The Real Reasons for the Race to Zero in the Copier Industry

 

After reading a recent thread on Linkedin posted by Dale Dupree the self-proclaimed “Copier Warrior” who is slaying high costs and conquering poor service. I thought it would be a great time to write about what’s driving the “Real Race to Zero in the Copier Industry”.

If you check out Dale Dupree’s profile page to learn more about him and what hes does to make himself unique and different in his marketplace.

Part of Dale’s comment below:

Copier reps are not out selling workflow strategies and basing an ROI around your business processes and how they relate to the device. And they’re definitely not selling the most important piece.

Instead, they tell you how #CHEAP they are first then they show you all the fancy facts about the machine, half of which you’ll never utilize and most you don’t even understand.

My response

Interesting to say the least. I have 37 years experience in selling copiers. Geesh, that's a long long time. The blame for the cheap price game is directly related to a couple of facts. I do not disagree with Dale's statement, but would like to enlighten all on how we got to where we are.

First

First one,  is revenue quota's on salespeople. In essence in to get to the bonus levels you need to hit the quota gates, if you don't, the basic commissions and salary can't or won't pay the bills. Thus, the high turn over in the industry today.

Years ago, there were mostly GP (gross profit) commission plans, you had to hold margin in order for a good commission, thus you had to hone your craft and skills of building relationships, selling ROI, prospecting and developing a great business acumen.

Workflows is a great talk track and that’s all it is until you can find pain points. Yes, on every appointment those good salespeople are looking for those pain points. But, in many opportunities, those pain points don’t exist or there is no exciting feature that will increase productivity for the end user. Alas, when that happens it’s more about getting the best price, the best service and the best quality for the lowest price. Which is impossible, yet prospects still try.

Second

Secondly, most (not all) dealer principals could not give a rats ass about how much money you (the salesperson) make. Only if you started to make more than they did.

A rep could meet his or her quota each month, make zero GP and the principals are delighted. That’s because their margins are already built into the SRC (sales reps cost). If you make more GP, then you’re adding tons of profit to that bottom line for that rep. Many of the better reps who generate decent GP are then subsidizing the salespeople that don’t perform as well. I’m not stating this is a bad thing, just the way it is.

Third

Thirdly, most of the very good reps (ones that sold on GP) always stayed in the dealer community and most (not all) never went into managers positions because they were doing quite well with doing what they do best which goes back to the skills of building relationships, selling ROI, prospecting and developing a great business acumen. Thus, most sales managers were not great salespeople but were capable of following directions and making a plan to hit their revenue each month and quarter. Many of these  managers promoted selling the devices at SRC and spun the tale of upgrades as the future of a recurring revenue stream. “Just think in three to five years you’ll be able to sell this account again and make a profit”. Yup, all well and good intentions until that company is out of business, moved away, was bought by someone else, your contact left, your contact died, the company was bought by another company.”

After a few years, most sales reps did not see the light at the end of the tunnel with that method of selling at cost and then left for greener pastures.

Lastly

The manufacturers are also to blame for some of the unrealistic quota’s that are placed on dealers. In order to meet those quota gates and to get those backend cash incentives (which has turned into an addiction for most) dealers had to move boxes at any cost because the backend incentives are so high.

Then new comp plans were created to incent sales reps to sell @SRC, thus any sales rep would realize they could make more commissions selling at SRC rather than selling with a Gross Profit.

All I’m saying is that it’s not just the salesperson, there is much blame to spread across the entire industry. I for one believe it’s too late for change here in the US copier industry. No manufacturer is going to lower their quota levels and tell the dealer to sell to higher GP. Their business plan has nothing to do with your business plan.

Selling copiers aka today is much more about knowing when and where you can make GP, what you can take and what you can’t take, where you can win and where you can’t. For those of us that are in major market areas, we have to fight every day with every direct branches that is selling at dealer cost or below.

Yes, learning to sell value is much needed, but when your device is twice the cost of the direct branch, that turn can turn a head or two. The prospect then thinks, “I can go to this dealer and pay twice as much rather than going to direct and paying half the price. “ It’s all about the comp plans!

If you’re fortunate to be with one of the megadealers in the major market areas, then as a salesperson you have a leg up on all of your competitors because of mega dealers huge buying presence with the manufacturer.

Late last year, I heard from another dealer principal that was planning a one million dollar purchase with a manufacturer. The manufacturer offered 90 points off of LDC (low dealer cost). Not sure if the deal went or not, but at 90 points I’m doing that deal. Think about the cost of those copiers. If the dealer made his usual margins,  then the cost to the end user was closer to the wholesale cost that another dealer would pay for the same box. It’s insane what goes on.

I firmly believe that Japanese have honed their manufacturing skills so much over the last thirty years that the cost to manufacturer a multi-functional copier is 5-10% of the MSRP.

If you’re in a secondary market, that type of market usually doesn’t have as much direct pressure then you’re in a much better place. You can hold more GP because there is not the pressure of every manufacturer that’s trying to dump a box.

If you’re in a tertiary market, then my hats off to you as a salesperson and you must be living the good life! I have visited a few of these markets in the US and those reps are doing quite well. No direct pressure, maybe two major dealers, no price dumping, low cost of living. It’s the Atlantis (not to be confused with Atlantic) of copier sales.

So, that was kind of a long rant about giving crap away and selling value. Remember don’t blame the salesperson, put the blame on the entire industry.

It's the 80/20 rule. Eighty percent of the reps could or will not care, twenty percent of the reps are the ones that do care, do make gross profit, make a nice living. I'm just glad to be part of that twenty percent.

-=Good Selling=-

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To all of the talented and amazing sales people on here, you owe it to yourselves to try out a more progressive industry or start your own business for at least 6 months. You will make twice as much money and work half as hard... 

I love the copier industry as much as the next person, but there comes a point where it's diminishing returns. For someone as talented as Dale Dupree, he could probably triple or even quintuple his salary if he switched to selling SaaS or medical. 

Everyone wants to hire copier reps because you are the mecca of sales people: hardworking, tenacious, competitive, adaptable to change, fearless... Time to capitalize on all you've invested instead of letting the dealer principals reap the benefits of your blood, sweat and tears.

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