Challenges Exist in Working Nontraditional Products into Managed Service Contracts

If you had the opportunity to check out our October State of the Industry report on nontraditional product offerings that can offer a foray into specific vertical markets, one of the questions you may have involves the ability to work them into managed service contracts. After all, monthly recurring revenue is the lifeblood of any dealership, and some of the products we profiled lack the repeating consumables and service opportunities that are truly sought.

Steve Gau, Marco

However, our panel of dealers provided insight as to how these nontraditional products can lend themselves to additional opportunities to add revenue. Steve Gau, president of the Copier Division for St. Cloud, MN-based Marco, notes that much of the audio/visual (A/V) offerings consists of primarily a hardware sale, with services in the form of project installations. Yet, there are opportunities to reap revenue with the IT tie-in.

“All of these A/V-related offerings naturally have a strong IT presence and more reliance on software, which is lending more opportunity to tie them into a true managed offering,” Gau said. “We expect to double the monthly recurring part of our offering in these solutions over the course of the next 12 months.”

Saturating Clients

Moody Hamdan,
A.D. Solutions

The Skywell Atmospheric Water Generator, available to dealers through Sharp, does provide the opportunity for managed service contracts for servicing, regular preventative maintenance and supplies. A.D. Solutions of Orlando, FL, which has enjoyed much success in placing the machines in Florida, has skilled technicians on staff to handle customer needs in the same vein as MFPs, according to CEO Moody Hamdan.

“For our clients that engage our services solely for Skywell, we develop custom A.D. Solutions managed contracts to specifically address Skywell needs,” he said. “For our clients who enjoy A.D. Solutions’ Sharp MFPs, audio/visual products and Skywell, we also develop custom managed contracts that further benefit the A.D. Solutions client.”

As an enticement, A.D. Solutions provides a 30-day free trial period for clients to test the Skywell, with no strings attached.

Donald Mihalevich, Paladin Managed Solutions

Paladin Managed Solutions of Springfield, MO, has one of the more esoteric offerings in the Double 2 Telepresence Robot, along with Promethean smart boards and 3D systems. The dealer incorporates them into one unified contract, but most of these products don’t entail a traditional service agreement and are handled in break/fix fashion. According to CEO Donald Mihalevich, the parts are under a standard warranty from the manufacturer, and those clients who purchase an extended warranty are also serviced through the manufacturer.

“I don’t look at (Konica Minolta’s) Workplace of the Future as huge revenue generators,” he said. “They’re innovative products that can sprinkle into our main offerings to make it more appealing to a customer. Yes, we can be your copier company, but we can do these 27 other things as well. With schools, I’ll sprinkle in the Workplace of the Future products because they (schools) are innovative, they love the 3D and showing off technology. We’re working those into a deal and showing a use case for how they can utilize them.”

Complete Solutions

Mike Noffsinger, RJ Young

Nashville, TN-based RJ Young carries the line of Ricoh interactive flat-panel displays. Mike Noffsinger, vice president of sales, notes the dealer rolled out a maintenance contract offering with the devices, but the sales teams and customers haven’t identified much need, as it is a device without moving parts and the electronic boards are not service intensive.

“On the managed contract side of the house, we’re looking at further engraining the flat panels into some of our other specialty offerings, possibly even putting together some package offerings,” he said. “We’re having it be part of a complete solution.”

Added Chris Clark, director of hardware sales, “We just saw this as an offering, an additional entry product that we could roll out to our customers to make them more efficient. That’s really where we saw the benefit to these products, as opposed to an aftermarket or servicing standpoint. It really makes customers’ lives easier and gives us another product to put us ahead of the competition.”

Erik Cagle
About the Author
Erik Cagle is the editorial director of ENX Magazine. He is an author, writer and editor who spent 18 years covering the commercial printing industry.