5 SIGNS YOUR MPS PROGRAM IS STUCK IN 2006

Transcription

1 5 SIGNS YOUR MPS PROGRAM IS STUCK IN 2006 It's been over a decade since MPS became mainstream. The world as a whole has changed a lot since then and yet MPS looks exactly the same! Let's take a look at how much the world has changed since 2006: 2006 Blackberry dominates Desktops rule, laptops are rare MySpace is still on the rise Netflix offers unlimited DVD rentals by mail MPS offers Cost Per Page billing NOW Android and Apple reduce Blackberry to 1% market share The "tablification" of America is underway and laptops are passé Facebook is everywhere, MySpace is a ghost town Netflix is entirely online and scaring cable companies MPS STILL offers Cost Per Page billing Hold on a minute! If everything else has changed so dramatically since 2006, how about your MPS program? Think your MPS offering could use some modernizing? Here are 5 Signs your MPS practice is stuck in 2006.

2 SIGN #1 Device Centric MPS: You think MPS is about improving device utilization levels and cost reduction through consolidation. Customers have had 9 years to learn that consolidation efforts don t always deliver as expected. Don't get me wrong, it is often the perfect solution provided it fits within the customer's needs. Any consolidation effort requires a leap of faith on the part of the customer that they will see ROI within a given time frame, usually 18 to 24 months. And customers don't always require a lease either: Financing equipment costs money. Have you recently had a customer ask you for your financing rates? Financing can be a great option but it doesn't save anybody any money. Many consolidation efforts don t involve any management after the sale. Sometimes consolidation efforts, even if done for the right reasons fall flat because the customer actually keeps their old gear and continues to use it even after we've told them to get rid of excess equipment. Print volumes remain the same, the new equipment is highly under-utilized, and user satisfaction is strained because they have a host of new devices to get used to. In the modern world of MPS, consolidation can play a valuable part in helping to satisfy customer needs and win more business but it isn't the whole story. Read on to discover other elements that could raise your game and help you win more MPS contracts than ever before. SIGN #2 Aversion to Rules-Based Print Savings: You are afraid to make your customer more efficient because you think you will lose revenue. The truth of the matter is you WILL lose revenue! Keep reading to find out why that s okay! Let s look at how rules-based printing will devour your revenue. It will do so by increasing the efficiency of how your customers print. One way to make your customer print more efficiently is to ensure they only print color when they need to. A good way to accomplish this is to use software rules that will force and web print to monochrome. This often results in a 40% to 50% conversion of color to monochrome pages! Another good way to help decrease print costs is to get rid of waste pages in the form of abandoned documents and multiple versions. Using print rules, as found in many secure release offerings, results in a 25% to 30% reduction in total volumes! If you are reading this and thinking to yourself Decreasing a customer s print spend has a direct correlation with me chewing off my own arm, then you are definitely thinking in 2006 terms. 5 signs your MPS program is stuck in 2006 Page 2

3 Don t worry, be happy! You can help your existing customers to save a significant amount of money on print-spend while your MPS program maintains (or grows) gross profit levels. I don t expect you to take my word for it. Here s how it would play out in a typical customer situation: Snapshot: Current customer background: 250 employees 50 print devices Average of 500 mono and 300 color pages per/employee/month Average mono cost of.0125/page and color cost of.06/page Current annual customer print spend: $63,000 And here is how you reduce customer spend while increasing your gross profit: Results: Future customer scenario after rules applied: 25% color to mono conversion 20% waste-page reduction Annual customer print spend reduced by 22% Savings are net and include $575/month of rules-based software costs! Dealer gross profit increases by 3%! You can save your customers money on print and you can maintain and grow your profit levels! All you need is the will to re-examine the deliverables of your MPS practice with an eye on more closely aligning with your customers needs. If you don t, they ll find somebody else who will. SIGN #3 You still sell software & maintenance. A good indicator that you are stuck in 2006 is that you sell the customer MPS software as a one time deal but contract them for pages on an annuity model! You used to sell toner cartridges on demand but switched to MPS in order to enjoy secure contracts. So why are you selling MPS software when you could be making annuity off of it too? There are several problems with selling software, and they are: You lose control: Once the customer owns the software they can use it with or without your MPS services. Charging a monthly fee contingent upon using your MPS services will eradicate the risk of a competitor taking your MPS revenue. You risk commoditization: What is to stop your customer from calling to get competitive quotes? And because there are so many 5 signs your MPS program is stuck in 2006 Page 3

