Any dealer can successfully sell managed print services and open the door to increased tech sales. The category might be more involved than other products lines, but if done right it is likely to deliver solid new sales and profit dollars. The choice is yours.
MPS pioneer finds continued success
Laser Resource, Grand Rapids, Michigan, started out remanufacturing HP laser toner cartridges. As the industry started to evolve early in this century, the company offered printer repair to complement toner sales. “Once we realized there was a value proposition in creating a system for clients where they could get supplies and services, we shifted into the managed print services business early in the 2000s,” says Adrian Lopez, Laser Resource president.
The dealership covers the western part of the state and extends down to the middle of Indiana. “We directly support that region but we operate today in something approaching 30 states through enterprise contracts,” says Lopez. That takes in companies with headquarters in western Michigan that have locations across the country.
Lopez compares the sales force selling MPS at Laser Resource to a Navy SEAL team. Like the SEALs, the handful of highly trained sales reps specialize in the full solution. “We challenge the status quo and do a holistic assessment of customers’ current environment and present them with innovative future states,” he says.
Most MPS customers at Laser Resource are in the mid-market space and larger—some fall in the enterprise category. There are some smaller customers and the dealership added the HP Inc A3 copier line for that market. (A3 machines are designed to print letter, legal and ledger size papers and some smaller sizes like postcards and envelopes and typically take up a larger footprint than their more compact A4 counterparts).
“What we found is that it didn’t really drive us downstream in the SMB space,” says Lopez. “What it did was allow us to build a more holistic enterprise solution.”
Laser Resource works with its customers to help them manage their IT networks in a meaningful and comprehensive way. As Lopez describes it, the current IT landscape is more complicated and has more moving parts than most people realize. “With our expertise we focus specifically in the print space where we are most effective and most valuable to those organizations,” says Lopez.
The dealership has partnered with HP for more than 20 years. Since the Great Recession, offerings have been driven largely by cost containment. “In the last three to five years we have seen a significant shift,” says Lopez. It is no longer enough to offer supplies and service from a break-fix perspective, he says.
“We’ve aligned with HP and its value proposition around solutions and OEM supplies,” he adds. In the last two years Laser Resource has become an OEM organization almost exclusively. “Which is ironic,” Lopez points out, “considering the company was founded to remanufacture HP laser cores.”
Managed print has also evolved with technology and in the case of the HP offering comes with a variety of solutions to enhance the customer experience. “HP has developed a solution called Smart Device Services (SDS) which brings some of the internet of things (IOT) to our clients and is creating innovation in a mature industry,” he says SDS provides Laser Resource with the ability to monitor its clients’ infrastructure remotely. Data gleaned through the monitoring process provides analytics such as predictive maintenance, proactive maintenance and remote help-desk support.
“We have found that by switching from remanufactured supplies to OEM supplies and leveraging these techniques, we have actually reduced our service call volume by 30 percent,” says Lopez. “We’ve also reduced our cost of goods sold by 30 percent due to higher yields and more reliable cartridges.”
One of the latest products offered by Laser Resource targets the security of printer networks. “People don’t realize that most printers are networked and they sit in a client’s IT environment,” says Lopez. HP estimates that upwards of 70 percent of printers globally have not had their firmware upgraded and are susceptible to incursions.
There is a massive amount of vulnerability to IT networks according to Lopez. “We’re actually advising and helping our clients make sure their networks aren’t vulnerable due to their printing devices,” he adds. This is new for many organizations but even third parties that work on hacking have started to look at replication devices—printers, copiers, scanners and multifunction devices. “We’re getting ahead of it to help our customers make sure they have policies to address these areas,” he adds.
Every customer deserves a unique MPS solution
Fireside Office Solutions, Bismarck, North Dakota, has offered managed print services for close to a dozen years. The dealership is an authorized sales and service Hewlett-Packard dealer and generally leads with HP products. As for toner, Fireside has partnered with a local supplier and pushes that local brand whenever possible.
