As the Office Equipment industry continues to mature, one thing is certain: Progressive dealers are spending a lot of time researching and investing in diversified business practices. For some that means creating or buying a Managed IT Services company. For others it means providing document management and BPO solutions. For fewer yet it means doing all of the above.
Diversifying is a necessity in a maturing industry if you are serious about combatting tightening margins and increased competition. There is no need, however, to increase the complexity of how you bill your customers for your new offerings. Doing so could actually be perilous to your success. Here are the top 3 reasons you should consider unifying how you bill for all of your services, no matter how different they might be:
1. Convoluted Billing Administration (that make admin wring their hands): The glaring problem with diversification from an administrative perspective is that each of these models comes with their own traditional billing models. For MPS, it is usually CPP or usage-based billing. For Managed IT Services, the billing model of choice is SBB (Seat Based Billing). Most document management solutions are sold on a line item basis with annual maintenance fees to keep the solutions current. If I was in billing administration I may not be as keen on adding these all together as those sitting at the top of the organization.
Making matters worse, many dealers that I talk with who are doing both Managed IT Services and MPS have 2 separate ERP systems! One system isn’t capable of doing CPP and the other isn’t capable of doing SBB so the easiest (and costliest) solution is to adopt and manage 2 systems. Thanks, but no thanks.
2. Complex Commission Structures (that slow down sales): If you want to slow a sales rep down the best thing you can do is give them a commission and compensation package that they don’t understand. Sales reps do what they are paid to do and if they don’t know how they’re paid it’s amazing how little they do. As we diversify our offerings how we pay our reps can get tricky. A compensation plan that includes some commissions on one time sales, some compensation based on pages under contract, and some compensation based on flat monthly recurring fees is a recipe for confusion and lack lustre performance.
There is a solution here, of course: Unify the compensation plan. And the only way to unify how sales reps are paid is by unifying how you bill in the first place. I’m a big believer in the KISS theory when it comes to compensation and the more you can do to simplify this area of your business the more likely your sales reps will know what you expect them to do.
3. Confusing Your Customers (which slows sales cycles): This is likely the most important reason of all to consider unified billing: Keeping things simple for your customers. Can you imagine if you went to buy a new car and were told that you would have to:
- Buy the base car
- Pay a flat monthly fee per person in the car for power windows
- Pay a per-wipe fee for the wiper blades?
I’m sure you’d find yourself at another dealership in a hurry. Automobile dealers learned a long time ago that you “package” options into the base price and have the customer pay one fixed monthly fee. From a billing perspective, the only choice you have is if you want to lease or purchase. After that you pay one simple unified monthly bill for everything the car includes.
Why can’t we, in the office equipment industry, offer one fixed-monthly bill for MPS, MITS, and additional services like Document Management solutions? There is no reason that we can’t – other than the will to change. Personally, I think the best way to do this is through the SBB model. You can read my most recent thoughts on this in my latest article in ENX Magazine. You can also get in touch with us for a more personalized review of SBB by contacting us.
Now it’s your turn! What kinds of things have you done to manage billing complexity as you introduce new products and services? Is trying to unify a billing structure the right thing to do or a waste of time? Is there a way to do this that nobody has considered? Leave your comments and be sure to share this article if you like it!