Managed Print Services: Some good tactics… but questionable sales strategy 5/5

By Jean-Louis de la Salle

This engagement was with a small size dealer. It was using consulting for the first time, which is pretty ordinary for a company this size. Their concern was that the assignment should be simple and quick to implement. No big MPS theories but practical and actionable items. When we prepared the assignment, we learned of the energetic nature of its leadership and knowledge about technology. That sounded exciting. As you will see from the learnings, strategy is still required within a smaller organisation and time has to be spent thinking about the company’s future.

Learning 1

A dealer principal can have good management qualities and have established a great work culture over the years; the company still needs a solid business model. What we had been told about the management was absolutely correct but we could highlight that they were going in a wrong direction; we were able to make them aware of that.

The usually available financial figures in any industry are generally between 3 and 15 months old and in our fast changing environment this can be a challenge. Having up to date data is critical today even for a smaller organisation. With part information from the last 6 months, we were able to reconstruct the P&L and show that the company was operating at a loss and that it was definitely time to challenge elements in the strategy, especially on the sales side. By contrast the back-end processes and automation were very good and showed superior efficiency.

MPS requires global thinking

We found that there was too much customer turnover, as a result of a  lack of a compelling services offering; that larger opportunities were not pursued due to the prices prevailing in the large account market, because no services offering could add margin and compensate for the low hardware prices; that in the smaller accounts, the average revenue per sales person was too low i.e. the cost of sales too high; that sales people had no incentive to expand within an account and take control of the fleet, etc. The cost of traditional sales was growing in a flat market so profitability was going down quickly.

This shows that MPS requires global thinking and realignment of the company where sales productivity is needed as much as back-end efficiency.

Learning 2

When confronted by a declining market, there is a call for change. It is not easy for a company of small size to decide what to do next. It is ill equipped to deal with consultancy and outside expertise. I believe it is the ecosystem’s responsibility to help a good company navigate through these difficulties. It can be called the supplier’s “extended” mission.

A supplier may act as a business strictly based on immediate results or it can make a choice to help its reseller out of a solid long-term view of its own business interest. Clearly smaller dealers, however dynamic, need the help of their larger partners to navigate through this huge market and profit dynamics change. Transparency has not been prevailing in our industry, neither the understanding of each party’s strategic interests. A culture of cooperation is called for.

In this series of real life examples, we insist on one or two key take-aways that we found important in this particular dealer environment. We stay high level not to disclose any confidential information. What is important to you is that when we go in, we address real strategic problems. If they are not addressed in time, the company could become at risk.