At the BTA National Meeting in March of this year, there were two topics I thought were hugely important for the service department. Let’s dive in and see why they matter so much and what effects they could have on service.
Strategic Shock, Surviving the Inevitable Crisis
The event’s keynote address was given by Ret. 1st Sgt. Matt Eversmann. His name may be familiar since he was one of the key characters in the book (and subsequent movie) “Black Hawk Down.”
He began by relating how he wound up in the Army Rangers and what he learned in his early days. One thing that stuck with me was his statement that the Rangers did the same things the rest of the army did—they marched, shot and learned to fight. He said the difference was they did the basics at a Ph.D. level.
This concept is important in the service department because the marketplace is more demanding and the competitive forces are increasing. Most of what you do, every other service department also does. In difficult times, survival may depend on your ability to provide better service than the competition.
So the question to ask yourself, is “Do we do the basics at the PH.D. level?”. Do you settle for average, or do you and every team member understand the importance of continually raising the bar and becoming better at caring for the customer and maintaining equipment? Your survival may be at stake.
Managed Technology Services
Managed Technology Services (MTS) was a phrase that was used by several individuals at the meeting to describe a portfolio of services offered by equipment dealers that go beyond just equipment and applications. While the term was new to me, I have been recommending this as the best option forward for dealers.
1. The Current Challenge
I believe that the current business model for most dealerships is a dead end. Page volume and page price are both going down, and that impacts the recurring revenue upon which the model depends. This trend will probably accelerate the increasing deployment of ink-jet technology. Clients will learn that they don’t have the service calls they used to, and will rebel against paying the click-rate they are paying for toner-based machines.
Competition from the A4 manufacturers such as HP, Epson and Lexmark will make matters more challenging. They are beginning to aggressively go after your MIF and convert them to printers while finding ways to cut the dealers out of the aftermarket.
Another challenge is beginning to take shape in the MNS/MSP arena. They are recognizing that there is an additional revenue stream to be had by selling and servicing print and scan devices. There is a relatively low barrier for them to get into the business and a high return on their investment.
2. MTS is the Answer
The more of a customer’s equipment you support, the more secure your relationship with the customer. I frequently point at Marco as an example. If you service everything that might connect to a network cable, and you do that for most of your clients, you become entrenched with those clients.
As an analogy, you could compare this to your teeth. Replacing a copier-only dealer in an account is like removing a loose baby tooth. Replacing an embedded MTS dealer that services most, if not all, of the company’s technology is like removing a deeply impacted wisdom tooth.
3. Preparing Service for MTS
I suggest that you start taking inventory of the skills available in your service department. Use this list to identify areas in which you might be able to expand your service offerings without making a significant investment. There are probably pieces of equipment that you add to your service portfolio now.
Analyze what you see in the client’s offices that your company could sell and or service. Paper shredders are a good example, in that they are easy to service and, when I had my dealership, it was easy to become a dealer. If your company provides Managed Network Services (MNS), could you add VOIP telephones to the mix? What about digital signage and displays?
In some cases, it may make more sense to purchase an existing company that already has the capabilities and clients. The key is to talk with senior management and identify the opportunities.
Once you have a path forward, it is time to use your inventory of skills by identifying technicians who best fit into different niches. Old-school technicians usually have reasonable mechanical skills and might easily adapt to maintaining equipment that requires mechanical service and adjustment. Your network-savvy technicians would be good prospects for learning to support new types of digital equipment, like VOIP or digital signage.
A New Billing Model
These changes will impact the way that you bill clients. I am a believer in a unified monthly billing model—seat-based billing (SBB) is a good example of this. Flat-rate billing is becoming the norm in the copier industry, and I believe it will be the billing model of the future, as it helps preserve margins and makes you more difficult to replace. If a new vendor wants to take a client from you, they would need to provide the same services you provide. The more you provide to a client, the more entrenched you become.
The challenge in service is that as you move beyond metered equipment, there is not a good financial model for service. There are also not any metrics that I am aware of that help us evaluate the efficiency of the department or a technician.
Survival Will Depend on Change
The one thing I am confident of is that change will happen rapidly and dramatically. It is up to dealers and service departments to plan now for the changes. Failing to plan is the same as planning to fail.
As a service manager, you have limits on what you can affect, but you do have the power to plan for the various possibilities and look for areas that you can expand into. May you plan well.
