For years, customers have resisted replacing
their copiers with smaller and less expensive desktop devices
because copier companies have told them they can’t live without a
“real” copier. The smaller devices were “too lightweight” to
handle their page volume; the cost per page was astronomical; what
if they need 11” x 17” (ledger/A3) printing?
Customers Shift To Letter Size Printers/AiO/MFPs
In response to these issues, letter size, desktop (A4) printer
manufacturers now offer devices that are more robust, capable of
handling 15,000 - 20,000 pages per month, if not more, with some
boasting monthly duty cycles of up to nearly 300,000 pages. The
cost has also come down on A4 printing as monochrome can now be
found for under a penny/page and color as low as $.04/page. As for
ledger size (A3) printing, if you need it, you need it, but our
research suggests that less than 6% of offices require oversized
print capability.
During the last couple of years, not only were inexpensive A4
printers and all-in-one devices becoming comparable to A3 on a
cost per page basis, they were also growing in capability. In the
past, a customer printing and copying 15,000 pages per month may
have had a console style (A3) 50 or 60 page per minute
multi-functional copier, possibly equipped with scanning, printing
and fax. Let’s say their current copier was a 55 page per minute
MFP that cost about $20,000 after some price negotiating. It’s
likely the company leased the device. Using competitive lease
rates, the customer may be paying about $460 per month for 60
months for a total of $27,600 over the five years.
In the old days, it would be pretty easy to flip this customer
from their current machine to the updated version, but with
today’s options, customers are beginning to consider
alter-natives. For less than the interest on the console device,
(about $4,200 including tax and shipping), the customer can buy a
55 page per minute Lexmark X658dme that offers a cost per page
below $.02. They can often put this on a credit card and pay it
off in 10 months at their current cost of $460 per month. That
means 50 free months if they expect to own it the same amount of
time as the device it replaced.
Even if they own it for half as long as the old device (a mere two
and a half years), that’s still 20 free months – a net saving of
$9,200. They could buy two of these and still save money, as well
as be able to place the machines closer to the point of need. It
also means less walking to the printer, reduced interruptions and
improved productivity. Obviously, the number of pages printed
impacts the true savings, but a good sales rep can make a very
convincing case for this solution.
Customers are beginning to understand that getting the print is
more important than how it is made. They are learning that there
are alternative products that can achieve the same goal, but for a
fraction of the cost. Hewlett-Packard’s (HP) intriguing Edgeline
products were the first to bring ink to customers in a console
device. Others have followed. Epson, Ricoh and Lexmark are also
all working toward grabbing office print volume with inkjet
de-vices. Customers are hearing ink from many directions and it’s
beginning to resonate.
A Dangerous Time To Be A Copier Dealer
This is a dangerous time to be a copier dealer. SMB customers are
beginning to think they can live without you. Fast and capable
Lexmark and HP devices among others can be purchased at CDW.com
with a three year on-site service contract for well under $2,000.
Our research suggests that only 72.3% of traditional copier
dealers sell A4 devices. This sounds low but there are a couple of
brands (Canon and Toshiba) that have failed to provide dealers
with competitive A4 products and they may be pulling down the
average. While Toshiba provides their dealers with the ability to
sell and service HP and Lexmark printers, only about 40% of them
are selling A4 product (according to 2010 Imaging Products Dealer
Distribution Strategies report by Industry Analysts, Inc.). And
Canon’s current A4 lineup is simply uncompetitive compared brands
such as other dealer brands like Ricoh and Kyocera Mita. Canon is
due to refresh their line so this could change in the next few
months.
The reality is, in most cases, dealers that aren’t offering A4
products are going to disappear. We’ve been watching the page
volume migrate from copiers to printers for several years and the
trend will continue.
What To Do?
Your dealership has many ways with which to compete with A4 and
alternative channels. The majority of the traditional copier
dealers now offer managed Print Services (MPS). With 70.3% of
dealers offering this service (Source: 2010 Imaging Products
Dealer Distribution Strategies report by Industry Analysts, Inc.),
the number of providers has risen steadily over the last several
years – this is no surprise to anyone. These dealers are
confirming what they always knew – it’s about the pages, not about
selling the copier or the printer.
