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OFFERING dyalog

The print and consumables category is often a tough one for office products resellers. But solutions are available to turn the challenge into an opportunity, says France-based Armor Group

The printing and consumables sector is under pressure like never before. What’s needed to reverse the sliding fortunes – and sales – are a willingness to change, new ideas and routes to market and, to top it off, excellent collaboration.

Bob Reynolds, Sales Director at aftermarket consumables manufacturer Armor, talks to OPI about its dyalog managed print services (MPS) solution, how it can open up new lines of business, cement existing ones and create even more customer ‘stickiness’.

OPI: Let’s start with the overall premise that printer consumables are in decline. It appears that office products resellers in particular are missing out – why do you think that is the case?

Bob Reynolds: You’re right. In a nutshell, there are four components that can explain this:

The first one is the digital revolution. Whether we like it or not, mobile phone technology, cloud-based services and other software solutions result in both B2B and B2C users reducing their print volumes. We’re still far away from a paperless environment, but the declines are there and will continue.

Secondly, OEMs in this space have embarked on an aggressive pricing strategy in an attempt to maintain their print volumes. They are prepared to literally slash pricing in order to keep or win a deal. We have seen examples where the recommended retail price for one consumable is in excess of €300 ($348), but the price given by the OEM, as part of a volume deal and linked to the end user committing to use only that OEM’s consumables, has been reduced to €50. It’s a discount I find difficult to justify.

Thirdly, OEMs are often negotiating directly with large B2B corporate end users, cutting out their traditional business partners. The wholesalers are being used as a logistics tool, but OP resellers lose

Bob Reynolds out. Similar tactics are deployed in the B2C setting. This includes HP’s Instant Ink programme, for instance. On paper, it looks attractive, but the end user is completely tied into HP and thereby loses all possibility of choice. This type of programme also cuts out most of the reseller channel, with the exception of a few chosen HP partners.

Finally, with the merging of A3 copier devices and A4 MFP devices, more people are addressing the same end user. The copier companies and to a lesser degree IT resellers are often very specialised in print; they have sales people who are not only knowledgeable and experienced, but also capable of selling contractual deals. The latter is where OP dealers often fail.

OPI: Why do they fail?

BR: OP resellers typically have very strong and sustainable relationships with their customers. They offer tailor-made solutions, make desktop deliveries to specific departments – all that creates incredible loyalty.

Print is different. Within medium or large corporate end users, you’re dealing with IT departments. Unlike copier companies or IT resellers, OP dealers don’t have relationships with this part of the company. IT people also consider print to be a pain. It’s not considered strategic and all they want to do is simplify the process or, better even, outsource the problem to someone else. The cost of printing is not their main concern.

Copier dealers and IT resellers have a distinct advantage here: they have the right contacts, know the print business, speak the same language as IT people and and sell value propositions encompassing print as a service. Quite different from just selling a printer and its consumables.

OPI: So how do OP resellers fit into Armor’s strategy and plans?

BR: Historically, our customer base was made up almost entirely of OP resellers. However, for the above reasons, transactional volumes with these partners started to decline, mainly with the contract stationers that served large corporate end users, as the OEMs entered into direct relationships.

At the other end of the spectrum, it was difficult to address the very small customer and the SOHO market – that side of the business was primarily served through retail and etail. Apart from supporting our retail partners, improving volumes in this segment was going to be tough for Armor.

On the plus side, what was left was this massive market of mid-sized companies. They were not well addressed by the OEMs – too small – or by OP resellers, as the IT department called the shots. This demographic, from a print perspective, was served by the copier and IT resellers.

We set up a project group – headed by my colleague Pierre Lefort – back in 2016 to assess what these types of customers want and expect from a print partner. The results were quite clear.

Simplicity from both an operational but also administrative perspective. Cost reduction, not tying up too much capital and no signing of lengthy rental contracts. No fixed tie-up with just one printer brand. Consumables to be replenished automatically, no ordering needed and only one quarterly invoice that encompasses all print costs. Sustainability awareness, with collection of empty, spent cartridges a must.

Neither the copier dealers nor the OEMs could – or wanted to – fulfil these requirements. We believed we could, in collaboration with our OP reseller partners, so we launched dyalog, a contractual-based offering conceived by Armor that is now available in all major European markets.

OPI: So dyalog has been going for a few years?

BR: The programme was launched in 2018 on a proof-of-concept basis. In the first year, we signed up over 800 devices; in 2019, a further 1,200 devices were put under contract. At the end of Q3 this year, we had 3,000 devices under contract, but as you can image, COVID-19 hit our 2020 plans somewhat in that we had planned for over 4,000 – a loss of 25%.

OPI: How does dyalog work?

BR: The keyword in everything was simplicity. The premise is that the reseller promotes the programme and Armor takes over all the back-office duties on its behalf. Investments by the customers are only required when each individual printer needs replacing. As Armor is a multibrand operator, we have the ability to do that very easily.

It starts with a free, no commitment audit of the existing print fleet that shows information about the printers in place, how many prints have been made, mono/colour usage and so on. The reseller – with support from the Armor dyalog team – can then advise the end customer how best to manage the fleet, the cost of doing so, the savings made, etc.

We’ve found that seven out of ten audits lead to further engagement, which is testament to the quality of information supplied. When an agreement is reached, simplicity again is key. No lengthy and binding contracts, just a one-year commitment from both the OP dealer and the end user.

Once that is done, the dyalog team installs the data collection agent permanently with the end user, and also ensures the smooth running from an operational perspective over the length of the contract. At the end of each quarter, dyalog provides the reseller with a report and an invoice covering the quarter. The reseller then invoices the end user with the previously agreed margin added.

OPI: It sound as if OP dealers can ‘sell’ this MPS model without having huge amounts of expertise in this area themselves.

If your offering and service is as good as you say it is, there is no need to have a contract, as neither the reseller nor the end user will want to walk away

BR: That’s correct. There needs to be a willingness to accept change, that’s certainly a prerequisite. Dealing with IT departments, for example, which may not be their usual port of call. The dyalog team is constantly on hand to provide full support and is also involved in joint visits to customers to help the reseller initially.

As I said, all the back-office work is done by dyalog while dealers get on with their usual transactional business. They merely bill the end user quarterly – the rest is handled on behalf of the reseller by the dyalog team.

OPI: Finally, what are your hopes for Armor as well as OP resellers with regards to the print and imaging space?

BR: We believe Armor – and dyalog – is a very viable, alternative route to market for these resellers. If they are innovative and prepared to change, they have an excellent chance of creating value while at the same time reinforcing that all important customer loyalty.

On a slightly different note, one of my aspirations is to ultimately completely do away with contracts. If your offering and service is as good as you say it is, there is no need to have a contract, as neither the reseller nor the end user will want to walk away. You can’t get a better endorsement that your concept works – for everyone.