May 2006 Office Technology

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CONTENTS Volume 12 No. 11

COURTS & CAPITOLS

FEATURE ARTICLES

16

Document Management Providing a solution for storage & retrieval pain

by Brent Hoskins Office Technology Magazine

by Robert C. Goldberg BTA General Counsel

If you are among those dealers still selling boxes as you always have, many would agree that it is time to move forward.

Where do you start? What software products should you be offering? One possibility lies in document management — well suited for nearly any business.

Take advantage of all of your BTA membership benefits and obtain what you need to remain successful.

The CPC Risk Color could destroy your service margins

by Lou Slawetsky Industry Analysts Inc.

SELLING SOLUTIONS Sales Compensation Creating a plan that works for your dealership

25

TONER CONSUMPTION Assumed vs. Actual L

al

tu

Ac

by Jim Kahrs PPMC Inc.

RISK ed

Assum

Page Coverage

Having a strong compensation plan can be the driving force behind building your dealership.

L

Don’t base your all-inclusive service contract rates upon vendor yields that assume unrealistic coverage areas and no information for higher rates of coverage.

18

‘BTA Has The Information’ Have you forgotten about this industry resource?

24

Toner Consumption

10

Dealership Newsletters Getting the solutions message out is important

PRINCIPAL ISSUES Close-up: Kyocera Mita OEM emphasizes solutions-focused training

27

by Tom Brasuell Kyocera Mita America Inc.

by Darrell Amy Dealer Marketing Systems

One of the best ways to let your current and potential clients know about your dealership’s new value-added services is through a monthly or quarterly newsletter.

20

Selling to IT The key is creating a real sense of value

Here is a look at Kyocera Mita’s training initiatives — KMAConnect and the KMA Learning Center.

Color is Here! ’05 workgroup UCP hardware revenue: $2.7 billion

29

22

Making Connections eCopy hosts dealers, ISVs & manufacturers at forum

by Brent Hoskins Office Technology Magazine

Software vendor eCopy Inc. has come far in recent months. That reality was particularly apparent at the company’s recent Paper Connection Forum.

4 | www.of ficetechnologymag.com | May 2006

Workgroup Copiers and Copier-Based MFPs Monochrome vs. Color U.S. Placements (000) Color Devices

800

600

Black & White Devices

400

200

0 2004

2005

2006

2007

2008

2009

by Jeff Hayes InfoTrends

by Michael Greenberg PrinTelogy Inc.

The reps are out pounding the pavement. “Sell, sell, sell” is the direction they are given, but they are returning empty-handed. How can they best sell to IT?

Placements (000) 1,000

Office color machines will overtake B&W devices in most product segments over the next five years.

DEPARTMENTS Business Technology Association

23

June-September Education Calendar

6

Editor’s Page

8

BTA President’s Message

30

Advertiser Index

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EDITOR’S PAGE

A Few More Ideas for ‘My Dealership’

I

n the April issue of Office Technology I shared some comments I heard in an education session at this year’s ITEX show.

My intent was to provide some insight and guidance shared in the session from the perspective of a dealer — as if I owned my own dealership. This month, I’d like to continue with the same idea.

This spring, in addition to the ITEX show, I’ve had the opportunity to attend several other industry events — national dealer meetings hosted by Sharp and Kyocera Mita America, the eCopy Paper Connection Forum and a press event hosted by Equitrac.

Based on what I heard at these events, following are some of the changes I need to make in “my dealership.”

I need to ensure my sales reps avoid the use of the word “copier” in their sales calls.

Otherwise, we will be unable to separate ourselves from the past. For many users, the word “copier” simply brings to mind two other words — “machine” and “jammed.”

We want to be seen as a technology company that provides solutions to documentrelated problems. The word “copier” doesn’t help us accomplish this task.

It is time to settle on at least one or two software applications to offer clients, perhaps beginning with a document management solution. I’ll direct my reps to begin prospecting among our current clients. I know many of them could benefit from a means to capture, archive and retrieve their electronic documents. If we don’t provide this solution, our clients will look elsewhere — jeopardizing some of our installed base.

6 | www.of ficetechnologymag.com | May 2006

Again,we need to be known as a company that helps solve problems. Many say this can be accomplished, in part, by adding a solution champion or specialist to work alongside my sales reps. To make this work, I need to ensure everyone involved is paid appropriately. Otherwise, I am told, my reps will not be inclined to involve the champion/specialist in the sales process.

Whatever software solutions we select, they need to be a part of the sales process from the beginning. We don’t want to sell the machine and then go back later and ask: “Would you like to buy some software to go with that?” Instead, we need to develop a strategy to assess the current needs of the client, so that we can be seen as an expert in document workflow from day one. Also, it will be necessary to remind clients that this needs to be an ongoing relationship. As hardware and software continue to evolve, we must make sure clients will always turn to us first for guidance — and upgrades.

If my dealership is going to be seen as a source of expertise in the area of office technology, we need to tell the world. That begins with regular education events, perhaps luncheons or open houses. Along with such events, we also need to provide support materials that serve to educate clients. This should include client testimonials and case studies as well. Once we have our first few successful software installs, we’ll let our current clients boast to our future clients about us.

I don’t want “my dealership” to be left behind. So, it is time to make these changes.

The challenge is doing so judiciously. I want to boost revenue and profit, not just expenses. I’m moving forward. How about you?

— Brent Hoskins

Editor Brent Hoskins brent@bta.org (816) 303-4040 Contributing Writers Darrell Amy, Dealer Marketing Systems www.dealermarketingsystems.com Tom Brasuell, Kyocera Mita America Inc. www.kyoceramita.com Robert C. Goldberg, General Counsel Business Technology Association Michael Greenberg, PrinTelogy Inc. www.printelogy.com Jeff Hayes, InfoTrends www.infotrends.com Jim Kahrs, PPMC Inc. www.prosperityplus.com Lou Slawetsky, Industry Analysts Inc. www.industryanalysts.com

®

Business Technology Association 12411 Wornall Road Kansas City, MO 64145 (816) 941-3100 www.bta.org Member Services: (800) 505-2821 BTA Legal Hotline: (800) 869-6688 Valerie McLaughlin Membership Marketing Manager valerie@bta.org Gary Hedberg Accounting Manager gary@bta.org Mary Hopkins Accounting Clerk mary@bta.org ©2006 by the Business Technology Association. All Rights Reserved. No part of this publication may be reproduced by any means without the written permission of the publisher. Every effort is made to ensure the accuracy of published material.

However, the publisher assumes no liability for errors in articles nor are opinions expressed necessarily those of the publisher.

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You u Deserve Peace e off Mind

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Office Equipment Finance Services © 2006 U.S. Bancorp®

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BTA PRESIDENT’S MESSAGE ®

Take Full Advantage of BTA Membership

I

was pleased to see Bob Goldberg’s column, “BTA Has The Information,” appearing in this issue of Office Technology. Bob does an excellent job this month of reminding dealers of the value BTA brings to our dealerships. He also reminds us that we often do not receive the full value of membership because we fail to take advantage of all of BTA’s programs and services.

With these thoughts in mind — and in the spirit of Bob’s column — allow me to list a few of the membership benefits that you may have overlooked: Currently posted for download in the members-only section of the BTA Web site (www.bta.org) are three Channel Benchmarking Reports. They are: 2005 Finance Report; 2004 BTA Service Productivity Report; and 2004 BTA Compensation Report.

These reports are free to members; nonmembers pay $200 or more each. (Watch for the 2006 Service Productivity and 2006 Compensation reports later this year).

Also in the members-only section of the BTA Web site is The Business Owner newsletter, a how-to information service.

The newsletter — one of the most respected in its field — is published bimonthly and contains pertinent information for business owners. Past issues are archived on the site.

When you joined BTA or renewed your membership you received a $150 discount coupon that can be used when registering for BTA courses and select courses offered by others in the industry. These include courses offered by such popular instructors as Jim and Paul Strauss, Gil Cargill, Ann 8 | www.of ficetechnologymag.com | May 2006

Barr and Darrell Amy. The coupon can also be used toward the purchase of other select BTA products, such as the Business Equipment Quota Index (BEQI).

BTA offers education scholarships for use at colleges and accredited vocational trade schools. They are available to the sons and daughters of BTA retail dealers and the sons and daughters of their full-time employees. For the current school year, the association awarded $16,500 in scholarships to 14 students. Was your child among them?

(The application deadline for the 2006-2007 school year has past, but keep this benefit in mind for the next school year.)

