MFP Copier Blog

Recently I had an opportunity to speak at ITEX, An Industry event for technology resellers. During that talk, I discussed the three types of deliverables or more importantly the three types of end-user customers within the print equipment and its services industry. This industry is strangling their full profit potential as they continue to deliver these different types of customers with the same processes.

Here are the three equipment customer types:

1.   High-Volume segments 6,7, and 8 Production Environments. This customer represents less than 2% of all print equipment customers. Today nearly every manufacturer is bidding for this extremely low potential. This barrage of dealers and OEM’s chasing the questionable high volume clicks and its revenues. Have caused most to eliminate the realities of low margins or in many cases no profit from their efforts.

2.   The Enterprise Customer or the Value-added Appreciative Customer. This group of customers represents probably no more than 15% of your customer base. These customers are complicated they use sophisticated software applications, they participate in real workflow efficiencies, they have complex depositories to navigate documents in and out of. These customers are usually enterprise type organizations. However, keep in mind there are many national accounts who buy units in the hundreds which do not have complex needs they simply want to print and occasionally copy.

3.   The Commodity Mindset Customer represents the most extensive customer base within your dealership or direct operation between 80-85% of your customers fall in this group. There are millions of these customers currently using A3 which are overkill to the needs of over 80% of the customers in this group. These customers could benefit more from A4 MFP’s.

So, now that we understand the three customer types. It’s time to discuss the extreme threat to the current circumstances of the Imaging Channel’s Dealers and Direct operations.

This threat I named the “Hertz Threat.”

When Hertz Car Rental lost the millions of Business Customers to the Rideshare industry, they found themselves in a position where they can’t live off the fridges.

Hertz still rents to the family an SUV to visit grandma; they occasionally rent to the victim of an auto accident till the needed repairs on the wrecked car are finished. But these renters can’t compensate for the millions of business traveling they lost.

My friends in the Imaging Channel soon an innovator will bring to market a process which delivers over 80% of your customer base a better experience. The innovator will educate those oversold A3 commodity mindset customers a better more practical option.  

When this happens, you too will not be able to live on the fringes of your 2% high volume business, or your 15% Value add business. Unless of course, you have a concrete plan and understand the cost impacts of the three customer types. Dealers and Direct OEM Operations must consider whole heartily their version of the decision Ricoh made in 2017. It just isn’t logical to service and support every customer the same. The cost in this approach is no longer in alignment with the potential profitability.

Should dealers eliminate some customers? Which ones and Why?

Let’s review those questions by customer types

The High-Volume Customer:

Smaller dealers should evacuate all high-volume efforts. This market is too small and too saturated with competition. Last year I published an article in ENX Magazine on a study of nearly 7,000 production units.

There is a link to the article under publications on my Linkedin profile page. Its titled Production-Print-taking-a-deeper-look-at-the-true-data-not-marketing-hype    

This study indicated that the average Volume on these so-called high-volume units was only 225,000 pages a month. The first call effectiveness was below 40% and the cost to deliver services was a little over .003 per page. If those reading these did a study on their high Volume, they would determine a similar result.

The cost and understanding of the high-Volume business model are too risky for smaller dealers without the operational maturity level the deliverable demands. Why chase something which has minimal payout and requires a tremendous amount of attention.

I learned quickly during the time I spent delivering IT services the importance of understanding the time required and the cost of that time for each contract. In reality, the reason the first call effectiveness on high Volume in many organizations is low is because in many cases the dealer is managing this customer in the same manner as the low volume customer. The Imaging Channel for the most part has the same processes for the lowest volume customer as the highest. The same sales process, the same agreement for services, the same dispatch process, the same response time, and sadly many times the same service tech.

Those dealers who can successfully deliver high Volume capturing a significant market share should do it. Provided they are managing the cost to deliver accurately. Just don’t fool yourself that somehow you can beat out the 12 or so manufacturers and their dealers in a profitable way without a real plan. Selling high Volume is a business model and should have a separate business plan. If your high-volume business does not cashflow enough to support all its cost, sell it off to a competitor and focus on delivering what is profitable. Ask yourself this. If you lost a vast majority of your small market base could you survive on high-volume? Make sure you factor in all the high-volume machines in inventory sitting in your demo rooms, the obsolete parts in the warehouse, the excessive supply inventory based on fantasy volumes, and make sure that labor cost are accurately accounted for.

