Yogi Berra on Channel Strategy for the Printing Industry

by Doug Johnson | 10/19/15

For good or bad, I’ve been in this industry a long time — from the early days of the HP LaserJet printer, where we signed up just about anyone who could fog a mirror to resell our products, until now, providing consulting to companies at all points in the value chain.  In between, I worked for an MPS reseller, provided industry consulting and training, and worked for a printing supplies distributor. If the printing industry’s value chain was a bingo card, I’m pretty close to shouting “BINGO” and taking home some really cool industry conference swag.

During the last 30-plus years, the world around us has changed dramatically, and with it so has the buying process in general.  In the early days, the technology buyer relied on brochures and technical data sheets with “feeds and speeds,” and, for larger buyers in particular, conducted a great deal of testing of new printers, copiers, and (later) multi-function devices to determine which hardware to buy.  As alternatives to OEM consumables came into the market in the late 1980s, and early 1990’s, evaluation and testing of consumables often underwent the same level of scrutiny.

Fast forward to today.  With the ubiquity of the Internet, information on document output-related products and solutions is widely and easily available.  A quick Google search can instantly give you best pricing on hardware, consumables, break/fix service, software, and just about any document output-related product or solution.  In fact, between 60 and 80 percent of the buying process has already been completed BEFORE the buyer makes contact with a seller, putting the buyer clearly in the power position with the seller.  In economic terms, near-perfect knowledge is possible for all, including the most casual and infrequent buyer.

This near-perfect knowledge has turned much of this type of buying into a commodity process, with little opportunity for “excess” margins above what a commodity market will bear. This, of course, affects everyone in the value chain, from the manufacturers to distributors to the resellers.  Combine that with a mature industry that is flat or in decline depending on who you believe, and the impact on the margins for most businesses across the print industry value chain has been quite dramatic over the last decade.

I’ll get to the late, great Yogi Berra’s perspective in a minute.

Also, over the last 15 years or so, another model has emerged that focuses on printing as a service — Managed Print Services (MPS).  Under this model, the seller, not the buyer, holds the knowledge about the best products and solutions to meet the document output needs of the buyer’s environment.  The financial buyer is looking to outsource a service that will provide a strong ROI, higher service levels, and predictable costs.

Just as the Internet affected the buying behaviors for transactional buying, the shift to outsourced services among businesses of all sizes created the opportunity for MPS.  Today, any company can (and often does) outsource many functions that are critical to their success — from payroll to HR to IT.  MPS was (is) just another outsourced service from that perspective.

On the surface, MPS promised the opportunity for higher revenues and certainly higher margins than the increasingly commoditized transactional sales of hardware, supplies, and the rest.  The reality of MPS looks more like transactional sales — competing at the fourth decimal on RFQs for MPS engagements — resulting in low margins with even higher support costs.  Is it just not possible to make money in the printing industry any more?

Here’s my take:  the market is bifurcating, and it is affecting all points of the value chain.  Economic buyers in the (near) future will either buy in transactional, commodity-like ways, OR they are buying outsourced services.  The former is often done by functional-level and below decision makers, while the latter is done by C-level decision makers.  (Homework assignment:  Use the word “bifurcate” in a sentence during your next social gathering and note the tilted-head responses.) 

The differences go WAY beyond the decision maker, however.  The assets and competencies required to successfully sell and operate either model are vastly different from one another.  Yet, as an industry we seem compelled to just tweak our existing business models a bit to try and capture both types of customers, then wonder why neither is bringing in the revenue and margins we expected.

My theory:  build the assets and competencies tuned to one of these two models, and you will have an extendable platform for success well beyond printing and imaging.  More on these two models, the assets and competencies needed, and the opportunities for extension into new markets, in my next blog.

Oh, and here’s your very relevant “Yogiism”: “When you come to a fork in the road, take it.”

Doug Johnson is a highly respected business owner, thought leader, and expert with over 30 years technology experience; 15 of those years specific to managed print. He is currently the founder and president of RedSage Group.