The BTA ProFinance course teaches dealers how to analyze current business practices and evaluate strengths and weaknesses. Participants explore important issues surrounding profitability benchmarks, asset management, expense controls and employee productivity. BTA members receive a $455 discount off the tuition. (You can use your $150 discount coupon for this course.)

In the members-only section of the BTA Web site, members may download any of nearly 100 job descriptions submitted by other dealership principals. Descriptions are available in eight categories: accounting, administration, customer service, executive management, inventory and warehouse, network technology, sales and service.

Space allows me to list only a few examples, but the question is obvious: Are you taking full advantage of BTA membership?

(By the way, did you know that some OEMs will underwrite the expense of BTA membership and education tuition? For details, call BTA at 800-505-2821.)

— Mark Naylor

2005-2006 Board of Directors President Mark Naylor ABM Automation 740 NW 63rd St. Oklahoma City, OK 73116 markn@abmautomation.com President-Elect Dan Hayes Purcell’s Business Products 222 E. 1st St. Campbellsville, KY 42718 dan@purcells.com Vice President Shannon Oliver Copier Source Inc. 215-G Industrial Ave. P.O. Box 36395 Greensboro, NC 27406-4542 soliver@copiersourceinc.com BTA East Thomas Chin Accolade Technologies LLC 604 Hampshire Road Mamaroneck, NY 10016 tchin@accotech.com BTA Mid-America Dave Johnson G-I Office Technologies Inc. 701 Atlas Ave. Madison, WI 53714 davej@gioffice.com BTA Southeast Bill James WJS Enterprises Inc. 3315 Ridgelake Drive P.O. Box 6620 Metairie, LA 70009 bjames@wjsenterprises.com BTA West Greg Valen Hawaii Business Equipment Inc. Toshiba Business Solutions 590-A Paiea St. Honolulu, HI 96819 gregory.valen@tabs.toshiba.com Ex-Officio/General Counsel Robert C. Goldberg Schoenberg Fisher Newman & Rosenberg Ltd. 222 S. Riverside Plaza Ste. 2100 Chicago, IL 60606 robert.goldberg@sfnr.com

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Document Management Providing a solution for storage & retrieval pain by: Brent Hoskins, Office Technology Magazine

I

t appears that for many office technology dealerships the path from the MFP’s feeder to the exit tray remains the sole point of contact with customer documents. For these dealerships, perhaps the opportunities beyond the box seem beyond reach.

In stark contrast, many other dealerships are regularly providing customers with the means to manage all stages of the document life cycle. They have embraced the opportunities presented by today’s growing number of software-based solutions. With an eye on new sources of revenue and stronger customer relationships, they have resolved to move forward, well beyond the box.

Without a doubt, the vast array of software products that work in conjunction with MFPs can be dizzying. Nevertheless, if you are among those dealers still selling boxes as you always have, many would agree that it is time to move forward. Where do you start? What software products should you be offering? One possibility lies in a software category that is well suited for nearly any business — document management.

Because of the varying explanations that are sometimes offered for this software category, some may ask, “What, exactly, is document management?” Gregory Schloemer, president of DocuWare, shares a simple definition. “Document management deals mainly with tracking the document from its creation through its life cycle,” he explains. “It involves capture, storage and retrieval — the ability to create an audit trail for the life cycle of that document.”

Today, there are many document management solutions from which to choose, including those offered through OEMs. Ricoh, for example, offers DeskTopBinder V2 Pro, pro10 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a y 2 0 0 6

moted as “personal document management software.” Similarly, Sharp offers Liberty Doc2NET, a privatelabeled version of Liberty IMS’ LibertyNET document management solution. Perhaps the latest of the OEM products is iTag, unveiled by Kyocera Mita America at its national dealer meeting in April. The product is promoted as “an intuitive, user friendly document management solution ideal for small businesses or departments.”

Of course, there are also many other document management solutions available for resell through dealers — those offered by software vendors. Among them: ColumbiaSoft Corp. (www.columbiasoft.com), CompuThink (www.comp uthink.com), DocuLex (www.doculex.com), Docutron Systems (www.docutronsystems.com), DocuWare (www.docuware.com), Idatix Corp. (www.idatix.com), InfoDynamics Inc. (www.infod.com), InfoNow Solutions (www.infonowsolutions.com), I.R.I.S. Inc. (www.irislink.net), Liberty IMS (www.libertyims.com), Marex Group Inc. (www.filebound.com), PrinterNet Imaging Solutions (www.filescan.net), The Hedman Company (www.hedman co.com) and ZyLAB (www.zylab.com).

Certainly, there are many other document management software vendors offering solutions through the dealer channel as well. Some products are designed for departmental use, while others are designed as enterprise solutions. Meanwhile, some vendors’ products are solely targeted at basic document management, while other vendors offer document management capabilities in addition to a variety of other advanced capabilities. Consequently, there is a wide range of investment costs and retail pricing.

As noted, despite the growing number of product offerings,

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it is stamped and routed to it appears that many dealers “You are dealing with the appropriate department have yet to take on even a such things as storage, manager. “The department low-end document manageretrieval time, bandwidth manager reviews it with the ment solution. Why the purchase order information, delay? The comments of ... For the average signs it, stamps it and three software vendors reseller to suddenly say routes it back for payment,” reflect some of the basic ‘Ok, I’m going into this he explains. “However, if reasons and an underfield’ without a guiding there are multiple departstanding of the dealers’ hesilight, so to speak, is overwhelming.” ments or remote offices, tation. From Christopher — Greg Schloemer then perhaps there is a Lupton, president of InfoDocuWare courier service, mail deDynamics Inc.: “They are livery or a person who physconcerned that the sale [of ically takes the invoice to the additional location. the hardware] is going to get hung up, and that it’s going to “With a document management solution, the invoice is get cost prohibitive for the customer.” From Mike Holp, channel manager for ZyLAB: “They are used to selling iron. captured, stamped and automatically routed to the departSelling a software solution requires a commitment to learn ment manager [and to any other necessary departments or the product and how to sell it.” And from DocuWare’s offices],” he continues. “With one search, the manager will Schloemer: “You are dealing with such things as storage, have the supporting documents, and can approve the retrieval time, bandwidth — a whole new concept that we invoice. It will then be automatically routed back to the call document management. For the average reseller to sud- accounting department for payment.”

Within the same day, says Schloemer, the invoice is ready denly say ‘Ok, I’m going into this field’ without a guiding for payment. “You are very quickly able to establish a real light, so to speak, is overwhelming.”

In an effort to assist dealers who may be hesitant in pur- benefit — a tangible cash benefit to that customer,” he says, suing the sale of a document management solution, fol- referring to the dealership that offers a document managelowing is a series of key questions on the topic. In addressing ment solution. “What you’ve done is you’ve eliminated the the questions, perhaps the comments shared by representa- need for a courier, etc., and all the time needed to search for tives of four of the many document management software information. You’ve improved productivity in the accounting vendors will serve to provide some of the insight and guid- department, and that of the manager, who can now focus on his core responsibilities. Nobody is paid to handle paper.” ance dealers are seeking.

Why haven’t more companies implemented a document How big is the opportunity? For the DocuWare product, says Schloemer, the target customers are those companies management solution? InfoDynamics’ Lupton says there with between 20 and 500 employees. “The results of the 2000 remains an adherence to the old adage, “If it’s not broken, U.S. census tell us that there are approximately 600,000 don’t fix it.” The problem, he says, is that many end-users companies matching that criteria,” he says, noting that are not fully aware that they have a business process that there are an additional 20,000 or so U.S. companies with needs fixing. “It’s difficult for them to see the number of more than 500 employees. “And we know that there is some- calls that they have to make to call back somebody after where in the neighborhood of about 60,000 professional they looked for a piece of paper and finally faxed it or esolutions installed. So, approximately 85 to 90 percent of the mailed it to them,” he explains. “The only reason it is not market is virtually untapped, totally open. We are not aware apparent to them is that they’ve been doing it the same way year after year. They don’t think about it.” of any market that has that kind of potential.”

How would one of these end-users respond if asked about What are the benefits of a document management solution?

Generally, the two leading benefits cited are savings in time what he (or she) has accomplished in a given day? “He is and money. Schloemer cites the simple example of an going to say, ‘I filed these claims, I talked to these customers, accounting department completing the task of accounts I helped these patients,’” explains Lupton. “He is not going to payable. He traces the typical route of the invoice, from its say, ‘I got up from my desk 12 times to search through manila arrival into the accounting department of a business, where folders and pull documents.’ So, it’s difficult for a company to 12 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a y 2 0 0 6

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Document Management Questions?

