May 2006 Office Technology

01OT0506 4/26/06 5:56 PM Page 1

02OT0506 4/12/06 8:32 AM Page 1

09OT0406 3/8/06 12:42 PM Page 1

Sales Compensation

Creating a plan that works

for your dealershipby Jim KahrsPPMC Inc.Having a strong compensation plan can be the driv-

ing force behind building your dealership.

4 | 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

CONTENTS

6

8

30

Editor’s Page

BTA President’s Message

Advertiser Index

Document Management

Providing a solution for

storage & retrieval painby Brent HoskinsOffice Technology MagazineIf 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 man-

agement — well suited for nearly any business.

D E P A R T M E N T S

Volume 12 � No. 11

16

Dealership Newsletters

Getting the solutions

message out is importantby Darrell AmyDealer Marketing SystemsOne 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.

2410

18

F E A T U R E A R T I C L E S

The CPC Risk

Color could destroy

your service marginsby Lou SlawetskyIndustry Analysts Inc.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.

25

P R I N C I P A L I S S U E S

20

C O U R T S & C A P I T O L S

Close-up: Kyocera Mita

OEM emphasizes

solutions-focused trainingby Tom BrasuellKyocera Mita America Inc.Here is a look at Kyocera Mita’s training initiatives

— KMAConnect and the KMA Learning Center.

�

TONER CONSUMPTIONAssumed vs. Actual

Page Coverage�

Ton

er

Con

sum

pti

on

Actual

Assumed

RISK

27

Selling to IT

The key is creating

a real sense of valueby Michael GreenbergPrinTelogy Inc.The reps are out pounding the pavement. “Sell, sell,

sell” is the direction they are given, but they are return-

ing empty-handed. How can they best sell to IT?

‘BTA Has The Information’

Have you forgotten about

this industry resource?by Robert C. GoldbergBTA General CounselTake advantage of all of your BTA membership ben-

efits and obtain what you need to remain successful.

23 Business Technology AssociationJune-September Education Calendar

S E L L I N G S O L U T I O N S

Making Connections

eCopy hosts dealers, ISVs

& manufacturers at forumby Brent HoskinsOffice Technology MagazineSoftware vendor eCopy Inc. has come far in recent

months. That reality was particularly apparent at the

company’s recent Paper Connection Forum.

22

Color is Here!

’05 workgroup UCP hardware

revenue: $2.7 billionby Jeff HayesInfoTrendsOffice color machines will overtake B&W devices in

most product segments over the next five years.

291,000

800

600

400

200

0

2004 2005 2006 2007 2008 2009

Black &White Devices

ColorDevices

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

Placements (000)

04OT0506 4/28/06 9:35 AM Page 4

05OT0406 3/1/06 12:01 PM Page 1

EDITOR’S PAGE

In the April issue of

Office Technology I

shared some com-

ments I heard in an

education session at

this year’s ITEX show.

My intent was to pro-

vide some insight and

guidance shared in the session from the per-

spective 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, fol-

lowing 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 our-

selves 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 com-

pany that provides solutions to document-

related 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 man-

agement 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.

� 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 hard-

ware 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 tech-

nology, 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 testimo-

nials 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 ex-

penses. I’m moving forward. How about you?

— Brent Hoskins

A Few More Ideasfor ‘My Dealership’ Editor

Brent [email protected]

(816) 303-4040

Contributing WritersDarrell Amy, Dealer Marketing Systems

www.dealermarketingsystems.com

Tom Brasuell, Kyocera Mita America Inc.www.kyoceramita.com

Robert C. Goldberg, General CounselBusiness Technology Association

Michael Greenberg, PrinTelogy Inc.www.printelogy.com

Jeff Hayes, InfoTrendswww.infotrends.com

Jim Kahrs, PPMC Inc.www.prosperityplus.com

Lou Slawetsky, Industry Analysts Inc.www.industryanalysts.com

Business Technology Association12411 Wornall Road

Kansas City, MO 64145(816) 941-3100

www.bta.org

Member Services: (800) 505-2821BTA Legal Hotline: (800) 869-6688

Valerie McLaughlinMembership Marketing Manager

[email protected]

Gary HedbergAccounting Manager

[email protected]

Mary HopkinsAccounting [email protected]

©2006 by the Business Technology Association. All RightsReserved. No part of this publication may be reproduced by anymeans without the written permission of the publisher. Everyeffort is made to ensure the accuracy of published material.However, the publisher assumes no liability for errors in articlesnor are opinions expressed necessarily those of the publisher.


®

06OT0506 4/28/06 9:18 AM Page 6

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07OT0506 4/26/06 6:03 PM Page 1

BTA PRESIDENT’S MESSAGE

Iwas pleased to see

Bob Goldberg’s col-

umn, “BTA Has The

Information,” appear-

ing in this issue of

Office Technology. Bob

does an excellent job

this month of remind-

ing dealers of the value BTA brings to our

dealerships. He also reminds us that we

often do not receive the full value of mem-

bership 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 Bench-

marking Reports. They are: 2005 Finance

Report; 2004 BTA Service Productivity

Report; and 2004 BTA Compensation Report.

These reports are free to members; non-

members pay $200 or more each. (Watch for

the 2006 Service Productivity and 2006 Com-

pensation 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

Barr and Darrell Amy. The coupon can also

be used toward the purchase of other select

BTA products, such as the Business Equip-

ment 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 ful l-t ime

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 weak-

nesses. Participants explore important

issues surrounding profitability bench-

marks, asset management, expense con-

trols 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 exam-

ples, 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

Take Full Advantageof BTA Membership

®

2005-2006 Board of Directors

PresidentMark Naylor

ABM Automation740 NW 63rd St.

Oklahoma City, OK [email protected]

President-ElectDan Hayes

Purcell’s Business Products222 E. 1st St.

Campbellsville, KY [email protected]

Vice PresidentShannon Oliver

Copier Source Inc.215-G Industrial Ave.

P.O. Box 36395Greensboro, NC [email protected]

BTA EastThomas Chin

Accolade Technologies LLC604 Hampshire Road

Mamaroneck, NY [email protected]

BTA Mid-AmericaDave Johnson

G-I Office Technologies Inc.701 Atlas Ave.

