I often receive calls or emails from dealers
seeking my advice on new staffing
recruitments, additional parts and supply
inventory levels and additional cross training
that will be required for a new MPS client.
Usually the inquiring dealer will send a
simple list of equipment to help me understand
their new customer’s needs. Unfortunately this
inquiry comes after the deal has been signed
and the problems have risen to the surface. In
most cases it happens about 2 or 3 months into
the deal when sales, service and the
controller are fighting with one another. The
owner realizes the MPS deal is losing money.
Sales is concerned that the client is
not satisfied with the level of service and
support. The promise of 4 hour response time
by factory trained technicians is not being
met. Prior to the signing of the deal, the
company did not even have any factory trained
technicians for the majority of products being
covered under the new MPS. The controller
maintains there is not enough money in the
deal to pay for parts, much less to hire more
The service department was
forced to lay off one tech (who had been with
the company for several years) to be able to
afford to quickly recruit a new tech that was
already certified on the very old equipment
being covered on the new MPS agreement. Long
time techs are upset that the new guy is being
paid more than they are making after many
years of loyal employment.
department is running over their monthly parts
budget because they must buy parts for
equipment they have never seen. Due to the
fact this company is not an authorized
servicing dealer, they have to buy parts from
distributors or grey market importers. There
is a lack of OEM technical support. The newly
hired certified tech is technically pretty
good, but he is so busy keeping the machines
working, there is little time for him to
cross-train other techs on the product.
The service manager tried to get a group
of his techs to come in on Saturday for
technical training on the newly acquired
products. The training would be taught by the
newly hired certified tech. Even though all
the attending techs will receive time and a
half overtime pay for the Saturday training,
there was a near mutiny caused over the newly
hired tech being paid more than the current
techs for the Saturday work.
controller wanted to have all the techs that
came Saturday for training to not work one day
the following week. By trading out the time no
overtime is required. The sales manager was
waiting for the newly trained techs to
immediately get to work on the newly acquired
equipment. He fought against the trade-out of
After listening to the dealer’s
tale of MPS woe, I said, “We need to work
backwards. We need to calculate the total base
revenue received each month and calculate the
anticipated overages. Once we know how much
money you are receiving, we can figure out
exactly what you can afford to do. You may be
able to hire an additional authorized tech,
and pay for a little overtime to cross train.
You may have to increase your parts and supply
budget for a couple of months to cover the
cost of ramping up your inventory. I need to
see a list of all the equipment being covered
including model and serial number, current
meter count, and exact location, including a
key operator contact.”
At that point I
heard a very big sigh. “We really don’t have a
complete list yet. I do know after the first
two months we are $47,000 in the hole. We lost
over $25,000 the first month. Last month we
improved, only losing $22,000. The equipment
is all over 5 years old. The previous
servicing company was an OEM direct branch.
From what the newly hired techs says, the
branch did absolutely nothing the past year
knowing the 5 year lease was going to be up.
As it turned out, the customer took advantage
of the $1 buyout clause and now owns all the
half-decade old equipment. Our sales rep
convinced them we can keep the equipment going
for half their former cost because they no
longer have a lease payment.”
asked the dealership owner to refocus on not
having a list of equipment that is being
covered. “If you do not have an itemized list
of equipment and meter reads, how do you know
what is being covered? How do you know how
much to bill each month? How will you get
beginning meter readings to have a point of
reference for your billing?”
the dealership owner’s sigh had turned into a
moan. “Our sales manager felt we should move
quickly on this opportunity. He was afraid if
we took time to get a list together, another
dealer might get in on the deal. He did not
want a bidding war. I now completely
understand the old saying when you make a
decision in haste, you will have plenty of
time to figure out what went wrong. We goofed;
we know we did a lot of things wrong. What can
we do now?”
Those dealers who are just
starting to make MPS agreements should
consider learning from the mistakes of others.
Make sure you do the tasks that are so basic
that they might be forgotten in the excitement
of closing a big MPS agreement.
Inspect every piece of equipment. Make a copy
or print to make sure it works.
serial numbers, meter reads and date of
original installation if available.
there is a service history with the machine,
make a copy of it during the inspection.
Note the exact location and appropriate key
operator and their phone number, extension
and/or email address.
• Find out why the
end user is considering changing their
• Always have a minimum
base click count which is invoiced monthly in
• Overages should be collected and
billed monthly or quarterly in arrears.
Verify in writing how long it will take to
receive payment once the invoice is received.
• Depending on your accounting system: Ask
if invoices can be sent electronically.
Request electronic transfers when they pay
your invoices. This can increase your cash
flow by 5 to 10 days per month which amounts
to increasing yearly cash flow by 60 to 120
• All machines are not the same.
Just because your service department is well
trained on one or two lines of equipment does
not mean they can fix everything.
calculating the cost of supplies plan on using
a high quality non-OEM supply on monochrome
printers. Do not use the lowest price vendor
you find on the internet.
• When dealing
with copiers (especially color) make your
calculations using the cost of OEM supplies.
• Include the cost of freight from the vendor
to you and from you to the end user. Once you
get a feel for the customer’s needs, you may
be able to transition into successfully using
compatible copier and color products. But do
not count on it.
• Having exact equipment
location and contacts can save the dealership
thousands of dollars in field tech labor.
Don’t be in a rush to lose money.
sure any signed MPS agreement does not require
a technician onsite 8 am -5 pm daily. It is
not necessary to have a technician assigned
full time to any location. Familiarity breeds
laziness, instant excuses and alibis. If a
full time tech is requested, write your MPS
agreements to include daily in person onsite
coverage of field technician. This does not
mean the tech must be assigned to work at a
customer’s office from 8 am -5 pm daily. In
fact, most techs who are paid for working full
time at a single location rarely work 8 hours
per day. Make a point of having the tech
always start at another customer’s site which
should be within a 30 minute drive. Have a
supervisor drop in unannounced from time to
time to see what the assigned tech is actually
doing. In the words of Ronald Reagan, “Trust,
When it comes to MPS
agreements, an ounce of prevention is worth
$100,000s of cure. Even a tiny pricing
mistake, multiplied by millions of clicks can
be disastrous. Don’t let the fox guard the hen
house. Anyone who will directly make money on
a new MPS deal should not be the sole person
verifying the facts or calculating the cost.
Ronelle Ingram, author of Service With
A Smile, also teaches service seminars. She
can be reached at