“One of the questions I recommend that the rep ask is, ‘Is your business model paper-intensive?’

If the answer is ‘yes,’ then ask, ‘How often do you need to go to a file cabinet to retrieve a document? ...’”

— Mike Holp ZyLAB acknowledge that there is a need when they’ve been doing the same thing for years.”

How can the sales rep best bring to the customer’s attention the need for a document management solution? “One of the questions I recommend that the rep ask is, ‘Is your business model paper-intensive?” explains ZyLAB’s Holp. “If the answer is ‘yes,’ then ask, ‘How often do you need to go to a file cabinet to retrieve a document? How often do you need to search your files? How much time are you actually spending looking up information in file cabinets?’

“If the answers to these questions are significant — let’s say an hour a day for a 10-person office — the payback is being able to save five hours a week previously spent searching for documents,” he continues. “Obviously, that scales upward when there are more people in the office.

The ROI [on a document management solution] can occur very quickly. Depending on the size of the company, it can be less than three to six months.”

Does the sale of a document management solution require a specialist or champion? “Absolutely,” says Lupton. “I think any dealership that has five or more outside sales reps needs to have someone. This person may not necessarily specialize in, say, Intact (InfoDynamics’ solution). It may be that he or she focuses on document management, fax solutions, print management, forms packages, etc.

“The kinds of questions that the sales rep is going to get hit with are going to be a little bit intimidating,” he continues. “One good way to circumvent that is for that rep to be able to say, ‘You know, we can definitely get you some answers on that. I’ll have Jill in our solutions department give you a call.’ So, a solutions person is almost a mandatory person to have on board to help facilitate solution sales.”

Steve Lehrer, vice president of business development for Liberty IMS, offers a similar response to the question.

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of the software itself and “Absolutely,” he says. “We “It is always easier ... to professional services fees see that the dealers who are (training, installation, etc.). moving volume have chamjust say, ‘It sounds like you In addition, Holp notes that pions who know the proneed a new MFP, because customers frequently opt duct very well. But, more your old one has seen its for upgrades after the initial importantly, they underday.’ But along with that software installation. “Maystand solution selling. They the rep should say, ‘We be they start out with a fiveneed to be able to identify also have software that ... user system, really embrace the opportunities and prowill get rid of those file cabinets ...‘“ the technology and the mote the solution, both with — Christopher Lupton company grows,” he extheir co-workers — with the InfoDyamics Inc. plains. “Now they need ten sales team — as well as with people to access document the customer.” collection.

So, there are lots of benefits in terms of increWhy is now a good time for the office technology dealership to begin selling a document management solution? mental revenue streams that the dealership can derive from Among the most commonly cited reasons is the prolifera- that initial sale.”

The sale of a document management solution may also tion of the digital document itself. “Five years ago we were lead to a hardware upgrade, says Lupton. “One of the biggest spending a lot of time explaining what a digital image is and the benefits of a digital image,” says Schloemer. benefits is that it can turn a customer who was looking at a “Today, everybody is networked and has access to digital 25 page-per-minute MFP without scan and print capabilities documents. There is e-mail, the MFP itself, which is cre- into a customer interested in a 50 page-per-minute MFP that ating digital images, the PC and, of course, we’ve always is loaded with scan and print features,” he says. “Initially, had faxes — digital as well. So, MFP providers are in a very they may not have been interested in a higher-speed model.”

Schloemer cites one final payoff that some dealers may strong position today, because MFPs are in most companies and customers are asking, ‘Hey, how can I make use of not initially expect. “In most cases, the solution starts out with what we call ‘day-forward’ capturing,” he says. “But then this digital image?’”

Lupton offers a similar observation. “People are getting the customer comes back and asks, ‘What about our 2005 exposed to the fringe of true document management right documents? I have to go back all the time to those docunow just by the equipment they are purchasing and the e- ments. Can you help me there?’”

This provides the dealership the opportunity to offer backmails they are receiving,” he says. “They are asking, ‘I can create an electronic copy wonderfully with the equipment file conversion, says Schloemer, noting that many dealerthat I have, now what do I do with it?’ A lot of times, dealers ships, for a fee, will scan the documents and provide the are introducing a very complex piece of equipment that has a customer DVDs containing all of the files. “I would say that lot of features and capabilities and then they are kind of 60 percent of our resellers provide this service,” he says. ‘leaving the customer standing at the alter’ when it comes to “MFP resellers are in a perfect position for this.”

Where should the dealership begin, once it has selected a truly getting their business to a point where it is paper-light.”

What’s the payoff for the dealership? From Lehrer’s per- document management solution to sell? Dealers should start spective, for dealerships, the greatest benefit of selling a doc- with their existing client base, says Holp. “They’ve sold to ument management solution is the ability to manage the them once before and it’s a lot easier to sell to them a customer. “You basically get account ownership,” he says. second time,” he says. “Oftentimes, those clients are asking “Whereas, when you are selling speeds and feeds, the next dealers, ‘I’ve got some pain here when trying to find docuperson who comes out with a faster device is the one who ments, can you help me out?’”

Lupton agrees. However, he also suggests that sales reps will get that business. When you are selling a solution, you now have, in a sense, formed a much closer partnership with should prospect for a document management implementayour customer in that you are involved in their business. tion in every sales call. “It is always easier for a sales rep to just say, ‘It sounds like you need a new MFP, because your You are not just a peripheral to them.”

There is also, of course, the added revenue from the sale old one has seen its day,’” he says. “But, along with that the 14 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a y 2 0 0 6

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rep should say, ‘We also company been in existence?

“They are very good at have software that works As dealers investigate the selling boxes, and this great with your MFP and document management opwhole idea of software will get rid of those file cabportunity, they can expect to inets over there.’ It is easier hear the same emphasis on and solutions is a little bit to bring it up first and have the importance of solution scary to the bulk of them. them say they are not intersales that they are hearing But if they don’t get on ested in the software, than from hardware vendors. A this ship called ‘Solutions,’ it is to introduce it after a comment from Lloyd Warit is going to sail without them.” competitor has brought man, president and CEO of — Lloyd Warman this idea to the table.”

Liberty IMS, reflects the Liberty IMS While the responses to common message: “They are each of the above questions very good at selling boxes, provide some guidance for dealers to consider, there are, of and this whole idea of software and solucourse, additional questions that dealers should ask when tions is a little bit scary to the bulk of them. seeking a document management solution provider. Among But if they don’t get on this ship called ‘Soluthem: What sort of training and support will the software tions,’ it is going to sail without them.” vendor provide my dealership? How many successful impleBrent Hoskins, editor of Office Technology mentations of the software are in place? How long has the magazine, can be reached at brent@bta.org.

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The CPC Risk Color could destroy your service margins by: Lou Slawetsky, Industry Analysts Inc.

I

Toner Consumption

assumed usage patterns. ndependent dealers Your vendors have esticontinue to use costTONER CONSUMPTION mated your toner cost per-copy/page plans Assumed vs.

Actual using an assumed covas a market strategy to erage average of 5 pershorten the selling cycle.

cent per page for monoThese plans combine chrome images. That’s hardware, service, supbeen an industry stanplies and financing into a l a dard for many years. As it single “click” charge. tu RISK Ac turns out, at least for The “Imaging Prodprinting, that is reasonucts Dealer Distribution ably close. And, if you are Strategies Report,” pubed Assum off by a bit, there is not lished annually by Inmuch risk to your botdustry Analysts Inc.,

tom line. But what about indicates that 68.3 perPage Coverage color? Now, you are not cent of dealers use these dealing with one color, plans. Further, those following this strategy place 39.4 percent of their units under but four. What’s more, color toner costs considerably more than the monochrome equivalent. Consequently, a small these “all-in” plans.

While these plans tend to simplify the selling cycle, we find error in your assumption of page coverage will be magnified that gross margins are traditionally lower than those by at least 5X. With a margin of error this wide, even a small achieved when selling contract components separately. Our miscalculation in toner consumption for a color printer or report shows that the overall gross margin for all hardware, MFP can result in an outright loss on your service contract. service and supplies activities is 36.0 percent, while the gross In many cases, this loss will not become evident until after margin for cost-per-copy/page programs is only 34.3 percent. the first year of the service agreement. If you have limited the Why the difference in margin between the two plans? rate of price increases, as many agreements do, you will not The answer is deceptively simple. When pricing cost of be able to increment the price fast enough over the ownership components separately (hardware, service, sup- remaining life of the agreement. The result will be a loss for plies, finance cost), there are multiple components to be the entire life of the imaging system.