“HP has a new offering on some of its devices where toner cartridges have a higher yield,” says Chris Whalen, owner. The cartridges offer higher yields, but you have to be a certain level of HP dealer to qualify, he explains. Fireside has also been an authorized dealer for Kyocera for 30+ years.
Every MPS offering available from Fireside is scalable to the specific needs of the customer placing the order. “If it’s color, depending on the customer’s preference, we’ll use genuine HP,” says Whalen. If it’s primarily black-and-white the offering is usually the locally produced brand. “If for some reason the customer wants to switch to genuine HP, we’ll make the call at that point.”
Any company is a prospect for MPS sales as long as there are at least a couple of installed copiers/printers. Companies with as few as two machines could be prospects. “It all depends on the customer,” says Whalen.
“We can position a printer in somebody’s office for $19 a month, which covers so many prints along with the printer service and toner,” says Whalen. At that price point the machine is probably not new but reconditioned. “They don’t have to worry about the hassle,” he adds. “We essentially take care of everything for them.”
Two salespeople sell machines, service and MPS. “They are always looking for these devices in offices they visit and trying to get a better understanding of how the customer handles service and supplies,” says Whalen. Separate teams sell supplies and furniture; Whalen encourages discussions between salespeople to identify cross-selling opportunities.
“Leads can come in from any business segment. For instance, if the furniture division is working with a business moving to the area they always ask about technology and printing requirements”, says Whalen. When a supplies customer is identified as a volume buyer of copy paper he or she automatically becomes an MPS prospect.
A recent MPS proposal for a local school district is indicative of the competition Fireside runs into on larger projects. “Five companies were bidding on it—Xerox Direct, HP Direct, a couple of other independent dealers and us,” says Whalen. HP’s bid was straight HP and Fireside went in with a mixture of HP and Kyocera. “In my mind the only one that’s winning is the manufacturer,” he says.
When Fireside acquired a dealership two years ago that company offered a managed print solution that went through My Printer Manager. “There was no service work; it was just a transactional sale of toner,” he said. Once customers were signed up toner was shipped out when needed. “It was kind of a hands-off approach,” he says. A number of office supply dealers could enter the market in this way, but Whalen doesn’t see them as strong competition.
“The success of our company rests with the success of our sales reps,” says Whalen. He says a win would be ten percent growth in his MPS business. With today’s competition coming from an increasingly diverse group of resellers any growth will be hard won.
MPS energizes dealer sales
With office supplies accounting for a stagnating portion of sales at Source Office & Technology, Denver, there was definitely a need to pursue different categories. “We looked at all of our transactional ink and toner business and wanted to move all of those printers and supplies under service agreements or MPS,” says David Sass, president. “That has been the primary focus for our dealership.”
For an office supply dealer that sells transactional ink and toner the primary competition is Amazon, says Sass. “If dealers continue to sell ink and toner in a transactional relationship they will ultimately compete head-to-head with Amazon,” he predicts. Source Office is doing everything it can to preempt that competition.
At Source Office & Technology equipment sales and MPS are combined under the technology services category. No matter how it’s sliced, the category has become the fastest growing and most profitable portion of the business and it is up more than 30 percent year over year, says Sass. “It’s now a third of our overall revenue and growing more rapidly than any other category, including office supplies.” So far, roughly 80 percent of the ink and toner business at the dealership falls under some sort of MPS agreement.
The dealership is now an authorized distributor for Hewlett-Packard, Xerox and Canon. Source leads with OEM HP supplies but will also sell remanufactured toner should the customer desire it. “We have built our own MPS program to provide our own proprietary brand and we choose to lead with HP,” says Sass. “HP gives us terrific discounts on supplies and they give us training for our service techs to repair HP devices.”
A separate and specialized tech services sales team is required to sell MPS, according to Sass. “Rather than hire legacy copier industry sales reps, we target recent college graduates and have them complete a comprehensive 13-week training program,” he says. The training program incorporates home-grown input as well as content provided by manufacturers. Recent college graduates tend to be competent with technology and are skilled at applying technology to solve problems for customers. “Copiers now incorporate artificial intelligence,” he says. “There’s a whole suite of apps that can be downloaded from the user interface.”
