Use these low-risk, high-impact first steps when transitioning to service contracts.

It’s easy to understand how a well-executed, managed print services and cost-per-page (CPP) contract can boost a solution provider’s profits beyond straight hardware sales. Harder to grasp is how best to make the plunge: What first steps should solution providers take to transition to this lucrative area?

Fortunately, managed print services won’t require an overhaul of existing business models, sales consultants and printer OEMs say. A careful and gradual move from selling boxes to promoting contracts can progress at each solution provider’s pace, which will help companies cope with change and hone their sales techniques.

Start Small
The first consideration, managed-services veterans say, is to start small. The allure of new double-digit profits may tempt some companies to target prospects with hundreds of printers and multifunction products (MFPs) ready to be managed. But a prudent initial approach should focus on small and easily managed accounts. These more-modest opportunities will allow time for understanding how to craft a solution for individual clients.
 
Next, solution providers need to hone their sales presentations to persuade customers that printers, like workstations and servers, are best maintained with ongoing contracts. This may require solution providers to speak to new people at customer sites. The IT department may handle hardware acquisitions, but the facilities management staff members are often the ones who sign service contracts. Rather than selling managed print services to each group separately, a more successful approach often targets the senior managers or finance heads who oversee the two departments. Senior executives may also be more receptive to the strategic, value-added message that managed print services represent.

Services contracts that don’t accurately estimate page usage, coverage and consumables costs can unexpectedly lock solution providers into an unprofitable contract for the following three to five years. Solution providers can guard against this with some upfront research. Historical data to estimate the service calls and parts needed to maintain individual printers and MFPs is available from the Business Technology Association, which provides industry-specific data on failure rates and other components related to total cost of ownership.

In addition, solution providers should write into contracts protection clauses that guard against page-coverage rates that turn out to be higher than expected. For example, an agreement for 100,000 pages and 12 cartridges per year may stipulate that additional cartridges will be billed at a prenegotiated rate.

Solution providers also need to select a tool for real-time tracking of devices and applications. These products will remotely monitor customer usage for each printer or MFP and provide an ongoing picture of activity at each customer’s site. Possibilities include Hewlett-Packard’s Web Jetadmin, PrintFleet Optimizer Plus and Print Audit’s Facilities Manager.

Finally, choose a billing application that can track shipments of consumables to customers and compare them to the contract’s terms. Products include Digital Gateway’s e-automate and La Crosse Software’s Nextgen.