The Enterprise Customer:

These customers are also more effort than the payout for smaller dealers without the necessary infrastructure to support. The reality of small dealers chasing these accounts and not understanding the scope of labor involvement evaporates all anticipated profit. How many remember, the excitement of selling a software solution and then realizing the thousands of dollars in support cost you neglected to anticipate and didn't include in the customer's cost. Or, the hundreds of hours spent working through network issues your organization didn't understand. Again, the hours used are not accounted for against the accounts contract, and this of, course hides the real cost against revenue. There are still many dealers who are listening to the hype of the big deal instead of the realities to the big deal's lack of profit.

“Don’t let the cheers for chasing revenue deafen the cries to controlling cost.”

The Commodity Mindset Customer:

Ricoh first recognized the market realities of this customer in 2017. They evacuated this customer type selling back nearly all of their direct operations to dealers. I would add Ricoh sold back this business for substantially less than the 2 Plus Billion dollars they paid for that distribution over the previous decade. The reason they cited was that print volumes were declining faster than anticipated and the revenue and margins on hardware were drastically squeezed.

Ricoh wanted to focus on enterprise customers where they felt they could keep higher margins and sell alternative technologies alongside their print equipment. Ricoh decided to stick with the customer I described as the Enterprise Customer the value-added Appreciative Customer. Time will tell how Ricoh will fare in its decision. But I believe they were spot on in recognizing the high cost to deliver services to the customer I described as the commodity minded buyer.

The commodity Minded Customer is the current greatest threat to being disrupted by an innovative process including A4 equipment. The new customer-centric processes will deliver closer to the expectations of the customer and will capitalize on replacing the oversold A3 MFP’s with A4, there are millions of A3 devices in the market which customers don’t need. However, I am not convinced that a majority of the current providers will deliver those innovative processes I envision.

As innovators come to the channel, they will focus on market share and have goals of displacing the quickest and easiest customer. Unfortunately for the Imaging Channel, this is the majority of their customers. I am looking forward to working with those dealers who are ready to fight for the significant market of oversold A3 and replace them with A4. There are millions of these A3’s in the market, and there is no doubt in my mind that their end-users will welcome the better experience of A4.

“A Company becomes obsolete when they focus on bringing the past to the future instead of the future to the present.”

Send invite if you wish connect on Linkedin

Ray Stasieczko

Hey, what can I say.

ITEX 2019 was awesome for a number of reasons.  I arrived late Monday evening and was picked up at McCarren by my new brother Pete.  We had no more than 30 minutes to chat that night on our drive to the MGM Grand, however we spent the entire next day to getting to know each other better. This was my first visit to the MGM and I thought venue was incredible. I could have done without the forty-five minute wait to check in though.

Wednesday

Wednesday morning and I'm up at 5:30AM (guess I was still on east coast time).  By 8:30AM I was on the show floor and eager to check out the vendors. 

If you've never been to an ITEX event the venue is somewhat different from the BTA events. At ITEX all of the breakout sessions are located in different rooms while the show floor is open.  On the other hand BTA  events allow for the educational seminars and vendors to be in the same room for the entire event.  In addition most of the educational seminars are no longer than forty-five minutes follow by a decent break. The BTA scenario allows for everyone (vendors and attendees) to attend all of the educational seminars.  Thus with ITEX there were some dead times on the show floor while the breakout sessions in progress. In fact if you wanted to attend all of the breakout sessions your time for the show floor was somewhat limited. 

Since I'm not a dealer owner and I was not speaking, there was only one breakout session that I needed to attend.  Notice I mention needed to attend right?  That breakout session was "Is Staples Acquisition of Dex a Disruptor?". After watching many of Ray Stasieczko's videos on You Tube I was looking forward to him hosting the panel and peppering them with questions about the future of our industry. Lucky me for arriving early because it was jammed with many having to stand for the session.  The breakout was everything I expected and Ray was on fire, in addition all of the panel members were on point with their answers.

Heard at ITEX 2019

I kinda let the cat out of the bad last week with my Sunday email note.  I took note of two discussions that had. 