Why does color represent such a problem, aside from shopped by the decision maker. On the other hand, when the fact that you simply use more toner? It is not the fact the decision maker only has one price with which to deal, the minute your sales representative says, “The total cost that color systems use more, but the amount they use. will be $.019 per page,” the prospect will begin to look for Earlier, I stated that the assumed page coverage for mono$.017 for a similar solution. Increased competition forces chrome pages was 5 percent (by the way, it used to be 6 percent, but that’s a different issue). In order to calculate margins down.

However, there is an even bigger risk, hidden among your toner use for four-color images, vendors simply assumed 5 16 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a y 2 0 0 6

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7% 2% 3/ 0,%!3%$ percent per color or a total of 20 percent. However, our research indicates that the actual average for four-color prints is closer to 8.5 percent per color or 34 percent.

Many dealers, on advice from â&#x20AC;&#x153;experts,â&#x20AC;? simply interpolate the extra toner needed when coverage is greater than the average indicated by their vendors. This would be a logical approach if the relationship between coverage and consumption was linear. That is, a relationship where a 20 percent increase in coverage resulted in a 20 percent increase in consumption. Unfortunately, that is not the case.

Testing in our Fairfield, N.J., lab has shown the curve describing that relationship to be shaped almost like a hockey stick. Consider, then, the chart on page 16.

The green line shows the assumed relationship between page coverage and toner consumption, while the blue line represents the actual relationship. (Note: This graph is a representation shown for example only. Hence, there is no scale.) The area between the two lines represents your risk.

It is obvious from the discussion to this point that any service contract for a color-capable MFP puts your margins at risk. Of course, you could always ask your vendor to supply toner consumption data for rates of coverage higher than 5 percent per color. Our assumption, based upon test data requests to our lab, is that few vendors have measured this under actual use.

Absent of these data, there are alternate courses of action that can protect your margins or, at least, minimize your loss. Here are two ideas: Write your service contract so as to include black toner only. Sell color toner separately.

Limit the amount of color toner to an agreed upon quantity based upon assumed coverage (5 percent per color). Charge for excess when the base amount is delivered.

No matter what course you choose, understand that basing your all-inclusive service contract rates upon vendor yields that assume unrealistic coverage levels and no information for higher rates of coverage is a recipe for disaster.

The explosive growth of color, forecasted by every organization measuring such trends, only serves to increase the impact and immediacy of this risk.

Lou Slawetsky is president of Industry Analysts Inc., a Rochester, N.Y.-based marketing and management consulting firm specializing in research, training program development and product testing for the office automation industry.

Visit www.industryanalysts.com.

7 ) 4 ( / 5 2 , !4 % 3 4 ) . . / 6!4 ) / .

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w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a y 2 0 0 6 | 17

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Dealership Newsletters Getting the solutions message out is important by: Darrell Amy, Dealer Marketing Systems

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o your current clients know about the new print and document management solutions that your dealership provides? How about your potential clients?

Getting the solutions message out to your market is important. The lost profit opportunities could be substantial. For example, a current client that does not know about your print management services may continue to purchase printer supplies elsewhere. Or, another client might buy a document management solution from a competitor.

One of the best ways to let your current and potential clients know about your dealership’s new value-added services is through a monthly or quarterly newsletter.

The Key Benefits A dealership newsletter offers many useful benefits: Reposition Your Dealership — As the hardware business continues to slip toward commodity status, a newsletter can be a key tool to reposition your dealership as a value-added solutions provider. Articles that feature your ability to solve critical business problems reassure clients that your dealership is a credible source of document solutions. Over time, a well-written newsletter content helps differentiate your dealership from other hardware-centric dealers.

Educate Your Clients — Many of your clients have not said “yes” to a solutions proposal because they feel like they do not know enough about your new technologies. A newsletter is a great way to provide bite-sized chunks of education about your print and document management solutions. This helps them feel more comfortable when it comes time to approve a solutions proposal.

Protect Your Base — If your clients do not know about your value-added print and document management solutions, they may purchase them from a savvy competitor without your awareness. Ultimately, this could lead to a substantial erosion of your base. A newsletter can be a proactive 18 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a y 2 0 0 6

E-mail: What You Need to Know If you opt to send your newsletter via e-mail, be aware that recent “Can SPAM” regulations regulate how e-mails are sent: > Broadcast e-mails must have an “opt out” option that permanently removes an e-mail address from your list. Once someone has opted out it is very important that you do not send any more messages to that e-mail address. > Broadcast e-mails must include your physical address.

E-mail marketing services provide a solution to this problem by managing your e-mail list and ensuring that your dealership is in compliance. Added benefits of these services include: > Click-through Reporting — You can see who clicked on the links in your newsletter and what sites they visited. > Spam Analysis — Evaluate how likely your newsletter is to get through SPAM filters. > One-to-One Distribution — Instead of sending one e-mail with thousands of addresses in the “BCC” line a good e-mail marketing service will send thousands of individual e-mails with one e-mail address in the “To” line. This helps ensure the e-mail will get through.

way to make sure your dealership is involved in all solutions opportunities inside your base.

Cross Sell Your Clients — We all know it is much easier to sell something to a current client than a new client. A newsletter is a good way to generate leads inside your existing hardware base. Each newsletter can feature promotions for additional products like document management solutions, color laser printers or shredders.

Stay in Front of the Customer — For most clients the only times they interact with your dealership are based on somewhat negative circumstances — they request a service call, send a meter reading or open an invoice. A newsletter is a positive way to keep your dealership in front of your clients, helping them associate your business with progressive ideas.

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To Print or to E-Mail?

Both print and e-mail marketing have their benefits. The best strategy leverages both technologies.

E-mail marketing offers the allure of no color printing and mailing cost. To create an effective e-mail marketing campaign you need to have e-mail addresses from your marketplace. To build this database, gather a list of all of your current customers’ e-mail addresses out of your CRM databases. Then, put a fishbowl by the door to the sales department and require your reps to dump cards from their sales calls. Do the same for trade shows. Enter these email addresses into your database. Over time, you will build up a great database of e-mail addresses.

As a dealer who sells machines that put color toner on paper, I would become a champion of direct mail for your newsletters. Sure, it is more expensive, but sending a printed newsletter helps you lead by example. Your salespeople can show your clients the benefits of a printed color newsletter helping them drive new color placements and volume.

Printed newsletters can be inserted in your invoices. They can also be mail-merged with your sales database and sent to the key prospects in your market.

concerns. Otherwise, the newsletter will not get read. Even worse, you will reinforce the fact that your dealership is out of touch with your clients’ business problems.

Creativity — Come up with creative angles for articles that address practical business issues and simultaneously drive key initiatives in your dealership like color, print management and document solutions.

Call to Action — Embed call-to-action statements throughout your newsletter. In the e-mail version of your newsletter these can be actual links to your Web site or to an e-mail address for more information.

Darrell Amy helps dealers succeed in the document solutions business with consulting, sales training and direct marketing services, including monthly newsletter content. He is president of Dealer Marketing Systems.

Contact Amy at (501) 626-4110 or damy@dealermarketingsystems.com.

Visit www.dealermarketingsystems.com.

Developing Newsletter Content Newsletter content should be written from your clients’ perspective. Your clients do not care about your business.

Your clients care about one thing — their business.

Write articles that provide practical solutions to business problems. Here are some sample article topics: How to Shorten Collection Times on Invoices How to Grow Your Business with a Customer Newsletter Ensure Compliance and Avoid Fines with a Document Management Strategy Protect Your Assets: Create a Disaster Recovery Plan Grab attention with catchy headlines. Use subheadings that lead the reader into the main benefits featured in the article. Provide content that shows that you have ideas that deliver real bottom-line benefits. At the end of each article, provide a brief call to action that invites the reader to contact your dealership to learn more about the solution.

The Strategies for Success Consistency — Your newsletter needs to go out on a consistent basis such as monthly or quarterly. Make a commitment to hit your deadline.

Content — Content must address your clients’ business w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a y 2 0 0 6 | 19

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Selling to IT The key is creating a real sense of value by: Michael Greenberg, PrinTelogy Inc.

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et’s assume your dealership has launched a print management program. The service staff is trained, systems are in place, the pricing structure is ready and you have created a lucrative plan for your field sales team. The reps are out pounding the pavement, prospecting and looking for opportunity. “Sell, sell, sell” is the direction they are given, but they are returning empty-handed.

Why is it so difficult? What is preventing your sales force from being successful? You have directed your reps to call on the IT department of every prospect and customer in your dealership’s territory. However, they are being thwarted at the door. Are they doing something wrong?

