending Machine Locations on The Vending Business Show, a publication of A & M Equipment Sales.
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