by Sarah Henderson, Clover Imaging Group
How often do we find ourselves observing that “hindsight is always 20/20”? I make this clichéd statement at times when working with dealers that are too often struggling with their MPS program or portfolio of underperforming deals. The frustration has some resellers longing for a trip back in time to simple bundling, break-fix and transactional printer supply sales. So take a moment and think back to the beginning of the MPS business and let this article be a warning letter to create a better MPS future.
You have a business plan, right?
How many of you pushed down on the pedal of your MPS program, racing forward like the modified DeLorean DMC-12, and were not really sure where you were going? While the early days of MPS were truly like a land grab in the Wild West, the time has come for dealers to be more strategic about their go-to-market strategies. I encourage dealers’ leadership teams to be disciplined in creating and updating a dedicated business plan for MPS annually or as often as the market dictates. This plan must include:
- A compensation plan to drive the sales activity.
- A documented sales process around which activity can be measured.
- Sales training for all key personnel on the MPS sales process.
- Updated marketing materials that reflect key message points.
- Revenue goals and affiliated timelines.
- Identification of key MPS business partners and infrastructure providers with set annual or semi-annual evaluation criteria.
- Assignment of accountability, and identification of MPS champions and key implementation personnel.
Without a plan, dealers may be driving their MPS programs in circles. The most successful programs I interact with are disciplined in their approach, and the dealerships’ leaders champion MPS within the culture of the organization.
Make pricing more of an exact science
Just like the frozen clock tower, has your pricing strategy been stuck on the same time? Too often dealers express frustration with underperforming contracts that are simply a result of outdated pricing strategies. First off, pricing calculations need to treat copiers and printers differently. I am not sure if many professionals in the industry would argue that these types of machines are in the same price range to service and supply. Secondly, understand that even within the printer category there is a wide range of cost strategies based on the printer engine and affiliated supplies. Yet too often, we see oversimplification of pricing strategies that work off one standard mono CPP for printers. The color factor generally results in more analysis focused on page coverage, but what is the end result?
I recommend that, at a minimum, dealers do an internal exercise to understand their CPP calculations by evaluating the copiers as one category and the printers as a separate one. Next, consider grouping printers by different CPPs based on the actual cost by machine. I also recommend entering actual service costs or utilizing industry statistics that can look at printer models individually. If this work seems daunting, look for tools to assist, such as a total cost of ownership (TCO) calculator. The result of this work will help dealers better understand where their profit centers in the printer fleets are, and what machines dealers will need to take off contract now or in the future.
Through my work with some dealers, I’ve seen that it makes more sense to look at MPS differently and unblend the CPP with confidence. What I mean by this is, by pricing deals with billing groups that better address actual costs, dealers will be presenting solutions where the end user has a clearer understanding of their cost related to print. Dealers can also experience better profit margins on lower TCO devices by not artificially bumping up the base CPP with a smaller percentage of high-cost machines. Even for end-users who prefer a completely blended CPP, this work will help dealers better manage their fleets by understanding the costs per machine.
If we were to go back in time, I believe most dealers wish they would have avoided just putting any brand printer under contract. Yet, many customers may demand this approach. So when it happens, dealers can accommodate them, but they should do it with the understanding that blending it all back into one CPP may result in frustration and lower profits down the road.
Why not go back in time?
I had a dealer lament recently about how much he misses the “old school” approach of selling a simple monthly payment that included the copier lease payment with an annual maintenance contract. I understand that frustration, as MPS and the industry overall has driven dealers into a CPP frenzy. The result of the past few years has been end users being placed on “managed print” agreements that range wildly in not only the terms and conditions, but also in the ability of the contracted provider to meet the needs and expectations of the client.
An end user who has been burned may go back to a non-CPP-based solution. While this may sound like blasphemy to some, it is simple to go back in and sell the program in a way that better meets the needs of the end user. By un-bundling a deal, dealers may not be selling a “cost-per” solution, but can still deliver efficiencies and managed print based solutions to clients.
An entry level approach to this is addressed above in separating copiers from printers as price points within the contract. The second approach is to look at the contract terms and conditions of the current provider. Has the customer been paying for clicks they are not consuming via page minimums? Has the customer been over- or undersold on devices? Look at the utilization reports from remote monitoring software against an invoice and do that analysis.
Another area of pain may be in the supply fulfillment area. I am still a bit surprised by the number of end users on MPS contracts who still maintain a supply closet of toners. While this may be a security blanket some end users are not willing to give up, it may also be an indication that the supply fulfillment of the current vendor is not meeting expectations of “just in time.”
If customers have been burned, are frustrated, or want to walk away from “cost per” billing, does that mean you can’t deliver solutions aimed at print management? It may seem silly, but the answer is a clear and plain “no.” Instead, seek to understand the client’s needs and meet them. Isn’t that the end game with MPS, no matter how it is priced?
When dealers focus on meeting the objectives of the client, they may find themselves proposing a “simple” auto-toner delivery model. I emphasize “simple” because with automatic toner fulfillment (ATF) there is nothing simple about it. If a dealer gets really good at toner delivery, they can carve out a distinctive niche, regardless of how it is priced. This means getting down and dirty with software and device management or looking for better partners who offer ATF as a service.
This same adage can be applied to a well-managed service of printers. I encourage dealers to evaluate service metrics and invest in triage, which will save both the dealer and the client time and money when deployed correctly.
Don’t forget the power of love
While we may have temporarily disrupted user behavior with a well-placed MFP, never underestimate the power of emotional attachment and love that some end users may have towards their printers. This same adage can be applied to end users who cannot imagine living life without OEM cartridges, even when they have never tried a remanufactured solution. We can’t simply throw in devices and expect change; a concept which really hit me at the Transform Global 2014 conference when someone stated “it is people who print, not devices.”
How does your program work to help change end-user behavior to meet your clients’ goals and objectives around print? When you implemented MPS, was your program the equivalent of the shock of walking into a new device configuration without addressing workflow needs? Each end user’s culture is different, and the same goes for the implementation plan. But at the bare minimum, dealers need to address site-specific onboarding plans, customer communication, and if needed, customized marketing materials and a communication plan. Encourage clients to inform end users of the “why” part of the solutions. This will help any program be more successful long term.
The magic of MPS
There is no lightning bolt coming that will create an alignment of the time and space continuum to allow us to travel back in time to warn ourselves how to start this business model better from the onset. If there was, I bet there are several MPS dealers who would rewrite better software integrations from the beginning, and develop sales talents that are adaptable to a new sales cycle from the start. This industry has built MPS based on trial and error in many instances. So do not be shy about making course adjustments to your program as the market, customers, and your own business goals dictate.
This article originally appeared in the July 2014 issue of The Imaging Channel.