Sunday, July 15, 2012

Bad Copier Quote Equals Dishonest Copier Rep

I got a call the other day from an existing customer who leased a color 35 page per minute color system from us two years ago almost to the day. Initially the customer and I had estimated that their color volume would be about 3,000 pages per month.  The call kinda went like this "we're spending too much money on color and we'd like to meet with you and btw, we're entertaining other vendors".

I knew that the customer had leased the system for 60 months and they still had 36 months left on the old lease agreement.  I did not want to go on this call, I thought that maybe Kyo or Xerox were in on it, and it would be agonizing to sell against the tiered color billing systems that they may be offering.

When I arrived at the account, by the way I like people with this account and this can't be said about all of my accounts.  I was prepared with the last four quarters of billing and pretty much instead of the estimated 3,000 pages per month they were pushing twice that.

What I really wanted to write about was the quote I saw from a competitor, most professionals in our industry will do a Total Cost of Analysis for the customer. In most cases I will look at the last year of usage and billing, just because it is indicative of their present volume.

The quote from the competitor just took a sampling of one quarter of the customers usage for  the year.  They based the ROI to move forward on just three months usage!

The customer is averaging 72,000 color pages per year, the competitor wanted to wrap the customer into a quarterly color volume of 13,500 pages which is only 54,000 pages for the year.  What happened to the other 18,000 pages?  Well if you look close on the quote there was the overcharge however the overage was not included in the proposal.  The average overage would have been 4,500 pages per quarter.  Looking a little deeper the customer would also have been under the 13,500 pages per quarter for two quarters!  Let's say the overage charge was .06 for color, 4,500 pages per quarter would result in an overage charge of $270 per quarter.

The competitor listed the savings of $309.95 per quarter and did not include the overages in the ROI analysis WTF!  The savings was more like $40 per quarter or $160 per year and $800 for the term of the lease not the $6,000 they were promoting! 

I explained to the customer that they were "hiding the cheese" you're going to pay interest on the remaining 36 month term of the lease and as long as the system is performing well, why not wait two years and then upgrade and your cost would go lower than the quote that you have from the competitor.  End result is that we were able to lower their costs by almost a $100 per month by moving them to a higher color volume band.

I just don't get it, how can someone present just a small snippet of the customers volume and try and sell them on the savings when they are not presenting all the facts?  No, I do get it, it's about making the sale whatever the cost and that's a shame.  You wonder why copiers sales people get a bad rap and it's because of BS proposals like this one.

If you'd like to see the proposal, I'm just about to upload it to the P4P forums, and you'll need to register here to access.

-=Good Selling=-


Greg Walters said...

This is why I collect every competitor's proposal I can get my hands on.

Keep them in plastic and bring em out when the competition shows up.

...and how does this practice continue, even today...



Jarno Aalto said...

This is an old topic but even if our MPF markets at FIN we have Xerox dealers using this same system just to get the sale. I have been through many meetings looking at the client's Xerox contract as the client is wondering why the heck is he getting bill from 1500-3000 overages quarterly. Looking through the contract of 2 machines the other is equipped with 3500 color and 4000 bw, the second machine has 0 and 0. At this point the client was pulling his hair of as the Xerox dealer offer mentioned 2 MFPs equipped with prints above but the client was not informed that those prints were only allocated for the other copier. Nicely done by Xerox dealer...