If we begin by understanding the basic eight objections all prospects have to doing business with us, we can narrow down the field in regard to IT managers. These eight objections are: (1) Lack of perceived value in the product or service you are selling.

(2) Lack of perceived urgency in the product or service you are selling.

(3) Perception of inferiority to a competitive offering.

(4) Internal political issue between departments/parties.

(5) Lack of funds to purchase the offering.

(6) Personal issues with the decision maker.

(7) Initiative with an external party.

(8) Perception of “it is safer to do nothing.”

Traditionally, your sales team members have been able to counteract these objections and turn them into opportunities for selling copiers. Prospecting and selling to managers 20 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a y 2 0 0 6

of information systems can be difficult without the right personnel tool set. Taking some time to understand how to sell to these contacts can help tremendously in your efforts to close business.

IT managers are looking for real value, not value in the sense of a “deal,” but value in the sense of creating a relationship whereby you can create value. By creating value, we can easily create needs among all prospects. So, if we want to create value in order to create a need, what is your 30second elevator pitch? Obviously, asking “When does your copier lease expire?” isn’t going to create value with these prospects. It is probably the last question you will ever want to ask an IT manager.

To create the “pitch,” you must first understand the role of your customers within their own organizations and then create value. The first thing I tell my salespeople is: “In order to create values and needs stop selling and start listening!”

Your elevator pitch should be a work of art, compelling to the extreme degree. To minimize this process is to potentially short circuit your entire sales process before you get started.

Your goal with any prospect is to create immediate interest in the product or service you are offering, creating several true benefits for your prospect, not simply features.

This is increasingly important with IT managers as their time tends to be extremely limited, and you may have only seconds to grab their attention. If your dealership is anything like mine, you will want to focus your pitch on service, as good service is something that is difficult to source and IT is almost always willing to consider.

IT managers are being asked to do more with less in their

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understand the process. Become a finanorganizations. Facilities, IT and purCompanies are looking cial, equipment and service consultant chasing employees are sharing duties to current vendors to the IT manager and you will create a with respect to devices that are conto provide additional deeper, more valuable relationship. nected to corporate intranets. A number So, we have now defined a couple of of companies I recently visited intromanaged services, terminologies to create an “elevator duced policy stating: “If it is connected including support pitch” — Intranet and managed services. via a network or telephone wire, then of copiers, fax We have uncovered that we can be of the support of these devices belongs to machines and printers. greater service to an IT manager by proIT.” If this was the policy in an organizaviding a clear understanding as to the tion you worked for, would you want to connect copiers and fax machines? This provides a tremen- financial decisions he is making and how those decisions dous opportunity to provide your customers with additional impact his organization. You are now beginning to create real value within your customer’s organization. services, recently defined as “managed services.”

What else do your sales reps need to know? I find that a Managed services, linked closely to outsourcing, provides the delivery and management of network-based services, basic understanding of how IT infrastructure works is applications and equipment to organizations. Companies helpful. Ask your sales reps, “Do you know what TCP/IP are looking to current vendors to provide additional stands for?” (The answer: transmission control promanaged services, including support of copiers, fax tocol/internet protocol, the suite of communication protomachines and printers. Now the argument for IT managers cols used to connect to the Internet.) Can your sales reps is not whether or not they want these devices connected, identify some of the software applications your prospects but rather to whom should they outsource this process? Can are using and how those applications might affect what you your dealership come up with a managed services program are offering? Have your prospects defined technology stanthat can help your prospects? If so, calling on IT managers dards for their network infrastructure?

Larger corporations develop technology standards so will become a simpler process because you are now helping your customers solve challenges within their own organiza- they can better control, understand and support what is happening within their IT infrastructure. Can you be of tions. You are now creating real value.

What else do you need to know to be successful within IT value in creating technology standards for your customers? departments? Understand that most IT managers have tra- Absolutely! For years I have trained my staff and others to ditionally made capital acquisition of the devices they use on help customers and prospects understand the value of cretheir networks. This includes network printers, the very ating standards within their own organizations. How sucdevices copier/MFP dealerships have been trying to replace cessful would your sales team be if your customers created for years. Until recently, they were unfamiliar with leasing standards that involved the managed services your dealership is offering? practices and are, therefore, leery of this acquisition model.

Do your sales team members really understand what As IT managers become increasingly responsible for the copiers, they are beginning to review the financial and lease your customers’ IT managers do within their organizations documents that purchasing and facilities departments have and how they can be of service to them? If you can create a executed with copier dealerships in the past. They are now need based upon this understanding, then you will be sucrequired to understand finance on a much higher level and cessful selling to IT. how their decisions impact their organizations. If you are Michael Greenberg is president and founder of PrinTelogy Inc., a 14-year-old Denver-based corporation. He is also on staff at capable of articulating the financial decisions for them, you NER Data Products Corp. for the delivery of its Print4 Program are providing additional value, another managed service. and has provided consulting services to But do not think for a minute you are going to “pull the Toshiba for its Encompass Total Print wool” over an IT manager’s eyes. He (or she) is used to Management Program. Greenberg can be explaining how things work within his organization, so why reached at mikeg@printelogy.com would he behave differently in this circumstance? Be preor mgreenberg@nerdata.com. Visit pared to explain how your dealership’s financial sales www.printelogy.com and www.nerdata.com. process works, and more importantly, how you can help him w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a y 2 0 0 6 | 21

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Making Connections eCopy hosts dealers, ISVs & manufacturers at forum by: Brent Hoskins, Office Technology Magazine

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hile eCopy Inc. was once only seen by dealers as a partner of Canon U.S.A., the scanning software vendor has come far in recent months.

That reality was particularly apparent at the company’s recent Paper Connection Forum, held April 3-6 in Fort Lauderdale, Fla. This year’s forum, the eCopy Inc. CEO Ed Schmid second for eCopy, drew 460 attendees, including 169 dealers, 110 attendees from independent software vendors (ISV) and 70 attendees from hardware manufacturing companies. Members of the industry press, analysts and end-users also attended the forum.

During the opening session, Tim Corkery, eCopy’s senior vice president of worldwide sales and services, commented on the mix of attendees — dealers, MFP manufacturers and ISVs. “The goal of this forum is to bring those three parties together to allow them to collaborate and build business strategies that will prepare them to deliver integrated solutions to their customers,” he said. “I’m sure there are many of you who can say today that your customers are demanding more in the form of solutions from your businesses.

“They are looking for tighter integration of their MFPs into their network and application infrastructure,” he continued.

“Business is changing and it’s going to change with or without you.”

Throughout the forum, eCopy officials emphasized how the company and its product offerings are positioned to help the industry address that change. Specifically, eCopy highlighted its expertise in integrating the scanning functionality of MFPs and ISV applications. During the forum, the company announced that the eCopy Connections 22 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a y 2 0 0 6

Alliance Program (eCAP) has surpassed 100 members. By integrating enterprise software with eCopy’s Open Platform Architecture, eCAP members enable users to easily incorporate paper-based information into their applications using an eCopy-enabled scanner or MFP. This is accomplished through “connectors,” which provide a link between the scanner or MFP and the software application. “We’re expecting to be at 250 connector partners by this time next year,” said CEO Ed Schmid, in a press conference held during the forum.

As noted, the company has come far in recent months.

“One year ago we basically had a single distribution agreement with one vendor, Canon, our partner for a number of years,” said Schmid. He noted that at eCopy’s 2005 forum, the company announced relationships with additional vendors for their MFPs to become capable of running eCopy software. “That included Sharp, Toshiba, Ricoh and HP. From April to September of last year, we signed agreements with all of those companies that had announced plans to become eCopy ready.”

At this year’s forum, eCopy also announced distribution agreements with Konica Minolta and Lanier. Like the MFPs of the other OEMs offering eCopy scanning, their MFPs work with eCopy ScanStation OP, which consists of a touch screen, keyboard and PC, attached to the MFP. With Canon products, eCopy scanning functionality also can be embedded in the MFP, enabled by Canon’s MEAP architecture. Over time, said Schmid, more MFP vendors will move to an embedded platform for the eCopy scanning software.

During the press conference, Schmid also commented on eCopy’s financial performance. “Last year our revenues were $41.8 million — a 39 percent growth rate over the previous year,” he said, noting that the rate is keeping pace in 2006. “If anything ... we’re seeing some acceleration.”

Brent Hoskins, editor of Office Technology, can be reached at brent@bta.org.

