Guest Column | August 12, 2013

3 Ways To Increase Revenue From Consumables

By Mike Garofola, senior marketing manager, channel and education for OKI Data Americas

Dealers understand that the initial hardware purchase is the beginning of a long-term customer relationship and the start of a recurring revenue stream. The post-hardware purchase of consumables provides the real profit and margins for dealers and can generate recurring revenue on a regular basis. Customers will continue to purchase toner, image drums, media — and more — throughout the life of their printers. There are a few tactics for dealers to consider as an opportunity to increasing revenue from consumables.

Establishing A Customer Contract

At the start of any customer relationship, it is recommended that dealers establish a contract with their end users. The contract will ensure that customers are purchasing consumables directly from them over a defined period of time. Sometimes customers will look to purchase remanufactured or “compatible” consumables from third-party organizations because the up-front cost appears to be significantly less. However, these consumables come with a lot of risk.  Original equipment manufacturer (OEM) consumables produce greater quality output, ensure optimum product performance, and guarantee warranty coverage. (Many manufacturers cannot guarantee how compatible consumables will perform in their printers.) By explaining the “buyer beware” threat from compatible consumables, customers will be more inclined to sign contracts with dealers and purchase directly from them. According to a recent post by Ken Stewart, director of the Photizio Group managed print service (MPS) advisory service, the number of pages managed under MPS contracts continues to rise. In the end, the contract protects the dealer from losing consumable sales to competitors and builds a stronger, more trusting relationship with the end user.

Identifying the Ideal Customer

As a dealer, placing printers into applications that are paper intensive is the goal. Printing and paper usage among the retail, healthcare, and public sector/education industries appears to remain steady.  In fact, a recent study by InfoTrends found that 32 percent of surveyed elementary, middle,and high schools administer tests and quizzes on paper and copied worksheets. Key verticals with paper-intensive usage help the dealer generate more revenue from consumables.

In the graphic arts, architectural, and engineering environments, page coverage is often higher, and in most cases, a majority of the ouput is in color. Firms in these industries are printing proofs, advertisements, and larger-sized documents that require a large amount of toner.  Therefore, businesses within these industries will quickly replace consumables, which, in turn, generate increased revenue and greater profits for the dealer.

Creating Loyalty Programs and Incentives

Establishing a loyalty program for your customer base is a great way to reward and encourage loyal buying behavior — which is potentially beneficial to the dealer. For example, a dealer can establish a recycling program so that customers receive points or a discount on supplies when returning spent toner cartridges. The customer not only eliminates waste and helps minimize their impact on the environment, but also returns to the dealer, which opens the door to additional sales opportunities.

In addition, dealers that are tuned-in to their customers’ specific printing procedures can provide media sample kits. Media sample kits encourage end users to print more, experiment, and purchase. This presents another revenue generating opportunity for dealers that offer media.

As a dealer, it is important to continue to find new ways to maximize the efficiency and profitability of sales for all products within the printing industry. Identifying the most profitable target markets, establishing a contract or creating incentives for customers can substantially increase revenue long after the initial hardware sale. With these methods, dealers can firmly establish customer loyalty and drive recurring consumable purchases.