The New Hybrid Dealer Is Coming – Are you Ready?

Ed Crowley, CEO,

During an interview with ZDNet back in 2010, when I was CEO of Photizo Group, I made the prediction that hybrid dealers would dominate the MPS market. At this time, the term hybrid dealer was still pretty new. We began using it in 2008 during dealer roadshows where we were talking about dealers who developed a hybrid business model based on a combination of the traditional dealer product sales model with the new (at the time) MPS contractual model.

Over time, our definition evolved as we conducted research on the dealer market and even defined a new class of dealer—the “services provider” who is focused almost exclusively on service contracts (M2 Digital in the UK is a great example). In fact, the term hybrid dealer became closely associated with MPS and over time, anyone who claimed to offer a per-page pricing contract called it MPS and claimed the title of hybrid dealer.

When we began using the term hybrid dealer, we really were trying to identify the leaders in the industry who were pushing the envelope of performance, execution, and excellence. But we had to find a way to measure performance and really separate out those who were claiming to be hybrid dealers and service providers from those who were just using the term MPS as a marketing tool. This lead to the development of the Leaders Index, a benchmarking program for the best hybrid dealers and MPS service providers in the industry.

Now, in my role of CEO of the advanced analytics firm Virtulyitx, I find that it’s funny how things change, but still remain the same! There still are lots of dealers and resellers out there claiming to be offering true MPS programs, when the vast majority (over 85%) are just offering a click charge or some other usage-based pricing model without any real fleet management. They don’t optimize the fleets. They don’t provide print guidelines or assess customer’s needs. Heck, a lot of these dealers are not even remotely monitoring devices. A case in point: Less than two years ago we had a dealer in Lexington offering so-called MPS contracts, based on a per page charge with minimum and overage charges, and no remote monitoring, and they basically tried to push as many A3 MFPs into a client’s office as they could get (regardless of end user’s needs). They were offering traditional click charge contracts and calling them MPS. It’s crazy!

However, there are a number of enlightened dealers who are actually offering true service contracts. They have (typically) built their own MPS program, invested in people and infrastructure so they can control the delivery of their services, and they are hyper-focused on optimizing operational efficiency. These dealers instantly understand the cost impact of having toner cartridges replaced before they are empty. They know that the traditional linear programming approaches and human behavior modification approaches don’t work and that the only answer is true just-in-time (JiT) toner delivery—which is only possible using predictive analytics. In talking to the new hybrid dealers, the ones who are truly focused on efficient and profitable services delivery, they understand that saving $50 a year per device in lost toner revenue and excess shipping is a big deal, whether you are managing 5,000 devices or 100,000 devices.

Now don’t get me wrong. There are some exceptional dealers who have built programs around their core strength (selling) and they completely outsource the fulfillment piece to distribution partners or OEMs.  I’ll call this group sales focused dealers—they really don’t care about efficiency. If customers throw out toner, it’s not the dealer’s problem, it’s a problem for the OEMs or distributors. Over time, even these dealers will be challenged by the hyper-efficient hybrid dealers who do control their own delivery and provide more efficient, JiT fulfillment. Why? Because the hybrid dealer will have a lower cost structure. And they can use this lower cost structure to undercut the sales-focused dealer. Ultimately, the most efficient provider wins. (I think Jeff Bezos at Amazon wrote a book on this. Or no, maybe he just built a multi-billion dollar retail killer company based on this premise.)

The next wave of hyper-efficient hybrid dealer/service provider is coming. I call them hyper-hybrid dealers. They are efficient, aggressive, growing in numbers and they are in every geography. Based on our work with providing these leaders with the Leaders Index and with our SuppliesIQ JiT toner solution, we have found these dealers have the following traits in common:

  • They have invested in the staff, technology infrastructure (including fleet management systems like PrintFleet, FMAudit, etc.) and processes to be able to manage every aspect of the services delivery chain, including toner fulfillment.
  • These dealers are hyper-focused on efficiency. They understand that every manual intervention, every service call, and everything that is not automated costs them money.
  • Hyper-hybrid dealers are constantly looking for ways to measure their performance, to quantify what is and what isn’t working. They know they are the best and define what this means using hard data. They’re not just relying on their gut instinct.
  • These dealers are more interested in customer support after the initial sale and know that this is the best way to build customer loyalty and increase profitability long term.

Are you a hyper-hybrid dealer? Or are you relying on your OEM or distributor to be hyper-efficient? If you are relying on them, can they show you facts or data to prove their efficiency level? We live in a market that never stops moving. Are you moving or just treading water?

Ed Crowley
About the Author
Ed Crowley is the CEO of Virtulytix Inc., a Lexington, KY-based developer of advanced analytics solutions driving hyper-efficiency for a number of industries including the office products, semiconductor, and nuclear energy industries. Virtulytix has created the Leaders Index, a benchmarking program for the best hybrid dealers and MPS service providers in the industry. This allowed Virtulytix to develop over 300 operational metrics which it uses to separate out the best performers from the rest. Dealers can learn more about the true savings involved in using JiT toner replenishment and the potential waste costs in real dollars by using the Virtulytix SuppliesIQ Cost Calculator.