Short-term Gain, Long-term Pain
Hello, readers. Since the last blog, what did you do? Were you moved to action? Did you:
Research your blended CPP selling rates?
Check how many new HP LaserJet M602S devices are in your fleet?
Call the major rechargers about buying remanufactured 90X toners? Did they have some? What was the price like? Were they availabile?
Don’t worry, friend; it’ll work out. It’s not like print is a declining industry. You’ve probably noticed your customers are printing more, right? Wrong.
Let’s come back to that scenario I mentioned in my previous post: You’ve won some contracts, and times are good. Now what do you do? You get the sales team to knock on more doors, beat the streets. Hey, this MPS game isn’t really that much different than selling copiers. Then you’re faced with:
Eek. What do you do?
Does your sales team sell them new printers? Let’s assume that the printer heir apparent is in the most popular segment – the small workgroup monochrome desktop range – which means your sales rep will probably try to sell customers the new, flashy HP M602. Whoa, hold on, cowboy! Not so fast. You read the last blog post (hyperlink: http://rechargermag.com/blogs/the-printer-guy/2012/05/go-on-threaten-me.aspx), didn’t you?
The vast majority of dealers I have worked with leave hardware purchases up to the customers. With the customers in control of the purchasing decision, the dealer will simply supply the toner and service.
Do you see why there is something very wrong with this scenario? Think about it: You let the customers — the same customers that hired you because the only thing they knew about printing was that they were smart enough to recognize they had completely lost control of it — choose which printers to purchase?
Need more evidence that customer-controlled hardware purchasing is a big mistake? Let’s review a common scenario:
A customer needs a new printer, and let’s say that your sales rep selects the HP M602, which costs $900. What do you think the customer wants to do? He or she wants to go to Staples and buy the HP P2035N because:
It prints at 30 ppm.
It’s a business class device; HP states it can print a “monthly duty cycle up to 25,000 pages.”
Your remote monitoring software says the customer only prints 5,000 pages per month.
It costs $300.
It’s a bargain.
Now, your customer knows that duty cycle thing is complete and utter BS, right? Your sales guy told them that, right? Everybody knows this …
Let’s examine the supplies cost:
The toner yields 3,500 pages.
Since it’s a new device, only OEM toner is available at $90 a pop.
That’s like (screaming for a calculator) 2.6 cents a page! And you’re losing 0.6 cents per page on every page!
Is this real? Not quite. The P2035 has been around for a couple of years, so — phew! — a remanufactured toner is available. However, this isn’t the end of the nightmare; it’s just the beginning because the P2035 model is soon to be replaced by HP with something else that has a new toner design. Aarrggghhh! The OEM-only cycle is about to begin again.
This is what happens when you let customers choose their own printers. You provide the service. You provide the toner. You bill per page, and you watch your margin slip away.
What did you expect? Why would they buy a $900 business printer when they can buy a $300 printer?
So what next, then?
Call the sales team in again, and let’s all understand that if you sell blended CPP rates on monochrome, you must stop customers from buying new hardware. The short-term quick fix of replacing a printer with a new model can equate to huge margin implications, and the sales team must understand this.
Posted on Jun 07, 2012