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Win More Deals: How User-data and User-management Will Make It Happen

4 Feb, 2014 By: West McDonald

It seems no matter how much "value" we try and sell that customers are still looking for more savings.  Our margins are tight enough as it is and we're left wondering how many more customers we're going to lose to a bargain-based provider who will simply undercut our CPP rates to win the deal or consolidate the environment beyond recognition.  There is good news provided we are willing to raise our assessment and customer-management strategies to include User-based data and control.

Let's pretend that a customer in the Newspaper business has asked us to do an Assessment.  We're not alone; they've asked one of our competitors to do an Assessment as well.  Their primary concern is cost cutting as the Newspaper has suffered a steep decline over the past 5 years in paper-based readership and advertising dollars.  They have asked us to give them our recommendations for the next 5 years and have allowed us (and our competitor) the freedom to ask for whatever information we want.  It's a good opportunity: The customer is currently printing 9.27 million pages/year and their current hard-dollar costs (paper, toner, service, & parts) are $476,367/year.

They give us the following numbers:

  • 1,000 Employees
  • 200 printers producing an average of 500 monochrome pages  and 1000 colour pages per/month
  • 35 MFDs producing an average of 8,500 monochrome pages  and 5,000 colour pages per/month
  • Printer costs/page: .025/page monochrome and .09/page colour.
  • MFD costs/page: .0095/page monochrome and .06/page colour.
  • They pay $38/box of paper (5K sheets/box), or .0076/sheet, for a total cost of $70,452/year.
  • 0% of total volume is currently duplexed

Our competitor is the first to deliver their recommendations.  They are (and they should look very familiar, it is the typical device-based approach):

  • Consolidate: Improve Current user: device ratio of 4.25:1 to 10:1.
    • They recommend 100 devices, 60 MFDs and 40 printers.
  • Redistribution of volume: Volumes from 160 removed printers are evenly distributed to the new MFDs.
    • Printer volumes: 40 printers and volumes/device remain the same monthly
    • New MFD volumes: 60 MFDs doing 6,291 monochrome pages/month/device Increase duplex to 60% by setting it as default setting on all devices. Total cost per year: $49,316
  • Improved Printer/page costs: .021/page monochrome and .08/page colour.
  • Lower MFD/page costs: .0090/page monochrome and .057/page colour.

The competitor presents their findings to the Newspaper first and grabs their attention with the results: They claim the future-state costs will be $362,645/year, which saves the customer $113,719/year or 24%!  

The only problem is that the Newspaper knows that the recommendations will likely never be approved by Copy/Editorial and they can shut the whole project down. And they love their printers.  Given the dramatic reduction in printers they tell our competitor the likelihood of the recommendations will likely not fly, they are too dramatic in the reduction of devices.  The only possible hope for our competitor is the 24% savings they offer, but now it's our turn.

How on earth do we beat our competitor without seriously digging into our margins? For starters we take a different approach, one that focuses on the users, not the machines.  By making good use of user data in the Assessment and ongoing management we have an ace up our sleeve. 

In our Assessment, we ask for far better user information and discover:

  • Over 80% of print jobs are 5 pages or less.  They are printing copy, for the most part, to review articles before submission.
  • 50% of their colour jobs are actually emails from their sources and only contain blue hyperlinks and sometimes company logos.
  • They hardly do any copying at all, most jobs are print only. So they don't need a lot of MFDs.
  • 30% of the jobs they print are immediately thrown into recycling as the journalists often make edits while the job is printing and resend the edited version.
  • They are against duplexing because they feel it interferes with their workflow, they use the backside of printed articles for writing lots of notes.
  • The journalists and copy editors are involved in the decision making mix and favour a solution that lets them keep their printers.

Given the additional user information we collected, we recommend the following:

  • Keep their current printer mix and MFD.  This will ensure the journalists have easy access to printers for getting their copy and drafts quickly.
  • Establish print rules enforced with software: All emails are automatically printed in monochrome even if a blue hyperlink or colour logo is present.
  • All remaining colour jobs sent to the more cost effective MFDs.
  • Don't enforce duplex across the board as it would interfere with the journalist’s workflow in a time sensitive environment. The news comes first. They will only entertain using duplex in limited areas. They agree to duplex 30% of their volume.
  • All CPP rates to remain the same, no discounts here.  We're keeping our margins healthy.
  • Based on their user/device mix, the rules-based software would cost $15/device/month

We blow our competition out of the water: Our recommendation saves the Newspaper $199,725/year, or nearly 42% of their current spend!  The newspaper is thrilled by this as it is an additional $86,003/year in hard dollars savings over our competitor. 

All these extra savings and we didn't "Consolidate" a thing.  We took the time to look at more user-based workflow data and we left the printer mix the same as it is today.  We didn't lower our CPP rates either.  Significantly lower costs for the customer and our margins remain the same.  We even pocket an extra $42,300 in software sales.   Which solution do you think the Newspaper would go with?  I'm betting on ours.

Come out to the annual ITEX EXPO at the Rio in Las Vegas (March 11-13) and while there be sure you register for session C3: Learn Why User Management Is Critical to MPS Success to see for yourself just how User Management will set you ahead of your competitors.  Save the customer more money, and keep your margins.  I'll be sharing the details of the above solution sets and providing all attendees with a detailed spreadsheet that breaks down the savings summarized above; a spreadsheet you can use yourself.  I look forward to seeing you there.  Full event agenda at http://www.itexshow.com

West McDonald has been directly involved in the Managed Print Services (MPS) space for nearly a decade and is respected as one of the foremost experts in the field. With a unique blend of MPS expertise and enthusiasm for solution selling, West McDonald has helped hundreds of organizations to focus and win in MPS.  For info visit http://www.focusmps.com

About the Author: West McDonald

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