In today’s BTA channel, you’d think that everyone would have mastered the MPS sales model by now, and easily built a nice portfolio of managed print renewals. I wish that were true. Launching services (MPS) from a hardware-centric industry is extremely challenging for many reasons. Profitability inside the MPS business model doesn’t just happen; there’s a fair amount of chatter that shares the opposite.
Profit comes from a plan and best-practice execution, with the intent to be profitable. With a proper MPS go-to-market strategy, most are able to master the hurdles—especially since they’re splitting the focus of their sales organization to accommodate both hardware and services together. Here are some helpful tips for driving profitable MPS opportunities:
- Create a mature plan that delivers high value and seeks an appropriate level of profit.
- Make sure you can financially survive the initial MPS learning curve.
- If not, wait until you can.
- Identify your TAM (total available market): are there enough targets to launch MPS?
- Specifically identify job titles that deliver the shortest path to growth and profit.
- Redesign your sales-team model for non-stop opportunity development and profit.
- Develop an onboarding strategy that works flawlessly the first time.
- Automate supplies and service (low/no inventory).
- Manage accounts with a fleet-service, not break/fix, mindset.
- Design your MPS plan to satisfy your client’s business model, not yours.
- Communicate, communicate, communicate.
Create a Mature Plan
I used the word “mature” intentionally. Many dealers haven’t taken into account the completely different market approach and sales-cycle requirements between the consultative (MPS) sale and hardware. I do understand that there are a lot of hardware-sales organizations with members who believe they’re consultative in their approach. But the majority of MFP sales reps I encounter deploy the renew/replace methodologies.
Consultative sales have a longer sales cycle, and can have many contributors toward the advancement of each deal. It requires an intense business-development process to create a successful sales result; renewals can sometimes be as hard and painful as the initial agreement. Not to mention that MPS can collide with your hardware business, and without a proper engagement protocol, can create an internal battle that few will recover from. A mature plan defines the rules of engagement and maintains a unified team approach to the marketplace.
If your plan simultaneously saddles an MPS quota on top of your hardware sales reps, I’ve never seen this drive success for both product lines. What does this have to do with profitability? If your MPS program kills your effectiveness in your hardware foundation, you obviously won’t be as profitable as you could be.
Some laugh when I bring this up. But I have seen many companies with mediocre sales results try to add an MPS program, only to bail because it kills their hardware momentum. If you track the stats like I do, you’d see that even successful MPS dealers take a hit on their profit margins, because the pedigree is still a hardware sales organization. So, if your successful months are outnumbered by unsuccessful months, I would consider waiting and repair your sales foundation before launching your MPS program.
Your Total Available Market
In order to build a profitable MPS program, your marketplace has to have enough TAM to support your transition. There are markets that simply don’t support a full-charge MPS program. If you don’t have enough enterprise-level prospects, you might consider a different direction—possibly managed IT services and focus on the SMB clients.
Some argue you can push MPS down to a medium-sized client, but remember their pain is less, so your value may be also. To be profitable with MPS, you have to find an enterprise-level client whose print fleet is large enough that it distracts the IT team from their core responsibilities and wasted spending is everywhere. In those environments, as an MPS dealer, you can do things the end user can never do!
When your MPS program doesn’t align to your client’s financial and performance objectives, most likely you’ll have to compete again to keep the business.
Let’s say you do have a target-rich environment for MPS, and a market loaded with enterprise-level prospects. Wouldn’t you rather spend your time approaching decision makers who will actually allow you to be profitable?
For 10 years, I’ve been tracking the profit levels of MPS by title. The typical position that allows the most profit within an MPS deal is the “senior-most financially concerned corporate officer,” or the CFO if all things are normal. Why would anyone want to spend time with anyone else? The IT leader is way below the CFO for profit, and purchasing is below that. Why don’t we focus on the CFO as our primary MPS target? Mostly because hardware-centered dealers can’t afford to have their sales reps stuck in the longer MPS sales cycle. Manufacturers and dealers push their reps into whatever door they can, to get whatever deal they can. When this happens one would have to ask: if your reps really don’t have a purposeful process to sell MPS to the right targets with an authorized sales cycle, why do it at all?
Sales Team Model
So what are the characteristics of a bad sales-team model? I’ve reviewed many sales teams for both best practice and process, and when a sales team fails to produce a consistent 90-day deep pipeline with a forecast accuracy below 70 percent, someone should be working to improve those results. When you blend hardware with services, you want to restructure your sales team model so that your market approach promotes the top comprehensive product and the fallback can be to sell the lessor product. So if you transform your entire team to sell MPS, any deals that falter or dissolve still give you the possibility for hardware sales. Seldom is the reverse possible.