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EDUCATION CALENDAR BUSINESS TECHNOLOGY ASSOCIATION â&#x20AC;˘ May 2006

EDUCATION CALENDAR June 7-8

BTA ProFinance Washington, D.C. Analyze current business practices and evaluate strengths and weaknesses. Participants will explore important issues surrounding profitability benchmarks, asset management, expense controls and employee productivity. They will leave with a clear set of benchmarks and proven strategies for successful implementation with a target goal of 14 percent operating income. This course is sure to help you take control of and improve the financial performance of your company.

10

Ann Barr Selling Supplies Seminar Manassas, VA TML Copiers is sponsoring this full-day seminar/workshop. Resellers of imaging supplies are encouraged to attend. Learn how to write attention-getting opening statements, sell against discount warehouses, find additional business in existing accounts and much more. To register, contact Ann Barr directly at annbarr3@cox.net or call (757) 463-0924. Visit www.sellingsupplies.com. (BTA member coupon applies toward this class.)

August 1-2

BTA ProFinance

Orlando, FL

2-4

CompTIA Breakaway For details, visit www.comptia.org/breakaway.

Orlando, FL

4

BTA FIX: Cost Management for Service Workshop Orlando, FL Learn proven service management and customer service strategies to use in your company. Costing out the service hour, effective and profitable maintenance agreements, efficient vehicle operations, reducing personnel turnover, competitive compensation plans and identifying profit-making opportunities through the service operation are issues that are critical for success. Receive service department worksheets and action plan templates, sample maintenance agreements, cost/price spreadsheet templates on diskette and a handy workshop reference manual.

September 9-10

BTA FIX: Cost Management for Service Workshop

Louisville, KY

For more information and to register for BTA seminars visit www.bta.org or call (800) 843-5059. www.of ficetechnologymag.com | May 2006 | 23

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COURTS & CAPITOLS

‘BTA Has The Information’ Have you forgotten about this industry resource? by: Robert C. Goldberg, General Counsel for the Business Technology Association

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efficiency, reliability and cost savings. n 1977, I met with a group of more BTA is objective and The equipment never performed reliably than 100 dealers who were concerned knowledgeable.

Take and the manufacturer refused to stand because the machines they were advantage of all your behind it. That same manufacturer was at selling were catching fire, risking the the recent ITEX show soliciting attensafety of end-users and their own finanmembership benefits dees. Before you invest in this technology cial security. When the dealers contacted and obtain from BTA wouldn’t you like to know about the the manufacturer about the hazard they the information and pending litigation against the vendor? were told they were the only ones having knowledge you need ...

BTA has the information to prevent you the problem and that it was likely their from making the same mistake. fault for not making the proper adjustMany members are currently considering document manments to the machine. BTA (then NOMDA) brought the dealers together, gathered the information and obtained agement software solutions for their end-users. I was told there relief from the manufacturer. Individually, the dealers had no were numerous document management software providers at this year’s ITEX show. Clearly, not all will survive. Have you success. Collectively, the problem was solved.

This example from the 1970s illustrates the key role BTA considered the ramifications of a potential provider’s failure to plays in assisting dealers, helping them to remain successful. your business and your customers? Is there an effective software escrow agreement in place should the provider go out of Today, that role endures.

In recent months, the manufacturer that once had copiers business? What do the terms of the reseller agreement that posed the risk of fire has been busy establishing branch provide? BTA has the information you need to be successful.

In recent years dealers have forgotten about the resource and direct operations. In fact, several manufacturers are demonstrating concern that their dealers’ businesses are BTA is to the industry. They attend the meetings of manufacbeing acquired and their existing customers will be converted turers and come away thinking they are getting the full story. to another brand. In order to protect that customer base, these Manufacturers feed dealers what they want you to hear. manufacturers have augmented their own sales efforts. Many Mostly, it is: “Buy more and pay your bills for we are partners.”

Today, BTA remains the clearing house for industry inforof these direct operations target competitive brands and respect their dealers’ customer bases. However, this one man- mation and knowledge. Brent Hoskins, for example, has ufacturer has not only increased its direct operations, but it edited this magazine and its predecessors since 1989 (he has also armed them with more favorable pricing than its joined BTA as a writer in 1986), bringing you more than 200 dealers’ best prices. What is more disturbing is the direct issues packed with knowledge and information. BTA Legal salespeople are taking away the accounts of the manufac- Services has monitored litigation, contracts and laws affecting your business for even longer. As a member, are you turer’s dealers.

If you are experiencing these actions in the marketplace, tapping into this vast resource?

BTA is objective and knowledgeable. Take advantage of all you should be in contact with BTA to determine your rights and obtain assistance. If you are considering a new line, you your membership benefits and obtain from BTA the informashould contact BTA to determine the experiences of other tion and knowledge you need to remain successful.

Robert C. Goldberg is general counsel members with that supplier. BTA can keep you from making a for the Business Technology Association mistake. BTA has the information.

He can be reached at A few years ago, an aggressive dealer, in an effort to reduce robert.goldberg@sfnr.com. costs, placed equipment on every copier in the field to autoMembers may call the matically communicate meter counts to the dealership BTA Legal Hotline at (800) 869-6688. without human intervention. The manufacturer promoted 24 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a y 2 0 0 6

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SELLING SOLUTIONS

Sales Compensation Creating a plan that works for your dealership by: Jim Kahrs, PPMC Inc.

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n our work with dealers, we frequently hear questions about finding, hiring and retaining sales reps. The next logical question: “How do I compensate sales reps?”

Twenty years in this industry has given me the opportunity to see almost every sales compensation plan possible. I’ve seen plans that favor the dealer. I’ve seen plans that favor the sales rep. And, I’ve seen plans that truly work to the mutual benefit of both. What makes a good comp plan? One of the major precepts of the Hubbard Management System states that when you reward production you get production. When considering a comp plan you first have to decide what “production” you are looking to increase. Comp plans can drive sales reps to increase total sales revenue, gross profit from sales, number of units sold, etc. They can also make reps favor one category over the others.

A sales comp plan can have a number of different components. Typically, they start with a salary. Unfortunately, the days of starting a new rep on a commission-only plan seem to be gone. During the interview process many reps even ask about the salary for the position. My advice is to keep the salary as low as possible while not hurting your recruiting efforts. Depending on your market and the make up of the rest of your comp plan, salary should probably range from $15,000 to $25,000.

Because salary is the guaranteed portion of the comp plan it often does not drive production since it acts as a reward even when there is little or no sales production. However, you can turn salary into a reward-based system. We have helped dealers set up sales activity systems that quantify sales reps’ activities like prospecting calls, appointments, demos, etc.

Each activity is assigned a point value and reps are required to accrue 50 points a day. When this system is in place sales rep salaries can be adjusted based on their points. For example, if a sales rep only reaches 80 percent of his (or her) point quota for the month of May, he would only get 80 percent of his salary in

June. Of course, you need to make sure that this type of plan is legal in your state.

The next component of many comp plans is a draw. When looking up the word “draw” in my dictionary I was surprised to see that there are 62 definitions listed. No wonder there tends to be confusion around this term. For the purpose of comp plans, a draw is an advance against future commissions or bonuses. Paying a draw allows the sales rep to receive income with each weekly or bi-weekly paycheck when commissions and bonuses are paid monthly or quarterly.

There are two types of draw. The first is a recoverable draw, meaning that all draw dollars paid to the rep must be paid back to the dealership from the next commission run. If the rep does not earn enough commission to cover the draw a negative balance is carried forward to the next period. When you have a recoverable draw in place it is important to have a maximum allowable negative balance. I would recommend setting that number between $3,000 and $5,000. Once the maximum negative balance is reached the rep would no longer get a draw until he has paid off a certain amount of the back dollars owed. Having this maximum negative balance in place has saved many dealers thousands of dollars and helped them identify sales reps who were not going to succeed. It lines up with the precept of rewarding production. If a rep does not produce commissionable sales he does not get rewarded with compensation.

The second type of draw is a non-recoverable draw, meaning that a shortfall in commissions earned would not be charged against the rep. For example, if a rep was paid $2,000 in draw and only earned $1,500 in commission, then the $500 shortfall would be wiped away and he would start the next month with a clean slate. The only time I recommend this type of arrangement is when you need to guarantee a new rep a certain income level for the first 90 days or so. By giving him a non-recoverable draw you are able to leave your standard comp plan in place and get him focused on commissions early in his tenure while w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a y 2 0 0 6 | 25

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achieving quarterly quota, or additional still meeting his initial income needs as he Making changes to percentages of sales commissions. ramps up his sales performance. This is a your comp plan Quarterly bonuses can also help retain much better option than guaranteeing reps should not be done strong sales reps. Usually these bonuses a high salary when they start because there are paid 45 days after the end of the is still a production/reward system in place. without proper planning quarter and reps must be employed at the The next component of the sales comp ... Understand that any time of payment to get the bonus. I’ve seen plan is commission. This needs to be the change will be this stop many a rep from leaving a dealerdriving force of your comp plan. Sales reps met with skepticism. ship until the bonus is paid and very often should earn the bulk of their income from they are now 45 days into another strong commissions on closed sales. Commissions are typically based on either gross profit or sales revenue. Each quarter and decide not to leave.

