Myth or Reality
Presented By:
Steve Huff
&
Matt Baker
No Matter How You Put
It, the question remains
the same…..
About You
- From the
24 survey
responses
that we
received
1. You Can’t Make Money
on Color Production
Equipment
What We’ve Learned
Placement is big variable
• CRD vs Print for Pay
• Knowledgeable key operators
• Media has an effect
• Toner fill plays a big role
• Needs Color Volume
• Minimal B/W Volume
• Specialists
•
2. You can’t create an incentive
plan that all of your Technicians
will be Happy With
What We’ve Learned
1.
Some People are indeed Eeyore
•
Fairness is in the eye of the beholder
Good Techs Rise to the Top regardless of
the Incentive Plan
3. Don’t Worry About Pleasing Everyone,
make a plan that incents your folks to
focus on what you want them to focus on
4. Our Focus; Taking Care of the Customer,
and Cost Control
2.
3. Running Charge Calls is more Profitable
then Servicing Equipment Under Contract
What We’ve Learned
•
•
•
•
•
•
Contracts better for all
Low volume placements might not take contract
Stream of revenue is preferable
High volume customer on charge = unhappy
Too much paperwork and collection time
Hourly rates range from $75- $150
4. Samsung Has Found the
Magic Bullet
What We’ve Learned
1.
2.
3.
4.
5.
6.
7.
Cosmos & Polaris underwhelmed
Samsung Cost Calculators where
too ambitious
Supply Cost is HIGH
Warranty Process is Troublesome
MX4 & MX7 look promising
Samsung has had GREAT Success
with consumer products, They are
a very strong brand
Don’t underestimate them
5. Warranty Claims Are
Worth the Time to File Them
What We’ve Learned
•
•
•
•
•
•
It’s a cost/benefit question
15 minutes for a $3 part? Nope.
Alarming trend toward consumer-like admin
intensive warranties
Set a minimum $$$ to file for warranty
Better if Techs participate in the savings
Manufacturers are assuming 100% warranties
claimed in cost calculations
6. Travel Time isn’t as costly as
sending an inexperienced Tech
What We’ve Learned
•
Travel time is #3 on our cost list
•
1.Parts costs (about 17% of revenues)
•
2. Travel time (27.5% (.80)(.33) = about 7% of revenues)
So, again it depends:
• High volume long distance requires experienced Tech
• High volume short distance still requires experience
• Low volume long distance dictates less experience,
but more parts
• Low volume short distance allows a more
inexpensive gamble on experience and parts
•
7. Company Cars Save You Money
What We’ve Learned
It depends: mileage reimbursement vs. vehicle price
• We are at 3.2% of revenues, .31 per business mile
• Buy and hold – but this is admin intense
• Lease with outside vendor
• Big vehicle: low gas mileage but parts rich
• Smaller vehicle: higher gas mileage but parts poor
• Always have a functional vehicle
• Consider the branding value of uniform, wrapped vehicles
•
8. Warehouse Space is
Cheaper than Parts
What We’ve Learned
•
•
•
Warehouse space costs is not usually the
issue
The efficiency killer: Techs return for parts
The key variables:
•
Minimizing incomplete calls for parts
•
Balancing this with obsolete parts write offs
•
Distance to parts distribution center
9. It’s Always Worthwhile to Match the
Competitors Price
What We’ve Learned
1.
2.
3.
Analyze Your Costs
Proceed with Caution
Ultimately it’s a Leadership
Decision whether your companies
focus is Top Line or Bottom Line
10. Sales & Service Can Get Along
in the Same Organization
What We’ve Learned
It can and does happen
• Each group needs the other
• Reach Out
• Must start from the top
• Joint events
• Aligned goals
• It is required to succeed
•
11. It’s Always Better to Sell
a Color Device
What We’ve Learned
Color Copier – Doesn’t Equal - Color Copies
2. Color Toner is Expensive, especially when it’s
just sitting on a customers shelf
3. Ironically the MFG (Ricoh) does a good
jobbing placing b/w MIF
1.
12. It’s Better When Technicians
Dispatch Themselves
What We’ve Learned
1.
2.
3.
It does improve Employee Satisfaction,
especially now that it can easily be done
by a handheld device
Techs are unhappy now when they do
have to call in to clear
But, Techs may not be fully aware of
Customer Demands
•
4.
