Smiling and dialling the way forward for RM sales staff

Devolution of purchasing in schools market prompts sales rethink at education supplier

Smiling and dialling – rather than pressing the flesh in person – appears to be the order of the day at education supplier RM.

As it announced an 8.4 per cent drop in annual sales to £261.7m, the London-listed firm announced it is focusing more on marketing and telephone sales rather than face-to-face selling, in response to the recent devolution in purchasing decisions among schools.

It was a solid year for RM, whose business is still recovering from the body blow of the government's decision to axe the Building Schools for the Future (BSF) programme in 2010.

Despite the sales drop, which was driven by a 10.8 per cent slide in revenue in its core Education Technology Division, adjusted operating profit for the 12 months ending 30 November rose 35 per cent to £17.2m and cash leapt from £37.8m to £63.2m. This prompted the firm to pay a special dividend of £15m to its shareholders on top of an improved final dividend.

As well as the BSF closure, RM has had to contend with a devolution in purchasing decisions among schools following the closure of central technology agency BECTA in 2010.

RM said it had got around this by instructing its staff to hit the phones.

"Purchasing decisions in England have been increasingly devolved to schools and academy groups and away from central government and local authorities," it said. "This required a change in the way RM engages with its market and the review has resulted in an increased focus on marketing and telephone sales over face-to-face sales, though direct contact will still be necessary when complex solutions are involved."

RM discontinued its PC building activities in December and will instead focus more on its own software and services. The operational rejig (it is cutting 300 staff) stemming from this "is in the process of implementation and is on track in respect of timing and cost", the firm said.

This means that RM's Education Technology Division will now focus on four areas: IT services; digital platforms and content; infrastructure solutions; and internet services. The rundown in BSF activity, combined with RM's PC exit, will lead sales in the Education Technology Division to halve between 2013 and 2015, it conceded.

"2013 has been an eventful but positive year for RM plc," said RM chairman John Poulter.