You deserve a pat on the back.
But why, you may ask? Because you’ve ingratiated your dealership deep within the heart of your client base, courtesy of managed services.
In crafting a managed print/IT service contract, you’re providing clients with a solution that takes into account all the needs of their business—from toner and consumables to rules-based printing and IT infrastructure. You’ve identified and implemented ways to contain and control costs while raising their efficiencies to another level. You’ve provided peace of mind to thousands of clients who view you as a trusted advisor. In fact, you’ve become so indispensable that it would be a major headache for clients to switch gears and turn to another provider.
This level of service excellence applies to virtually every member of our Elite Dealer roster and countless others.
Unfortunately, it doesn’t apply to all dealers. There are many who still view the MFP as the alpha and the omega of the product world. The universe has expanded to include many newcomers with extensive buying powers and capabilities that can dwarf the traditional mom-and-pop or lifestyle business. These entities include online retailers, cold and impersonal though they may seem, that are poised to whisk away profit margin from the more humble among the dealer brethren.
The $1 million-to-$5 million dealer is under intense competitive pressures, and many have folded their tents to join much larger contemporaries, some of whom are backed by venture capital. For some, it is the lone path to survival in an industry that is making “business as usual” intensely more difficult for the MFP-only sellers.
Stay Sticky
Does this mean a dealer with a strong MPS and/or managed IT offering is free and clear of margin erosion courtesy of online retailers, buffered by the “stickiness” they enjoy with clients? As a complement to this month’s state-of-the-industry focus on online threats posed by providers such as Amazon and Staples, we asked some prominent dealers and pure-play MPS specialists what dealers could do to ensure their managed services portfolio is unassailable.
The operative word is management. Also, the lack of a universally accepted definition for managed services can put dealers at a distinct disadvantage if they simply see it as a service-and-supply contract for printers and copiers, notes Kevin Morris, president and CEO of OneDOC MPS, a managed print specialist based in Oklahoma City.
“Those companies are very vulnerable, because they haven’t gone above and beyond in any layers of different services on the accounts, and they use MPS as a marketing scheme,” Morris said. “Companies that truly manage an account manage workflows, set up different layers within the accounts. That’s where you really create a lot of stickiness, especially when people want to buy locally.”
OneDOC’s advantage in that regard is that Morris has reps calling on companies locally across the country, as opposed to selling through Oklahoma City. But it goes beyond that; it entails setting up customer workflows, managing pages, using software and rules-based printing. Reducing costs is important, but beyond that, it’s critical to manage to the needs of the individual account, tracking usage and becoming a guardian over every facet of their operation.
“Once you have those programs in place, you create that stickiness and become indispensable,” he added.
National Presence
Dave Clark, vice president of sales for AIS of Las Vegas, feels that a dealer with a strong network operations center, a strong infrastructure to support it and a roster of skilled technicians is well positioned to provide on a local level. But most dealers do not sell nationally, and Clark sees a tough road ahead for DEX Imaging and Staples, should it make the expected foray into national sales.
“Any major organization—including manufacturers—has a hard time supporting a national or global contract because of the level of service they’re offering in each marketplace,” he said. “So it really comes back to whether the consumer is happy with what they’re getting. If they’re calling customer service offshore and they really don’t have a person who understands their business, they get frustrated. If they’re not being billed correctly, they get frustrated. Or if they’re down three days on email with no explanation other than they’re working on it, that’s a problem.
“Those are issues major organizations on a national and global scale sometimes have because they become too big and try to support it with the most-efficient way. Most times, the customers are the ones who suffer because of the ‘most-efficient way.’”
Stronger Relationships
The issue with a national provider on the scale of a DEX-Staples is the loss of intimacy that’s generally viewed as endemic to relationships. Kevin DeYoung, president and CEO of Pompano Beach, Florida-based Qualpath, a pure-play MPS provider, believes the larger a provider is, the less detailed knowledge they have and the less nuance they can provide. It’s here where an incumbent dealer can exploit its relationship and add that layer of protection against a provider who might offer fractional cost-per-copy savings.
DeYoung, like Morris, has worked with members of the DEX brain trust and has ample respect for their business acumen. He believes the company may provide a threat of scale, but doesn’t see a marked service difference that could trigger a mass exodus of clientele. Even if a prospective conversion is experiencing pain with its current provider, DeYoung isn’t 100% convinced it could trump the objection to change many clients harbor.
Having ongoing presentations and communication about upcoming threats to cybersecurity demonstrates knowledge and value. Dealers need to be certain they never take their business for granted.
Chip Miceli, Pulse Technology
Still, DeYoung doesn’t want to marginalize the DEX-Staples game plan. “Staples has a very large client base and DEX brings tremendous knowledge and service capabilities,” he said. “They can expand that to make inroads into Staples’ customer base and expand DEX’s portfolio of offerings. But you’re not going to have a bunch of OEMs and dealers sitting on the sidelines. They’ll be adjusting and digging in on their important relationships. The question is, what is their target market going to be?”
Chip Miceli, president of Pulse Technology in Carol Stream, Illinois, points out that a fundamental piece in any business continuity plan is meaningful and ongoing communication. Clients need the reassurance that their infrastructure is being protected.
“If a dealer can convince clients that he/she is equal to that task, the larger players will not easily penetrate the market,” Miceli noted. “Having ongoing presentations and communication about upcoming threats to cybersecurity demonstrates knowledge and value. Dealers need to be certain they never take their business for granted.”
The Human Element
One final thought regarding the dangers of being a pure-play equipment dealer, sans services. Relationships have been a cornerstone of selling for decades, yet we have reached a turning point from a generational perspective. Today’s consumer is much more likely to do a majority of research online, and millennials are accustomed to making buying decisions on the internet. As that generation takes on more responsibility for purchasing, especially in the SMB space, one could argue that the value of the face-to-face interaction diminishes—at least from their perspective.
For dealers such as Donnellon McCarthy Enterprises of Cincinnati, the face-to-face interaction still reigns supreme outside of the major metro markets, according to Rich Brandenburg, senior vice president of sales. “I think there’s a lot of validity in having feet on the streets, being able to talk with customers and meet with them, discussing what a solution provides,” he said.
“The threat with the online retailer is quite real. We have a couple of operations in rural markets that thrive because we are the local business and they don’t want to deal online. But in some of our major metro markets like Columbus and Cincinnati, clients can buy online or buy from you, so the threat there is becoming quite scary. It’s very concerning. But our industry has always seen changes and will continue to thrive.”