Madison, WI [email protected]

BTA SoutheastBill James

WJS Enterprises Inc.3315 Ridgelake Drive

P.O. Box 6620Metairie, LA 70009

[email protected]

BTA WestGreg Valen

Hawaii Business Equipment Inc. Toshiba Business Solutions

590-A Paiea St.Honolulu, HI 96819

[email protected]

Ex-Officio/General CounselRobert C. Goldberg

Schoenberg Fisher Newman & Rosenberg Ltd.222 S. Riverside Plaza

Ste. 2100Chicago, IL 60606

[email protected]


08OT0506 4/28/06 9:22 AM Page 8

15OT0406 3/17/06 12:00 PM Page 1


by: Brent Hoskins, Office Technology Magazine

Document ManagementProviding a solution for storage & retrieval pain

It 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 docu-

m e n t s . F o r t h e s e d e a l e r s h i p s ,

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 soft-

ware-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. Neverthe-

less, 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 cat-

egory 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. “Docu-

ment management deals mainly with tracking the docu-

ment 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, pro-

moted as “personal document man-

agement software.” Similarly, Sharp

offers Liberty Doc2NET, a private-

labeled version of Liberty IMS’ Lib-

ertyNET document management

solution. Perhaps the latest of the

OEM products is iTag, unveiled by

Kyocera Mita America at its na-

tional dealer meeting in April. The

product is promoted as “an intu-

itive, user friendly document man-

agement solution ideal for small

businesses or departments.”

Of course, there are also many other document manage-

ment 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), Info-

Dynamics 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 de-

partmental use, while others are designed as enterprise solu-

tions. 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,

10OT0506 4/28/06 10:58 AM Page 10

13OT0406 3/9/06 9:21 AM Page 1

it appears that many dealers

have yet to take on even a

low-end document manage-

ment solution. Why the

delay? The comments of

three software vendors

reflect some of the basic

reasons and an under-

standing of the dealers’ hesi-

tation. From Christopher

Lupton, president of Info-

Dynamics Inc.: “They are

concerned that the sale [of

the hardware] is going to get hung up, and that it’s going to

get cost prohibitive for the customer.” From Mike Holp,

channel manager for ZyLAB: “They are used to selling iron.

Selling a software solution requires a commitment to learn

the product and how to sell it.” And from DocuWare’s

Schloemer: “You are dealing with such things as storage,

retrieval time, bandwidth — a whole new concept that we

call document management. For the average reseller to sud-

denly say ‘Ok, I’m going into this field’ without a guiding

light, so to speak, is overwhelming.”

In an effort to assist dealers who may be hesitant in pur-

suing the sale of a document management solution, fol-

lowing is a series of key questions on the topic. In addressing

the questions, perhaps the comments shared by representa-

tives of four of the many document management software

vendors will serve to provide some of the insight and guid-

ance dealers are seeking.

How big is the opportunity? For the DocuWare product,

says Schloemer, the target customers are those companies

with between 20 and 500 employees. “The results of the 2000

U.S. census tell us that there are approximately 600,000

companies matching that criteria,” he says, noting that

there are an additional 20,000 or so U.S. companies with

more than 500 employees. “And we know that there is some-

where in the neighborhood of about 60,000 professional

solutions installed. So, approximately 85 to 90 percent of the

market is virtually untapped, totally open. We are not aware

of any market that has that kind of potential.”

What are the benefits of a document management solution?

Generally, the two leading benefits cited are savings in time

and money. Schloemer cites the simple example of an

accounting department completing the task of accounts

payable. He traces the typical route of the invoice, from its

arrival into the accounting department of a business, where

it is stamped and routed to

the appropriate department

manager. “The department

manager reviews it with the

purchase order information,

signs i t , stamps it and

routes it back for payment,”

he explains. “However, if

there are multiple depart-

ments or remote offices,

then perhaps there is a

courier service, mail de-

livery or a person who phys-

ically takes the invoice to the additional location.

“With a document management solution, the invoice is

captured, stamped and automatically routed to the depart-

ment manager [and to any other necessary departments or

offices],” he continues. “With one search, the manager will

have the supporting documents, and can approve the

invoice. It will then be automatically routed back to the

accounting department for payment.”

Within the same day, says Schloemer, the invoice is ready

for payment. “You are very quickly able to establish a real

benefit — a tangible cash benefit to that customer,” he says,

referring to the dealership that offers a document manage-

ment solution. “What you’ve done is you’ve eliminated the

need for a courier, etc., and all the time needed to search for

information. You’ve improved productivity in the accounting

department, and that of the manager, who can now focus on

his core responsibilities. Nobody is paid to handle paper.”

Why haven’t more companies implemented a document

management solution? InfoDynamics’ Lupton says there

remains an adherence to the old adage, “If it’s not broken,

don’t fix it.” The problem, he says, is that many end-users

are not fully aware that they have a business process that

needs fixing. “It’s difficult for them to see the number of

calls that they have to make to call back somebody after

they looked for a piece of paper and finally faxed it or e-

mailed it to them,” he explains. “The only reason it is not

apparent to them is that they’ve been doing it the same way

year after year. They don’t think about it.”

How would one of these end-users respond if asked about

what he (or she) has accomplished in a given day? “He is

going to say, ‘I filed these claims, I talked to these customers,

I helped these patients,’” explains Lupton. “He is not going to

say, ‘I got up from my desk 12 times to search through manila

folders and pull documents.’ So, it’s difficult for a company to


“You are dealing withsuch things as storage,retrieval time, bandwidth... For the averagereseller to suddenly say‘Ok, I’m going into thisfield’ without a guidinglight, so to speak, is overwhelming.”

— Greg SchloemerDocuWare

12OT0506 4/28/06 11:01 AM Page 12

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 con-

tinues. “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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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 | 13

“One of the questions Irecommend that the repask is, ‘Is your businessmodel paper-intensive?’If the answer is ‘yes,’ thenask, ‘How often do youneed to go to a file cabinet to retrieve a document? ...’”

— Mike HolpZyLAB

13OT0506 5/1/06 11:37 AM Page 13

“Absolutely,” he says. “We

see that the dealers who are

moving volume have cham-

pions who know the pro-

duct very well. But, more

importantly, they under-

stand solution selling. They

need to be able to identify

the opportunities and pro-

mote the solution, both with

their co-workers — with the

sales team — as well as with

the customer.”

Why is now a good time for the office technology dealer-

ship to begin selling a document management solution?

Among the most commonly cited reasons is the prolifera-

tion of the digital document itself. “Five years ago we were

spending a lot of time explaining what a digital image is

and the benefits of a digital image,” says Schloemer.

