THE IMPACT OF A CHANGING MARKET

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THE IMPACTOF ACHANGING MARKET

• Lou Slawetsky
• INDUSTRY ANALYSTS, INC.

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INDUSTRY ANALYSTS, INC.Background

• Incorporated - 1973
• Locations
• Rochester, New York
• Fairfield, New Jersey
• Sales training
• Market research
• Management development

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INDUSTRY ANALYSTS, INC.Technical Services
Division

• Confidential product testing
• Competitive benchmarking
• Supplies and parts certification
• Network compatibility testing
• Productivity analysis

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INDUSTRY ANALYSTS, INC.Publications

• The Office Products Analyst
• The Used Copier Report
• Imaging Systems Dealer Strategies
• www.IndustryAnalysts.com

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AGENDA

• Demographics
• Sales Rep Productivity
• Service Issues
• Digital Impact

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AGENDA

• Demographics
• Sales Rep Productivity
• Service Issues
• Digital Impact

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DEALER SIZE
Small Medium Large Universe
17.1 36.8 46.2
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COPIER-RELATED REVENUEDigital
Universe Dedicated Multi-brand Hardware 44.1 47
.0 42.7 Service 35.7 34.3 36.5 Supplies 20.1
18.7 20.7
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WEIGHTED MARGINSDigital
Universe Dedicated Multi-brand Hardware 29.5
29.4 29.6 Service 43.6 44.2 43.3 Supplies 36
.6 36.2 36.8 Weighted 36.0 35.7 36.1
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AVERAGE BRANDS

• Universe 2.1
• Dedicated 1.0
• Multi-brand 2.6

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DEDICATED DEALERS

• Universe 33.3
• Dedicated 100.0
• Multi-brand 0.0

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PLACEMENT DISTRIBUTIONDigital
Universe Dedicated Multi-brand lt15 CPM 6.9
7.5 6.6 15 - 24 CPM 23.2 25.4 22.2 25 -
44 CPM 34.2 33.2 34.7 45 - 59
CPM 19.0 19.0 19.0 60 - 69 CPM 9.3 8.9
9.5 70 - 84 CPM 5.0 4.1 5.5 85 CPM
2.4 2.0 2.7
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COST PER PAGE CONTRACTS
Universe Dedicated Multi-brand Dealers 68.3 55.
0 75.0 Placements 39.4 42.1
38.4 GM 34.3 33.7 34.5
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AGENDA

• Demographics
• Sales Rep Productivity
• Service Issues
• Digital Impact

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GROWTH AND TURNOVER
Universe Dedicated Multi-brand Growth 14.0 20.8
12.5 Turnover 32.3 32.1 32.1
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SALES CALLS PER PLACEMENT - STANDALONE DIGITAL By
Copier Speed Range
of Sales Calls
Speed Ranges
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SALES CALLS PER PLACEMENT -STANDALONE DIGITAL
Universe Dedicated Multi-brand lt15
CPM 2.4 2.3 2.5 16 - 24 CPM 2.7 2.8 2.6 25 - 44
CPM 3.0 3.2 3.0 45 - 59 CPM 3.7 3.7 3.7 60 - 69
CPM 4.0 4.1 4.0 70 - 84 CPM 4.3 4.5 4.3 85
CPM 4.5 4.7 4.5
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SALES CALLS PER PLACEMENT - CONNECTED DIGITAL By
Copier Speed Range
of Sales Calls
Speed Ranges
19
SALES CALLS PER PLACEMENT - CONNECTED DIGITAL
Universe Dedicated Multi-brand lt15
CPM 2.8 2.9 2.8 15 - 24 CPM 3.2 3.3 3.2 25 - 44
CPM 3.6 3.7 3.6 45 - 59 CPM 4.2 4.2 4.2 60 - 69
CPM 4.7 4.7 4.6 70 - 84 CPM 5.0 5.2 4.9 85
CPM 5.0 5.2 5.0
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WORKFLOW ANALYSIS
Universe Dedicated Multi-brand Percent of
dealers perform workflow analysis 72.9 72.5
73.1 Percent of sales analysis is
performed 26.4 27.0 26.0 Percent of workflow
sales are sold 60.3 57.5 61.7
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PRODUCTIVITY DATA VALIDITY

• 125 - 150 interviews per year
• Telephone
• In-person
• Consistent trends since 1988
• 5,000 dealer interviews per year
• 50,000 user interviews per year
• Data based upon equivalent rep

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EQUIVALENT REP

• Number of sales reps
• Percent of dealers using dedicated reps
• Number of dedicated reps
• Percent of dealers using multi-brand reps
• Number of multi-brand reps
• Time spent on copiers

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DEFINITIONS

• Dedicated rep
• A copier sales rep who sells only copiers
• Multi-brand rep
• A copier sales rep who also sells other products

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YIELD PER FULL-TIME EQUIVALENT REP

