Toner Control and Service Profitability

When a copier dealer replaces a competitor’s machine they usually also pick up a supply of surplus toner that is stored at the customer’s site. These supplies in many cases get discarded or sold wholesale. While this is good for the dealer installing the new equipment, it is an unnecessary expense for the previous vendor.

When examining why service profitability is suffering, problems with supply expenses may not surface. This can result in pressure on technicians for more productivity and to reduce parts costs.

Why it Matters

Toner control affects two issues. One is the need for capital, and the other is dealer profitability. From the capital perspective, if the average toner costs the dealer $30, and they have 10,000 units in the field, and the average unit has two extra cartridges, that is tying up $600,000 of capital.

From a profitability standpoint, that same $600,000 has been written off and would show up as an unneeded expense. This could have an impact on a...

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Taking Time to Prepare Can Make Foray into Solutions Less Stressful for Dealers

I remember talking to a dealer principal several years back and asked him for his e-mail address. He responded that he didn’t like computers, and told me to just send it to one of his admins.

I knew his business was in serious jeopardy, and in fact, it failed a few years later.

The point of that story is to emphasize that we are in an ever-changing business environment. And in many cases today, dealers and service departments are reluctant to get into the solutions business. Some have tried dipping their toes in and gotten burned; others just want to be old-school dealerships. But we must remember that we can’t afford to get trapped in the current way we do business, or we will soon be out of business.

The Reality

Office equipment today is designed to be part of a network’s infrastructure. Devices are no longer output-only or scan/fax/print devices, but now can—and often do—serve as portals for access to applications. If your company is not currently...

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A Day in the (Training) Life: Service Managers Gain a Wealth of Info at Visual Edge Technology Event

I had the privilege of attending the training program that was provided for the service managers of the various Visual Edge Technology companies.

Visual Edge Technology is interesting in that it buys successful dealerships, and then provides back-office support while allowing each company to continue to operate the way it did prior to being purchased.

Because of this, many of the service managers in the room had never met, and many had never even spoken to each other before this program. They had a variety of backgrounds, with a number of them never having had any formal training as a service manager—they had learned their craft the hard way. Additionally, the experience levels ranged from very recent promotions to managers with decades of experience.

The Event

The training program was co-located with the ITEX show in Las Vegas, May 16-17. In addition to the service managers, the sales managers and company presidents were also there for training. While each group received an...

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Managed Print Services and the Service Department

In talking with service managers over the last decade, I have found a variety of opinions about Managed Print Services (MPS).  Some service managers have found it to be a profitable addition to their revenue stream.  Others find it difficult to manage due to the wide variety of equipment and the difficulty in becoming proficient at supporting a multitude of brands and models.  Some see it as an unprofitable nuisance mandated in their department.

No matter how it is viewed, MPS is a program that is here to stay.  Sales will continue to sell the program and service will have to continue to support it.  The need then is to find ways to make it both manageable and profitable.

We will discuss several challenges to the service department created by an MPS program.  We will also look for steps to take to improve the serviceability of a contract and profitability.

The Challenges

A typical prospect for MPS may have a wide variety of makes and models.  In...

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Secure the Recurring Revenue

In our industry, the most important area for the profitability and survival of the company stems from the recurring revenue in the service department. When considering the trends in our industry for the future, this topic deserves serious attention.—dealers that fail to secure the revenue stream properly are most at risk for failure.

What Does it Mean

When we are talking about securing the revenue stream, we are talking about creating a binding support agreement for the duration of the equipment lease. I know some dealers do not like to build the service into the lease, but failing to do so diminishes the value of the dealership and does not provide any future security for the company.

I am not suggesting pre-funding the service component of the lease, and most leasing companies no longer offer that as an option. When valuing your dealership, a pre-funded service contract is viewed as a liability rather than as an asset.

Building Value

When you build your service contract into...

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Servicing Your Own Future: Exploring New Roadways to Information for Service Managers

Over my 30-plus years in various roles within our industry, one common issue I’ve seen is the need for service managers to share knowledge. In my travels, working with two different manufacturers, I saw dealers constantly struggling to re-invent the wheel.

I became convinced that individual service managers, and our industry as a whole, had the opportunity to get better if there was a way for them to share ideas.

In most cases, the opportunities are not open to service managers. I attend BTA events regularly and there are two things I notice: there isn’t much content for service managers, and there are not many service managers attending even when there is content available. I do see owners and sales managers all the time, yet service generates the majority of the profit in a dealership. So it makes me wonder why these events aren’t more geared toward service.

Most Service Managers Don’t Share

I believe that several factors create this situation. Service...

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Get Ready to Face the Future: BTA National Meeting Highlights Major Issues Facing Service

At the BTA National Meeting in March of this year, there were two topics I thought were hugely important for the service department. Let’s dive in and see why they matter so much and what effects they could have on service.

Strategic Shock, Surviving the Inevitable Crisis

The event’s keynote address was given by Ret. 1st Sgt. Matt Eversmann. His name may be familiar since he was one of the key characters in the book (and subsequent movie) “Black Hawk Down.”

He began by relating how he wound up in the Army Rangers and what he learned in his early days. One thing that stuck with me was his statement that the Rangers did the same things the rest of the army did—they marched, shot and learned to fight. He said the difference was they did the basics at a Ph.D. level.

This concept is important in the service department because the marketplace is more demanding and the competitive forces are increasing. Most of what you do, every other service department also...

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Evaluating Service Performance

In the last article, I discussed the importance of Mean Copies between Calls (MCBC) this may also be referred to as Mean Calls between Visits (MCBV). Since that is the number one factor in the cost of a copy, every service manager needs to focus his attention on growing that number. In this article, we will look at several factors that affect that metric. These factors can be measured using First Call Effectiveness (FCE), and this is the easier metric to measure.

How to Define FCE

I will use the same definitions and formulas as used by BEI Services to determine the FCE. I chose this method because it more clearly identifies the performance factors involved, and it does not get diluted by including courtesy calls, installs or network calls. This is known as a results-based FCE.

Call back (CB) is: CB%= CB/ (Emergency (EM) + Scheduled Calls (SC))

Hold for Parts (HP) is: HP%=Hold for Parts (HP) + No Parts/ (NP + SC + CB)

FCE would be the balance of the CB% and HP%.

Defining the...

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