You have made the decision that you want to be in the Seat Based Billing (SBB) business. Making the decision is only the first step on the journey, so the question arises: How do I make the transition? Creating a plan and then implementing it is the key to success. Addressing the following areas will dramatically improve the odds of success:
Identify the customer size that provides the best opportunity. Very small businesses with fewer than 10 employees may not be viable. Fortune 500 companies are not likely prospects either. Determine what your target market looks like and then create your marketing materials.
Select vertical markets that have the need for document security and develop specific marketing pieces for those markets. Review the options for marketing, including social media and targeted email.
Selling SBB is different from your current sales process. It requires a longer sales cycle, and the revenue that it generates is different from traditional equipment sales. SBB is a specialized sales process and requires a dedicated representative(s).
Provide training to the representative(s) on the process. Utilize available training from vendors you choose to support SBB.
Start the process using current clients, getting the appointment will be easier, and you will have some of the necessary data for the assessment. Once you have several deals working, then start working on a new client pipeline.
SBB will not affect daily service operations. But the service manager does need to use available data to identify the most cost-effective machines in a given volume band. Researching and developing connections with the aftermarket parts and toner suppliers for printers is a priority.
Identify options for non-OEM training on printers and start training technicians for the models you expect to support. Review the companies that remanufacture printers and find a quality partner. When a client has a high page cost printer, replacing it with a remanufactured unit will improve contract profitability.
The real work starts with collecting the necessary data from the client. For your current customers, you will have the records of what they spent on service and supplies for the equipment you maintain. You will need copies of the invoices for service and toner for equipment that you are not currently supporting.
Look for devices that are locally attached and make sure to include those costs. Finding this information may take some detective work. Departments may purchase these supplies using credit cards, and the cost may not show up to the purchasing department as a printer supply.
Compile this information to get a total current cost for output. If you plan on proposing additional services or software, include the current cost for this in your total cost.
The site assessment is the most critical pre-sales process. Use tools or data that let you see what is printed, where it is printed and who printed the information. This information is critical to price the seat correctly. When you show the client this information, you have the basis for a conversation about control printing costs and rules-based printing. You may see locally attached printers, and you want an assessment tool that captures those prints as well. Some vendors have DCA (data collection agents) as well. Pick one that can capture the local prints as well as network prints.
Gather the following three types of data during your assessment. Use this information to identify areas where the client’s workflow can be improved and to locate potential savings with SBB.
User Information: It is important to gather information about the individual users, including how may monochrome and how many color pages they print. Also, gather information on the number of individuals printing and identify the top 10 users.
Device Information: Identify the total number of devices and their locations. Compile the average monthly volume for each device. Separate the volume by page size for both color, and monochrome.
Document Information: Document the different types of information printed by its source. In many cases, emails with hyperlinks are printed to a color device for no reason. You will use this information during the presentation to the client.
Optimizing the rules
The foundation for making SBB work is developing the rules governing how and where print jobs get printed. These rules create the savings that you generate for the client. These rules also ensure your profitability.
For example, when clients print email to a color device, if there are hyperlinks or color text these become color clicks. Printing emails in color add no value to most documents; it just increases the cost. Use rules to force those types of print jobs to monochrome devices or drivers.
The assessment process usually discovers printing that is not company related —for example, personal documents and non-work-related webpages. The client will have to decide whether these are acceptable uses of the equipment.
This step varies depending on the where the client is in the life cycle of the copier equipment lease. Optimize the equipment by choosing the most cost-effective device that meets the needs of a particular location in a company. Most hardware in the field today was placed because that device generated the most revenue for the salesperson.
Use the data collected earlier in this process to identify the types of print jobs performed by each machine. In most cases, clients print on letter and legal-size paper. If there is not a specific need for ledger-size paper, an A4 device is probably the cost-effective choice.
I recommend purchasing the client’s printer fleet and then building the cost of leasing the equipment into the SBB price. Doing this provides a great deal of flexibility and allows the replacement of high page cost devices. When replacing the high-page-cost devices, use refurbished devices with low page costs when possible.
If the client is in an upgrade window: Clients are in the upgrade window when the remaining lease obligation on their current MFP fleet is low enough to roll it into the SBB financing. Where possible, combine all of the client’s devices into one program. This course makes managing the program easier and generates the most revenue for your company.
In most cases, if data shows that the client does not print on ledger paper you will replace A3 devices with lower cost A4 devices. For clients that do print some ledger size paper, recommend consolidating those pages to one A3 device.
If the client is not in upgrade window: This situation is more difficult to manage. If your company is only managing part of the client’s equipment, you need to protect your company with a “Fair Play” clause in the contract. We will discuss this in the contract section.
If the customer has equipment leases through your company, discuss with your leasing company the cost to move those leases into the SBB contract. You can then optimize the workflow to utilize the most cost-effective devices.
Building the seat price
Building the seat price can be either a very simple process or a very complex process.
Simple process: After properly doing the assessment, you know the number of individuals printing, and the pages each device prints. You also know the types of documents printed and the associated page volume.
Add the equipment cost, service cost, and profit margin together and then divide the results by the number of individuals printing and you have the price for a seat.
This process is not what you use to discuss with the client, but it illustrates what is involved.
Complex process: The components that make up the actual seat price are the same. However, the process differs. Use the information you found in the assessment on types of pages printed where pages are printed to color devices and pages that are printed but not company related. Use that information to identify potential cost reductions for the client.
Optimizing the print fleet may provide additional cost savings for the client and increased profitability for your company. Review the current equipment base looking for opportunities to replace high page cost devices with lower page cost equipment.
This will generate less revenue and profit for your company. We will increase the profit by adding in software to control where and how users print. By adding in additional services, we can increase the margin and still reduce the client’s outlay.
Creating the contract
The leasing agreement is specialized for SBB. You need to make sure that your leasing partner supports SBB. The lease does need to have the previously mentioned “Fair Play” clause in it, which allows the dealer to increase the seat price if the client moves print volume from another company’s equipment to devices on SBB. It also allows the seat price to be adjusted if the company starts bringing new work in-house or in some other way substantially changes their print output.
Other added services
One additional option is to include additional services to the SBB agreement. For example, if your company provides water service, Managed IT, and connectivity support for devices include these in the seat price. This makes it more difficult for the competition and more profitable for your company.
Flat rate pricing is coming
The major manufacturer’s direct operations are already advertising flat rate pricing. They may not label it as SBB, but the result is the same. You have the option to become a leader in the field, or left standing on the sidelines. Choose wisely.
Ken Edmonds is a consultant, management coach and service management trainer with 25 plus years experience in the industry. He has had the opportunity to participate in every function inside a dealership, having owned a Toshiba dealership and worked with two different manufacturers as a district service manager. During that time he had the opportunity to learn from and share information with some of the largest dealers in the U.S. He has had the privilege of attending the BTA Fix class two times, the Pros Elite Group Training two times, the Service Managers Achieve Results Through Training conducted by John Hey and John Hansen, and the BTA ProFinance training. He is a noted speaker and contributing editor to multiple publications.