“Today, everybody is networked and has access to digital

documents. There is e-mail, the MFP itself, which is cre-

ating digital images, the PC and, of course, we’ve always

had faxes — digital as well. So, MFP providers are in a very

strong position today, because MFPs are in most compa-

nies and customers are asking, ‘Hey, how can I make use of

this digital image?’”

Lupton offers a similar observation. “People are getting

exposed to the fringe of true document management right

now just by the equipment they are purchasing and the e-

mails they are receiving,” he says. “They are asking, ‘I can

create an electronic copy wonderfully with the equipment

that I have, now what do I do with it?’ A lot of times, dealers

are introducing a very complex piece of equipment that has a

lot of features and capabilities and then they are kind of

‘leaving the customer standing at the alter’ when it comes to

truly getting their business to a point where it is paper-light.”

What’s the payoff for the dealership? From Lehrer’s per-

spective, for dealerships, the greatest benefit of selling a doc-

ument management solution is the ability to manage the

customer. “You basically get account ownership,” he says.

“Whereas, when you are selling speeds and feeds, the next

person who comes out with a faster device is the one who

will get that business. When you are selling a solution, you

now have, in a sense, formed a much closer partnership with

your customer in that you are involved in their business.

You are not just a peripheral to them.”

There is also, of course, the added revenue from the sale

of the software itself and

professional services fees

(training, installation, etc.).

In addition, Holp notes that

customers frequently opt

for upgrades after the initial

software installation. “May-

be they start out with a five-

user system, really embrace

the technology and the

company grows,” he ex-

plains. “Now they need ten

people to access document

collection. So, there are lots of benefits in terms of incre-

mental revenue streams that the dealership can derive from

that initial sale.”

The sale of a document management solution may also

lead to a hardware upgrade, says Lupton. “One of the biggest

benefits is that it can turn a customer who was looking at a

25 page-per-minute MFP without scan and print capabilities

into a customer interested in a 50 page-per-minute MFP that

is loaded with scan and print features,” he says. “Initially,

they may not have been interested in a higher-speed model.”

Schloemer cites one final payoff that some dealers may

not initially expect. “In most cases, the solution starts out

with what we call ‘day-forward’ capturing,” he says. “But then

the customer comes back and asks, ‘What about our 2005

documents? I have to go back all the time to those docu-

ments. Can you help me there?’”

This provides the dealership the opportunity to offer back-

file conversion, says Schloemer, noting that many dealer-

ships, for a fee, will scan the documents and provide the

customer DVDs containing all of the files. “I would say that

60 percent of our resellers provide this service,” he says.

“MFP resellers are in a perfect position for this.”

Where should the dealership begin, once it has selected a

document management solution to sell? Dealers should start

with their existing client base, says Holp. “They’ve sold to

them once before and it’s a lot easier to sell to them a

second time,” he says. “Oftentimes, those clients are asking

dealers, ‘I’ve got some pain here when trying to find docu-

ments, can you help me out?’”

Lupton agrees. However, he also suggests that sales reps

should prospect for a document management implementa-

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

old one has seen its day,’” he says. “But, along with that the


“It is always easier ... tojust say, ‘It sounds like youneed a new MFP, becauseyour old one has seen itsday.’ But along with thatthe rep should say, ‘Wealso have software that ...will get rid of those file cabinets ...‘“

— Christopher LuptonInfoDyamics Inc.

14OT0506 4/28/06 11:34 AM Page 14

rep should say, ‘We also

have software that works

great with your MFP and

will get rid of those file cab-

inets over there.’ It is easier

to bring it up first and have

them say they are not inter-

ested in the software, than

it is to introduce it after a

competitor has brought

this idea to the table.”

While the responses to

each of the above questions

provide some guidance for dealers to consider, there are, of

course, additional questions that dealers should ask when

seeking a document management solution provider. Among

them: What sort of training and support will the software

vendor provide my dealership? How many successful imple-

mentations of the software are in place? How long has the

company been in existence?

As dealers investigate the

document management op-

portunity, they can expect to

hear the same emphasis on

the importance of solution

sales that they are hearing

from hardware vendors. A

comment from Lloyd War-

man, president and CEO of

Liberty IMS, reflects the

common message: “They are

very good at selling boxes,

and this whole idea of software and solu-

tions is a little bit scary to the bulk of them.

But if they don’t get on this ship called ‘Solu-

tions,’ it is going to sail without them.” �

Brent Hoskins, editor of Office Technology

magazine, can be reached at [email protected].


“They are very good atselling boxes, and thiswhole idea of softwareand solutions is a little bitscary to the bulk of them.But if they don’t get onthis ship called ‘Solutions,’it is going to sail without them.”

— Lloyd WarmanLiberty IMS

15OT0506 4/28/06 11:14 AM Page 15


by: Lou Slawetsky, Industry Analysts Inc.

Independent dealers

continue to use cost-

per-copy/page plans

as a market strategy to

shorten the selling cycle.

These plans combine

hardware, service, sup-

plies and financing into a

single “click” charge.

The “Imaging Prod-

ucts Dealer Distribution

Strategies Report,” pub-

lished annually by In-

dustry Analysts Inc . ,

indicates that 68.3 per-

cent of dealers use these

plans. Further, those fol-

lowing this strategy place 39.4 percent of their units under

these “all-in” plans.

While these plans tend to simplify the selling cycle, we find

that gross margins are traditionally lower than those

achieved when selling contract components separately. Our

report shows that the overall gross margin for all hardware,

service and supplies activities is 36.0 percent, while the gross

margin for cost-per-copy/page programs is only 34.3 percent.

Why the difference in margin between the two plans?

The answer is deceptively simple. When pricing cost of

ownership components separately (hardware, service, sup-

plies, finance cost), there are multiple components to be

shopped by the decision maker. On the other hand, when

the decision maker only has one price with which to deal,

the minute your sales representative says, “The total cost

will be $.019 per page,” the prospect will begin to look for

$.017 for a similar solution. Increased competition forces

margins down.

However, there is an even bigger risk, hidden among your

assumed usage patterns.

Your vendors have esti-

mated your toner cost

using an assumed cov-

erage average of 5 per-

cent per page for mono-

chrome images. That’s

been an industry stan-

dard for many years. As it

turns out, at least for

printing, that is reason-

ably close. And, if you are

off by a bit, there is not

much risk to your bot-

tom line. But what about

color? Now, you are not

dealing with one color,

but four. What’s more, color toner costs considerably more

than the monochrome equivalent. Consequently, a small

error in your assumption of page coverage will be magnified

by at least 5X. With a margin of error this wide, even a small

miscalculation in toner consumption for a color printer or

MFP can result in an outright loss on your service contract.

