MPS: No Tech? No Service Department? No Problem!
- By Sarah Henderson
- Jul 01, 2012
Have you been thinking about starting an MPS program but don’t have confidence in providing service? Or is the growth of your program stunted due to not wanting to add additional personnel? Even worse, have you turned away MPS business because it required service outside your traditional sales footprint? If you answered yes to one of these questions, you are not alone.
On a call recently, I advised a long-time dealer customer to stop stressing out so much about planning the company’s managed print services program. One of the reasons I can offer this advice with confidence is because the software, tools and programs designed to implement MPS have come a long way in assisting with all of the above MPS business dilemmas. MPS infrastructure providers have responded with innovative solutions designed to help make MPS programs more turnkey for dealers. As the director of MPS Operations at West Point Products, I spend my time not only working on program deployment but also listening to my customers share their frustrations so we can offer such solutions.
For this specific customer and many others, the pain point to launching an MPS program centers around the area of providing service for equipment. After listening to this business leader’s concerns and sensing frustration, I felt a good laugh was needed. So in my best Caribbean accent, I said, “No service techs for MPS? No problem!” Thankfully, after a good chuckle, the dealer and I were able to address the biggest concerns about providing service for MPS. This candid list of concerns from an industry peer is outlined below so other dealers can learn why and how to execute MPS without hiring a technician, adding a service department or incurring additional start-up expense.
No. 1: The burden of hiring service technicians
According to Copier Careers’ “Service Technician Salary Survey,” the average base salary of a service technician was $40,998 in 2011. For a dealership that does not currently offer service, this additional overhead can be too much to carry as it launches an MPS program. This level of investment can also be a hurdle for dealers with growing programs who have not yet reached the machines-in-field (MIF) count to justify hiring an additional technician. My advice to dealers who are considering starting a service department or hiring additional technicians to support MPS is to answer a few key questions in their business plan:
What is your timeline to ramp up service calls? Managed print services sales timelines average 60-90 days. For dealers new to this sales model, it may take longer to get the first five contracts landed. Predicting the amount of time after a contract is signed that will pass before a first service call may be required is difficult. Factors that affect the need for service include, but are not limited to: age of the fleet, type of equipment, service history, end users’ print behaviors and some luck. For dealers who are within the first year of their program, carrying a technician’s salary for occasional calls probably doesn’t add up.
Are you selling service outside MPS? I also ask dealers who plan on employing a service technician if the only area they intend to sell services is within the MPS program. As you add MPS, you may also start offering one-off “break/fix” service, triage support to customers or stand-alone service agreements.
Can you co-op service? Dealers may also partner with noncompeting organizations or service providers within or outside their typical sales regions. For dealers seeking service support in either scenario, they can partner with national service providers or organizations to simply resell service through them. Another option is to consider co-opting technicians through these networks for additional revenue. There will most likely be certification requirements to participate in these programs, so be sure to hire or train accordingly.
No. 2: Avoiding additional service management responsibilities
Offering service for MPS requires more than hiring a technician. A service management resource will need to be allocated. Dealers considering adding in-house service will need to determine who will manage dispatch, the service area and performance management. Dealers should evaluate the certifications their personnel possess prior to hiring and budget accordingly for any future training needs.
Outsourced service can require management of the provider as well. Dealers should take time evaluating these types of providers. Options include contracting with a national or regional service provider, partnering directly with other dealers or utilizing a national service dispatch service that works with multiple sources. Ask providers to demonstrate their capabilities in providing the appropriate reporting and supporting the service level agreements (SLA) that your customers require.
Dealers can benefit from partners who can offer triage support to existing service staff or directly to end users. Well-executed triage will result in service call avoidance. Within MPS contracts, a service call is a net expense deducted from that month’s income associated with that contract. The more calls within an MPS program that can be triaged and avoided, the better. There are partners who can provide phone- or Web-based triage support for printing problems that do not require an on-site technician. In addition, this support can collect vital information for any to-be-dispatched technician to address problems with faster results.
No. 3: Being able to trust outsourced providers
One of the first objections many dealers raise to using an outsourced service provider is that a competitor’s technician could be dispatched to their customer. Dealers should vet outsourced providers to make sure they have the appropriate safeguards and nondisclosures in place to protect customer information.
Dealers have also expressed concern about the level of communication between themselves and outsourced providers when calls are taking place. I advise dealers to ask service partners to provide a description of how the dealer will receive updates on service calls. Dealers should know ahead of time how notifications will be provided from dispatch, including updates on when the technician is on-site and any follow-up parts or work that may be needed. This way, if the customer calls the dealership directly, it will have up-to-date information.
Dealers have shared concerns about lacking control over customer relations when they outsource service. When a service technician is representing a business, it is important that the dealer’s brand and customer experience is maintained. In order to ensure the best experience, dealers should understand the qualifications their service provider requires for technicians. Look for providers with certified technicians held accountable for negative customer feedback they receive. If a dealer chooses a partner that stands by its program, even if a problem arises, that partner should be ready to resolve it.
No. 4: Is outsourced service profitable?
Within MPS programs, outsourced service can be a more costly call to place if you are just comparing burden rates with those of an in-house technician. MPS pricing with a higher burden rate, however, can still be profitable. I recommend dealers look for service providers who offer flat-rate pricing per call. While this approach may initially appear more expensive, the predictability of this pricing may perform better over the term of the contract, as it is simpler to account for.
An even more important profitability factor than the cost of the actual service call is the ability to accurately predict the amount of service costs you will need to apply to your per-page pricing most MPS deals require. Dealers should seek out pricing tools and partners who understand and can provide insight into service factors. The right partner can help dealers avoid the frustration of manually pricing MPS deals.
Once dealers run pricing calculations, they may determine a margin adjustment is needed within contracts with outsourced service in price-competitive deals. But remember, within that same contract, dealers will have the opportunity to place hardware and supplies at a higher margin than they may be getting today on transactional business. In addition, MPS provides a termed contract with more predictable revenues long-term.
Regardless of the above concerns with providing service to start or grow an MPS program, the No. 1 question is: Can dealers afford to lose even one customer to a competitor’s MPS solution? Unfortunately, I have had conversations with dealers who have lost major supplies accounts to MPS and only find out after the orders stop coming.
My advice is to learn the sales model, understand the pricing and choose a service model for MPS. Instead of stressing, dealers can easily compare and select the best service solutions for them. As business owners, dealers are often up to their necks working most days a week, but they shouldn’t put off an MPS program launch longer than needed. Instead, business leaders can stop dreaming of protecting their customer share and start earning the profits that can come through a well-executed MPS program.
This article originally appeared in the July 2012 issue of Recharger.
Sarah Henderson is Director, MPS Operations, for West Point Products. In this role, she plans, develops, and manages the implementation of MPS programs and key infrastructure tools in multiple channels in North America through the Axess program. Since joining West Point last year, she has helped launch the industry leasing MPS TCO costing calculator and a national service dispatch center. In addition, Henderson is a volunteer with the MPSA. Henderson’s background includes more than five years in the imaging industry, with hands-on experience assisting dealers in implementing MPS and marketing strategies. Prior to joining West Point Products, Henderson was Director, Strategic Marketing, for the Office Equipment Group at GreatAmerica Leasing Corporation.