Print Management Insider Blog

5 Signs Your MPS Program is Stuck in 2006: Sign #4 - You Think an MPS Contract Must Include Toner & Service

Posted by West McDonald on Oct 27, 2014 10:09:45 AM

Welcome back to “5 Signs Your MPS Program is Stuck in 2006”. In last week’s entry we looked at sign #3 which you can find HERE.  This week, let’s look at the 4th sign your MPS business is stuck in 2006:

Sign #4: You Think an MPS Contract Must Include Toner & Service.

The average win rate for an MPS dealership going after net-new business is about 30%. That means for every 3 deals we win we LOSE 7 more. The reasons we lose vary. Sometimes we just get outsold. Sometimes the customer just isn’t interested in MPS. There are tons of times when the customer is already in a long-term MPS contract with somebody else.

What if I was to tell you that you could win business even when there is no MPS business? What if I told you that you could increase your gross profits by an additional 50% without selling any toner or service? Call me crazy, but I think adding double digits to our gross profits is always worth consideration.

Here’s how the typical MPS sales cycle works:

Let’s pretend you’re starting an MPS business from scratch. And a typical customer looks like this:

    • 250 employees
    • 50 print devices
    • 600 mono pages/employee/month & 200 color
    • pages/employee/month
    • $5,250/month in CPP revenue ($3,000/month in color and $2,250/month in mono)

And let’s say your team sales/closing efforts look like this:

    • 10 new prospects per month
    • Convert 30% of those leads into happy MPS customers
    • Average gross profit of 30%
    • Revenue by end of year one is $1,228,500
    • Gross profit by end of year one is $368,550

Good for you! But what about the 7 deals you “lost”? Is it okay to be happy with $368,550 in gross profit? What if you could increase year one gross profit by 50% or $201,825?

The conversation with the customer you can’t sell MPS to (at least not for now…) could go something like this:

“No problem, we understand you are engaged with Dealer XYZ for MPS for the next 2 years. We can still help you to reduce your print spend by 20%-30% without selling you any MPS by helping you to do a better job of managing your print-stream more effectively.”

I won’t give you the entire elevator pitch here, but you can sell them print-stream optimization WITHOUT selling any toner and service. Win 5 print-stream management deals every month:

    • Convert 25% color volumes to monochrome
    • Reduce waste-print by 25%
    • Charge $575/month to do that
    • Save the customer 22% of current spend
    • Make $517.50/customer/month in gross profit!

You might say “That’s crazy, we’d never win 5 out of 10 deals a month on print stream management!” Okay, say you only won 2 or 3 print-stream deals per month: That is still an additional $100,000/year in additional gross profit! And once the rules are setup and configured the software does all the work! And you can begin to groom that customer to buy your MPS services when it comes time for contract renewal by providing real value in the interim.

Come back to the blog next week to learn about sign #5 that your MPS business is stuck in 2006: You think CPP is still the best way to charge for MPS.

 

Topics: business, business strategy, contract, managed print, Managed Print Services, MPS, office, Office Equipment Dealers, print audit, print management, print tracking, printers, printing, sales, sales cycle, Savings, selling, strategy, success, tips, Toner, value

West McDonald

Written by West McDonald

West McDonald is Vice President of Business Development for Print Audit.

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