In many cases, this loss will not become evident until after

the first year of the service agreement. If you have limited the

rate of price increases, as many agreements do, you will not

be able to increment the price fast enough over the

remaining life of the agreement. The result will be a loss for

the entire life of the imaging system.

Why does color represent such a problem, aside from

the fact that you simply use more toner? It is not the fact

that color systems use more, but the amount they use.

Earlier, I stated that the assumed page coverage for mono-

chrome pages was 5 percent (by the way, it used to be 6

percent, but that’s a different issue). In order to calculate

toner use for four-color images, vendors simply assumed 5

�

TONER CONSUMPTIONAssumed vs. Actual

Page Coverage�

Ton

er

Con

sum

pti

on

Actual

Assumed

RISK

The CPC RiskColor could destroy your service margins

16OT0506 4/28/06 11:50 AM Page 16

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 “experts,” simply interpo-

late 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 infor-

mation for higher rates of coverage is a recipe for disaster.

The explosive growth of color, forecasted by every organi-

zation 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.


17OT0506 4/28/06 1:31 PM Page 17


by: Darrell Amy, Dealer Marketing Systems

Do your current clients know about the new print and

document management solutions that your dealer-

ship provides? How about your potential clients?

Getting the solutions message out to your market is

important. The lost profit opportunities could be substan-

tial. 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 serv-

ices is through a monthly or quarterly newsletter.

The Key BenefitsA dealership newsletter offers many useful benefits:

Reposition Your Dealership — As the hardware busi-

ness continues to sl ip 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 docu-

ment 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 edu-

cation about your print and document management solu-

tions. 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 solu-

tions, they may purchase them from a savvy competitor

without your awareness. Ultimately, this could lead to a sub-

stantial erosion of your base. A newsletter can be a proactive

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 promo-

tions 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.

Dealership NewslettersGetting the solutions message out is important

E-mail: What YouNeed to Know

If you opt to send your newsletter via e-mail, be aware thatrecent “Can SPAM” regulations regulate how e-mails are sent:

> Broadcast e-mails must have an “opt out” option that per-manently removes an e-mail address from your list. Once some-one has opted out it is very important that you do not send anymore 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 incompliance. Added benefits of these services include:

> Click-through Reporting — You can see who clicked on thelinks in your newsletter and what sites they visited.

> Spam Analysis — Evaluate how likely your newsletter is toget through SPAM filters.

> One-to-One Distribution — Instead of sending one e-mailwith thousands of addresses in the “BCC” line a good e-mailmarketing service will send thousands of individual e-mails withone e-mail address in the “To” line. This helps ensure the e-mailwill get through.

18OT0506 4/28/06 2:23 PM Page 18

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 e-

mail 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.

Developing Newsletter ContentNewsletter 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 SuccessConsistency — Your newsletter needs to go out on a con-

sistent basis such as monthly or quarterly. Make a commit-

ment to hit your deadline.

Content — Content must address your clients’ business

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 man-

agement 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

[email protected].

Visit www.dealermarketingsystems.com.


19OT0506 5/1/06 11:34 AM Page 19


by: Michael Greenberg, PrinTelogy Inc.

Let’s assume your dealership

has launched a print man-

a g e m e n t p r o g r a m . T h e

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,

se l l ” 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 deal-

ership’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 objec-

tions 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 opportuni-

ties for selling copiers. Prospecting and selling to managers

of information systems can be dif-

ficult 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 30-

second 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 any-

thing 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

Selling to ITThe key is creating a real sense of value

20OT0506 4/28/06 1:48 PM Page 16

organizations. Facilities, IT and pur-

chasing employees are sharing duties

with respect to devices that are con-

nected to corporate intranets. A number

of companies I recently visited intro-

duced policy stating: “If it is connected

via a network or telephone wire, then

the support of these devices belongs to

IT.” If this was the policy in an organiza-

tion you worked for, would you want to

connect copiers and fax machines? This provides a tremen-

dous opportunity to provide your customers with additional

services, recently defined as “managed services.”

Managed services, linked closely to outsourcing, provides

the delivery and management of network-based services,

applications and equipment to organizations. Companies

are looking to current vendors to provide additional

managed services, including support of copiers, fax

machines and printers. Now the argument for IT managers

is not whether or not they want these devices connected,

but rather to whom should they outsource this process? Can

your dealership come up with a managed services program

that can help your prospects? If so, calling on IT managers

will become a simpler process because you are now helping

your customers solve challenges within their own organiza-

tions. You are now creating real value.

What else do you need to know to be successful within IT

departments? Understand that most IT managers have tra-

ditionally made capital acquisition of the devices they use on

their networks. This includes network printers, the very

devices copier/MFP dealerships have been trying to replace

for years. Until recently, they were unfamiliar with leasing

practices and are, therefore, leery of this acquisition model.

As IT managers become increasingly responsible for the

copiers, they are beginning to review the financial and lease

documents that purchasing and facilities departments have

executed with copier dealerships in the past. They are now

required to understand finance on a much higher level and

how their decisions impact their organizations. If you are

capable of articulating the financial decisions for them, you

are providing additional value, another managed service.

But do not think for a minute you are going to “pull the

wool” over an IT manager’s eyes. He (or she) is used to

explaining how things work within his organization, so why

would he behave differently in this circumstance? Be pre-

pared to explain how your dealership’s financial sales

process works, and more importantly, how you can help him

understand the process. Become a finan-

cial, equipment and service consultant

to the IT manager and you will create a

deeper, more valuable relationship.

So, we have now defined a couple of

terminologies to create an “elevator

pitch” — Intranet and managed services.

We have uncovered that we can be of

greater service to an IT manager by pro-

viding a clear understanding as to the

financial decisions he is making and how those decisions

impact his organization. You are now beginning to create

real value within your customer’s organization.

What else do your sales reps need to know? I find that a

basic understanding of how IT infrastructure works is

helpful. Ask your sales reps, “Do you know what TCP/IP

stands for?” (The answer: transmission control pro-

tocol/internet protocol, the suite of communication proto-

cols used to connect to the Internet.) Can your sales reps

identify some of the software applications your prospects

are using and how those applications might affect what you

are offering? Have your prospects defined technology stan-

dards for their network infrastructure?