Close to 90 percent of the time when equipment is sold a service agreement attaches to it. “We use our service agreements and our service technicians as a moat around our commodity-based ink and toner,” says Sass. That service agreement also provides a bridge from tech-based sales to all the supply categories offered by Source Office.
One advantage of selling MPS is that the service appeals to virtually every size business. “We have agreements with Fortune 500 companies around the country, and we also have agreements with five-person offices,” says Sass. Almost any company has either a copier or printer in their facility and it is a great way to open a conversation. “Once we sell a copier or printer with an MPS agreement attached, we then sell them office supplies, furniture, coffee and janitorial products. MPS is a great leading category to establish relationships with customers.”
Sass joined Source Office three years ago after time spent in the copier industry and brought with him techniques he had learned there. For instance, copier leases are a matter of public record and that data can be purchased and used to target customers that could be open to purchase MPS agreements. “Typically you want to send your salesperson in about a year before the lease expires to begin the conversation around a proposal for the renewal,” he says.
In terms of growing the MPS category, every existing Source Office customer is a prospect for additional MPS sales. “Once you make that evolution, there are so many products to sell to this customer base, including printers, copiers and MPS agreements,” says Sass.
“We have completed individual deals and installs that included more than 150 total copiers around the country,” he adds. As copier sales have greatly increased at the dealership, sales have expanded to production printing devices. Prices on these units have come down and sales are growing rapidly.
Next up, Sass is investigating 3D printers, which are expected to account for $20 billion in annual sales in a few short years. He says it’s relatively easy to get copier service technicians certified on 3D printers and plans to do that. “What is so exciting about the technology services category is there are so many subcategories you can sell into that all offer double-digit profit opportunities,” he adds.
Listen to customers for MPS success
Copyfree Document Imaging and Solutions, San Gabriel, California, first started to work on its managed print offering close to ten years ago. Those early years were important to lay the groundwork; more recently MPS has gained additional traction. “Really it’s been in the last five years that we really understood what our value-add is,” says Roger Wei, principal with Copyfree.
So much of the competition for MPS business comes from manufacturers looking to sell machines that Copyfree has come to the party with a different strategy to ripping and replacing devices. “We’re not going to tell you to replace all the devices in your fleet,” says Wei. Instead Copyfree surveys customer needs and comes up with plans that align with the customer’s business goals and guides them through the process to reach those goals.
Customers are drawn from all walks in terms of size and industry. The one common factor is that they all run through a lot of paper on a regular basis. Salespeople identify prospects and as they introduce the MPS concept, they uncover basic information that is turned over to an analyst in the back office who then develops a custom MPS plan.
Much of the success in selling MPS is a result of paying strict attention to customer wants. “We pay attention to what they’re saying and work out a custom solution based on what they tell us,” says Wei. The process results in a longer sales cycle as well as a longer implementation phase, but he says the extended time frame helps develop long-term relationships.
According to Wei, the biggest challenge to a successful MPS effort is the underlying infrastructure needed to support that effort. “As a smaller dealership we don’t always have the resources to implement our ideas,” he says, “but we make every effort to get the details right and have relied on ourselves for most of the back-end infrastructure.” A major portion of that equation revolves around supplies fulfillment. LMI Solutions is the major vendor Copyfree works with on its MPS offering. Knowledgeable employees on staff process the information received from the DCA—Data Collection Agent—and work to supplement information received so it’s more meaningful.
“A lot of analysis happens on the back end; we make numerous inferences based on the data that is collected,” says Wei. The PrintFleet software provides basic information but it only goes so far. “You can set a threshold and say okay you’ve hit your limit and now we can ship the toner,” he adds. In a perfect world that’s a valid approach, but actually for most MPS users that doesn’t work.
