Las Vegas is definitely not on my list of top ten favorite places to travel. Yet I have driven there at least 4 times each year for the past 40 years for various industry events. Ultimately, each trip to Vegas provides me with enough positives to make up for the long drive. Even though it’s commonly referred to as Sin City, there is a lot to learn from its business model, where the house always wins.
This year has been no different. While in Vegas this year, I had a chance to speak with some dealers in the office technology industry. I was reassured to hear a bit of sanity return. Many proudly discussed which items and services they are no longer offering. At long last the concept of making a profit on each section of the deal is more important than merely generating dollars that do not cover the cost of the promised services. One point that stood out was that selling products and services for less than they actually cost the dealer is a kamikaze business model.
I began to think about which office equipment businesses will be willing to provide the required products and services for the less-desirable equipment. Who are the people that have products and need service or supplies for the non-networked printers, stand-alone faxes, low volume inkjets, shredders, a few left over analog machines, after hour services, network administration, mailing equipment and Windows XP?
Most profit-minded dealers now have operating systems and software that can (hopefully) accurately calculate the cost of each click and each labor hour burden rate. Many have decided to simply refuse to take on equipment that doesn’t fit into their proven (sometimes narrow) range of profitability. I understand and agree with the concept. If it doesn’t make a profit, don’t do it.
However, I would extend this concept to, ‘Never say NO, just tell them how much,’ then walk away. Now that dealers have the knowledge and software to accurately calculate their costs, they can appropriately price most everything in a way that can generate a reasonable profit. Rather than saying NO, realistically calculate how much you must charge for a service or product that is requested. Explain to your clients that your goal is to truly provide a one-stop shopping experience; however, a few items must be offered a la carte.
Take for instance the sheer folly of the emotional and business cost I have endured after purchasing, installing, and then reinstalling Windows 8 and Windows 8.1. I would have joyously paid Microsoft $1000 to allow me to continue to use XP for the rest of my life. Microsoft could have had a few of their older IT guys keep Windows XP running for the millions of baby boomers who would have gladly paid an additional cost to have XP supported for a few more years.
I know dealers who happily and profitably allow their MPS clients to have equipment that is not attached to the network. They merely have a monthly minimum base up front charge of $25, plus the standard per click fee. Additionally a $35 monthly fee is charged for having to request the client to provide a monthly manual meter count. This amounts to a flat yearly fee $720 per piece of equipment, plus the click charge, to service the random inkjet printer or stand-alone fax machine. Most dealers would love to have a dozen of those in each customer’s office. That would generate an additional $8640 dollars of revenue for a minimal cost of service and supplies.
In the 1980’s when we included a customer’s shredder in a CPC agreement for the first time, as a service manager I had great concern as to how we would fix a broken shredder. I was savvy enough to insist the make, model and serial number of each shredder was listed on an amendment page of the CPC agreement with a per item monthly charge. I quickly realized, if your field staff can fix copiers, they can fix shredders. Over the past 35 years our shredder service agreements have generated tens of thousands of dollars of incremental income. We have also sold thousands of dollars’ worth of shredder oil.
To be the best in the industry, you need to think outside of the box and provide an original service to your clients that separates you from the others. By offering a better product, you can earn more business and more revenue. This thought process has been utilized in other industries as well. For example, while in Las Vegas I heard about and then read an article in USA Today about how the Palms Casino Resort now offers their 1,200 rooms for a full 24 hours after you check in. What a great idea for Las Vegas! No more in after 4pm, out before 11am.
Many Las Vegas casino hotels offer early check-in and late check-out for extra fees. Additionally the 11am check out time requires business travelers to pack completely up and check out in the early morning. Late night partiers must sober-up and check out a few hours after their all night binges. Rather than adding extra charges that often irritates customers, some forward thinking businesses are offering a higher-quality complete product (like MPS), for one pre-set charge.
Chekitan Dev, marketing professor at Cornell University’s School of Hotel Administration states, “Whoever determined that 4 pm was the perfect check in, and 11 am was check-out time was thinking of the housekeeping shift, not the guest. With customers becoming more demanding, and intensifying competition for market share, the hotel industry is developing standard operating procedures that are more guest-centric rather than operations-centric.”
Daniel Lee, CEO of Palms Casino Resort, commented, “This is the first time a large Las Vegas hotel has tried this. It always struck me as a bit odd that we make people check out at 11 in the morning or noon, and we don’t let them check in until 3 or 4. If you look at the car rental industry, you get a car for 24 hours. Hotels are reluctant to provide late check-outs because it poses challenges for housekeeping staff, many of whom work day shifts. To make the late check-out work, some of the Palm’s housekeeping staff will be working night shifts. It does require a different type of thinking and training, and we’ve undertaken that because we are trying to be innovative and creative.”
Whether you are renting rooms or providing MPS, your business goal should be to generate additional profits by providing your customers a greater value. Comparing yourself to the competition is not good enough. Look to the future needs of your customers. Visionary companies are always looking for ways to provide positive answers to their client’s questions before the questions are asked.