1. All print (we can say copy also) manufacturers are preparing for a 50% reduction in print (clicks)!

2). A4 devices that are coming off lease are worthless (not only to the leasing companies but the wholesalers also).

The 50% reduction in clicks came from someone I know and trust. Thus, I'm taking this as gospel.  Is it alarming, hell yes it is!  While many may think this is doom and gloom I'm seeing it more as an opportunity to see dealers follow the migration of print.  The migration of print is color wide format and color labels. If you want to stay in print and not migrate to MSP, those two models are expecting huge growth in the next five years.

In reference to the A4's. It's good to see that more A4's are making their way back to the wholesalers.  Which means that we've placed more and more of them in the field and help our clients navigate which devices are better for them. As far as the devices being worthless it's something I would expect.  But one man's junk is another man's treasure, and it got me to thinking that these off-lease devices may be a great opportunity for dealers to fund and start their own DaaS for their clients.

Vendors

Another one of the reasons that I attended was to support our Print4Pay Hotel vendors. I was happy to spend some time with Perfect Copier, The Copier Solution Shop, BEI Services (now NEXERA), Arlington (formerly Carolina Wholesale), Mid-West Copier and DocuWare. In the next week I'll be posted up a special blog for our sponsors and what they were showing. I also met many Print4Pay Hotel members on the floor and made sure that I introduced them to our P4P Hotel vendors that were there.

I was surprised that there was only one print vendor at the show.  That was Epson and they had a nice display printers, scanners and their really fast inkjet MFP. I was also told that Epson is making improvements and will continue with their 150PPM ink based MFP.  Epson did not have any of their wide format color devices their. For me that should have been a no brainer to have, however across town on the same dates was the ISA show. I'm sure it may have been complication to show wide format in two locations at the same time.

MSP type companies were also big this year.  More than any other year that I've attended.  I made some special notes about IT Glue, Evolved Office, Char-Tec, Pros Elite, Concertium, and Untangle. More to come on these vendors also.

Thursday

Yes, Thursday. What is Vegas known for?

It's the night life and the show floor on Thursday proved it. The show floor was empty, I guess many had slept in or had early flight out. I felt so bad for the vendors because it's quite the expense for the travel, the time and the cost of the event. In addition the show floor closed at Noon. Thus there was only three and half hours for traffic.

My flight out was 4PM that day. I had some time in the AM to visit with a few more vendors and had some chats with many of the Print4Pay Hotel members that were there. 

All in all ITEX 2019 provided great value and a chance to have those special conversations with peeps that we normally don't have. The chance to see new offerings from new vendors, the chance to catch up with existing vendors and the breakout sessions. I would highly recommend ITEX2020.

-=Good Selling=-

Nice thread here from my good buddy Mike.  This is from 15 years ago and he writes about how the members of the Print4Pay Hotel were able to help him secure a nice copier order! P4P Saves the Day

Enjoy these threads from 15 years ago this week!

Need to bring back some memories?  Seems like it was ten years ago this week that Xerox released the infamous ColorQube!

Enjoy these awesome threads from ten years ago this week!

In each one of the "This Week in the Copier Industry", I'm always looking to add some type of content or tip that would be of value to our members.  There's a blog in these threads for "Is There Really a "Natural Born Salesperson"? . I wrote this five years ago and it's still relevant five years later.

Enjoy these threads from 5 years ago this week!

Wide Format Scanning Whitepaper

Whether you are replacing a current wide format scanner or purchasing for the very first time, it’s important to consider the two basic technologies currently in use for wide format image capture and how these technologies fit into the workflow and business model of your scanning needs.

Wide format scanners today use either a Charge Coupled Device (CCD) or a Contact Image Sensor (CIS) to capture data. Information enters into the scanner through a lens system and a light source that is reflected from the document and captured by the photo sensors.

Overview of CIS Technology: CIS or (Contact Image Sensor) technology was originally developed for small format devices and has been in use for many years on fax machines, check readers and ATM card readers. The technology uses multiple CIS modules that contain lenses and lighting within each module. The modules are placed side by side just under the scanning glass. The self-contained modules typically use low power light emitting diodes (LED) of red green and blue to light up the document. The light is then reflected by the document and captured by a glass rod lens, directing the light towards the image sensors which capture the pixel.