Making changes to your comp plan should not be done has its pros and cons. Plans based on gross profit ensure that the sales rep does not earn significant money unless he creates without proper planning. There are few things that can kill a significant profit. The drawback to this plan is that the rep can sales team as quickly as a comp plan change. Understand that sell a couple of machines for a lot of profit and earn a good any change will be met with skepticism.

Prior to launching a comp plan change you need to do a living while not really building the long-term future of the dealfew things. First, go back and run the new comp plan against ership through ongoing service revenue.

Plans based on sales revenue reward reps for selling larger the actual sales figures for the last six months to a year for systems and/or multiple systems that lead to increased service each rep. Though this will take some time it will give you revenue. The drawback to these plans is that the equipment tremendous insight into what effect the change will have and is well worth the effort. Very often this leads to further sales tend to be less profitable over the long run.

Adjustable commission plans also work very well. These tweaking of the plan. Once you have done this and come up plans provide the opportunity for reps to earn higher commis- with the new plan, you need to recruit support from some of sion percentages for sales to new customers or for achieving the sales team members. Ideally, you would bounce the plan sales milestones. This can help balance the pros and cons of the off a rep or two to get their feedback. You want to choose reps two different commission plans. Because sales to new custom- who can be trusted to keep things quiet until you are ready to ers bring in new service revenue many dealers choose to pay as launch the plan. They can give you valuable insight from the rep’s viewpoint. Additional tweaking might be needed at this much as 5 to 10 percent more commission on these deals.

A gross profit-based commission plan can pay higher com- point. When you are ready to launch the plan these reps can mission percentages as the rep reaches and exceeds sales also be your advocates with the rest of the team, helping to revenue targets. For example, a rep who sells $20,000 in make sure the new plan is understood and accepted.

Having a strong comp plan can be the driving force behind revenue could earn 30 percent of the gross profit while a rep who sells $50,000 would earn 35 percent of the gross profit. building your dealership. It will help you attract and retain This provides the incentive to keep gross profit high while strong sales reps and will drive them in the direction you want driving for higher sales revenue, in effect working both sides of them to go. Take a few minutes to look at your sales comp plans and see if they truly provide the incentive and drive the equation.

The final component of a well-structured sales comp plan needed to spark on your sales team. If the answer is “yes” don’t is a quarterly bonus. When a sales rep is paid a salary, draw change a thing. If the answer is “no” consider the above points and commission you can still get tremendous peaks and and start building a comp plan that will bring you the growth valleys in his sales performance. For some reason it is quite and profitability you desire.

Jim Kahrs is the founder and president of Prosperity Plus common in this industry for reps to have a great month folManagement Consulting Inc. PPMC works lowed by a poor month. Having a quarterly bonus program with office technology companies in building that is based on total revenue or total units sold can bring a revenue and profitability and improving longer-term focus to your sales efforts. Reps who have a good organization structure using the Hubbard month are encouraged to keep it going to earn the quarterly Management System. He can be reached at bonus, while reps who had a poor month can make up some (631) 382-7762 or jkahrs@prosperityplus.com. of the lost income by reaching a quarterly bonus. These Visit www.prosperityplus.com. bonuses can be either flat dollar amounts, like $2,000 for 26 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a y 2 0 0 6

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PRINCIPAL ISSUES

Close-up: Kyocera Mita OEM emphasizes solutions-focused training by: Tom Brasuell, Kyocera Mita America Inc.

Editor’s Note: Throughout 2006, Office Technology magazine will be inviting the copier/MFP O E Ms that sell through th e dealer channel to submit articl es regarding th eir d eal er su p p or t i n i ti a ti v e s a n d / or training programs. The intent is to provide each of the OEM’s authorized dealers — and the channel in general — a better understanding of some of these current initiatives and programs. Following is the fourth of th ese O E M submi ssion s, from Tom Brasuell of Kyocera Mita America Inc.

dealer training and testing. At the heart of KMAConnect is the KMA Learning Center, developed by our Educational Services Department to help take dealer sales training to the “next level.” The Learning Center offers a unique blend of state-of-the-art Web-based training technology, complemented by dynamic instructorled workshops taught by The KMA Learning Center gives sales representatives instant experienced sales trainers. Its access to Web-based sales, product and solutions training mission is to provide dealer 24/7. They can simply log on and view multimedia training and reseller sales professeminars and product demonstrations. sionals with the most comprehensive and effective sales, product and solutions-based training in the industry today. y now it is no secret that for office technology dealerThe KMA Learning Center gives sales representatives ships, the business landscape has changed dramati- instant access to Web-based sales, product and solutions cally. The modern workplace is fueled by information. training, 24 hours, seven days a week. Sales professionals can The companies that succeed are those that can manage that simply log on and view multimedia training seminars and information quickly, efficiently and cost-effectively. Stand- product demonstrations. They can use the Learning Center to alone boxes no longer suffice. become well trained and fully certified on new products the Our BTA dealers need to create entirely new business day they launch. models to help them stay several steps ahead. This involves Advanced training is vital. In this industry the training bolstering their infrastructure and their capabilities. It means process for new products has historically taken many reaching new certification levels and obtaining a deeper months to complete; in some cases sales professionals were degree of understanding about the information management not truly certified on a particular product until well more issues their clients tackle every day. than a year after that product was introduced. Essentially, At Kyocera Mita America Inc., we understand these chal- once they became fully versed in a product’s capabilities, the lenges and are committed to addressing them in a smart, manufacturer was preparing to introduce a replacement strategic and forward-thinking manner. Through KMACon- and the slow training cycle began anew. Kyocera Mita nect.com, for example, we offer our dealers a robust assort- America long ago recognized the flaw in this process and set ment of tools and programs designed to assist them in the about correcting it. The Learning Center is a proud result of solution selling process. KMAConnect contains a great that insight. many dealer-friendly assets, including: product and warA mere nine months after it was first launched in July of ranty data; advertising, public relations and marketing 2003, in fact, the Learning Center had issued more than 3,000 resources; and an ever-growing collection of Kyocera training certificates. Over the past 18 months Kyocera Mita product award information.

America has trained nearly 650 CDIA+ candidates. There are KMAConnect is also a comprehensive resource for BTA fewer than 6,000 CDIA+-certified professionals in the world,

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complex workgroups. For example, which highlights the impact the Learning The business world KYOcapture, our server-based document Center is having on a solutions-focused continues to change workflow solution, offers best-in-class business world. rapidly and we are in a scan, capture and routing capabilities.

Sales representatives who utilize the KYOcapture helps users intuitively Learning Center also reap the benefits of never-ending race to manage their company’s vital information live workshops that deliver true expertise adapt, survive and thrive by using our output devices as a hub and and hands-on experience. In the past, in that world. Together, then routing the information to one of a classroom training was traditionally comwe are succeeding. variety of popular document manageprised of roughly 75 percent lectures and ment systems.

25 percent training. Kyocera Mita We have also established a new division we call the ProfesAmerica has since flipped that statistic — Kyocera training classrooms now involve in-depth training augmented by a sional Services Group, which provides best-in-class data manminimum of classroom discussion. Interaction with the agement solutions to dealers and end-users in need of products and solutions is a crucial part of real learning for comprehensive document management strategies and support. The Professional Services Group was formed to help sales professionals.

Kyocera Mita America does not train people for the sole lead Kyocera dealers in the creation of a business model more purpose of passing certification tests. That form of training is acclimated to modern needs. This group allows dealers to useful only in the short term. We train in a way that ensures deliver new, revenue-generating services including on-site each participant truly understands, remembers and appreci- environmental analyses, customer-specific solutions, driver ates the nuances of solution sales. Kyocera Mita America customization, API development, network integration and dealers retain their knowledge and build on it over time. It is customized portfolios encompassing floor plans, site surveys, the difference between a Princeton Review education and a migration, and full installation and workflow design.

Kyocera Mita America is continuously updating, revising Princeton University education.

