Agents Defined - Pros & Cons6 Mar, 2002 By: Jeff Smith imageSource
Agents Defined - Pros & Cons
In the past several years, the copier/printer industry has seen an influx of independent consultants that provide advice to end-users in their equipment acquisitions. Even the nation’s big five accounting firms have gotten into the act, providing their corporate accounting clients with advice on reducing the total cost of owning document output devices. In contrast, many dealers offer extensive site surveys and other research intending to provide the buyer with a clearer view of spending and usage levels. Clearly, there are enough people offering "help" in making equipment acquisitions, but can any of it be considered truly in the best interest of the consumer?
To date, the issue of agency has yet to see the light of day in the trade press. This article will break that silence and explore the advantages and disadvantages of independent consultants relative to the advisory services offered by office equipment dealers.
Before we look at the merits of the various advisory services being offered to the consumer, an important distinction needs to be drawn. Consultants, whether they be independent from or affiliated with office equipment manufacturers/dealers, can be categorized either as "Buyer’s Agents" or "Seller’s Agents." Here is a brief overview of each type:
Buyer’s Agent: First allegiance is to the buyer (purchasing agent or IT manager). This type of consultant is compensated by the buyer, either through a flat-fee arrangement or, in some cases, via a percentage of the savings generated. Many buyer’s agents are ex-equipment salespeople who cover a limited geographic area.
Seller’s Agent: First allegiance is to the seller (manufacturer, distributor or dealer). Seller’s agents are paid a commission by the dealership owner based on the value of the equipment placed. Seller’s agents generally do not come from the purchasing field.
Although the above agency distinctions are well-established in such industries as real estate, the differences in agency types are not so clearly understood by buyers or sellers of office equipment. Let’s compare the advantages and disadvantage of each agency type:
Advantages: Do not carry equipment sales quotas; can help the buyer to benchmark with like-size organizations in similar vertical markets; can provide independent assessments and unadulterated go-forward strategies; can streamline the bidding and evaluation processes for both the buyer and the seller; can more easily gain the trust of the buyer; can help defuse politically volatile bidding situations by acting as the intermediary.
Disadvantages: May not be office equipment experts; may not speak the language of the industry; may encourage the customer to accept long-term agreements in order to reduce costs to their lowest possible levels; may have no knowledge of copier-industry specific terms and conditions; tend to look at digital copiers as a commodity, so pricing may be the primary specification; may specify certain conditions that copier/printer dealers cannot provide; may have side deals working with some local dealers, thus shutting down truly open competition on the bid.
Advantages: Extensive copier equipment expertise; backed by a well-known brand name of office equipment; ability to leverage the resources of a large copier/printer manufacturer-partner to conduct extensive document management studies.
Disadvantages: May steer buyer to equipment not suitable for the intended need in order to meet sales quotas; sometimes will provide sample RFPs with language that intentionally "specs out" the competition; may not be sensitive to the frustration and confusion experienced by the buyer in acquiring digital connected copiers.
Legislation On the Horizon?
Some industries have strict laws that agents must adhere to or face heavy government fines. Although there are preciously few laws that govern business-to-business dealings in our industry, we believe that the time is well passed for legislation that outlines what constitutes fair business practices with the business consumer. We have seen too many consumers get burned by the questionable behavior of both seller’s and buyer’s agents, usually resulting in gross overcharges for services rendered (or, in some cases, never rendered).
Buyers today are smarter than ever and are looking for answers to such critical questions as: How do I maximize my organization’s overall buying power? What are the primary challenges we face in connecting digital copiers?
Buyer’s agents are vying for the buyer’s confidence in competition with representatives from your company. This could be a blessing or a curse, depending on whether you are the incumbent supplier or not. Incumbent copier suppliers obviously would not like the business to be bid out to all competitors; the competition, on the other hand, wants the buyer’s agent to create a fair and level playing field.
A good buyer’s agent will streamline the process; a less-than-knowledgeable one will turn the bidding situation into a circus and confuse the buyer. If a buyer’s agent is consulting with one of your potential customers, it makes sense to check out the background of the person(s) doing the consulting work. Try to resist the urge to go around the consultant to your ultimate customer, however, as the customer may be depending on the consultant to handle all communications with suppliers.
Whether you have run into a consultant recently, or whether you have not yet had the opportunity to work with one, buyer’s agents are a fact of business life in this day and age. In fact, you never know when a buyer’s agent will appear next. The best advice we can give is to respect the process that the independent consultant has set up within the account. Trust that the buyer’s agent will give you a fair opportunity to win the business. Win the confidence of the buyer’s agent over by doing what is asked and you may find that winning the account is much easier than through conventional prospecting and account development strategies.