4 people selling software in the same way there will be no shortage of options for your customer to examine. You hand your account over to the software vendor: You do all the work, the software vendor gets all the benefits. Your customer no longer comes to you for expertise, they go straight to the software vendor. The reality of 2014 is that SAAS (Software As A Service) is here to stay and is quickly becoming the new model for software delivery. SAAS too trendy for you? Do you think it s a fad? There are lots of examples of companies who have moved away from traditional software sales with annual maintenance. You might recognize them: Google: Google Apps: 4 million businesses and growing. Corporate mail, calendar, and document storage all for a low monthly fee. Who s using them? Just small companies, right? Think again: The U.S. Army, Lexmark, Delta Hotels, Cadillac Fairview, Motorola, and 4 million other businesses (and over 40 million users) you ve probably never heard of, right? SalesForce: Traditional CRMs didn t stand a chance. Anybody using Siebel anymore? I didn t think so. Microsoft: Anybody heard of Office 365? All your Office favorites available online and for a low monthly fee! Microsoft Office 365 and SalesForce announced that they will be integrating. Oracle: That s right, I said Oracle. They are seeing double digit growth in their cloud based CRM, ERP & HCM categories. Selling software as a service aligns your MPS billing elements. Now toner, service and software can be delivered on a recurring annuity basis. Better for you and your customers. Time you got your SAAS on. SIGN #4 You think an MPS contract must include toner and service. The average win rate for an MPS dealership going after net-new business is about 30%. That means for every 3 deals we win we LOSE 7 more. The reasons we lose vary. Sometimes we just get outsold. Sometimes the customer just isn t interested in MPS. There are tons of times when the customer is already in a long-term MPS contract with somebody else. What if I was to tell you that you could win business even when there is no MPS business? What if I told you that you could increase your gross profits by an additional 50% without selling any toner or service? Call me crazy, but I think adding double digits to our gross profits is always worth consideration. Here s how the typical MPS sales cycle works: 5 signs your MPS program is stuck in 2006 Page 4

5 Let s pretend you re starting an MPS business from scratch. And a typical customer looks like this: 250 employees 50 print devices 600 mono pages/employee/month & 200 color pages/employee/month $5,250/month in CPP revenue ($3,000/month in color and $2,250/month in mono) And let s say your team sales/closing efforts look like this: 10 new prospects per month Convert 30% of those leads into happy MPS customers Average gross profit of 30% Revenue by end of year one is $1,228,500 Gross profit by end of year one is $368,550 Good for you! But what about the 7 deals you lost? Is it okay to be happy with $368,550 in gross profit? What if you could increase year one gross profit by 50% or $201,825? The conversation with the customer you can t sell MPS to (at least not for now ) could go something like this: No problem, we understand you are engaged with Dealer XYZ for MPS for the next 2 years. We can still help you to reduce your print spend by 20%-30% without selling you any MPS by helping you to do a better job of managing your print-stream more effectively. I won t give you the entire elevator pitch here, but you can sell them print-stream optimization WITHOUT selling any toner and service. Win 5 print-stream management deals every month: Convert 25% color volumes to monochrome Reduce waste-print by 25% Charge $575/month to do that Save the customer 22% of current spend Make $517.50/customer/month in gross profit! You might say That s crazy, we d never win 5 out of 10 deals a month on print stream management! Okay, say you only won 2 or 3 print-stream deals per month: That is still an additional $100,000/year in additional gross profit! And once the rules are setup and configured the software does all the work! And you can begin to groom that customer to buy your MPS services when it comes time for contract renewal by providing real value in the interim. 5 signs your MPS program is stuck in 2006 Page 5

6 SIGN #5 You think CPP is still the best way to charge for MPS. This installment is very important. It is The future of your MPS practice type of important. Here are the facts: We live in an age of declining pages (or flat growth at best). There is NO argument here, just a question of by how much decline we ll see in the next 5 years. Millennials are entering the workforce and they print far less than the people they are replacing. The Cloud is offering new ways for people to approach workflow and mostly these workflows get rid of paper-based processes. CPP could kill you in the coming years. Well, not YOU the person, but your MPS practice. As volumes decrease so do CPP revenues. CPP competition is tough and margins are getting tighter every day. If volumes decline by 20% to 30% in the coming 5 years that could put a lot of MPS companies out of business. CPP is just a billing mechanism, nothing more. Nothing personal. You can help your customer to print less, make less revenue, and still come out with more gross profit. True story. I ve had people call this counter-intuitive. I would agree that trying to make less revenue and make more gross profit is close to impossible under a CPP program. But CPP isn t the only way to bill for managed print. Some MPS providers sell all inclusive cartridges. And more progressive MPS shops are exploring flat-rate or per-user billing models. Why is per-user a better way to bill for MPS in this hybrid world of screen-based workflows and the printed page? Because it aligns both customer and provider needs. The customer wants to pay less for print and the provider wants to make sure that revenues are predictable and stable. Print Audit has built a sales model that allows for a 20% to 30% reduction in customer print spend while at the same time INCREASING total gross profit by 5% to 6%. How does this alignment occur? How can you make less MPS revenue and still increase profits? What is the secret? You ll have to contact Print Audit to find that out. We ll be waiting for your call. 5 signs your MPS program is stuck in 2006 Page 6

7 2006 Blackberry dominates Desktops rule, laptops are rare MySpace is still on the rise Netflix offers unlimited DVD rentals by mail MPS offers Cost Per Page billing NOW Android and Apple reduce Blackberry to 1% market share The "tablification" of America is underway and laptops are passé Facebook is everywhere, MySpace is a ghost town Netflix is entirely online and scaring cable companies MPS STILL offers Cost Per Page billing

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