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Top Five Profit Pitfalls with MPS to Avoid

Not a week goes by when I am not working with a dealer whose Managed Print Services (MPS) program is struggling to produce the revenues they want.  The easy answer sometimes is just to say, “We need to sell more MPS!” Yes, I agree. Focusing on sales is a good idea, but the profit pitfalls go beyond the “sell more” rally cry.

Stop guessing on your pricing

No matter what tool, spreadsheet, or voodoo magic you use to calculate your cost per page, the real guessing game I hear repeatedly are dealers asking me how much margin to add once they calculate the cost.  Your sale price should be driven by what the customer is currently spending to manage their fleet overall, with savings when applicable. This requires your sales process to include the work of collecting the current costs vs. your proposed costs.  This write-up should also include any related costs of staff time, IT intervention, etc. The sales process I train MPSs to use seeks acceptance from the prospective customer of what their current costs are prior to delivering your final proposal. 

Mine your own data / DCAs

When is the last time you really reviewed the “unmanaged” assets in your remote monitoring software for sales opportunities in your current MIF?  If you don’t remember, or can admit you do not do this, you are not alone!  There are new business and page volumes with your current customers just waiting to be reviewed and added on contract.  Put a process in place and assign accountability for reviewing this data.  Do not rely on traditional copier reps to see these easily overlooked opportunities.  They may only see two or three printers in an account but multiply that across your overall account base, and it adds up to real dollars.   

Understand device level TCO

Not all printers are created equal in terms of driving a lower total cost of ownership.  It is still common for clients to buy inexpensive printers (low acquisition cost) and expect you to manage them at a penny a page, even though there is no extended yield cartridge to help drive that cost equation.   Understanding where these machines are, volumes on them, and how that affects your overall blend is key to profitable MPS. These are most likely the devices I’d recommend you consider, coding for hot-swapping vs. field service.  Small changes in support drive larger changes in your operating costs.

Total Cost of Ownership graphic to determine profit
                                                                                                                         Small Changes in support drive larger changes in your operating costs.

Streamline toner fulfillment processes

If you are still providing tons of extra toner, know you are over shipping toner, or just keep a “toner closet” at your client’s site, you really need to change that process soon.  Simply put, you extended your product with a direct expense way too early and placed its value at risk for displacement, mismanagement or of being permanently lost.

Beyond that, what is your process to even determine when to order and audit for toner waste?  This is a key metric on cost-per-page programs to drive more profitable contracts.  If you have not applied a process mapping exercise to look to reduce staff via automated tools, I recommend you make that an action item for your team this quarter.

Account review analysis

Are you conducting account reviews?  Now be honest, how disciplined are you in pulling reports from your ERP and DCA software to review device utilization, service call performance, and resolution and printing trends, all by machine and impression type?  If you are not doing this, it is easy for page volumes to shift to less profitable devices, or for you to miss equipment upgrade opportunities and continue to service machines that may need to be retired.  Account reviews also give you the opportunity to connect with your clients to uncover opportunities, to cross-sell in document management and IT services, and beyond.

It is all too common for MPS contracts to be written on a termed agreement. Providers adjust or look-in once the account has a problem, such as high service costs, excess toner consumption, or customer complaints. Then, we are in fix mode vs. proactive management.  Do not be in a reactive mode within your dealership.  If you are reviewing this list and saying to yourself, “I don’t have the time” or “my team needs help doing this!”  that is ok. If you need guidance on how to do this, I can help.  If you are not sure how to do this or need help reviewing your data, my team is here to help with this too!  Do not be shy to call on your key partners to be an extension of your team, for sales support and training, analysis, and more. 

Sarah Henderson
Director, MPS and Professional Services

Clover Imaging Group

About the Author:

Sarah Henderson
Sarah Henderson works hands-on with office equipment dealers to build more successful MPS programs for the Clover Imaging Group. She leads training and workshop events, provides strategic planning and gap analysis and supports strategic MPS sales initiatives. Sarah specializes in MPS program design, provide profitability analysis and implementation of MPS solutions in North America. Sarah has been recognized as one of the Top 40 Influencers in the Imaging Industry, named a “Difference Maker” by ENX Magazine elected to the Board of Directors and Executive Committee of the MPSA. Sarah has been a featured speaker at ITEX, World Expo, MPS Executive Summit, and the Global MPS Conferences. Prior to joining Clover, Sarah served as the Director of Strategic Marketing for the Office Equipment Division at GreatAmerica Financial Services.