MPS is a stepping-stone to the future. It’s just a product with a newer lifecycle that most likely will eventually lead you to other service products. But if your sales team model promotes MPS, and thus hardware at the same time, you can enjoy congruent momentum, which protects your foundational business while moving you to a services future.
Onboarding
Any company winning MPS deals knows there are a significant number of things that can go wrong in the onboarding and implementation stage. Sales works way too hard to win MPS deals, often to experience a fumble in the end zone. Onboarding a new MPS client can be an amazing experience, assuring everyone that they did the right thing. It can also be a nightmare, and a place where sales rep promises turn into “we can’t do that” explanations that most likely shift costs under “emergency-overnight” fixes that eat profit like crazy. So a great best practice is to have an internal meeting where the sales team explains and hands off every aspect of the newly acquired MPS agreement. Cover every promise made and share your proposal to your team exactly like you shared it to the client. You’d be surprised what you can shake out.
This has a lot to do with training in both the sales and onboarding department. These teams need to function as one from the client’s point of view. How to do that?
- Break down your processes, making sure software and drivers are installed first. Communicate your purpose and presence at their facility, and introduce your company to all stakeholders of the process.
- Set up a staging zone, possibly ship your new inbound devices there and have a set up team work at their facility in that controlled area making ready all devices for deployment.
- Have a dedicated follow up team do ops training and make sure everyone is printing correctly.
- Make sure end users know your software will alert you when anything is less than perfect, but have them schedule follow-up training and leave their direct connect contact information so all issues can be dealt with immediately.
Smooth onboarding leads to happy end users, happy end users leads to great end user productivity, their productivity leads to your profit.
Manage with a Fleet Mindset
I blended these two topics because I think they go together. Do I really need to mention that your service and supply management needs to be automated from the device level? I really don’t want six people on my payroll tied to a computer screen all day long, just so they can respond to an alert that pops up from someone’s device in the field. Can you say profit killer? The more fleets you win, the more people you’d have to apply to the process, not even accounting for vacations and turnover.
I don’t know if you’ve ever experienced a board meeting where the big-money investors are present to protect their investment. If I’ve heard it once, I’ve heard it a hundred times: build everything so it’s scalable and repeatable. Keeping everything in house doesn’t always produce scalable, repeatable results, not to mention that it may hit your profitability. Go lean and grow your MPS business portfolio. Using companies like Supplies Network, LMI and Clover for fleet management allows you to focus on growing and expanding your business.
Regardless of which path you take to support your client’s fleet, look at the big picture and any time your people are onsite, scan the environment for all preventable problems. Anything your team can do while they’re onsite makes you more profitable. Train your team to think fleet, not single call.
MPS that Satisfies.
A lot of people believe MPS is a great deliverable which sells a lot of hardware and supplies. But I contend that managing a client’s print fleet should yield a result where the client is spending less and devices last longer. If you understand this point, most likely you’ll have less account turnover, because customers will know that your objectives mirror their objectives. When your MPS program doesn’t align to your client’s financial and performance objectives, most likely you’ll have to compete again to keep the business.
Once you’ve won the deal, nurture and expand your relationship by providing the client with timely, accurate information to support their decision for choosing you. It’s NOT a QBR where you blab about the ten things someone told you to share. It IS about providing information your client requires. Nurturing the relationship—loving the client to renewal—is as important as the initial sale. Don’t wait until six months before expiration to re-engage the client; that’s right about where the competitors begin their hard-core press. So if you haven’t been communicating with them all along, you’ll just be one of the crowd.
I’ve never understood sitting down with a client and sharing all of the negative things that have happened over the last 90 days. I only want them to hear about how my company has created a maximum amount of “up” time, and how we’ve increased their productivity. So share the great news and endorse their decision for choosing your company. Deal with any concerns immediately and make problems non-existent. This drives your renewal, and renewals drive ongoing profit.
If your main contact ever tells you they’re leaving the company, make sure you set up a meeting to transfer and consummate the new relationship. New people can often bring in new service partners, and you want the best chance to communicate your value with someone in the room who will validate your worth. If you are surprised and find out that your main contact is already gone, resell the entire deal to the new contact, no matter how long the remaining term is. They have to KNOW and feel good about sending you that big check every month.
There are so many things that can go wrong to eat up your profits. I’ve even heard of a couple of situations where dealers got stuck in an MPS deal in which their monthly costs were greater than the inbound revenue! It happens. However, should you fail (and you will), fail forward. Evaluate every step of your process from prospecting to renewal. You don’t have to do everything in-house to grow; choose high-quality partners for fleet management. Focus on profitable growth first, then make decisions on how you execute. Now, stop reading and go win another deal!
