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Office channel & MPS: the moment has come to act

Read the previous articles here and there.

Question: I understand the points being made, but it seems to me that this still quite new and uncertain. Is there any harm in waiting a year or two longer, to see how things develop, before deciding whether to commit to MPS?

Answer: This is a very understandable question, but in this case, being over-cautious may represent the greatest risk to future business prospects.

The most straightforward MPS sale is to a customer who is a first-time MPS buyer – the fleet is typically unmanaged and presents large and fairly obvious opportunities for rationalisation, with potential for significant savings to be delivered relatively easily. However, as the market matures, there will be fewer first time buyers left, and already in the UK market, there are indications that we are close to a cross-over point, where the majority of sales opportunities will be to existing MPS users. The point here is that a sale to an existing MPS user can be much tougher. The obvious rationalisation gains have already been made, and to persuade the customer to shift, the new provider has to work much harder to make a significant differentiation.

This point is underscored by market research, which shows that rates for renewal of MPS contracts with the same provider are currently running at well over 90%. Customers, as well as providers, invest a lot of time and effort in setting up an MPS contract, and they are reluctant to go through the whole process again, unless they see a very good reason to change provider.

The implication is clear. OP dealers need to seize as many as they can of the first time buyer opportunities, while they still exist, and turn them into long-term loyal customers. Otherwise, they will be left scrapping with other new entrants, to persuade existing MPS users to switch provider. This is a land grab.

 

Q: Now I understand why I need to look seriously at MPS. However, it looks very different from the core OP business. I wonder how realistic it is for an OP dealer to be successful with MPS, and how they should get started.

A: It is correct to say that this not easy, and the first piece of advice must be not to start, unless you are serious and committed. This will involve a significant change of business model, with major implications for all parts of the business, including people, processes, infrastructure and software tools.

However, the good news is that help is readily to hand. There are ready-made MPS programmes, such as HP’s Smart Printing Services, XPPS from Xerox, Channel OPS from Konica Minolta, and Partner MPS from Brother. OP dealers can subscribe to one of these programmes, which will help them to get started, by providing support for many of the more difficult components. Then over time, dealers can choose to take on more of the MPS offering themselves, as they gain in experience.

Another key point is that OP dealers have some advantages over other MPS providers, through their intimate knowledge of their customer base, and their logistics capability.

IDeAs has a lot of experience in helping resellers to succeed in MPS, and would be happy to discuss this with you.

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This article was written on 29 Jan 2015, and is filled under Business Forecast, Managed Print Systems.

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