Thresholds work differently for different customers and different devices. “We had to figure out how to devise a system where we could really calculate individual customer needs,” he adds. Toner usage depends on much more than the threshold that is set in the software. Volume and page fill both need to be taken into consideration. “When you do toner fulfillment usually ‘days till empty’ is what you want to go off,” says Wei. That calculation is based on actual usage. A high-volume user might go through the same amount of toner in a couple of hours that a low-volume user would take months to use up.
“This is the sort of analysis that LMI Solutions has been working on,” says Wei. The supplier is developing a separate system to take the information and perform needed calculations to best determine “days till empty”. LMI has partnered with Copyfree on the development of this software because as Wei explains: “we’re one of the few dealers that actually understands the details of toner fulfillment.”
While MPS tends to be associated with mid-size and larger organizations, smaller businesses can also be targeted. Not that long ago there was talk in the industry about a magic number of devices that was needed to make an MPS offering worthwhile. “In more recent years we’ve been less worried about that,” says Wei. It really depends on the customer. If it has five devices they could be running high-volume jobs on all five.
Wei is insistent that size doesn’t determine success in MPS and that even a smaller dealership can generate MPS sales. He points out that while vendors tout turnkey MPS solutions, there is really no such animal. “They all say we have the engine for you to run an MPS program, but in reality you have to understand the details,” he says. “You need to understand where you fit within MPS and how to propose your solution to the customer.”
Lock-in toner sales with MPS
MPS provides dealers with improved control of toner sales and it was that element that originally attracted Office Basics to start with MPS. Not that many years ago the handwriting on the wall suggested that the industry was moving away from transactional toner sales. “Foreseeing the erosion of toner sales was John Leighton’s impetus six years ago to look into this,” says Dan Riordan, director of sales for managed print services. Leighton is the owner/president at Office Basics.
Office Basics has 25 sales representatives who sell the full line of products the dealership offers. “John has put specialists in place for furniture, janitorial products and an MPS category,” says Riordan. He is the specialist that works with all the salespeople to grow MPS sales. “Reps are trained to talk, identify and then bring me out to consult with the customer.” Riordan has been in the position for six years and came on to ramp up MPS category sales.
“MPS sales have evolved over time,” says Riordan. “Initially we started with Synnex and then moved to Supplies Network.” More recently Office Basics has transitioned to S. P. Richards for its MPS program. The wholesaler is the primary distributor that Office Basics uses for the majority of its purchases so the change made perfect sense.
The MPS offering available from Office Basics sets up a software-driven contractual arrangement for customers to purchase toner. “We show them the benefits of a managed print solution in terms of the software benefits that provide them with reporting and accountability,” says Riordan. Then toner orders are fulfilled automatically.
In addition to Hewlett-Packard machines Office Basics also sells Xerox and Lexmark. For machine service Office Basics works with several providers including the Xerox National Service offering, a national third-party provider as well as a local authorized service provider.
“Because we are not tied to one manufacturer, we can truly go in and ascertain what’s best for the customer,” he says. “Whether it is a Xerox, HP or Lexmark offering we have a solution for all environments.” The final determinant rests on the relationship with the customer and that customer’s belief that Office Basics is truly working for them.
There are any number of competitors in the market that have their sights on the same business. In order to get there with any customer Riordan competes using any number of variations “We all want that print count; we want the toner and the monthly billing,” he says. “We have OEM and compatible offerings. We can truly sit in front of a customer and say, ‘let’s work together and find out what’s important to you’.”
For the longest time the desktop printer and standalone copier were two different worlds, says Riordan. “Those processes have all combined and copier dealers have become well-versed at not only targeting copiers but going after desktop printing as well,” says Riordan. The leading competition for MPS tends to come from copier dealers, he says. For the past decade copier dealers have educated the consumer on the benefits of moving their print traffic to more efficient copiers.
Office Basics has the ability to sell copiers as well as MPS. The goal is to reach prospects first and explain that the offering includes both A-3 copiers as well as desktop units. “That’s probably our biggest strength, and we are getting the word out to our customers,” says Riordan. The message is that Office Basics has a complete offering of machines, supplies and services to meet any reproduction requirements. “We tell our customers that we have a print solution that we will tailor to their needs, while being extremely price competitive,” says Riordan.
