Traversing the Workgroup MFP Minefield: The Customer Experience

by Jake Wang
Senior Analyst, Digital Imaging and Printers

When was the last time you solicited feedback from your customers on satisfaction? In most industries the frequency of collecting customer experience data is quite adequate, but in the workgroup MFP market I'm beginning to wonder if anyone's asking or listening. Purchasing a mid-volume, copier-class color MFP is often analogous to buying a used car. Throw in depreciation, market fragmentation, inaccurate or missing information, time requirements necessary to collect information, and poorly trained sales staff, and your customers are in for some headaches.

Why is the workgroup MFP market so different than the rest of the technology equipment market? The number-one reason is the distribution structure for which these products are sold and maintained. Understanding this framework requires an examination of three core areas: equipment pricing, customer needs assessment, and consumables & maintenance costs. Short change any of these areas and your customer could end up with a budget overrun, over or under capacity, or long term sustainability issues.

Purchasing a workgroup copier or color MFP is daunting for most organizations because of the lack of information and the inherent difficulty in comparing products and pricing. The current market makes price or print quality comparisons extremely difficult as most dealers carry limited manufacturer lines and sales staffs that have little knowledge of competitive offerings. To make matters worse, finding the best street price requires spending countless hours with sales agents who may or may not have your best interest at heart. TCO (Total Cost of Ownership) and CPP (Cost Per Page) costs for self service consumables are virtually impossible to find as few individuals know what consumable components are required for a particular machine let alone the yield and pricing. The average small or medium business owner doesn't have time to call numerous dealers and compare features, performance and price then create a cost analysis model to compare volume and time effects.

ARS recently performed a study that surveyed approximately a hundred dealers to evaluate user experience and to collect pricing data on equipment, consumables, and service agreement costs. The result: pricing variance between dealers of the same manufacturer for equipment costs ran between 1% and an amazing 39%. This variance is the difference between prices quoted by dealers for a single model.

Pricing data was collected for similarly configured machines with limited options to create the concept of an average base platform MFP with networking capability. The huge variation in dealer prices from the same manufacturer is a clear sign that the workgroup MFP market is characterized by chaotic pricing and information. The large disparity can be explained by a number of possible reasons: misinformation, quality of sales staff, size of organization, control of manufacturer pricing directives, incentives, and inventory levels.

Sales tools employed by many organizations, used to estimate costs of operation, are woefully lacking in real world pricing data. Sales agents routinely quote average CPP figures that are created from thin air. Needs assessments by sales agents are often based on monthly volume estimates. However, monthly estimates aren't perfect and are just the beginning of the data points necessary to create an accurate cost benefit model. A complete TCO analysis that accounts for capital costs, consumables costs, finishing labor, media costs and maintenance costs, is necessary to provide the customer breadth and depth to make an informed decision. Overselling customers seems rampant as a number of dealers surveyed supported the notion that 90% of SOHO (Single Office Home Office), corporate and medium sized business owners over-purchased capacity when buying a workgroup color copier. This overselling is a disservice to customers and prevents true value-added solution selling.

Consumables and maintenance costs (long term costs) are by far the most confusing for average users to understand. Most sales agents are either unwilling or unable to disclose these costs or are directed by management to push service contracts, which are the de facto standard in the industry. The service contract can be a strong value if a business is too small with inadequate IT staff necessary to maintain equipment or if print volumes are too low to generate cost savings. Analyzing the difference between self sourced consumable CPPs and maintenance service contract CPPs for a number of products in the same performance band between six manufacturers found a cost delta of one cent to eight cents a copy for color prints. This delta measured the pricing variance between prices collected for the same product between multiple dealers. Multiplying this Delta by monthly page volumes in the tens of thousands could mean a savings of thousands of dollars a month for your clients. Remember that the delta discussed here is for machines with similar print speeds and capabilities; expanding the universe to include a cost comparison for inkjets and color lasers increases the possible delta by as a much as four times. Providing this type of cost-based analysis to customers should be a priority for any workgroup MFP manufacturer or dealer.

The key to connecting with customers is enabling them to make their own decisions based on independent data that supports your marketing message. Instead of adding to the confusion that is so pervasive, clearly present information that allows easy analysis of specifications and pricing of equipment and services. Provide tools that reduce the time necessary to make decisions including specification matrices, cost, and return on equity analysis. Monitor industry competitiveness through real world data collected from your distributors and solicit customer satisfaction feedback in order to compete on both price and service. Finally, understand your competitive advantage and clearly articulate your brand message to customers.

Customers are looking for simplicity, clarity and value. Can you provide it?

For more information on the workgroup MFP pricing study or upcoming workgroup MFP services please contact ARS.

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