Uncertainty equals opportunity
Mark Ash, head of print at Samsung UK & Ireland, tells us why current uncertainty in the business world offers plenty of opportunities for those dealers who think beyond transactional sales
There’s no denying that the fallout from the general election and continuing discussions about Brexit are creating uncertainty in our marketplace. Also, our customers are typically faced with a shrinking budget, so it’s a perfect storm. Rather than becoming pessimistic about the situation, however, I think we need to flip thinking and be encouraged - because where there’s uncertainty there’s opportunity.
Historically, the print industry and our dealer network have been great advocates of asset finance and we’ve seen demand develop further over the last six months, despite industry experts suggesting that there was going to be a slight reduction in IT equipment finance. We’re bucking the trend.
We’re also growing business by seizing the opportunity and talking about the connected workplace. Print dealers have financed print hardware so now they have the opportunity to expand their offering to interactive whiteboards, mobile phones, tablets and so on. If dealers think in terms of ‘device as a service’ or a subscription model, cash outlay and uncertainty is taken out of the equation. By offering a subscription service what exactly are you offering? The answer is the most cost-effective and efficient route to continual technological development.
Hotels are a good example. They’ve traditionally made cash purchases and dealers may well already be supplying MFPs for them to print invoices out at reception and to provide services in a business lounge. But why don’t we bundle additional products together for them? Why don’t we sell print alongside conference tech for the meeting rooms where they typically make quite a large amount of their revenue and, more importantly, profit? I actually don’t think there’s a single vertical this model doesn’t apply to - with the possible exception of the charity sector where, traditionally, finance has always been a no-no.
The subscription model allows an easier upgrade path because, typically, assets will be sweated for the life of the product. The life of a product in the IT world is usually about three years; however, when you’re cash purchasing it, an accountant will advise you to write off the value over five-to-seven years. All too often you get this mismatch, where the technology in the workplace is older than that in the home! So, for us, we’re now giving customers – via our dealer partners – an affordable way to obtain the equipment they require on a regular replacement cycle, as opposed to worrying about capital expenditure budgets and limitations.
As an aside, I believe the same can apply in the home – and there’s an opportunity here as more of us start to work from home. Why shouldn’t we wrap a home printer, PC, tablet and smartphone into one bundled subscription-based service? We’re now used to having mobile and digital TV subscriptions, so it’s a natural progression.
So how do dealers successfully transition to this new model? For me, it’s back to our old friend – mindset. For a lot of individuals and businesses there’s a stigma attached to not having the cash to buy a product, but speak to anyone in finance and they will never use their capital to buy things when they can lease them or rent them. Capital needs to be used in better ways. There’s a perception that there’s a cost premium for using a finance service but, as budgets have been shrinking, we’ve been showing customers that the finance model is a far more effective way to manage budgets because costs are fixed until the end of the agreement when technology is upgraded. This, in turn, can lead to productivity benefits or facilitate better, more secure remote working.
Dealers are already diversifying away from the standard route to market of hardware sales so they have the perfect opportunity to transform the way they sell. We see our partners looking for us to provide them with access to finance, which they’ve always had, but also to provide a more holistic offering. Can you provide me with the finance, Samsung - and can you wrap that into a service? Can you put in software support, or service support, or can you give us access to other products on a rate card? Samsung Capital is the conduit that drives the clear, transparent and regular costs to the customer, and it’s the glue that holds together the service and the hardware.
The challenge of transactional print is that it’s become a commodity play and, if you’re online, the margins are very, very low single figures. It becomes a Darwinian process where the fittest survive by accessing the best data and search engine optimisation. As a result we’ve seen dealers revert to their core business where finance gives them flexibility and also eliminates the disadvantage of ownership, such as disposal hassles and the risk of obsolescence. Dealers must ensure they change their mindset to understand that they can finance more than just print without exposing themselves, understand that they can use their ability to provide a contractual service, expand the scope of it, and reap the rewards.
Posted by Austin Clark (95)
Written on 26th July 2017
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