As a result, a large part of our BTA dealer training involves and strengthening our dealer training initiatives. We accomin-depth simulations. Simulations allow learners to interact plish this through a variety of ways. One method involves and practice in a risk-free environment. We offer a state-of- posing a Question of the Day on KMAConnect, to which the-art simulation tool that can replicate any live software dealers can offer useful feedback in a public setting. Another application. Students get inside our solutions — they probe involves rolling out anonymous surveys across our dealer them, test them, interact with them and learn them deeply. network, designed to unearth advice and opinions that some Our interactive methodology is driven by four stimuli that we dealers may be reluctant to share publicly. A favored method see as critical to learning: Show Me, Teach Me, Let Me Try, involves direct personal contact. It is a point of pride for me Test Me. These principles have led us to develop and deliver a that I am either speaking face-to-face with or on the phone comprehensive sales training suite that we believe to be the with our dealers every single day, learning what they need, answering their questions, addressing their issues and earning most effective in the marketplace today.

Our dealers agree. Impact Networking, a solutions-focused the trust that no amount of impersonal interaction can foster.

Our emphasis on solutions-focused training continues to dealership in Waukegan, Ill., is fully committed to the value of consistent, blended training and advanced certification. “Our pay dividends. We are justifiably proud of the “certified” philosophy is to continuously train our salespeople, because double-digit revenue and profitability growth we have we can’t build tenure without training,” says Frank Cucco, achieved over the past four years. Our BTA dealers have president of Impact Networking. “A lack of training only leads embraced our philosophies and have played a vital role in to higher turnover. We make sure every sales rep is CDIA+ crafting, reshaping and implementing them. The business certified. By putting a better trained rep in front of each cus- world continues to change rapidly and we are in a nevertomer, we can sell more sophisticated products, make more ending race to adapt, survive and thrive in that world. Together, we are succeeding. money and continue to grow.”

Tom Brasuell is director of Educational Kyocera Mita America’s BTA dealer support extends well Services for Kyocera Mita America Inc. He can beyond KMAConnect and our various training initiatives. We continue to roll out new products specifically designed to be reached at thomasbrasuell@kyoceramita.com.

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Color is Here!

‘05 workgroup UCP hardware revenue: $2.7 billion by: Jeff Hayes, InfoTrends

Editor’s Note: The February issue of Office Technology featured an article by InfoTrends’ Jonathan Bees, “Universal Copier/Printers.”

This month Jeff Hayes provides additional insight into the product category.

printing and copying volumes will eventually crest 1,000 and begin to decline as office workers reduce the Color 800 Devices amount of paper used for business processes and 600 opt to view on-screen inBlack & stead of on paper.

White 400 Devices We also estimate that impression volume proeveral years ago, 200 duced on black-and-white InfoTrends stated devices (printers and copthat the next big 0 iers) has peaked and that thing in the office will be 2004 2005 2006 2007 2008 2009 color devices will account the migration to Universal for a growing percentage of workgroup volume. Black-andCopier/Printers (UCPs) — devices capable of printing and copying in black and white and color at little to no premium white volume will decline, but not too quickly, because a sigover dedicated monochrome devices. We indicated that a nificant portion of impression volume on color devices is series of advances in engine design, marking materials, media black-and-white pages. Our survey suggests that between 30 and controllers would create new economics and opportuni- percent and 50 percent of page volume produced on color ties for the $40 billion office equipment industry. Now, in 2006, devices is black and white, depending on the type of device, we believe that the transformation of printing and copying in size of company and region. the office is well underway.

InfoTrends estimates that overall U.S. placements of copiers Fueling this growth is the latest generation of marking in the workgroup environment grew 8.9 percent to 823,000 in engines, which offer dramatically higher print speeds, excel- 2005. Nevertheless, placements of black-and-white copiers lent print quality and prices that are a fraction of those from (and copier MFPs) grew only 1.3 percent in 2005 to 660,000. just a few years ago. Recent product introductions from com- The vast majority of this growth came from color copiers and panies like Canon, Hewlett-Packard, Konica Minolta, Kyocera UCPs, which were estimated to reach nearly 168,000 placeMita, Lexmark, Oki Data, Ricoh, Toshiba and Xerox have ments in 2005, an increase of 55 percent over 2004. In most dropped the price of color by half while providing much better cases, manufacturers and distributors view UCPs as replacespeeds, duty cycles and paper handling capabilities. Color ments for monochrome Segment 2, 3 and 4 products and are laser printers are now available for under $500. Color copiers marketing them as such. By the end of the decade, InfoTrends are routinely being placed in the general office for black-and- projects that approximately half of all copier-based products will be monochrome and half will be color. white and color jobs.

InfoTrends estimates that nearly 70 percent of the 168,000 InfoTrends projects that total impression volumes (printerand copier-based products) in the U.S. workgroup environ- UCP placements in 2005 were color-capable devices, including ment will peak in 2008 at just over 1.1 trillion impressions. many single-drum products. These devices are designed to pri(Note: all impression volume figures are for electrophoto- marily produce black-and-white pages as well as some color graphic and solid inkjet-based machines.) Although the popu- pages. Over the forecast period, we project that UCP placelation of employees in the United States continues to grow at ments will rise at a CAGR (compound annual growth rate) of about 1 percent per year and GDP grows at about 3 percent 31.3 percent and reach more than 422,000 units per year by per year (critical factors in volume growth), workgroup 2009. We also expect color-centric devices (e.g. tandem-based Placements (000)

Workgroup Copiers and Copier-Based MFPs Monochrome vs. Color U.S. Placements (000)

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designs that offer similar speeds for monomachine placements from declining. ...

Vendors and dealers chrome and color output) will account for InfoTrends believes that vendors and should put the majority the majority of sales as the price difference dealers should put the majority of their between color-capable and color-centric marketing and sales resources behind of their marketing and devices narrows. their color products and generally not sales resources behind InfoTrends estimates that total U.S. emphasize their black-and-white prodtheir color products and hardware revenues from workgroup UCPs ucts. Companies should also invest in ... not emphasize their reached $2.7 billion in 2005, representing a training to ensure that sales representablack-and-white products.

42 percent increase over 2004. The majority tives are properly positioning the devices. of this revenue came from color-capable UCPs will require a consultative sell, and devices. We are projecting that revenues from color-capable the sales rep needs to match the right product for the cusUCPs will peak over the next few years in the United States as tomerâ&#x20AC;&#x2122;s output requirements. overall placements of color-centric devices continue to increase.

Jeff Hayes is a group director at InfoTrends, a global market Office color machines will overtake black-and-white devices research and consulting firm specializing in the in most product segments over the next five years. Vendors imaging and document technology industry. and dealerships that do not have an aggressive color strategy InfoTrends, which has more than 75 employees, will lose market share and consumables revenue. Our research has offices in North America, Europe, Japan indicates that color products are replacing black-and-white and China. For more information devices, but not at a fast enough rate to prevent total office visit www.infotrends.com.

ADVERTISER INDEX Ames Supply Company (800) 323-3856 / (630) 964-2440 Fax: (800) 848-8780 / (630) 964-0497 www.amessupply.com / E-mail: info@amessupply.com

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Business Products Council Association (800) 897-0250 www.businessprouductscouncil.org

2

InfoDynamics Inc. (888) 446-8228 / (317) 578-2167 / Fax: (317) 913-4580 www.infod.com / E-mail: intact@infod.com

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InkCycle (800) 736-8877 / (913) 894-8387 / Fax: (913) 894-8513 www.lasercycle.com / E-mail: sales@lasercycle.com

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Color Imaging Inc. (800) 783-1090 / (770) 840-1090 / Fax: (770) 840-7029 www.colorimaging.com / E-mail: sales@colorimaging.com

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NER Data Products Inc. (888) 637-3282 Ext. 211 / (856) 881-5524 / Fax: (856) 881-2393 www.nerdata.com

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Print Audit (877) 412-8348 / (403) 685-4932 / Fax: (403) 249-9471 www.printaudit.com / E-mail: sales@printaudit.com

5

CompTIA www.comptia.org/breakaway DocuWare Corp.

(888) 565-5907 / (845) 563-9045 / Fax: (845) 563-9046 www.docuware.com / E-mail: dwsales@docuware.com

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The Hedman Company (800) 872-2788 / (847) 718-6500 / Fax: (847) 718-0603 www.hedmanco.com / E-mail: sales@hedmanco.com

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FMAudit (573) 632-2461 / Fax: (573) 632-2465 www.fmaudit.com / E-mail: sales@fmaudit.com

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U.S. Bancorp (800) 328-5371 / Fax: (800) 328-9092 www.usbank.com

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