MPS provides customers with lower-cost, improved functions
Eakes Office Solutions, Grand Island, Nebraska has had a copier sales division for a long time. Early in this century the head of the division, Doug Gallaway, suggested that the dealership could provide better value to customers by consolidating their output devices. “The idea was to replace high-dollar devices such as printers with more cost effective and functional copiers,” says Mark Miller, Eakes president.
The goal was to eliminate printers when possible, keep them when needed and then add more copiers to the mix. “Ultimately that is how MPS works,” he adds. “You take a total ownership view to a company’s business.” The offering met most of the requirements of a typical managed print services type of agreement. Only thing was, the term hadn’t been invented yet!
The offering separated Eakes from its copier competitors as no one else in the market offered anything similar. “To this day the premise is largely the same,” he adds. “Get rid of higher per click devices in favor of lower cost ones that give the customer better functionality for a lower price.”
At Eakes, MPS is sold by office supply salespeople as well as copier representatives. “The copier reps are expected to sell some MPS programs every month,” says Miller. Supply reps sell a scaled-back MPS program solely based on printers. The supply side program is referred to as MPS Silver (OEM) or Gold (Reman) and essentially includes printers and toner.
From its beginnings Eakes’ copier division has represented Sharp equipment and has also added the Ricoh line. Early on HP printers were used to complement Sharp copiers in MPS offerings and they continue to be combined, says Miller. More recently, both Sharp and Ricoh have added standalone printers to their lines to allow for a single source MPS solution.
“Were still married to the prototypical multi-function printer (MFP) manufacturers for copiers, such as Sharp and Ricoh,” says Miller. At the highest levels, success with MPS requires that dealers have an MFP offering, he says. “Without MFPs, true MPS doesn’t work as well.”
Miller contends Sharp and Ricoh see MPS as the path to improved hardware and toner sales. “They’re very interested in the sale of photocopiers via MPS,” says Miller. “They know it is important.” He suggests that’s why Sharp introduced a printer line; so it would have a printer to complement its MFPs in the MPS world. “They know they sell more MFPs when a dealer sells MPS,” adds Miller.
That principle holds true for sales of MPS at the dealership. Photocopier reps who sell hardware don’t have specific MPS goals, but know that they need to sell MPS. “For them to sell an adequate amount of product, they have to sell MPS and they know that,” says Miller. Most businesses, regardless how small, have a copier and a printer. Therefore, almost all businesses are a prospect for MPS. “In our copier world, if it includes both printers and MFPs, it’s MPS,” says Miller.
Competition started to heat up in the middle of this decade, but Eakes has managed to continue to stand out. More often than not competition comes from independent copier dealers as, these days, almost every copier dealer has an MPS program offering according to Miller. Many manufacturers also have direct sales initiatives that include some form of MPS.
Eakes offers its Smart Print Program in which businesses can lease machines and pay on a price per click basis. Eakes has worked with a local bank for its leasing needs for the past 20 years and it has been competitive on rates. “They’re better than most of the big boys, which is really a competitive advantage,” says Miller.
The next evolution of MPS has already begun and now includes workflow, account control and document management software. When an MFP scans a document, it becomes digitized. Software tracks document usage and manages its digital movement through the workflow. Any company with an accounts payable division, for example, needs to store and track invoices as they get approved at various levels. As the document moves through the organization it is no longer paper but has become digital.
Recognizing that document management software is quickly becoming a critical part of MPS, Eakes recently created its Technical Services Division. This division is responsible for all document management software along with many other technical services its customers demand such as install, integration and functionality of many different software products. Eakes, for example, says it is one of the nation’s top-selling dealers of PaperCut software, which manages print and copy output.
Miller suggests that larger, more advanced MPS companies must provide these document management services. “The base offering of copier output, print output and now document management software has really become the industry standard for MPS,” says Miller.
Michael Chazin is a freelance writer specializing in business topics, who has written about the office supply business for more than 15 years. He can be reached at email@example.com.