Larger corporations develop technology standards so

they can better control, understand and support what is

happening within their IT infrastructure. Can you be of

value in creating technology standards for your customers?

Absolutely! For years I have trained my staff and others to

help customers and prospects understand the value of cre-

ating standards within their own organizations. How suc-

cessful would your sales team be if your customers created

standards that involved the managed services your dealer-

ship is offering?

Do your sales team members really understand what

your customers’ IT managers do within their organizations

and how they can be of service to them? If you can create a

need based upon this understanding, then you will be suc-

cessful selling to IT. �

Michael Greenberg is president and founder of PrinTelogy Inc.,

a 14-year-old Denver-based corporation. He is also on staff at

NER Data Products Corp. for the delivery of its Print4 Program

and has provided consulting services to

Toshiba for its Encompass Total Print

Management Program. Greenberg can be

reached at [email protected]

or [email protected]. Visit

www.printelogy.com and www.nerdata.com.


Companies are lookingto current vendors to provide additionalmanaged services,including support of copiers, faxmachines and printers.

21OT0506 4/28/06 1:55 PM Page 1


by: Brent Hoskins, Office Technology Magazine

While eCopy Inc. was

once only seen by

dealers as a part-

ner of Canon U.S.A., the scan-

n i n g s o f t w a r e v e n d o r h a s

come far in recent months.

That reality was particularly

apparent at the company’s

r e c e n t P a p e r C o n n e c t i o n

Forum, held April 3-6 in Fort

Lauderdale, Fla.

This year ’s forum, the

second for eCopy, drew 460

attendees, including 169 dealers, 110 attendees from inde-

pendent software vendors (ISV) and 70 attendees from hard-

ware 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 solu-

tions 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 func-

tionality of MFPs and ISV applications. During the forum,

the company announced that the eCopy Connections

Alliance Program (eCAP) has surpassed 100 members. By

integrating enterprise software with eCopy’s Open Platform

Architecture, eCAP members enable users to easily incorpo-

rate 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 agree-

ment 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 prod-

ucts, 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 [email protected].

Making ConnectionseCopy hosts dealers, ISVs & manufacturers at forum

eCopy Inc. CEO Ed Schmid

22OT0506 4/28/06 2:02 PM Page 22

EDUCATION CALENDAR

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 | 2 3

BUSINESS TECHNOLOGY ASSOCIATION • May 2006

EDUCATION CALENDARJune7-8 BTA ProFinance Washington, D.C.

Analyze current business practices and evaluate strengths and weaknesses. Partici-pants will explore important issues surrounding profitability benchmarks, asset man-agement, expense controls and employee productivity. They will leave with a clear setof benchmarks and proven strategies for successful implementation with a target goalof 14 percent operating income. This course is sure to help you take control of andimprove the financial performance of your company.

10 Ann Barr Selling Supplies Seminar Manassas, VATML Copiers is sponsoring this full-day seminar/workshop. Resellers of imaging sup-plies are encouraged to attend. Learn how to write attention-getting opening state-ments, sell against discount warehouses, find additional business in existing accountsand much more. To register, contact Ann Barr directly at [email protected] or call(757) 463-0924. Visit www.sellingsupplies.com. (BTA member coupon applies towardthis class.)

August1-2 BTA ProFinance Orlando, FL

2-4 CompTIA Breakaway Orlando, FLFor details, visit www.comptia.org/breakaway.

4 BTA FIX: Cost Management for Service Workshop Orlando, FLLearn proven service management and customer service strategies to use in yourcompany. Costing out the service hour, effective and profitable maintenance agree-ments, efficient vehicle operations, reducing personnel turnover, competitive compen-sation plans and identifying profit-making opportunities through the service operationare issues that are critical for success. Receive service department worksheets andaction plan templates, sample maintenance agreements, cost/price spreadsheet tem-plates on diskette and a handy workshop reference manual.

September9-10 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.

23OT0506 4/28/06 2:17 PM Page 23

In 1977, I met with a group of more

than 100 dealers who were concerned

because the machines they were

selling were catching fire, risking the

safety of end-users and their own finan-

cial security. When the dealers contacted

the manufacturer about the hazard they

were told they were the only ones having

the problem and that it was likely their

fault for not making the proper adjust-

ments to the machine. BTA (then NOMDA) brought the

dealers together, gathered the information and obtained

relief from the manufacturer. Individually, the dealers had no

success. Collectively, the problem was solved.

This example from the 1970s illustrates the key role BTA

plays in assisting dealers, helping them to remain successful.

Today, that role endures.

In recent months, the manufacturer that once had copiers

that posed the risk of fire has been busy establishing branch

and direct operations. In fact, several manufacturers are

demonstrating concern that their dealers’ businesses are

being acquired and their existing customers will be converted

to another brand. In order to protect that customer base, these

manufacturers have augmented their own sales efforts. Many

of these direct operations target competitive brands and

respect their dealers’ customer bases. However, this one man-

ufacturer has not only increased its direct operations, but it

has also armed them with more favorable pricing than its

dealers’ best prices. What is more disturbing is the direct

salespeople are taking away the accounts of the manufac-

turer’s dealers.

If you are experiencing these actions in the marketplace,

you should be in contact with BTA to determine your rights

and obtain assistance. If you are considering a new line, you

should contact BTA to determine the experiences of other

members with that supplier. BTA can keep you from making a

mistake. BTA has the information.

A few years ago, an aggressive dealer, in an effort to reduce

costs, placed equipment on every copier in the field to auto-

matically communicate meter counts to the dealership

without human intervention. The manufacturer promoted

efficiency, reliability and cost savings.

The equipment never performed reliably

and the manufacturer refused to stand

behind it. That same manufacturer was at

the recent ITEX show soliciting atten-

dees. Before you invest in this technology

wouldn’t you l ike to know about the

pending litigation against the vendor?

BTA has the information to prevent you

from making the same mistake.

Many members are currently considering document man-

agement software solutions for their end-users. I was told there

were numerous document management software providers at

this year’s ITEX show. Clearly, not all will survive. Have you

considered the ramifications of a potential provider’s failure to

your business and your customers? Is there an effective soft-

ware escrow agreement in place should the provider go out of

business? What do the terms of the reseller agreement

provide? BTA has the information you need to be successful.

In recent years dealers have forgotten about the resource

BTA is to the industry. They attend the meetings of manufac-

turers and come away thinking they are getting the full story.

