Competing in the big leagues

Five years ago, at the age of 30, Scott Wakser left a high-salaried sales position with a national medical device manufacturer to set out on his own.

He had one mission: to show his former employer, and a handful of national, billion-dollar companies, that he could compete in their exclusive arena.

Today, Wakser is president of DiaMed Inc., a company which has grown to more than $6 million in sales, and is doing exactly what Wakser and Vice President Doug Sharpe said it would when they founded it in 1995. By staying local and focusing on customer service, the medical supply distributor has carved out a niche in an industry that has historically been dominated by a small handful of national players.

“I’ve always had the entrepreneurial spirit,” Wakser says. “I didn’t see myself working for someone else my whole life. When I was growing up, I had my own lawn service. I’ve always been a hustler that way.”

While Wakser and Sharpe have focused on building business one physician office at a time in a limited territory that includes Ohio, Michigan and Western Pennsylvania, the two received confirmation of their success late last year when they won a $2 million contract from University Hospitals of Cleveland.

DiaMed is now the exclusive vendor of physician supplies to UH’s 170 physician offices. And that hasn’t gone unnoticed.

When Wakser and Sharpe left their sales positions at New Jersey-based Q-Med Inc., which develops, manufactures and sells medical devices and systems, to start DiaMed, they were told, “We’ll have you out of business in six months,” Wakser recalls.

“At the time we started, they [our competition] laughed at us,” he says. “Twenty-four months later, they tried to buy us.”

Physician Sales & Service Inc., a $1.3 billion medical supply distributor, based in Jacksonville, Fla., approached DiaMed with a $2 million purchase agreement in 1997, he says. The partners refused, but Wakser keeps the agreement in an easily accessible desk drawer, pulling it out on occasion as if to remind himself how quickly things can change.

Today, he says simply, “They respect us.”

What makes DiaMed’s success noteworthy is not necessarily the exclusivity of its industry, but the fact that the small North Canton company does not sell on price or product.

“We sell the same thing that the billion-dollar businesses sell,” Wakser says. “There’s no difference. Price does not create loyalty. The difference is what you will do.”

So far, Wakser has shown his customers that there isn’t much of a limit to what he will do for them. Rosanna Boveington, lab manager of Ohio Family Practice in Fairlawn, has used several suppliers over the years, but five years ago switched to DiaMed for the majority of her practice’s supplies.

“When I need something, I call and talk to the same person every time. That’s very important,” she says. “If I have a problem, Scott sometimes comes himself.”

It was that personal attention that Wakser noticed was missing from the industry when he decided to leave Q-Med. He and Sharpe gambled on the idea that enough of the industry’s clients would sacrifice a big name for the personal attention they had never received.

“I thought, ‘What a great idea,'” he says. “We would be the guys to service the equipment, to train the doctors how to use it, to show how to bill the products, and to really focus on service.

“Make the customer feel like a king, that was our goal.”

While many entrepreneurs make that promise in the start-up stage, few are personally overseeing its execution five years down the road.

One of the ways Wakser personally monitors every customer’s satisfaction with DiaMed is by sending out, reading and responding to customer surveys. He asks every customer to grade DiaMed’s performance on a quarterly basis in areas such as customer service, sales representatives’ knowledge and responsiveness and product quality and delivery.

The last question asks whether the customer would recommend DiaMed to an associate. Wakser says that if any of the questions come back with a poor rating, he calls the customer to attempt to rectify the problem.

But that’s not to say he takes sole responsibility for maintaining high customer satisfaction levels. Visitors and clients will spot customer service programs in nearly every area of the company, starting with the friendly voice that answers the phone, “Hello. DiaMed: the company that cares.”

Other customer-satisfaction measures include:

  • A training program in which every new employee works a shift in every department of the business.

    “I’ve worked the warehouse, and everyone here has packed a truck,” says Wakser.

    This training corresponds with his belief that every position is as important as the next one.

    “I’m no more important than the delivery guy. He’s the guy who’s going to see the customer five times as much as I am,” he says. “If you can’t focus on ‘we,’ you have no company.”

  • All new customer service reps are given mirrors for their desks. This one’s simple: Wakser believes that a smile is heard through the phone, and he wants to make sure his employees are smiling when they’re talking to customers.
  • The first office visitors approach upon entering DiaMed is Wakser’s. His office, while small with barely room for two guest chairs, is the first in the building.

    “I want everyone to know they have a right to see me and to talk to me,” he says.

Last year, DiaMed expanded its reach, opening a retail store out of its Belden Village office.

While the showroom houses an assortment of products including diabetic shoes, scooters, wheelchairs and walkers, for most customers, it’s easier to shop from the convenience of their homes. DiaMed staff brings the products to the customer, then helps them with assembly, usage information or insurance coverage needs.

Wakser plans to continue to grow the retail side of the business, which accounted for $1 million of the company’s sales in 2000, again selling the products on service, not price.

“We believe that within the next five years, we will be the dominant force in medical distribution in this area,” Wakser says. “We know this marketplace. That’s all I want to understand. I stay with what I know, so I don’t lose my focus.” How to reach: DiaMed Inc., (330) 966-7264

Going up against the big boys

Scott Wakser looks at his company’s size as an advantage, not a weakness, in going up against his billion-dollar competitors for contracts. Here are three ways he uses DiaMed’s size to his advantage:

1. As a smaller company, he is able to respond to the needs of his clientele more quickly, because he doesn’t have bureaucracy to go through, he says.

2. A more focused organization can bring better service to the table, he says. A large company has lots of contracts, so each customer is one in a million. As a smaller company, the bottom line is that each company’s business is imperative.

3. Selling by reference. Sell through other customers. Wakser develops a referral list that includes letters from happy customers on why they have chosen to do business with him.

“Whenever I have a good client, I always ask them to write a letter about why they chose us, and why they continue to do business with us.”