Last year proved to be a very busy and successful one for German shredder manufacturer HSM. Big box deals, government contracts, new product launches and an Arabian conference all played a part in the company’s annus miraculous.
HSM secured its first ever contract with one of the big power-channel players, OP giant Office Depot. The deal, which involved the production of a range of shredders and baling presses, required a large-scale restructure at HSM’s manufacturing operations in Germany.
Innovation was high on the agenda in 2006. Government military and security agencies commissioned HSM to manufacture new shredders that decrease the size of shredded waste. Elsewhere the company put the finishing touches to its eco-friendly product Crusher – a tool for crushing plastic bottles, that aims to cash in on Germany’s recycling initiatives (which see supermarkets handing out euros for used plastic bottles).
HSM’s objectives for the past year were ambitious indeed – among other things, it aimed to double sales of HSM America, target new markets and host its very own conference in Egypt.
OPI caught up with HSM’s director of corporate companies, Irene Dengler, and head of marketing, Stefan Schraff, to find out whether the manufacturer achieved its goals for 2006. And, of course, to learn what lies ahead…
OPI: One of your targets for last year was to double your US revenues – how’s it going with HSM America; what progress have you made?
Irene Dengler: Yes, in 2006 we were indeed able to double the sales of our US subsidiary and this year we expect another significant increase of more than 50 percent.
Our structure and process organisation has been redefined and repositioned in order to cope with this fast growth in turnover. In the US market there is great demand for high-quality machines. That is one of our strengths as we provide a complete range in the professional arena that is based on very high-quality standards and criteria. The own brand policies of the market leaders in both office and technology products are another important feature in the US and require high degrees of flexibility from a manufacturing point of view.
OPI: You secured your first big box deal with Office Depot last year. You said that you expected more of these contracts to follow and also predicted an overall 25 percent sales increase. Are you on track with these plans?
ID: Yes, we had a successful year and exceeded the forecasted 25 percent rise in sales. And the Office Depot contract was clearly very relevant for our figures.
That said, success was not just the result of a single customer or a few big contracts. It has a much broader base. Our continued efforts in the Eastern European markets and innovations in environmental technology have also contributed significantly to this positive development.
OPI: Please reveal a bit more about your geographical expansion plans. What have you accomplished so far?
ID: Central and Eastern Europe were key markets in 2006 and continue to be so. Our focus for the region is on human resources as well as budgets.
We feel it’s possible to develop the potential in these regions in a fast and positive manner. This is reflected in the creation of additional distribution partners and ultimately in an increase in turnover.
We’ve now established a subsidiary in Poland as the country is hugely important for HSM. We feel that a market with such dynamic development can be served in greater detail and much more thoroughly with our own employees.
OPI: You recently integrated your service division in the UK. What were the benefits of this move?
ID: We outsourced the after-sales area after the establishment of HSM UK in 2003, but that resulted in interface problems and we couldn’t always maintain customer benefit. We took the decision to integrate the entire service organisation. After only a few months, we were able to increase customer satisfaction and create a much more structured and efficient service organisation.
OPI: Broadly speaking, what else have you been doing in terms of your strategic agenda and product innovation?
Stefan Schraff: Of course, designing and preparing new product lines for market launch is always a challenge. Our international strategy for the office technology sector coincided with the launch of our SECURIO product line, which we introduced at Paperworld.
The Frankfurt event is our most important event in the office technology sector. For us, it is the perfect opportunity to reach all of our target groups within a short time and in one place. The more comprehensive audience at this year’s event was also a great chance for us to reach new target groups and show them our product portfolio.
The SECURIO range is a good example of how we understand innovation within our strategic alignment to create real customer benefits. We aim to have sustainable innovations, rather than pseudo-benefits for our customers. We therefore concentrated on just a few but very important new features within the new range, including better energy management, reduction of noise levels and handling improvements.
In terms of marketing, we devised an international branding strategy, which is key to being successful worldwide. Think global, act local – that’s the pivotal concept behind our strategy. Integrating the needs and ideas of our US and European organisations and input from our international partners was vital to this process.
Brand strategy, partner conferences, new products and other efforts like a comprehensive web platform are all part of an overall move to become stronger and more visible internationally. Now we feel well prepared to increase our brand awareness as well as market share in the future.
OPI: You mention the launch of your SECURIO range. Were its new features the result of customer research?