Manufacturers feed dealers what they want you to hear.

Mostly, it is: “Buy more and pay your bills for we are partners.”

Today, BTA remains the clearing house for industry infor-

mation and knowledge. Brent Hoskins, for example, has

edited this magazine and its predecessors since 1989 (he

joined BTA as a writer in 1986), bringing you more than 200

issues packed with knowledge and information. BTA Legal

Services has monitored litigation, contracts and laws

affecting your business for even longer. As a member, are you

tapping into this vast resource?

BTA is objective and knowledgeable. Take advantage of all

your membership benefits and obtain from BTA the informa-

tion and knowledge you need to remain successful. �

Robert C. Goldberg is general counsel

for the Business Technology Association

He can be reached at

[email protected].

Members may call the

BTA Legal Hotline at (800) 869-6688.

by: Robert C. Goldberg, General Counsel for the Business Technology Association

COURTS & CAPITOLS


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

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24OT0506 4/28/06 2:04 PM Page 24

In 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 pro-

duction. 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 compo-

nents. 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 arrange-

ment 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

by: Jim Kahrs, PPMC Inc.

SELLING SOLUTIONS

Sales CompensationCreating a plan that works for your dealership


25OT0506 4/28/06 4:06 PM Page 24

still meeting his initial income needs as he

ramps up his sales performance. This is a

much better option than guaranteeing reps

a high salary when they start because there

is still a production/reward system in place.

The next component of the sales comp

plan is commission. This needs to be the

driving force of your comp plan. Sales reps

should earn the bulk of their income from

commissions on closed sales. Commissions

are typically based on either gross profit or sales revenue. Each

has its pros and cons. Plans based on gross profit ensure that

the sales rep does not earn significant money unless he creates

significant profit. The drawback to this plan is that the rep can

sell a couple of machines for a lot of profit and earn a good

living while not really building the long-term future of the deal-

ership through ongoing service revenue.

Plans based on sales revenue reward reps for selling larger

systems and/or multiple systems that lead to increased service

revenue. The drawback to these plans is that the equipment

sales tend to be less profitable over the long run.

Adjustable commission plans also work very well. These

plans provide the opportunity for reps to earn higher commis-

sion percentages for sales to new customers or for achieving

sales milestones. This can help balance the pros and cons of the

two different commission plans. Because sales to new custom-

ers bring in new service revenue many dealers choose to pay as

much as 5 to 10 percent more commission on these deals.

A gross profit-based commission plan can pay higher com-

mission percentages as the rep reaches and exceeds sales

revenue targets. For example, a rep who sells $20,000 in

revenue could earn 30 percent of the gross profit while a rep

who sells $50,000 would earn 35 percent of the gross profit.

This provides the incentive to keep gross profit high while

driving for higher sales revenue, in effect working both sides of

the equation.

The final component of a well-structured sales comp plan

is a quarterly bonus. When a sales rep is paid a salary, draw

and commission you can still get tremendous peaks and

valleys in his sales performance. For some reason it is quite

common in this industry for reps to have a great month fol-

lowed by a poor month. Having a quarterly bonus program

that is based on total revenue or total units sold can bring a

longer-term focus to your sales efforts. Reps who have a good

month are encouraged to keep it going to earn the quarterly

bonus, while reps who had a poor month can make up some

of the lost income by reaching a quarterly bonus. These

bonuses can be either flat dollar amounts, like $2,000 for

achieving quarterly quota, or additional

percentages of sales commissions.

Quarterly bonuses can also help retain

strong sales reps. Usually these bonuses

are paid 45 days after the end of the

quarter and reps must be employed at the

time of payment to get the bonus. I’ve seen

this stop many a rep from leaving a dealer-

ship until the bonus is paid and very often

they are now 45 days into another strong

quarter and decide not to leave.

Making changes to your comp plan should not be done

without proper planning. There are few things that can kill a

sales team as quickly as a comp plan change. Understand that

any change will be met with skepticism.

Prior to launching a comp plan change you need to do a

few things. First, go back and run the new comp plan against

the actual sales figures for the last six months to a year for

each rep. Though this will take some time it will give you

tremendous insight into what effect the change will have and

is well worth the effort. Very often this leads to further

tweaking of the plan. Once you have done this and come up

with the new plan, you need to recruit support from some of

the sales team members. Ideally, you would bounce the plan

off a rep or two to get their feedback. You want to choose reps

who can be trusted to keep things quiet until you are ready to

launch the plan. They can give you valuable insight from the

rep’s viewpoint. Additional tweaking might be needed at this

point. When you are ready to launch the plan these reps can

also be your advocates with the rest of the team, helping to

make sure the new plan is understood and accepted.

Having a strong comp plan can be the driving force behind

building your dealership. It will help you attract and retain

strong sales reps and will drive them in the direction you want

them to go. Take a few minutes to look at your sales comp

plans and see if they truly provide the incentive and drive

needed to spark on your sales team. If the answer is “yes” don’t

change a thing. If the answer is “no” consider the above points

and start building a comp plan that will bring you the growth

and profitability you desire. �

Jim Kahrs is the founder and president of Prosperity Plus

Management Consulting Inc. PPMC works

with office technology companies in building

revenue and profitability and improving

organization structure using the Hubbard

Management System. He can be reached at

(631) 382-7762 or [email protected].

Visit www.prosperityplus.com.

Making changes to your comp plan should not be donewithout proper planning... Understand that anychange will be met with skepticism.


26OT0506 4/28/06 4:11 PM Page 26

Editor’s Note: Throughout 2006,

Office Technology magazine

will be inviting the copier/MFP

O E Ms that sel l through the

dealer channel to submit arti-

c l es regarding th eir d eal er

su p p or t i n i t i at iv 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 pro-

grams. Following is the fourth

of th ese O E M submi ssion s ,

from Tom Brasuell of Kyocera

Mita America Inc.

By now it is no secret that for office technology dealer-

ships, the business landscape has changed dramati-

cally. The modern workplace is fueled by information.

The companies that succeed are those that can manage that

information quickly, efficiently and cost-effectively. Stand-

alone boxes no longer suffice.

Our BTA dealers need to create entirely new business

models to help them stay several steps ahead. This involves

bolstering their infrastructure and their capabilities. It means

reaching new certification levels and obtaining a deeper

degree of understanding about the information management

issues their clients tackle every day.