With average dealer MPS engagements consisting of about 40 units
(Source: 2010 Imaging Products Dealer Distribution Strategies
report by Industry Analysts, Inc.), MPS is generally only
attractive to larger accounts. But smaller accounts, like the ones
that make up the SMB market (small and medium size business), are
also shifting to A4 for the same reasons and they’re usually the
bread and butter of dealerships. How can you compete with retail
and the Internet?
Relationship Sales Still Work
Keeping your customers and grabbing new ones at your competitor’s
expense is not much different today than when I sold copiers. Stay
on top of your account. You need to know what’s going on. There’s
nothing like walking into your expiring lease’s office to drop off
literature and pitch the “replacement box,” only to find an HP or
Lexmark sitting where your machine had been. Even worse, you have
to go back to your sales manager and explain that you won’t be
upgrading a current customer, his MIF just shrank and you need to
adjust your forecast. With more channels available from which to
choose, your customers are being exposed to competitive products
everywhere. You need to be there as much as possible, especially
since these latent competitors with whom you share the account may
also be waiting for your lease(s) to expire.
Stopping in with a ream of paper or a box of donuts (or a
cartridge of toner you knew they were going to need soon because
you remotely checked their toner level before you “stopped in”)
gives you the right to ask if everything’s working OK, if they
hired anyone new that might need a few minutes of training
(ensuring they print to your devices and not others) or if they’re
thinking about buying a new printer or scanner in the near (or
distant) future.
Just make sure your face is there often and you’ll be much more
likely to be involved in any acquisitions. The purchase of a $150
inkjet fax machine behind your back may not seem like something
that would have sold but in buying it elsewhere, your customer is
establishing a relationship with another vendor and you are losing
control of your account.
Justify Your Existence
Seemingly, it may cost the customer less if they buy their gear
online but they need to understand what they give up.
1. A professional sales executive is trained to understand
workflow and technology in order to make effective
recommendations. The customer may see a low cost device but not
realize the supply costs are very high. Or, maybe they don’t
realize the printer they are considering online is refurbished.
They could make an expensive mistake if they don’t keep up with
the latest products.
2. When companies buy the three-year warranty, they typically have
no control over who will be servicing their device. This continues
to be your strength against the printer vendors. You can get your
customers service in about four hours or less. VARs, like the ones
that will service your printer, still often arrive in days and the
customer often has no say in who will come. And, quite often they
need to take the printer with them to fix it or order parts,
costing your customer days without a printer. Make sure customers
understand this risk.
3. You can offer a blend of products and technology and explain to
the customer the effect these will have on their printing in terms
of cost, ease of use and the impact their decisions will have on
productivity. When customers look online or at retail stores, they
see a low purchase price and they tend to forget that printing is
more complex than simply buying a printer and plugging it in.
4. SMB customers generally outsource their IT, such as installing
computers, maintaining their network and backups, etc. You can
install the print devices and scanners and save the customer money
with lower cost (or free) device installations. Your installation
may undercut the incumbent IT vendor they would normally call to
install a peripheral on their network. This keeps these possible
competitors from supporting (or bad-mouthing) your products while
simultaneously helping your customer, further securing your
account.
A Shift To Inkjet?
Not every print needs to occur on a laser device. Products ranging
from home photo and office printers to multi-million dollar web
presses use ink technology. Is it so difficult to believe ink may
finally be ready for the office? It’s coming and there might be
great opportunity in it for you. Tektronix developed solid ink
printers in the 1980s and even today are still sold under another
name. HP, Epson, Lexmark and Ricoh all have very capable and
affordable inkjet printers and all-in-one (AiO) devices, some that
cost less than $200.