• Universe 4.2
• Dedicated 5.2
• Multi-brand 4.0

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DISCOUNTED REVENUEPER REP
Universe Dedicated Multi-brand Discounted
average unit 8,966 8,524
9,235 Revenue/ Rep/Month 37,657 44,325 36,9
40
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DEALER SALES REP IMPACTGross Margin
Universe Dedicated Multi-brand Per unit
2,650 2,539 2,720 Per rep 11,130
13,203 10,880 Per year 133,560 158,434 130,
560
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AGENDA

• Demographics
• Sales Rep Productivity
• Service Issues
• Digital Impact

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SERVICE CONTRACTSAnalog vs. Digital
Universe Dedicated Multi-brand Differentiating 5
2.1 52.5 51.9 Higher 19.4 19.0
19.5 Change 13.5 - - - - 16.8 Lower 80.6 81.0
80.5 Change 23.8 21.9 24.7
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SERVICE CONTRACT PRICESStandalone vs. Networked
Universe Dedicated Multi-brand Price
difference between standalone vs.
networked 34.5 30.0 36.7 Higher price
for networked 87.5 91.7 85.7 Percent
higher 10.2 9.0 10.7
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OF DEALERS WITH CERTIFIED NETWORK SPECIALISTS

• Universe 97.5
• Dedicated 95.0
• Multi-brand 98.8

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NETWORK SPECIALISTS
Universe Dedicated Multi-brand Number of
specialists 3.0 2.2 3.4
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AGENDA

• Demographics
• Sales Rep Productivity
• Service Issues
• Digital Impact

33
INSTALLED BASE GROWTH Universe
Net Placement Rate 48.8
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INSTALLED BASE GROWTH Dedicated
Net Placement Rate 50.4
35
INSTALLED BASE GROWTH Multi-brand
Net Placement Rate 48.0
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CONNECTIVITY RATES

• Universe 59.3
• Dedicated 55.8
• Multi-brand 60.9

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CONNECTIVITYBY SPEED RANGE
Universe Dedicated Multi-brand lt15
CPM 41.3 40.7 41.7 15 - 24 CPM 50.8 50.9 50.7
25 - 44 CPM 50.8 56.1 59.2 45 - 59
CPM 63.1 59.6 64.9 60 - 69 CPM 63.8 61.3 65.0
70 - 84 CPM 66.1 63.0 67.6 85
CPM 71.6 58.7 77.2
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DIGITAL REPLACEMENTACTIVITY
Universe Dedicated Multi-brand Copier 79.5 77.7
80.4 Printer 24.1 21.4 25.4 Fax 16.4 15.7
16.7 Scanner 8.4 6.4 9.4 Multiple
responses
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VOLUME DIFFERENCEStandalone vs Connected
Universe Dedicated Multi-brand lt15
CPM 25.6 23.2 26.8 15 - 24 CPM 23.8 20.2 25.6
25 - 44 CPM 28.4 22.5 31.0 45 - 59
CPM 26.0 21.5 28.2 60 - 69 CPM 24.9 20.7 27.0
70 - 84 CPM 24.8 18.9 28.1 85
CPM 27.3 24.0 28.7
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DIGITAL VOLUME
Universe Dedicated Multi-brand Fax 10.8
11.0 10.7 Print 33.5 31.1 34.8 Copy 55.7 5
7.9 54.6
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CARRY PRINTERS

• Universe 80.7
• Dedicated 75.0
• Multi-brand 83.5

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FULL-COLORCOPIER ACTIVITY
Universe Dedicated Multi-brand Dealers
carrying 95.8 92.5 97.5 Monthly
placements 4.8 5.4 4.5
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FULL-COLORCONNECTIVITY

• Universe
• Connected 95.9
• Copies 38.8
• Prints 61.1

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COLOR vs.MONOCHROME OUTPUT

• Universe
• Color 59.0
• Monochrome 41.0

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SO WHAT HAVE WE LEARNED?

• Market is flat based upon hardware revenue
• Price per unit is decreasing
• Margins decreasing
• Hardware
• Service
• Supplies

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SO WHAT HAVE WE LEARNED?

• 70 cpm/ppm still less than 10 of total
• Sales force turnover remains high
• Workflow analysis performed only 25 of time
• Close ratio 60
• Almost double average

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SO WHAT HAVE WE LEARNED?

• Placements per rep steady
• Revenue per placement decreasing
• Most charge less for digital service
• lt35 charge for connected vs. standalone support
• More than half of installations replace your own
  equipment

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SO WHAT HAVE WE LEARNED?

• Connectivity rate growing (59)
• Print volume not growing as fast (34)
• If sold as a copier, will be used as a copier
• Printer and color activity increase network
  presence

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ACTION PLAN

• Go deeper into accounts
• Specific applications
• Incorporate scanning
• Focus on higher speed
• Increased aftermarket
• Increased connectivity

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ACTION PLAN

• Focus on net placements
• Color
• Printers
• Address sales force turnover
• Training
• Compensation changes
• Implement workflow analysis programs

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It is not the strongest of the species that
survive, nor the most intelligent, but the one
most responsive to change. Charles Darwin
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Thank You!
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