At Kyocera Mita America Inc., we understand these chal-

lenges and are committed to addressing them in a smart,

strategic and forward-thinking manner. Through KMACon-

nect.com, for example, we offer our dealers a robust assort-

ment of tools and programs designed to assist them in the

solution selling process. KMAConnect contains a great

many dealer-friendly assets, including: product and war-

ranty data; advertising, public relations and marketing

resources; and an ever-growing collection of Kyocera

product award information.

KMAConnect is also a comprehensive resource for BTA

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, comple-

mented by dynamic instructor-

led workshops taught by

experienced sales trainers. Its

mission is to provide dealer

and resel ler sales profes-

sionals with the most compre-

hensive and effective sales, product and solutions-based

training in the industry today.

The KMA Learning Center gives sales representatives

instant access to Web-based sales, product and solutions

training, 24 hours, seven days a week. Sales professionals can

simply log on and view multimedia training seminars and

product demonstrations. They can use the Learning Center to

become well trained and fully certified on new products the

day they launch.

Advanced training is vital. In this industry the training

process for new products has historically taken many

months to complete; in some cases sales professionals were

not truly certified on a particular product until well more

than a year after that product was introduced. Essentially,

once they became fully versed in a product’s capabilities, the

manufacturer was preparing to introduce a replacement

and the slow training cycle began anew. Kyocera Mita

America long ago recognized the flaw in this process and set

about correcting it. The Learning Center is a proud result of

that insight.

A mere nine months after it was first launched in July of

2003, in fact, the Learning Center had issued more than 3,000

training certificates. Over the past 18 months Kyocera Mita

America has trained nearly 650 CDIA+ candidates. There are

fewer than 6,000 CDIA+-certified professionals in the world,

Close-up: Kyocera MitaOEM emphasizes solutions-focused training

by: Tom Brasuell, Kyocera Mita America Inc.

PRINCIPAL ISSUES

The KMA Learning Center gives sales representatives instant

access to Web-based sales, product and solutions training

24/7. They can simply log on and view multimedia training

seminars and product demonstrations.


27OT0506 4/28/06 4:19 PM Page 27

which highlights the impact the Learning

Center is having on a solutions-focused

business world.

Sales representatives who utilize the

Learning Center also reap the benefits of

live workshops that deliver true expertise

and hands-on experience. In the past,

classroom training was traditionally com-

prised of roughly 75 percent lectures and

2 5 p e r c e n t t r a i n i n g . K y o c e r a M i t a

America has since flipped that statistic — Kyocera training

classrooms now involve in-depth training augmented by a

minimum of classroom discussion. Interaction with the

products and solutions is a crucial part of real learning for

sales professionals.

Kyocera Mita America does not train people for the sole

purpose of passing certification tests. That form of training is

useful only in the short term. We train in a way that ensures

each participant truly understands, remembers and appreci-

ates the nuances of solution sales. Kyocera Mita America

dealers retain their knowledge and build on it over time. It is

the difference between a Princeton Review education and a

Princeton University education.

As a result, a large part of our BTA dealer training involves

in-depth simulations. Simulations allow learners to interact

and practice in a risk-free environment. We offer a state-of-

the-art simulation tool that can replicate any live software

application. Students get inside our solutions — they probe

them, test them, interact with them and learn them deeply.

Our interactive methodology is driven by four stimuli that we

see as critical to learning: Show Me, Teach Me, Let Me Try,

Test Me. These principles have led us to develop and deliver a

comprehensive sales training suite that we believe to be the

most effective in the marketplace today.

Our dealers agree. Impact Networking, a solutions-focused

dealership in Waukegan, Ill., is fully committed to the value of

consistent, blended training and advanced certification. “Our

philosophy is to continuously train our salespeople, because

we can’t build tenure without training,” says Frank Cucco,

president of Impact Networking. “A lack of training only leads

to higher turnover. We make sure every sales rep is CDIA+

certified. By putting a better trained rep in front of each cus-

tomer, we can sell more sophisticated products, make more

money and continue to grow.”

Kyocera Mita America’s BTA dealer support extends well

beyond KMAConnect and our various training initiatives. We

continue to roll out new products specifically designed to

help end-users better manage information across increasingly

complex workgroups . For example ,

KYOcapture, our server-based document

workflow solution, offers best-in-class

scan, capture and routing capabilities.

KYOcapture helps users intuit ively

manage their company’s vital information

by using our output devices as a hub and

then routing the information to one of a

variety of popular document manage-

ment systems.

We have also established a new division we call the Profes-

sional Services Group, which provides best-in-class data man-

agement solutions to dealers and end-users in need of

comprehensive document management strategies and

support. The Professional Services Group was formed to help

lead Kyocera dealers in the creation of a business model more

acclimated to modern needs. This group allows dealers to

deliver new, revenue-generating services including on-site

environmental analyses, customer-specific solutions, driver

customization, API development, network integration and

customized portfolios encompassing floor plans, site surveys,

migration, and full installation and workflow design.

Kyocera Mita America is continuously updating, revising

and strengthening our dealer training initiatives. We accom-

plish this through a variety of ways. One method involves

posing a Question of the Day on KMAConnect, to which

dealers can offer useful feedback in a public setting. Another

involves rolling out anonymous surveys across our dealer

network, designed to unearth advice and opinions that some

dealers may be reluctant to share publicly. A favored method

involves direct personal contact. It is a point of pride for me

that I am either speaking face-to-face with or on the phone

with our dealers every single day, learning what they need,

answering their questions, addressing their issues and earning

the trust that no amount of impersonal interaction can foster.

Our emphasis on solutions-focused training continues to

pay dividends. We are justifiably proud of the “certified”

double-digit revenue and profitability growth we have

achieved over the past four years. Our BTA dealers have

embraced our philosophies and have played a vital role in

crafting, reshaping and implementing them. The business

world continues to change rapidly and we are in a never-

ending race to adapt, survive and thrive in

that world. Together, we are succeeding. �

Tom Brasuell is director of Educational

Services for Kyocera Mita America Inc. He can

be reached at [email protected].

Visit www.kyoceramita.com.

The business worldcontinues to changerapidly and we are in anever-ending race toadapt, survive and thrivein that world. Together,we are succeeding.


28OT0506 5/1/06 1:16 PM Page 28

Editor’s Note: The February

issue of Office Technology

featured an article by Info-

Trends’ Jonathan Bees,

“Universal Copier/Printers.”

