When I started my career in the office equipment industry, dealers were having a tough go of it. Cartridge and toner margins were way down due to an influx of inexpensive compatible and remanufactured options and an ocean of people trying to take a piece of the pie. Business owners were pulling their hair out trying to compete against low-cost options and new basement-grade competitors. Toner cartridges were a commodity and they were sold as such. The customer picked up the phone (or answered the phone from a savvy sales rep), ordered the toner they needed, and the process repeated. It wasn’t a very sophisticated buying or selling process, and the customer held all the cards. The good news at that time was that print volumes per user were still growing; growing big time.
Times were kind of tough. The way we offered office print and copy had to change if our businesses were to remain healthy. It changed alright, it changed a lot. No single vendor or software provider or dealer can take credit for this change, though some will try. No, the great change was from a thousand threads of smaller changes that came together at the right time and the right place. A new model for print was born and it was called “Managed Print”. It brought margins back and swept smaller price-based competitors into the gutters. I’ve been lucky enough to work with hundreds of top-players over my career to date. Let’s have a look at what they did to succeed. I’ll break down the things that made them successful, and in some cases, wildly successful:
Successful:
Here are the top characteristics of successful office equipment dealers I’ve witnessed to date:
- Powerful Sales Engines: The old days of “Inside Sales” reps taking toner orders became passé. Those that developed powerful outside sales organizations knew that it was a land grab and being first mattered. As Managed Print was new, there was a lot of land to grab. An army of strong sales professionals grabbed it.
- They stopped selling cartridges: “CPP” (Cost Per Page) “CPS” (Cost Per Click) and “CPI” (Cost Per Impression) became the buzz terms of the day. The billing acronym didn’t matter. What mattered, no matter what you called it, was that every customer buying toner did so under a term agreement, a contract, lasting three to five years.
- Service excellence: One thing I’ve always believed is that the type of hardware never mattered. All that mattered was that the customer felt it was the best equipment because it worked more often than not. Successful office equipment dealers built large service organizations to ensure the customer experience was seamless.
- They nailed auto-toner replenishment: The easiest way to make sure customers weren’t calling around for toner was to make sure they never had to worry about ordering it. Also, you didn’t want to warehouse toner. To be successful, dealers worked with a distributor who could drop ship your stuff for them, custom labels and all.
- They made money with money: An expression I love is “If you ain’t leasing you ain’t living.” I heard it from a sales rep nearly a decade ago. Getting the equipment under a lease and tying in the CPC contract was a huge success factor for successful dealers.
Wildly Successful:
If we’re honest, it was pretty easy to be successful for a lot of years as long as you knew how to run a business. To be wildly successful, however, required a lot more. In addition to the success factors listed in the first set of bullet points, to be wildly successful dealers had to do the following:
- They sold using Assessments: The dealers who were wildly successful understood that good managed print assessments could increase win rates from 30% to a staggering 70% or higher. Why? Because a good assessment got the customer to build their own solution based on good intelligence. You didn’t just replace a copier with a spec for spec alternative. Was it being utilized correctly? Did you have the right size device for the volume being produced? What were the average job sizes, and did they warrant consolidating devices or distributing the infrastructure? Using software tools and walkthroughs, wildly successful dealers let the customer sell themselves on the final solution. Sales reps, especially good ones, cost a lot of money, so a seven out of 10 close rate allowed for some incredibly fat margins.
- They helped customers to spend less: Like it or not, one of the main benefits of managed print was helping customers save money so they could use it for other stuff like information technology (IT) assets and other areas strapped for cash. Wildly successful dealers understood this and employed powerful rules for recovery and cost reduction. They consolidated infrastructure and found ways to get rid of waste. They were ravenous savings hunters, taking over competitive accounts by proving they could be much more effective at putting dollars back into their customers’ bank accounts.
- They took everything over: Sharing was not an option. Wildly successful dealers made sure they knocked their competitors out of all of their accounts. “One throat to choke” became a battle cry and they convinced customers that the right partner could do it all. Every printer, every fax, every copier, every MFD, every scanner, EVERYTHING.
Being Wildly Successful Tomorrow:
The key attributes of successful and wildly successful office equipment dealers no longer matter for those looking to be wildly successful. Yup, I said it. Everything that got us to where we are is now the expected norm and offers no opportunity for consistent and dramatic growth. Why? Because print volumes per user are shrinking, and fast.
- They will grow through acquisition: Organic growth was okay for those looking to be successful in the past but for those looking to be wildly successful, buying other dealers and building a national presence will be key. To be wildly successful without buying other successful companies, well, frankly, it’s impossible. Page volumes aren’t growing anymore and we’ve hit a saturation point for converting non-managed print customers to managed print customers. If you want a new market share, you need to buy it. If you want to increase margins, you need to standardize through scale. Everybody is chasing the same customers now, the days of the land grab are behind us. It’s a dog eat dog world out there, so you’d best get used to the taste of acquisition if you expect to be one of the big dogs. It’s already happening as the birth of several Mega Dealers has proven.
- They will get more than 60% or more of their revenues from things that aren’t print: Managed IT, Document Management, digital workflow optimization, anything but the printed page. Pages per user have been declining steadily, as has the cost of impressions. Cheap color isn’t going to save the office equipment space, don’t listen to those folks. The latest customer studies at Print Audit show that color volumes have remained static over the last three years while color revenues have dropped through the floor.
- They will realize CPC (or CPI or CPP) is as antiquated as selling cartridges: XaaS (Everything as a Service) is the new CPP. Fixed, predictable monthly fees by user or asset. SBB (Seat Based Billing), Device Based Billing (DBB) and other XaaS models are no longer the alternative, they are the future. Wildly successful dealers of the future will understand they need to offer office automation stacks that combine office print, copy, IT services and workflow solutions. XaaS is the only way to do it. That said, if you’re a dealer out there who hasn’t made the leap to CPI, it’s a great place to start in order to evolve.
- They will employ new and innovative finance models: Traditional Copier leases with CPP minimums built in won’t be enough. In the world of XaaS, new and innovative finance vehicles will need to arise to facilitate SBB and other “stack” models. I’m going to make a shameless plug here for GreatAmerica Financial Services because they’ve already taken the plunge. If you want to be wildly successful you should probably have a chat with them because they get it and have moved way past just talking points.
I’m sure that many who read this blog won’t agree with me, and that’s okay. Just like the early days of managed print, some of what I’ve written is pretty strong medicine. The difference between now and then is that as an office equipment dealer you only have a few choices ahead of you: Survive, sell, or become wildly successful. So what’s it going to be?
