Presented By: Steve Huff & Matt Baker Myth or Reality Presented By: Steve Huff & Matt Baker

No Matter How You Put It, the question remains the same…..

About You - From the 24 survey responses that we received

1. You Can’t Make Money on Color Production Equipment

What We’ve Learned Placement is big variable CRD vs Print for Pay Knowledgeable key operators Media has an effect Toner fill plays a big role Needs Color Volume Minimal B/W Volume Specialists

2. You can’t create an incentive plan that all of your Technicians will be Happy With MB

What We’ve Learned Some People are indeed Eeyore Fairness is in the eye of the beholder Good Techs Rise to the Top regardless of the Incentive Plan Don’t Worry About Pleasing Everyone, make a plan that incents your folks to focus on what you want them to focus on Our Focus; Taking Care of the Customer, and Cost Control

3. Running Charge Calls is more Profitable then Servicing Equipment Under Contract

What We’ve Learned Contracts better for all Low volume placements might not take contract Stream of revenue is preferable High volume customer on charge = unhappy Too much paperwork and collection time Hourly rates range from $75- $150

4. Samsung Has Found the Magic Bullet MB

What We’ve Learned Cosmos & Polaris underwhelmed Samsung Cost Calculators where too ambitious Supply Cost is HIGH Warranty Process is Troublesome MX4 & MX7 look promising Samsung has had GREAT Success with consumer products, They are a very strong brand Don’t underestimate them

5. Warranty Claims Are Worth the Time to File Them

What We’ve Learned It’s a cost/benefit question 15 minutes for a $3 part? Nope. Alarming trend toward consumer-like admin intensive warranties Set a minimum $$$ to file for warranty Better if Techs participate in the savings Manufacturers are assuming 100% warranties claimed in cost calculations

6. Travel Time isn’t as costly as sending an inexperienced Tech MB

What We’ve Learned Travel time is #3 on our cost list 1.Parts costs (about 17% of revenues) 2. Travel time (27.5% (.80)(.33) = about 7% of revenues) So, again it depends: High volume long distance requires experienced Tech High volume short distance still requires experience Low volume long distance dictates less experience, but more parts Low volume short distance allows a more inexpensive gamble on experience and parts

7. Company Cars Save You Money

What We’ve Learned It depends: mileage reimbursement vs. vehicle price We are at 3.2% of revenues, .31 per business mile Buy and hold – but this is admin intense Lease with outside vendor Big vehicle: low gas mileage but parts rich Smaller vehicle: higher gas mileage but parts poor Always have a functional vehicle Consider the branding value of uniform, wrapped vehicles

8. Warehouse Space is Cheaper than Parts

What We’ve Learned Warehouse space costs is not usually the issue The efficiency killer: Techs return for parts The key variables: Minimizing incomplete calls for parts Balancing this with obsolete parts write offs Distance to parts distribution center

9. It’s Always Worthwhile to Match the Competitors Price MB

What We’ve Learned Analyze Your Costs Proceed with Caution Ultimately it’s a Leadership Decision whether your companies focus is Top Line or Bottom Line

10. Sales & Service Can Get Along in the Same Organization

What We’ve Learned It can and does happen Each group needs the other Reach Out Must start from the top Joint events Aligned goals It is required to succeed

11. It’s Always Better to Sell a Color Device MB

What We’ve Learned Color Copier – Doesn’t Equal - Color Copies Color Toner is Expensive, especially when it’s just sitting on a customers shelf Ironically the MFG (Ricoh) does a good jobbing placing b/w MIF

12. It’s Better When Technicians Dispatch Themselves MB

What We’ve Learned It does improve Employee Satisfaction, especially now that it can easily be done by a handheld device Techs are unhappy now when they do have to call in to clear But, Techs may not be fully aware of Customer Demands Make Sure to Communicate the “URGENCY” to the tech Tech Call Ahead/Response is Vital

13. Customers Prefer a Live Operator to a Phone Tree

What We’ve Learned We think so Most competitors have a phone tree It’s a differentiator for us Cost control is moving us away from this The smaller the phone tree the better Trend toward e-mailing, texting, or website supply and service call requests

14. All Manufacturers Provide an Equal Level of Dealer Support MB

What We’ve Learned Each Manufacturer seems to excel at something, but they definitely aren’t on the same level Sometimes it’s as much about the individual assigned to your dealership than the MFG

15. We will only be selling A4 devices by the year 2025. MB

What We’ve Learned We Shall See Lexmark & Samsung are making the A4 Push, expanding into faster segments Ricoh & Canon have A4 product offerings but they aren’t their front line device More bids are allowing A4 With a high % of output being A4, this does seem to be inevitable