You think inkjet isn’t ready for the office? At the moment, we’re
evaluating the Epson B-510DN inkjet printer. It costs $599 and its
cost per page is $.0087 for black ink and $.0344 per page for
color ink. This is right off the Epson website. There is also a
maintenance box that carries an estimated cost per page of $.0004
per page, which is almost not worth mentioning. It is network
ready, has a standard paper capacity of 650 sheets in two trays
and Epson says it prints about 19 pages per minute in black (18
PPM in color) at default settings. People will say it’s not robust
and can’t handle volume but I’ve been running this thing non-stop
for a few hours while writing this article and I have printed over
2,000 pages without changing the inks or clearing a misfeed. This
pro-duct is something you should consider bringing into your
product mix.
Where could this printer fit? Anything printed that is sitting in
a waste or recycle bin is probably a good candidate. Look for
documents that are used as drafts, printed e-mails, directions or
information from websites and any document that is disposable.
Maybe you’d want to print your proposals on a laser device because
of its permanence, but take a look at what you print most of the
time. Would it matter if it were printed in ink or toner as long
as it looks good? It all looks the same in the recycling bin. This
printer will be the first of many coming from several very notable
players.
Inkjet is also building a reputation for being extremely green
compared to laser pro-ducts. They generally use much less
electricity and the ink cartridges are much smaller than toner
cartridges found in laser products, which has a direct impact on
the carbon footprint of the device (less packaging for supplies to
throw away, less plastic and metal to recycle, etc.). Customers
with green initiatives are starting to take a hard look at inkjet
as an option.
Decentralize Their Printing
The current 55 PPM mono-chrome MFP is located in a centralized
area that everyone must walk to every time they print. Instead of
offering the customer a newer version of their current MFP,
essentially continuing a $460 monthly payment for another five
years and another $225/month in page clicks (assuming $.015/page
for service and supplies), there are alternatives that can
simultaneously bring this cost down and increase productivity.
This customer is paying nearly $700 per month for a single black
and white copier with no backup device and no color printing
capability.
Let’s look at the same customer equipped with two color Epson
inkjet printers ($.01 for black) and two 45 PPM monochrome Lexmark
laser devices (copier/printer/scanner/ fax, $.02/page). Total
hardware cost for this solution is $4,320 compared to a single 55
PPM device for about $20,000. Using the same lease rate, the
monthly cost for 60 months would be $99/month compared to $460 for
the MFP we discussed earlier. Even if every single page of that
20,000 page monthly print volume was printed for $.02 each, the
customer would be paying hundreds of dollars less each month and
that’s a worst case scenario. Epson inkjet appears to be very
capable in handling serious print volume (their website says 4,000
pages recommended). The only thing the customer gives up is
possibly automatic stapling and the ability to print and copy 11”
x 17” documents, which they may not need.
Even if you only save the customer $200/month, that comes to
$12,000 over 60 months. The rest can go into margin, which is then
split between the rep and the dealer. You’re also changing the
customer’s workflow to make them more efficient, both in terms of
economy as well as productivity. Laser printing, copying, scanning
and faxing are all placed closer to the point of need, they have
the ability to print in color (if they want to) and they have
redundancy – if a device requires service, they still have three
other working devices. Or, if one person is sending a fax, another
can be copying/printing/scanning/ faxing on the second device. The
upside to decentralizing the printing is enormous.
Inkjet devices are not for every situation and they still have
their drawbacks. Two-sided printing is still very slow due to the
fact that the prints must dry before the device can print on the
other side of the page. Prints are still more susceptible to
damage from water and liquids. No, the ink doesn’t run off the
page the way it used to, but it still smudges if it gets wet.
However, these devices are becoming so inexpensive they’re
difficult to ignore. Just as customers initially didn’t consider
A4 devices because they weren’t “business class,” inkjet
manufacturers will continue to adapt.
Inkjet will increase its presence in the SMB office and having a
strategy that incorporates this technology will keep your
dealership on the cutting edge. At the very least, have a plan to
educate customers on how the industry has changed since they
signed their lease and rather than flipping that into the new
version of their current device, as your competitors are likely to
do, look at your portfolio and offer creative, customized
solutions. The game is changing but if you adjust, there is still
a lot of money to be made in printing.
Andy Slawetsky is President of Industry
Analysts, Inc., a marketing and management consulting firm for the
office automation industry. Much of the company’s research and
testing results can be viewed on their website
www.industryanalysts.com.
