It is easy to say that the movement toward bundled services under a flat-rate, monthly subscription model is a factor of the millennial generation taking a bigger role in customer buying decisions.
It is true that millennials have now grown in size and demographic representation, and now wield greater influence in the business community than they did five years ago. But putting the movement squarely on their shoulders ignores the other factors at play. It also resists the call to mobilize.
“Dealers want the easy button,” noted West McDonald, founder of West McDonald Co. and the industry’s resident seat-based billing evangelist. “Programs that are approaching flat rate from a device perspective are easier for dealers – they don’t have to do any work. That’s probably a good way to get started, but as I always caution, the same problem with managed print right now is we didn’t take it far enough. MPS is much more than taking meter readings and billing customers, but that’s not really managing as you would think of it in the managed services world.
“Dealers can start with a flat-rate model, use those great numbers provided by BEI Services (NEXERA) and make sure that they’re contracting simply and profitably, but have an eye on stage two. How can we get some of those other services that we’re doing into the contract?”
Dealers who embrace flat-rate billing, or are gradually moving in that direction, need to be cognizant of how it might impact their business from an internal perspective. Kim Louden, vice president of sales, Office Equipment Group for GreatAmerica Financial Services, notes dealers should consider the impact on their sales compensation program. Other considerations include benchmarks and escalations within the contract; inclusion could bump up the service rate, or be kept flat for the life of the pact.
Another scenario some dealers have pondered is implementing a flat rate for the entire imaging solution. “Do you try to do just a flat rate for the printers, the way dealers do MPS for printers only?” she posed. “A printer-only flat rate, with the larger A3 machines still on the standard cost-per contract. You can say any A4 device is going to be a flat rate for the month and not worry about non-networking devices or getting the meter readings from every printer in the office. Dealers could check on meters quarterly or semi-annually to make sure pricing is still in line.”
While Jeff Dotzler, vice president of professional services for Gordon Flesch Co., sees a certain comfort level among millennials as it pertains to the subscription era of products and services, the appeal to embracing a subscription as opposed to other billing structures for labor, supplies and material will ultimately win the day.
“It’s more of an operational mindset to do certain things, and when you think about technology and how quickly it’s changing, it’s kind of become more of a requirement,” Dotzler said. “I don’t think people look at Microsoft licensing anymore and say ‘I’m just going to own it.’ With the security threats and the advancement of technology, it’s really important that you have a more current version of the software, and the subscription provides the easiest and fastest path to that.”
Subscription software has taken a bite out of the larger up-front sales, notes Pacific Office Automation President Doug Pitassi. But ultimately, he sees more positives in the subscription model for the dealer.
“It’s not as fun to not get the big hardware deal up front, but I think the expectation of subscription services is where we’re already at and our industry needs to get on board with it,” he said. “We’re used to getting a $50,000 sell of software, where on a subscription basis you lose the up-front sell, but you can sell the membership over time. If you don’t start selling clients the subscription software, someone else will.”
