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Connected Copier Agreements

15 Jun, 2003 By: Ronelle Ingram imageSource

Connected Copier Agreements

No matter how
sophisticated our service departments have become, we still need to focus on
being able to create profit. Making sure there is a clear understanding between
the dealership and the end user about what is and is not included in any
warranty, service agreement, cost per copy, rental, or hourly service rate is
vital to earnings. When there is confusion between what is and is not covered,
the service manager must often give into the demands of the customer.

Frustrated customers
often expect a free service to get connected copiers back online when their new
copier won't print from their network. Worse yet, is the customer who comes up
with a neatly typed list of promises on your company's letterhead, attached to
the original sales order that entitles them to free mods, patches, updates,
driver installations, and re-hookups for the life of a 60-month lease. All of
this for .0075 cents per click for the entire lease? It just doesn't make sense.

Giving Away
Potential Profits

You can rarely convince a customer to pay for something that is not specifically
excluded (in writing) from their perceived coverage. While profitable companies
can make logical business decisions to "give away" that which is
excluded (in writing) from a service agreement, earning profits should not be
left to chance. Most dealerships are still "giving away" those random
labor hours that are required to install new drivers, update a print system,
reset a frozen job, reinstall the scan function, update an internet connection,
change internet providers, etc. It is all those relatively simple tasks that
quietly steal thousands of dollars of potential billable hours away from service
department revenue.

It is often the
customer's perception that a Cost Per Copy Agreement or other type of
Maintenance Agreement is all inclusive. In the customer's mind, the copier and
the print functions on a machine are the same thing. If a piece of paper does
not come out of the copier with the appropriate images when the print icon is
clicked, the copier is broken. If the copier is broken, in the customer's mind,
their prepaid Maintenance Agreement or CPC takes care of everything.

So, how do we change
the customer's preconceived notion of free service on network administration of
connected equipment? After five years of frustration, I have come to the
conclusion that if you can't beat them…join them.

Creating Connected

If a customer thinks that their copier network administration is (or should be)
included in their prepaid service agreement, then lets offer to sell the
customer what they want. The Connected Copier Agreement (CCA) fulfills the
customers need. This is a hybrid between the standard Cost Per Copy Agreement
and a Prepaid Network Administration Blocks of Time Agreement.

We are currently
offering three options of prepaid maintenance agreements:

        > The standard Maintenance
Agreement (MA) which covers labor, travel, parts, drums, PM Kits.

      > The
standard Cost Per Copy (CPC) Agreement which is billed through a lease agreement
and covers labor, travel, parts, drums, PM kits, toner, developer, and oil.

        > The innovative Connected Copier
Agreement (CCA) which covers all of the above, PLUS, copier network

It makes sense to
finally charge a little bit more to pay for that which is so often given away.
Even when I initially get a CPC or MA customer to agree to pay for network
administration, they somehow never seem to pay that networking labor invoice.
How can we put a customer on credit hold for one network administration invoice
when they are promptly paying hundreds of dollars each month for their CPC?
Inevitably, our controller credits off the network administration service fee
and everybody is happy except the service manager whose Profit and Loss
Statement just shifted a little more to the red.

When establishing a
pricing level for the CCA, I reviewed which of our customers most often call for
network administration. While higher volume customers tended to have more
problems, they usually had in-house IT personnel who could be instructed over
the telephone or e-mailed the appropriate fix. If the IT person was on vacation
or out sick, the network was usually in relatively good condition and could be
quickly repaired by one of our field digital specialists.

I found that the low
end user, with one or two workstations, usually causes a disproportionate amount
of grief, per print made. Smaller networks or peer to peer connections are often
administered by the most computer savvy employee, friend or high school aged
child of the small company's owner. Even when this person is knowledgeable, they
are often unavailable. The network is a mishmash of patches, MacGyver-type
connections, mixed platforms, no backup software and multiple operating systems.

Setting Up a CCA

During a year of standard MA or CPC coverage, the high end user is less likely
to need an in-office network administration service call than is the low end
user. When setting up CCA pricing criteria, I factored two service calls for the
low end user, one service call and three help desk phone calls for the high end

My goal was to
generate an additional $200 to $300 per CCA agreement. The customer, who is only
paying for 30,000 to 60,000 prints per year, must pay an additional .005 to .009
cents per click to generate enough revenue. The customer that makes 500,000
clicks per year, need only be charged an additional .0005 cents per click to
generate that same $200 to $300.

In any case, the
additional money that is generated from the CCA agreement goes to the service
department's bottom line. More importantly, the customer has a clear
understanding of the limitations and inclusions of the services that are being
offered at the time the equipment is purchased.

When I first
approached our sales department management with the CCA concept, I was braced
for a fight. I came with statistics, cost analysis, long-term customer
satisfaction theories and a prayer. Much to my surprise, the sales manager
thought the CCA was a great idea. We were offering a needed product (low cost,
all inclusive copier network administration) that was unique within our

The sales department
is able to bring added value to the customer. We are offering the customer an
additional level of piece of mind. For a fraction of a penny, the customer can
rest assured that their thousands of dollars worth of investment (their new
connected copier) won't go down for want of a new driver or locked out print
queue. No need to haggle over whom has the ultimate responsibility for making
the copier work. Whether it is a copier, print system, network card, memory or
misguided end user, the remedy is a no charge (pre-paid) service call away. The
CCA truly takes all the hassle out of connected copying.

The Connected Copier
Agreement is working for our customers, our sales department, the service
department and administrative services. Our accounts receivable clerks no longer
have to deal with customers who refuse to pay for the network administration
service calls. The service dispatches no longer have to ask for Purchase Order
numbers from customers who "normally get everything for free." Service
Managers no longer have to explain what is and is not covered under the
customer's Maintenance or CPC Agreement

Is the Connected
Copier Agreement the next logical step for the industry or just a special niche
we have managed to provide our customers? The CCA is already providing our
company and customers a new level of security and easily administered profits.
The next step is up to you. Be a leader, be a follower or be left behind.

- - -

Ingram is a speaker, writer, management consultant and Director of Technical
Service for FKM Copier Products in Irvine, CA. Ronelle can be contacted at
ronellei@msn.com or 800.854.3337.

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