Declining print volumes and hardware placements require tough decisions.
Can revenue from services replace the losses associated with the decline in A3 and A4? Yes, but dealers need to think further outside the traditional services box.
An economist will tell you a service is a transaction in which no physical goods are transferred from the seller to the buyer with the benefits based on the buyer’s willingness to make the exchange. For copier and printer dealers, service has largely meant keeping the machines running while maintaining a steady flow of toner and paper. These services have long been combined or bundled into a monthly nut for each customer. It was a great business model until a couple of things happened: The volume of A3 and A4 impressions declined, and a pandemic put the kibosh on whatever “normal” was for countless businesses across the U.S. Although many customers kept paying the monthly charges for their equipment, bean counters began asking their CEOs and COOs why the company was paying for machines that weren’t being used, especially ones that declined in usage before the pandemic. When the corner-office guys saw the numbers, some began calling dealers, looking for ways to lower costs and renegotiate leases. It’s one of the trickle-down effects of the pandemic that have appeared like stains on the ceiling after a water leak.
The Four “Ins” of Service
Before going deeper, consider the four ins of service:
- Intangibility: You cannot handle, touch, transport, stock, or manufacture a service. Think of it like Google Maps giving directions to an Airbnb at 1 a.m. or one of your service techs running a diagnostic on an A4 printer.
- Inventory: Services are basically one and done—they cannot be stored for future use. For instance, connecting three new A4 printers to a network doesn’t do much for the two A4 models already there or the copier being installed next month. Most services disappear once provided, although some may retain value to the company where they are rendered.
- Involvement: Both the user and provider of a service participate in its delivery. For example, during a network software and hardware upgrade, there are two participants—the computer person at your customer’s site and your IT technician. Unless both are present, a complete service may not be possible because your IT tech may not fully access the customer’s network.
- Inconsistency: Each service is unique in some way, even when the same customer requests the same service at another time. As a result, deliveries of any service won’t exactly match previous or future ones, even though the need and result may be much the same. For instance, different techs may do the same thing in different ways, or the various copiers and printers at a customer’s site have different requirements for firmware upgrades.
In contrast, most goods are pretty much identical. For instance, even individual models of moderately complex mass-produced machines like laser printers are more or less the same. But the real question is the extent to which dealers can make services a revenue driver. Thinking outside the box, as some consultants put it, is not enough. You have to re-draw the box. Service has to be different if it is to be a revenue driver.
“What dealers can do is focus on markets and verticals that have the potential in their area,” said Ray Belanger, president of Bay Copy in Rockland, Massachusetts. “For example, look at healthcare, small commercial banks, and credit unions. Schools are good, too, and will be coming back.”
These verticals have printing and copying needs and often want more than routine support and break-fix services. It is critical to ask what they need and find a way to deliver it. In the post-COVID era, many businesses will be evaluating relationships with various providers, and it might not take much for a dealer to be shown the door. Don’t be the one leaving!
“It’s important to have a diverse customer portfolio that focuses on areas that deliver more impressions and can provide the opportunity for additional services,” continued Belanger.
He suggested having contacts in a customer’s organization beyond the people who handle and use copiers and printers.
“Being exposed to more of how a company works helps dealers’ sales and service people see a company more holistically,” said Belanger.
For example, the teachers and support staff at a school may know a lot more about making printing and copying more efficient than the school’s IT person. Likewise, the person in charge of car loans at a credit union may have a different want list than the buyer at the corporate office who sets up equipment leases. What do they tell you? How can you deliver what they need?
“With the right conversations, it is easier to position your company as a partner that will add value that helps the customer’s business,” explained Belanger.
This may seem more like added value than service, but because the added value has some or all of the “four ins of service” it can really be an extension of your service offerings.
The distinction can be important because many customers still define service as break-fix and routine maintenance. You may have led them to think of you this way by not proving yourself as more than a copier-printer dealer.
“While technology has improved device reliability, the machines still need service more often than anyone wants, and dealers rely on that fact,” noted Wes McArtor, president of NEXERA. “But as customers realize they don’t print as much as they once did and that A4 is cheaper and more reliable than A3, the need for break-fix will change. The technology that dealers seem to be moving to [with diversification] will require less break-fix but more security and IT specialization. Production and specialty print will continue to need break-fix techs, but overall, I see a decline in the core of service contract business.”
Pursuing Expected Outcomes
The underlying point here is that dealers need to get out in front of the changing nature of services now. As in right away, because if you don’t, the dealer in the next ZIP code may be coming to eat your lunch. McArtor thinks the changing nature of services is really about providing the best possible outcomes for customers.
“We need to move away from a product-centric, feature-benefit sale with break-fix service tied in, to an all-inclusive solutions model that gives customers the outcome they want, while letting dealers maintain a recurring revenue stream,” he said.
This means you may have to accept less money for your usual bundle of services while pulling in more revenue for other services more closely aligned with the outcomes your customers are seeking.
McArtor says IT and security have become critical needs—and part of expected outcomes.
“Customers understand the need but not always the complexity and technical aspects,” he said. “This gives dealers the opportunity to become subject matter experts—and bill accordingly.”
This usually requires having tech-savvy people on your team who will learn from OEMs and partners to identify the best ways to educate customers. Customers are not stupid, but they can be willfully ignorant, as in, “We’ll be OK. Nothing bad will happen.” Then, they have a data breach. And they call you. The trick is being ready ahead of time, so the breach never happens. That is worth money.
If you look at the data you presumably collect on each customer, you can probably identify patterns, like the third week of the month is always extra busy for an accounting firm, and the first week of the month is always heavy for municipal offices. Your techs may even plan service schedules around these events. This ties back to customer expectations and outcomes. Ideally, your techs should be aware of each customer’s peak periods and do some preventive service accordingly. In the eyes of a customer, such work is part of your standard support, but when you do this, you set your dealership apart from others. For example, knowing peak volumes are coming up, an astute tech may suggest balancing machine loads during busy periods.
Detailed awareness of each customer’s needs is a good thing. Maybe it can be the basis for a recommendation for swapping an installed machine for a more capable one. The newer one may require more (or less) service, but it shows that you are acting on the customer’s behalf and improving their business. Then, you move forward, talking about the array of managed services you offer and how they can help move their company toward the desired outcomes.
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