Across any industry, you can find products and services being sold with little to no profit. Does that mean there are no deals that offer a nice profit opportunity? In our industry, if you listen, you can hear dealers every day talk about how hard it is to make a profit selling managed print services.
It sends me back to another time way before MPS existed. Office Depot started selling low-end MFPs by Xerox in all their stores. Everyone said; “There goes our profit on the low end.” I guess it may have changed our industry a little bit, but I don’t think it had a lasting effect because the value of a properly placed MFP is way more than just a place to buy one at a good price.
Taking a product to market profitably doesn’t happen by accident. Obviously, you have to have sales to determine profit levels, and in order to have sales, you have to know what you’re selling and who will buy it. If you read anything I’ve written here in ENX Magazine, you’d know that I do blame a weak go-to-market strategy for almost any business failure.
Profit from MPS only happens if you’ve built a strategy that creates profitable MPS deals. The strategy is needed way before you conduct your first appointment. So what is that strategy?
Building a Strategy
Some say, “sell the deal,” then increase profits by beating up the toner, parts and equipment distributors for discounts. Still others say, make sure every service call hits anything near a PM so you can minimize your service costs. But all of this is after you’ve closed a deal. What most dealers want to know is: “How do I propose an MPS deal that will have a profitable return?”
Every part of your strategy, plan and process are interlinked and dependent on each other. Without a map or navigation, what value are roads? The amount of profit that can be generated by any product or service is always based on the target’s perception of its value and benefit to them. If you agree with that, then you must ask the next question: “Who is the right target and what values do I offer?”
Profit? Perceived value? Targets? Just go sell it! That summarizes the extent of many dealers’ plans for selling MPS. So it’s no wonder low profit deals are the result.
Recently, I had a conversation with a dealer who is involved in several elite dealer networks and he couldn’t believe how some of those dealers have yet to venture into the managed services world. He found that to be amazing and asked me, “How can they possibly think they’ll be relevant in the future?” I replied that some dealers execute in a default mode, meaning when they don’t have a real plan, they wing it.
Of course, there could be other reasons. It may be that they have their own leasing company and enjoy the interest income from that second business and are keeping it healthy even while the MFP product life cycles matures. My sense is that if they were smart enough to create their own leasing company, they will most likely be smart enough to know when they need to transition their business model. Let’s hope so.
You Can’t Sell it if…
Profitable MPS starts as a key business objective and must be initiated once the strategy and plan are complete. You can’t sell it if you don’t know to whom you’re selling (target). You can’t sell it if you don’t know what to call it (marketing). You can’t sell it if you don’t know what it does for them (benefits). You can’t sell it if you don’t know how to calculate costs, retail price and profit (product development). You can’t sell it if you don’t know why your target needs your services (go-to-market). You can’t sell it if your sales team can’t generate enough appointments to present your services (activity). You can’t sell it if your sales reps can’t perform a C-Level presentation (expertise). You can’t sell it if your team doesn’t know how to convert an opportunity to a sale (process). You can’t sell it if your website doesn’t provide the proper message to your marketplace (reputation). If any of one of these requirements is missing, you most likely won’t be profitable selling MPS.
It’s possible that while you’re reading this article, some dealer right now is closing a profitable MPS deal. And if they are, they most likely set the deal up correctly from its inception. Business moves way too fast not to think through a “stick with it” strategy. If you don’t, you’ll be all over the place and won’t have a chance for a focused market approach.
The key here is that three or four of the right MPS deals a year can grow your company exponentially, so execute a proper discovery.
It isn’t too much of a stretch to understand that your best MPS target will be a certain size business with plenty of devices and printing going on. Stick to commercial businesses where you can reach the C-level and find someone who’s charged with improving the value of their company. Present your values in a conference room and on that first appointment, close for their sponsorship. What does that mean? Use that old, old sales close early in your sales process: “If I can save you significant costs, would you be willing to engage my company to manage this process for you?” Remind them again that there are major benefits for those who go through this process. If done correctly, MPS programs deliver many significant benefits, including a hard-cost savings opportunity. Learn what their key business initiatives are and align your MPS program as one that can deliver the improvements desired.
Build a Bridge
Talk to a decision maker and close early. One of the strongest things you can do to assure a profitable deal is to qualify them as someone worth doing business with. Think your market doesn’t have enough businesses like what I’m describing? Remember, MPS can easily bridge to other marketplaces without too much of a problem, but don’t waste time with titles (non-decision makers) and RFPs of those who you have little chance to persuade and win.
I’m going to assume that by now you understand that the right size business is important. You’ve met with qualified decision maker and got their “If I do this, you’ll do that” commitment. Now it’s how you set up the deal that’s most important toward driving a profitable result.
In almost every outsourcing opportunity like MPS, there are certain objectives your client is after. It’s your job to uncover them and make sure your efforts deliver to those objectives. How you build your MPS deal is most important, don’t leave the interpretation of your program’s value up to some fill-in-the-blanks import data tool. Perform your due diligence in the cost-data gathering. Understand their work environment and audit everything that is crucial toward making the right decision to choose you and your program.
Delivering the Right Deal
Maintain communication with your target. On proposal day, present the offer in their conference room, scheduling enough time to assure a proper transferal of value. It’s your job to translate discovery data from facts, reality, problems to your managed print solution as one solution that hits all of the metrics of their key business objectives. Don’t just show a fact page and the pricing. Walk them through their environment with your eyes and capabilities. Most of the MPS failures I see or those wins that produce low profits or no profit are because winning “a deal” was more important than winning “the right deal”.
The key here is that three or four of the right MPS deals a year can grow your company exponentially, so execute a proper discovery. Remember, you’re not competing against other dealers or manufacturers. You’re competing against the client’s ability to manage their print environment toward their key business objectives. If they could do it themselves, they would have, and you’d have no opportunity at all, would you? Profitable deals are out there…go find them.