SS: Yes indeed. Within this product innovation process we conducted a survey among office product dealers, industrial purchase managers and professional as well as private end-users to find out the most important items and features to include in our new product line.
In close collaboration with a renowned market research institution, we asked several hundred shredder users to identify the features that they consider most important to them. Energy management, design and noise level were some of those mentioned and so we went about incorporating these into the new product concept.
Analysis of this research revealed that quality and customer benefits are more important than cheap pricing. The price of a product today frequently seems to be the most important criterion when buying a product. But our survey showed that quality and technology is even more important. This result confirms our quality and product policy – to produce and market high-class premium products made in Germany!
OPI: Your Crusher product is another new business segment. What exactly does it do?
ID: The company’s use of the word Crusher stands for compactors that use the technical principle of document shredders (two crushing/cutting rollers rotating in opposite directions) to compress and perforate used plastic bottles or cans to achieve a permanent state of compression.
Sales of the Crusher product to reputable manufacturers of reverse vending machines (RVM) and for bottles in the OEM business have proved particularly successful. Practically every RVM contains one or more compactors of this or a similar kind. Within the scope of the introduction of container deposit legislation in Germany, as well as the retailers’ legal obligation to take back bottles from May 2006, HSM was able to secure a large slice of this important cake.
OPI: What is HSM’s strategy in terms of product sales marketing? You appear to have a strong web focus.
SS: In terms of timely information, the internet is ultimately the unbeatable medium of the moment. HSM has created a special department to concentrate on eCommerce and internet topics to further develop these increasingly important channels.
Our website is the central information platform for customers. We have recently established several tools to ease and increase communication with and for our partners and customers. These include a customer forum, our marketing platform, which has all kinds of specific information, a merchandising shop, and a sales support platform – with additional, exclusive sales and service tools.
You can see from the new SECURIO web-platform, that we view the internet as a hugely important tool. The platform is the central and leading communication medium for the whole marketing launch campaign of the new product line.
OPI: Going back to HSM’s international focus, you held your Arabia 2006 conference last November. What was the reasoning behind staging an event in Egypt? What were you hoping to achieve and what type of feedback did you get from attendees?
ID: Three years ago, we organised our first international partner conference in Thailand. This conference has now become a fixed platform for presenting new products, marketing concepts, web topics, market developments, communication strategies, etc. Our trade partners use the opportunity to exchange ideas and implement successfully applied concepts.
We chose the Arab region for 2006 to accommodate these increasingly important countries and to honour the tremendous efforts of our customers in this region. In our view, the combination of HSM’s presentations with plenty of time and space for networking and social events makes for a successful event – the aim is to be constructive as well as entertaining.
Besides the conference as a workshop platform, ‘The Arabian Night’, which was arranged by our Egyptian partners Al-Amin, was an unforgettable and enjoyable experience for all participants. And the feedback confirmed that the event in Egypt was hugely successful.
SS: These conferences also provide excellent opportunities to receive firsthand information from international markets as well as feedback on our own efforts and activities. In addition, they are tremendous for sharing experiences and ideas and strengthening customer relationships. We’re already planning the 2007 international partner conference which will take place somewhere in the European region.
OPI: What can we expect to see from HSM in the short term?
ID: Human resources, innovation, new products, market activities and an uncompromising focus on customer benefit – these concepts will remain the measures and guidelines for our plans and activities.
HSM stands out as an innovative distributor with extensive expertise in technology, production knowledge, quality, logistics and a high degree of service. We continue to believe that we should focus on our core competencies instead of diversifying our efforts.
As we mentioned before, the launch of the new SECURIO shredder line is very important to us right now. With regard to structural organisation and workflow management, we are continuously working on synergy and efficiency potentials.
Lastly, we will continue to grow successfully with our existing customers and plan to attract new HSM customers with the help of our enthusiastic and talented staff.
SS: On that last point, we believe that with a big pool of well trained and educated employees, both HSM and our partners can be more successful. The better they know about our products, our philosophy and our targets, the better they can do their jobs and the more success HSM will have.
With that in mind, the HSM Academy is a know-how transfer institution that has been created to improve the sales and service skills of our own employees as well as those of sales and service people from our customers and partners. And for 2007, we are working on some new projects, such as a wide range of new internal training for HSM staff and our worldwide partners.
The Academy is one of our key success factors and very important for us. In addition to training, our Academy staff also support us on service topics. For instance, they created the whole range of service manuals for technicians and engineers of the Office Depot contract and other substantial contracts in the environmental technology sector.