16. Desktop Printing will be replaced by Smartphone Style APP’s

What We’ve Learned Possibly……. Size and power of Smartphones and tablets Millennials tend to prefer using these devices Proliferation and acceptance of apps

17. Copies Between Calls (CBC’s) Always Improve with New Models MB

Service Population AMV Total Population Pages What We’ve Learned Example from BEI Model Service Population Nat Cpc Service Population AMV Total Population Pages Cpc Labor Cpc Parts Avg MT MCBV MTBV PRO8100EX 364 0.00357 89,895 190,536,246 0.00224 0.00133 1.6 55,905 19 PRO907EX 5,081 74,417 2,276,704,904 0.0014 0.00084 1.3 77,701 32 It depends on the generation of the machine Updated generations are typically better New generations tend to be worse There is an overall trend toward cheaper manufacturing costs

18. Improved Machine Performance offsets the increase in time needed to support New Functionality

What We’ve Learned These are RJY numbers. Now vs 4 years ago. Slightly less calls Slightly more time per call Total time per machine per year down slightly Answer: for black, better machine performance is offsetting added machine functionality Information from BEI segment stats

What We’ve Learned These are RJY numbers. Now vs 4 years ago. Significantly fewer calls But more much more time per call Total time per machine per year down Answer: for color, better machine performance is offsetting additional machine functionality time. Information from BEI segment stats

19. Today’s Hardware Tech will be Unemployed in 10 Years if they don’t learn Connectivity or IT Support MB

What We’ve Learned Specialization is Good Clicks appear to be Flat Dealers and MFG are looking at MNS & MPS The better question might be this: will DEALERS be out of business if they are MFP only in 10 years?

20. You should require your Techs to be A+ & Net+ Certified

What We’ve Learned Some direct service teams require it Used to be A+ Net+ seems to be more relevant now Consider Tech marketability vs. company benefit We have not required it Does it have any marketing benefit?

21. Bonuses Should be 20% or less of a Technicians Total Compensation MB

What We’ve Learned 20% or Less works for us Techs are more interested in the steady paycheck Are bonuses stimulators or motivators? Bonuses do motivate Is it the money or the prestige?

22. The Best Technicians are Motivated by an Incentive Plan that Publicizes the Results

What We’ve Learned Is competition between Techs good? Should techs be competing against each other or only against their own performance? At RJY, the best Techs are motivated by the ranking

23. When Going Up Against the MFG in a Bid, you can rely on the fact that they follow their own Lowest SMP Guidelines to set their rates MB

What We’ve Learned MFG definitely price well below their own published Rates They often go lower than dealer cost Is labor really a sunk cost? Marginal profit dollars or profit %?

24. Sales Should Make Service “Whole” when SMP rates have to be discounted to make the Sale

What We’ve Learned This is common at many dealers “Equality of sacrifice” Dictated by how departments measured Sales (revenue dollars or margins or both?) Service (profit %, or profit dollars, or other?) Who decides this? President General Manager or COO Automate it in the pricing tables Other?

25. Customers Expect The Technician to Arrive in Less than 4 Hours MB

What We’ve Learned Large Customers request a Guaranteed Response Time or Up Time Customer expects what they’ve had, so you must be able to maintain it Four hours seems commonplace

26. The Johnson Model Ratios are Out-of-Touch with the Current Changes to the Industry

What We’ve Learned Was a great model when developed Simple to use The best dealers are besting the model Labor costs/revenue appear to be dropping Costs appear to be shifting to supplies (user replaceable units) The model is too dependent on revenue per copy (who controls this?) Are costs per page (by segment) a better measure? Other models are in development

27. Industry Standards Make it Easy to Compare Results with Other Dealers

What We’ve Learned In general yes It gives us common measurements Difficult to get to apples and apples Are all revenues and costs in the right bucket? Does this create misleading results? Should service be measured by revenues?

28. All Printers will Need 3D Capability in the Near Future MB

What We’ve Learned We Shall See, but my opinion is No

29. The Burden Rate of $60 per hour is too low

What We’ve Learned Has been at $60 for years Calculate it for your organization All service related operating costs divided into total Tech field hours

30. Aftermarket Supplies Always Save You Money in the Long Run

What We’ve Learned Our sponsors say so! Must measure costs vs. yields vs. failure rate In general, we say yes Must get Tech buy-in Make supply costs or profits a small part of a Tech incentive plan Sometimes bound by manufacturer agreements

31. Copier Dealers Need to do MNS to protect their Clicks MB -

Trusted Providers Customer Positioning Credibility Doctor Accountant Banker Credibility Managed Services Provider Traditional Copier Dealer 95

What We’ve Learned The Pyramid of Trust, IT is on the top IT Companies are selling Printers/MFP’s and vice versa Software makes it a Partnership