This month Jeff Hayes pro-

vides additional insight into

the product category.

Several years ago,

InfoTrends stated

that the next big

thing in the office will be

the migration to Universal

Copier/Printers (UCPs) — devices capable of printing and

copying in black and white and color at little to no premium

over dedicated monochrome devices. We indicated that a

series of advances in engine design, marking materials, media

and controllers would create new economics and opportuni-

ties for the $40 billion office equipment industry. Now, in 2006,

we believe that the transformation of printing and copying in

the office is well underway.

Fueling this growth is the latest generation of marking

engines, which offer dramatically higher print speeds, excel-

lent print quality and prices that are a fraction of those from

just a few years ago. Recent product introductions from com-

panies like Canon, Hewlett-Packard, Konica Minolta, Kyocera

Mita, Lexmark, Oki Data, Ricoh, Toshiba and Xerox have

dropped the price of color by half while providing much better

speeds, duty cycles and paper handling capabilities. Color

laser printers are now available for under $500. Color copiers

are routinely being placed in the general office for black-and-

white and color jobs.

InfoTrends projects that total impression volumes (printer-

and copier-based products) in the U.S. workgroup environ-

ment will peak in 2008 at just over 1.1 trillion impressions.

(Note: all impression volume figures are for electrophoto-

graphic and solid inkjet-based machines.) Although the popu-

lation of employees in the United States continues to grow at

about 1 percent per year and GDP grows at about 3 percent

per year (critical factors in volume growth), workgroup

printing and copying vol-

umes will eventually crest

and begin to decline as

office workers reduce the

amount of paper used for

business processes and

opt to view on-screen in-

stead of on paper.

We also estimate that

impression volume pro-

duced on black-and-white

devices (printers and cop-

iers) has peaked and that

color devices will account

for a growing percentage of workgroup volume. Black-and-

white volume will decline, but not too quickly, because a sig-

nificant portion of impression volume on color devices is

black-and-white pages. Our survey suggests that between 30

percent and 50 percent of page volume produced on color

devices is black and white, depending on the type of device,

size of company and region.

InfoTrends estimates that overall U.S. placements of copiers

in the workgroup environment grew 8.9 percent to 823,000 in

2005. Nevertheless, placements of black-and-white copiers

(and copier MFPs) grew only 1.3 percent in 2005 to 660,000.

The vast majority of this growth came from color copiers and

UCPs, which were estimated to reach nearly 168,000 place-

ments in 2005, an increase of 55 percent over 2004. In most

cases, manufacturers and distributors view UCPs as replace-

ments for monochrome Segment 2, 3 and 4 products and are

marketing them as such. By the end of the decade, InfoTrends

projects that approximately half of all copier-based products

will be monochrome and half will be color.

InfoTrends estimates that nearly 70 percent of the 168,000

UCP placements in 2005 were color-capable devices, including

many single-drum products. These devices are designed to pri-

marily produce black-and-white pages as well as some color

pages. Over the forecast period, we project that UCP place-

ments will rise at a CAGR (compound annual growth rate) of

31.3 percent and reach more than 422,000 units per year by

2009. We also expect color-centric devices (e.g. tandem-based

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

by: Jeff Hayes, InfoTrends

PRINCIPAL ISSUES


1,000

800

600

400

200

0

2004 2005 2006 2007 2008 2009

Black &White Devices

ColorDevices

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

Placements (000)

29OT0506 4/28/06 5:02 PM Page 29

designs that offer similar speeds for mono-

chrome and color output) will account for

the majority of sales as the price difference

between color-capable and color-centric

devices narrows.

InfoTrends estimates that total U.S.

hardware revenues from workgroup UCPs

reached $2.7 billion in 2005, representing a

42 percent increase over 2004. The majority

of this revenue came from color-capable

devices. We are projecting that revenues from color-capable

UCPs will peak over the next few years in the United States as

overall placements of color-centric devices continue to increase.

Office color machines will overtake black-and-white devices

in most product segments over the next five years. Vendors

and dealerships that do not have an aggressive color strategy

will lose market share and consumables revenue. Our research

indicates that color products are replacing black-and-white

devices, but not at a fast enough rate to prevent total office

machine placements from declining.

InfoTrends believes that vendors and

dealers should put the majority of their

marketing and sales resources behind

their color products and generally not

emphasize their black-and-white prod-

ucts. Companies should also invest in

training to ensure that sales representa-

tives are properly positioning the devices.

UCPs will require a consultative sell, and

the sales rep needs to match the right product for the cus-

tomer’s output requirements. �

Jeff Hayes is a group director at InfoTrends, a global market

research and consulting firm specializing in the

imaging and document technology industry.

InfoTrends, which has more than 75 employees,

has offices in North America, Europe, Japan

and China. For more information

visit www.infotrends.com.

Ames Supply Company 19

(800) 323-3856 / (630) 964-2440Fax: (800) 848-8780 / (630) 964-0497www.amessupply.com / E-mail: [email protected]

Business Products Council Association 2

(800) 897-0250www.businessprouductscouncil.org

Color Imaging Inc. 15

(800) 783-1090 / (770) 840-1090 / Fax: (770) 840-7029www.colorimaging.com / E-mail: [email protected]

CompTIA 31

www.comptia.org/breakaway

DocuWare Corp. 11

(888) 565-5907 / (845) 563-9045 / Fax: (845) 563-9046www.docuware.com / E-mail: [email protected]

FMAudit 3

(573) 632-2461 / Fax: (573) 632-2465www.fmaudit.com / E-mail: [email protected]

InfoDynamics Inc. 32

(888) 446-8228 / (317) 578-2167 / Fax: (317) 913-4580www.infod.com / E-mail: [email protected]

InkCycle 17

(800) 736-8877 / (913) 894-8387 / Fax: (913) 894-8513www.lasercycle.com / E-mail: [email protected]

NER Data Products Inc. 9

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

Print Audit 5

(877) 412-8348 / (403) 685-4932 / Fax: (403) 249-9471www.printaudit.com / E-mail: [email protected]

The Hedman Company 13

(800) 872-2788 / (847) 718-6500 / Fax: (847) 718-0603www.hedmanco.com / E-mail: [email protected]

U.S. Bancorp 7

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

ADVERTISER INDEX

... Vendors and dealersshould put the majorityof their marketing andsales resources behindtheir color products and... not emphasize theirblack-and-white products.


30OT0506 4/28/06 4:43 PM Page 1

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