One of the truisms in marketing is that the easiest sale is to a current customer. The next easiest is to a former customer, and the farther back one goes, the more difficult it gets. Selling to someone who has never been a customer is the most difficult sale -- a key reason for focusing your strategy on peripherals.

Peripherals are a fairly easy, efficient means of bringing in sales because the customer is a current one -- he or she has just been sold computers and/or software solutions. Once a customer is sold, say, a laptop, selling peripherals such as a carrying case, mouse, extended warranty, extra battery, DVD burner or external USB drive takes a relatively small amount of effort.

"It's very difficult for solution providers to recruit new customers, so most want to cultivate great relationships with their current customers," says Steven Malony, director of sales at Belkin. "They want to become trusted advisors, and peripherals are a great way to do it."

Jihad Jubran, vice president of e-commerce and business development at solution provider M&A Technology, agrees. "Peripherals create more satisfaction in the use of the product and prevent returns," he says. "They are a necessary part of providing a total solution."

Broadly defined as a range of secondary products and services that include keyboards, mice, printers, scanners, KVM switches, multifunction devices, print management services, power backups, warranties and the like, peripherals allow solution providers to boost profit margins, contribute to customer satisfaction and bring in additional revenue.

Better Margins
Every solution provider knows that commodity gear such as desktops, laptops and servers typically has single-digit profit margins. Peripherals, though, often come with margins well into double digits. Jay Tipton, owner of Technology Specialists, sees 7 percent to 9 percent profit margins with hardware, while peripherals earn in the 15 percent to 30 percent range.

Perhaps one reason is that customers usually spend a lot more time researching primary purchases, such as laptops and servers, than peripherals. "Peripherals are generally not scrutinized as much," says Michael Cizmar, president of solution provider MC+A. "They're often an impulse buy."

Jim Fall, vice president of strategic planning at Cannon IV, an imaging and printing solution provider, gives the following example. Margins on printers are 5 percent to 15 percent, he says. On a $1,000 printer, the gross profit would be between $50 and $150. He says, though, that peripherals relating to that printer, such as a service contract that covers toner, maintenance, supplies, labor and parts, can produce $2,000 to $3,000 in total revenue over a threeyear period with margins of 35 percent to 50 percent, for a profit of $700 to $1,500. Focusing on just the printer means missing out on most of the sale's potential.

Extended warranties make the sale of laptops worthwhile for Luigi Giovanetti, owner of CPU Sales & Service, a systems integrator. A three-year extended warranty for an HP notebook at full retail is $199, he notes, and enhanced versions of the warranty, such as those that cover up to three cracked screens, can run up to $549 for three years. Profit margins on these run 25 percent. "Basically, you give the notebook away," he says. "You make it up on the sale of peripherals and add-ons."

Sticking Like Glue
Peripherals promise more than just heftier profit margins. "Selling peripherals makes for a good solution set, and this creates stickiness between customer and solution provider," says Carole La Forge, director of strategic development at Ingram Micro. She cites a Hewlett-Packard study which found that customers who buy printers sold without a warranty came back for repeat purchases 62 percent of the time. Those who bought a warranty returned 85 percent of the time. Says La Forge, "Especially during tough times, providing your customer with the right products to solve their needs creates customer satisfaction and will win you repeat business."

Fall of Cannon IV has found this to be true. He says peripherals have led to additional sales of PCs, servers, data storage devices and software applications related to document workflow and security. "Peripherals are part of a company's overall technology ecosystem," he says. "If we help customers in that part of it, they ask us for help in other areas."

Selling Strategies
To effectively sell peripherals, it helps to understand why peripheral sales are often overlooked. "Salespeople are rushed for time, and may not understand peripherals and what the customer is trying to accomplish," says Susan O'Sullivan, sales director at Ingram Micro.

Another reason is the salesperson's focus on the big-ticket items and concern about scaring away the customer by running up the price. The antidote is educating salespeople that peripherals are worthwhile, and that needed peripherals will make a customer happier with the sale. "Solution providers need to ask for the peripheral sale at the same time they are selling the hardware," says Mike Erwin, director, peripherals vendor management at Ingram Micro.

This is the approach taken by Tipton of Technology Specialists. When he gives a quote, he includes all the peripherals he thinks appropriate. He finds that about 30 percent of the time customers will want to cut back on his recommendations, but 70 percent of the time they accept them.

Another strategy is to motivate salespeople to sell peripherals via your commission schedule. Jubran of M&A Technology recommends focusing on the attachment rate. If a computer is sold for $1,200, and $200 in peripherals are sold, the attachment rate is 17 percent ($200 divided by $1,200). He gives as an example, a sales person earning 1.5 percent on peripherals if the attachment rate is 10 percent to 19 percent, and 2 percent if the attachment rate is 20 percent or above. A minimum attachment rate needs to be established. He says with a laptop, a 10 percent minimum is okay, but not with a printer. That's because a $100 printer might be sold with two cartridges costing $35 or $40 each, leading to an attachment rate of 70 percent to 80 percent. So the attachment rate for printers needs to be higher than for laptops.

Giovanetti of CPU Sales says that although some customers resist buying peripherals at the time of their primary purchase, he does not give up on them. Often, after customers have used a product for a while, they find one or more peripherals they would really like. Giovanetti follows each sale with a call. Time here is critical. Call too early, and the customer may not have used the product enough to know what peripherals are needed; call too late, and the sale may be lost to a big-box retailer. Giovanetti finds the sweet spot to be seven to 10 days after the sale.

Managing the Service
Sometimes, though, making a peripheral sale is more complicated than selling a case or mouse to a laptop buyer. An example is selling a printer buyer a managed print services contract, which guarantees the buyer a certain cost per printed page. Typically running three years, such contracts can involve a significant amount of money if the printers are heavily used. Doug Polkosky, vice president of Thomas Computer, a value-added reseller, has an effective approach to making such a sale. It's important, he says, to recognize that there are two customers involved. One is the IT department, which has to be convinced that the product is reliable and able to do what users require. He sells to this customer by carefully analyzing the users' needs and matching those needs to the abilities of the equipment.

Once a printer is approved by the IT department, it usually comes under the budget of the department that is using the device. Now you must sell to the department managers, who are more concerned with the cost of printing than with the cost of the printer. The sales pitch here is along the lines of promising cost predictability (the cost per page is fixed) and return on investment. Polkosky says the managed services model can save the customer 10 percent to 30 percent of its usual printing costs. And such a sale locks in all future purchases of supplies and consumables, while delivering a continuous revenue stream -- "essentially an annuity," Polkosky says.

Selling peripherals is not hard. But it also is not automatic. Salespeople must be trained in selling them and appreciate the value they bring to the solution provider. When this is accomplished, peripherals can be a gateway to enhanced profit margins, additional revenue and improved customer satisfaction.