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Look to the Prints, Not to the Printer. Do You Have An A4 Strategy Yet?

22 Oct, 2007 By: Andy Slawetsky imageSource

Look to the Prints, Not to the Printer. Do You Have An A4 Strategy Yet?

A couple of years ago HP launched the LaserJet 4345mfp. A 45-pages per
minute (PPM) multi-functional device, the 4345mfp broke the mold and offered
customers a different approach than the centralized printer strategy long pushed
by traditional copier companies. Since the introduction of that product and
other A4 multi-functional devices from HP, other vendors have followed with
their own. Even traditional copier manufacturers like Xerox and Konica Minolta
have brought A4 MFP devices to market despite the fact that often they poorly
fit into the centralized printer strategy.

Copier dealers and resellers have shied away from these products. The primary
reason is that they cannot adequately compensate their sales force for selling
$2,000-$3,000 products. Or can they? At a recent HP Print 2.0 event in New York
City, Hewlett Packard’s Executive Vice President Vyomesh Joshi told a house full
of international analysts and press “instead of looking at how many printers we
ship we need to look at how many pages were printed.”  No, Vyomesh was not
suggesting that HP was going to introduce a new metering plan for selling pages
under cost per page contracts. In fact, he specifically said that HP does not
want to charge “clicks like copier companies.” His point was that this business
is not about the hardware, it’s about the aftermarket and HP doesn’t care how
many printers a customer has as long as the prints were made on an HP device.

Copier dealers have built empires on this aftermarket strategy, selling the
hardware for small margins and making their money off service and supplies.
Sales representatives that sold more expensive devices, however, built these
empires. Selling a $15,000+ 45-PPM offers much more room for commissions than a
$2,200 A4 MFP will yield. This is the reason copier dealers have shied away from
offering customers inexpensive A4 MFPs. They simply can’t afford to compensate
the sales force. 

While your dealership may have been successful in the past in fending off the
encroaching A4 devices, this trend won’t continue in the under 50-PPM market.
Two years ago there were less than five A4 models for customers to choose from. 
Now there are literally dozens, many coming from a host of vendors new to the
MFP space such as Dell, Samsung and Oki Data. 

Understand it’s extremely difficult for customers to ignore the potential
savings these devices offer in the proper environment, especially considering
they can spread many of them throughout their office closer to the point of need
and still save money.  In the past, the argument for centralized printing was
easy. By replacing expensive printers and smaller copiers found throughout the
office, the customer was able to reduce operating costs because supplies for
these devices were so inexpensive. 

But the field has changed and these A4 printers and MFPs now offer a cost per
page comparable to A3 devices with a much smaller acquisition cost. As your
customers are exposed to these products through competitive media campaigns and
VARs, more and more will decide to take a chance and try them. If you don’t
carry this product class, you may not find out you’ve lost the account until
your rep walks into the customer’s office three months before the lease expires
and sees a brand new HP (or Xerox or Lexmark or Canon, etc.) that was purchased
through another source. 

Although A4 multi-functional devices offer smaller margins than A3 devices
with similar speeds, selling two or three of them at a time (or 200+ in a fleet
deal) makes compensating the sales representative a bit easier. However, this
may not be enough to convince sales representatives to push A4 devices. To
accomplish this, more dealers may want to consider adjusting their compensation
plans to pay the rep on pages rather than hardware.  If a customer has a monthly
volume of 20,000 pages, does it matter what those pages are printed on? As long
as they’re on your machine and the supplies come from your warehouse, you win.

According to Laura Hunt, Director of Marketing for Printfleet, their company
holds 1-Day Cost per Page Seminars and/or “road shows” where the agenda
addresses sales compensation plans that include topics such as: How your current
compensation plan makes it easy for reps to discount pricing, and examples of
page based compensation models for supplies and hardware sales reps. Input from
VircoSoft’s president, Steve Breault and team suggests that “We find many people
in the industry signing maintenance agreements (for CPC-cost per copy) and
commissioning the reps the first months invoice. No residual. This goes for
managed services (print managed & IT managed) as well.”  Setting thorough,
conscientious goals in this area seems evident.

Dealers will need to develop some type of cost per page pricing on products
to lock-in customers, especially for brands where there are multiple channels in
which a customer may find the supplies. However, once the minor details are
worked out, you will have an expanded product line that gives customers a choice
that includes you regardless of whether they choose a centralized or
decentralized printing approach.

The benefits of including A4 products in your portfolio are numerous. It
protects you from losing your customer to another channel.  Yes, they can still
purchase this type of product from a VAR or online but if they decide they want
to dump that tank of an MFP for two or three A4 devices you’ll be able to offer
a similar solution.  You also have an advantage when it comes to service; a huge
advantage. VARs generally don’t offer service in hours; it’s still usually
measured in days. They also don’t typically stock the parts they need to keep
the devices running, they order them as needed. Buying online or in a retail
store can be worse. Does your customer want to physically carry their device to
a Staples or Office Depot to have it sent in for service, leaving them without a
machine for days or weeks?

Carrying A4 devices also allows your dealership to offer a blended solution.
For example, a 30-person office with two 60-PPM A3 MFPs may decide that one
60-PPM device will suffice if they acquire six additional A4 MFPs. With devices
closer to the point of need, you may find customers print more since they don’t
need to walk as far for their prints. This strategy also adds a layer of
redundancy to the customer’s imaging operation. If a device is out of service,
your customer won’t be stuck, they’ll have several other machines on which they
can complete their job. In the end, the customer gets more devices closer to
their workstations, protection for when a device requires service while still
retaining the high-volume finishing capabilities found on the A3 device. 

Many larger customers, particularly Enterprise customers, often require bids
from vendors when they obtain new imaging devices. Quite often, this is more of
a formality as the incumbent dealer helps customers create the specifications
for the bid, doing so in a manner that creates requirements that other vendors
cannot meet. This has always been an effective method for locking competitors
out of opportunities.  While this isn’t necessarily fair, it still occurs.
Presenting a mix of A3 and A4 devices when most of your competitors cannot is an
excellent method for keeping customers when you are able to help write the bid

The bottom line is, don’t shy away from these products because they don’t
yield the margins of the A3 machines. Embrace them. Your customers are going to
start shifting towards these products whether you sell them or not. Make sure
you’re there with products to offer or you may find yourself out of the race.
Taking a page (no pun intended) from Vyomesh’s recent keynote, look to the
prints, not to the printer.

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