Overview of CCD Technology: CCD or (Charged Coupled Device) technology, commonly referred to as camera technology, has been designed for all types of digital imaging including scanners, video cameras, security systems, as well as, equipment for industrial testing, monitoring and measurement. This technology has been in use for years. Most synonymous with high quality scanning, camera technology employs a linear array of CCD’s or cameras and a sophisticated lighting system to illuminate the image to be scanned. The more advanced systems utilize 4-channel RGB cameras- red, green, blue and panchromatic mono channels that deliver 48-bit color depth at 16 bits per channel.

Now that you have a basic idea of the technology, lets examine our top 5 reasons why we recommend camera over contact image sensor technology.

1) Image Quality and Flexibility: CCD scanning technology produces quality scans for virtually any type of document that will fit through a roll fed scanner. Whether your originals are hand drawn engineering drawings, B&W photos, or maps, CCD scanning technology will capture 16-bit grayscale (64,000 shades of grey) using a dedicated panchromatic monochrome channel for a much sharper clearer image. CIS scanners deliver only 8-bit grayscale (256 shades) and green capture only and have restrictions in some document classes like full bleed graphics and copying to 8 and 12 color printers. If you need to run
GIS maps, blueprints with stiff edges, newspaper, delicate documents or mylars a Contex CCD scanner is highly recommended over CIS technology.

2) Productivity: CCD scanners (Contex only) scan with originals face down. Some might argue that face up scanning allows for better quality control but assuming sheets only take 3 to 4 seconds to scan, quality control is better performed at the software level using Line of Sight Scanning techniques like the National /AZON Zero Turn system. CIS scanners and most non-Contex brand CCD scanners employ face up scanning which requires operators to “double handle” every document to keep them in their original order. Face
down scanning allows for true scan and drop capability which offers the most efficient way to handle documents. In addition to face down scanning, CCD scanning software, coupled with the latest developments in media sensing technology, reads the input media size much faster and more accurately, reducing post scan error correction.

File transfer is another serious productivity feature in Contex CCD scanners. The enhanced utilization of USB 3.0 for file transfer guarantees a much higher degree of productivity as operators will experience virtually zero wait time for file transfer between images. Side by side productivity tests generate a minimum of a 2 to 1 speed increase for
CCD vs. CIS scanning.

3) Color Fidelity when close isn’t good enough: Due to the inherent technical advantage of camera-based technology, the color gamut is much wider, color fidelity is greater and image noise is reduced. Since cameras capture up to 48-bit color, printing and copying to 8 or 12 color printers produces significantly better results than CIS. Color depth and the ability to recognize the nuances of gradients is superior on CCD scanners.

4) Thick Document and folded document Scanning: Scans of mounted originals up to .60” thickness can be done with CCD scanners but not with (most) CIS scanners. The reason is that the lighting system and focal point of the CIS technology does not lend itself well to raised or uneven surfaces. If your document archives consist of a good percentage of any of these two documents, go with CCD. In addition, if you are a print service provider
(PSP) and are at the will of your customer, go with CCD to ensure the highest level of customer satisfaction and business retention.

5) Optical Calibration/Stitching: Contex CCD scanners come equipped with 4 to 7 Quad linear CCD’s. These CCD’s are each controlled by an adjustment motor that sets height and width and are accurate to 1/400th of an inch when stitching between cameras. CIS elements are fixed in place or in some cases have a single element across scan widths. Contex CCD scanners offer the only “self-correcting” optics available without a technician being required for adjustment or having an operator physically turning screws inside the scanner.

This factors in when using Closed Loop Calibration which performs the function of printing a wide color target to a customer’s scanner, then scanning that target with a CCD scanner to provide Nextimage Repro copy software with an accurate reading of how the printer is delivering defined colors in its output.

In summary, CIS scanners hold a significant market space and are very well suited to scanning CAD/GIS generated images as well as AEC markups and building plans, they are more portable and lightweight and generally less expensive than CCD based scanners. However, if your outputquality is of utmost importance, if you are a print service provider, if you have an archive full of varied originals, if you plan to scan color graphics, maps photos or thick originals a Contex CCD scanner is best suited to your needs.

Visit AZON.com for more information.