Make Sure to Communicate the “URGENCY” to the
tech
Tech Call Ahead/Response is Vital
13. Customers Prefer a Live
Operator to a Phone Tree
What We’ve Learned
•
•
•
•
•
•
We think so
Most competitors have a phone tree
It’s a differentiator for us
Cost control is moving us away from this
The smaller the phone tree the better
Trend toward e-mailing, texting, or
website supply and service call requests
14. All Manufacturers
Provide an Equal Level of
Dealer Support
What We’ve Learned
1.
2.
Each Manufacturer seems to excel at
something, but they definitely aren’t on the
same level
Sometimes it’s as much about the
individual assigned to your dealership than
the MFG
15. We will only be selling
A4 devices by the year
2025.
What We’ve Learned
We Shall See
2. Lexmark & Samsung are making the A4
Push, expanding into faster segments
3. Ricoh & Canon have A4 product offerings but
they aren’t their front line device
4. More bids are allowing A4
5. With a high % of output being A4, this does
seem to be inevitable
1.
16. Desktop Printing will
be replaced by
Smartphone Style APP’s
What We’ve
Learned
•
•
•
•
Possibly…….
Size and power of
Smartphones and tablets
Millennials tend to prefer
using these devices
Proliferation and acceptance
of apps
17. Copies Between Calls
(CBC’s) Always Improve with
New Models
What We’ve
Learned
Example from BEI
Model
PRO8100E
X
PRO907EX
•
•
•
•
Service
Population
Service Population
Nat Cpc
AMV
Total Population
Pages
Cpc
Labor Cpc Parts Avg MT
MCBV
MTBV
364
0.00357
89,895
190,536,246
0.00224 0.00133
1.6
55,905
19
5,081
0.00224
74,417
2,276,704,904
0.0014 0.00084
1.3
77,701
32
It depends on the generation of the machine
Updated generations are typically better
New generations tend to be worse
There is an overall trend toward cheaper manufacturing costs
18. Improved Machine
Performance offsets the
increase in time needed to
support New Functionality
What We’ve Learned
•
•
•
•
•
•
These are RJY numbers. Now vs 4 years ago.
Slightly less calls
Slightly more time per call
Total time per machine per year down slightly
Answer: for black, better machine performance is offsetting added machine
functionality
Information from BEI segment stats
DIGITAL
BLACK
2012
avg
2016
avg
monthly monthly
segment volume volume
1
2,013
2,199
2
3,053
3,054
3
5,978
5,990
4
12,691
10,996
5
31,746
30,095
6
62,953
51,895
7 198,121 121,442
2016
2012
2016
avg days avg days
avg
avg
MCBV MCBV
between between
visits
visits
2012
2012
avg
2016
avg
machine machine
time
time
2012
hours/
2016
hours/
annual
year/
year/
machine machine
hours
change
9,344
11,295
139
156
0.8
0.8
2.1
1.9
-11%
11,525
12,011
113
120
0.8
0.9
2.6
2.7
6%
14,439
15,389
73
78
0.9
0.9
4.5
4.2
-7%
23,557
22,976
56
64
1
1.1
6.6
6.3
-4%
38,668
45,508
37
46
1.1
1.1
11.0
8.7
-21%
48,314
43,053
23
25
1.4
1.3
22.2
19.0
-15%
86,707
48,696
13
12
1.9
1.9
52.9
57.8
9%
What We’ve Learned
•
•
•
•
•
•
These are RJY numbers. Now vs 4 years ago.
Significantly fewer calls
But more much more time per call
Total time per machine per year down
Answer: for color, better machine performance is offsetting additional machine functionality time.
Information from BEI segment stats
BUSINESS
COLOR
2012
2016
avg
avg
monthly monthly
segment volume volume
1
2,816
2,903
2
4,269
4,016
3
6,810
6,825
4
12,762
11,928
5
26,429
18,401
2012 2016
avg
avg
MCBV MCBV
2012
2016
avg days avg days
between between
visits
visits
2012
2016
avg
avg
machine machine
time
time
2012
2016
hours/ hours/ annual
year/
year/ hours
machine machine change
5,147
9,602
55
101
0.7
1
4.7
3.6
-22%
9,051
12,849
64
97
0.8
1.1
4.6
4.1
-10%
12,622
15,504
56
69
0.9
1.1
5.9
5.8
-2%
15,737
20,603
37
53
1.1
1.2
10.9
8.3
-24%
14,465
18,764
16
31
1.3
1.5
28.9
17.7
-39%
19. Today’s Hardware Tech will be
Unemployed in 10 Years if they
don’t learn Connectivity or IT
Support
What We’ve Learned
1.
2.
3.
4.
Specialization is Good
Clicks appear to be Flat
Dealers and MFG are looking at MNS &
MPS
The better question might be this: will
DEALERS be out of business if they are
MFP only in 10 years?
20. You should require your Techs to
be A+ & Net+ Certified
What We’ve Learned
Some direct service teams require it
• Used to be A+
• Net+ seems to be more relevant now
• Consider Tech marketability vs. company benefit
• We have not required it
• Does it have any marketing benefit?
•
21. Bonuses Should be 20% or less of a
Technicians Total Compensation
What We’ve Learned
1.
2.
3.
4.
5.
20% or Less works for us
Techs are more interested in the steady
paycheck
Are bonuses stimulators or motivators?
Bonuses do motivate
Is it the money or the prestige?
22. The Best Technicians are
Motivated by an Incentive Plan that
Publicizes the Results
What We’ve Learned
Is competition between Techs good?
• Should techs be competing against each
other or only against their own
performance?
• At RJY, the best Techs are motivated by the
ranking
•
23. When Going Up Against the MFG in a
Bid, you can rely on the fact that they
follow their own Lowest SMP Guidelines to
set their rates
What We’ve
Learned
1.
2.
3.
4.
MFG definitely price well below their own
published Rates
They often go lower than dealer cost
Is labor really a sunk cost?
Marginal profit dollars or profit %?
24. Sales Should Make Service “Whole”
when SMP rates have to be discounted to
make the Sale
What We’ve
Learned
•
•
•
•
This is common at many dealers
“Equality of sacrifice”
Dictated by how departments measured
•
Sales (revenue dollars or margins or both?)
•
Service (profit %, or profit dollars, or other?)
Who decides this?
•
President
•
General Manager or COO
•
Automate it in the pricing tables
•
Other?
25. Customers Expect The Technician to
Arrive in Less than 4 Hours
What We’ve
Learned
1.
2.
3.
Large Customers request a Guaranteed
Response Time or Up Time
Customer expects what they’ve had, so you
must be able to maintain it
Four hours seems commonplace
26. The Johnson Model Ratios are Out-ofTouch with the Current Changes to the
Industry
What We’ve
Learned
Was a great model when developed
Simple to use
The best dealers are besting the model
Labor costs/revenue appear to be dropping
Costs appear to be shifting to supplies (user
replaceable units)
• The model is too dependent on revenue per copy
(who controls this?)
• Are costs per page (by segment) a better measure?
• Other models are in development
•
•
•
•
•
Johnson Model
Expense
Salaries
Parts
Auto Expense
Training and other
TOTAL EXPENSES
% of service
revenues
27.5%
16.0%
3.5%
1.0%
48.0%
EXPECTED PROFIT
52.0%
27. Industry Standards Make it Easy to
Compare Results with Other Dealers
What We’ve
Learned
•
•
•
•
•
•
In general yes
It gives us common measurements
Difficult to get to apples and apples
Are all revenues and costs in the right bucket?
Does this create misleading results?
Should service be measured by revenues?
28. All Printers will Need 3D
Capability in the Near Future
What We’ve Learned
1.
We Shall See, but my opinion is No
29. The Burden Rate of $60
per hour is too low
What We’ve
Learned
•
•
•
Has been at $60 for years
Calculate it for your organization
All service related operating costs
divided into total Tech field hours
30. Aftermarket Supplies
Always Save You Money in
the Long Run
What We’ve
Learned
•
•
•
•
•
•
Our sponsors say so!
Must measure costs vs. yields vs.
failure rate
In general, we say yes
Must get Tech buy-in
Make supply costs or profits a small
part of a Tech incentive plan
Sometimes bound by manufacturer
agreements
31. Copier Dealers Need to
do MNS to protect their
Clicks
Customer Positioning
Trusted
Providers
Doctor
Accountant
Banker
Credibility
Managed Services Provider
Traditional Copier Dealer
What We’ve
Learned
1.
2.
3.
The Pyramid of Trust, IT is
on the top
IT Companies are selling
Printers/MFP’s and vice
versa
Software makes it a
Partnership