The Equipment Buying Decision: How the Sales Process Is Changing

People do not just pick up the phone and say, ‘We want to buy a printing press,’” observes Eric Frank, whose job is selling printing presses. As senior VP of marketing and product management for Koenig & Bauer, he knows that investment in capital equipment is a process, not an impulse — and the process is one that both the vendor and the customer have to carry out in the same deliberate, analytical way.

This understanding applies to investment in digital as well as conventional printing equipment, and it arises from long-standing relationships. “We stay very close to our existing customers,” Ed Jansen, VP of marketing for Canon Solutions America, notes. “We know their businesses intimately.”

“The No. 1 thing in a successful relationship is to assess what a client is trying to accomplish in their business,” Jeffrey Zellmer, VP of global sales for Eastman Kodak, concurs. “That’s a people process. We will take as much time as is necessary to understand our clients’ needs.”

Phil Self, VP, continuous feed and software and strategic solution sales, Production Printing, for Ricoh USA, also attests to a consultative relationship. “It’s not so much about speeds and feeds,” he points out. “It’s more about where printers want to go, need to go, or where they don’t understand they need to go.” The goal, he says, is to help clients understand their options, and how new equipment fits into their businesses today and tomorrow.

By working together, buyers and sellers of printing equipment find the best ways to evaluate what should be acquired, and build the right strategy for getting the maximum return on the investment (ROI).

Goodbye to ‘Gut Feelings’

There was a time when capital equipment investment was more about “gut feelings” on the buyer’s part than the disciplined methods used today, Clarence Penge, VP of sheetfed product management for Heidelberg, notes. Today, vendors and customers rely extensively on data to answer what he says is the key question about configuring a press for purchase.

“Is this adding value, or is it adding cost?” Penge elaborates. “If it’s only adding cost, it’s doing no one any good.” For example, fully automated plate changing on a press that will be used exclusively for very long runs adds less value than it would if installed on a press built for short runs and numerous job changeovers.

This illustrates the approach vendors take toward helping customers parse and clarify their technology needs. Chris Manley is the owner and president of Graphco, part of a network of equipment dealers that distribute RMGT offset presses in North America. He calls needs assessment “the crux of the matter,” and the key to deciding how the prospective buyer should or should not proceed.

“We do a cost analysis on practically everything we’ve offered our customers,” Manley says. This is carried out to probe the customer’s costs related to staffing, waste, reruns, maintenance, machine downtime, and other factors. The answers provide data upon which Graphco’s recommendation will be based.

According to Dino Pagliarello, senior VP, production management and planning for Konica Minolta Business Solutions U.S.A., much of the move toward a more rational equipment decision has to do with understanding ROI and breakeven points. He also says that, as an OEM, Konica Minolta sees itself as a trusted advisor tasked with facilitating the correct purchase.

Self adds, “Too many customers in the past have bought assets that are not as fully utilized as they want them to be.” Ricoh's approach, he says, is to study the business, create optimization strategies, and ensure that any new purchase delivers value.

Q&A Is the Way

Defining need is a baseline sales procedure for all of the OEMs. “We ask a lot of questions of both customers and prospects: where they are today, where they may want to go with technology, or if it’s a new product that one of their customers has approached them with,” Mark Milbourn, executive VP, Komori America, adds. “We ask the right questions to make sure that we marry up not only the press, but the accessories to the press.”

Richard Rindo, VP, commercial print strategy and business development, Fujifilm Graphic Systems, says an early sales process goal is to get clients to understand how they see themselves, their customer bases, their applications, and where they want to take their businesses. Once this is understood, he notes, his team can help clients understand their needs, and suggest a press that fits their realities.

Pagliarello stresses it is most important to understand customers current needs, their pain points, and what they’re trying to solve. They are often looking to transform their businesses, he adds, and are curious to learn what it would take to move in a new direction.

HP starts the conversation about what’s needed by examining “buckets” of potential opportunity in the customer’s business, according to Brandon Betts, team lead for financial consulting in HP’s printing and industrial market segments.

“Justification for a piece of equipment is going to come from one of three different places,” Betts explains. These include conventional production that can be migrated to digital; existing digital assets that can be upgraded; and outsourced work that can be brought in-house by adding digital capability.”

Understanding what those buckets contain lets HP identify the data points needed to make recommendations specific to a client’s business.

“We’ll churn the data, and working with our solutions architects, who are the applications specialists, we’ll generate that analysis and provide it to the customer,” Betts says. He adds that it’s also common for customers to ask HP to match presses from its portfolio to the types of work they most often run.

Mark Schlimme, VP of marketing at SCREEN GP Americas, says his company helps print service providers (PSPs) that are seeking a new press by gathering data points about actual jobs, and running variables of image quality, print speeds, and levels of ink control. In so doing, he explains, a full accounting of the new acquisition's cost can be realized. “When a print provider takes this comprehensive, 360-degree view,” Schlimme adds, “it can help uncover hidden costs. Our approach is to help customers identify and address as much risk as possible.”

Crunch Time, All the Time

Once need is established, the vendors employ a variety of analytical tools to refine and validate the equipment recommendations they have made.

Manley says Graphco calculates comparative budgeted hourly rates — a menu of the costs associated with producing work on a given piece of machinery — for both the existing equipment and the press Graphco thinks the customer should replace it with. In some cases, he indicates, it’s possible to show that even at 50% utilization, the new press would achieve ROI based on its reduced cost of manufacturing versus that of the old equipment.

This is similar to how Zellmer describes Kodak’s approach to doing deep-level assessments of customer needs. “It would include an ROI on minimal, medium, and high levels of usage of capital equipment,” he says. “Our goal would be to sit down with the potential partner and explore those different scenarios.”

Jansen notes that Canon Solutions America can perform a total cost analysis that compares the cost of existing print equipment with the cost of new equipment — not just for the initial acquisition, but over the long term of the investment.

Rindo further emphasizes how essential it is that printers have an accurate understanding of their capacity needs, with the data “chunked” accurately, to better understand production requirements. Given the decreasing run lengths many printers are facing, he notes, “changing marketplace factors are strong — especially post-COVID.”

HP, according to Betts, has tools that include calculators of crossover points, ROI, and TCO (total cost of ownership) for HP presses in various market segments and applications. These findings, he says, are presented “in a simple Excel spreadsheet that customers then can take and build into their business plans.”

“What we try to do,” Schlimme points out, “is help companies uncover all the numbers. It’s the only way to do this — the data won’t lie.”

Some Heidelberg customers obtain this kind of data from Heidelberg Assistant, a digital interface that monitors the output of their equipment, and lets them compare it with data from other presses in the vendor’s cloud-based network. Penge says Heidelberg’s performance team advisors can also base recommendations on data drawn from customers’ MIS and ERP systems.

Buying Decisions Can’t Be Rushed

In Koenig & Bauer’s effort to apply the right analytical tools to its customers’ needs, Frank says, “we do audits of their organizations. We bring in application specialists to see what they’re producing, and how. We have analytical specialists who look at their overall equipment effectiveness numbers, as well as their key performance indicators. We look at how they’re producing things from the front door to the time the product goes out the back door, in a holistic manner, to see if we can enhance it.”

For Self, the sales process must include client education. He notes that printers may not fully realize the benefits that can come from a new unit. “The true benefit,” he says, “can come from a press providing so much more than expected. We want them to understand the benefits that are possible when they move away from their original need toward generating much higher value.”

Selling capital equipment along these consultative lines “is a process that doesn’t happen quickly,” notes Frank. He says that although some sales happen more quickly than others, there could be a span of six to 18 months between the customer’s initial decision to acquire a press and the time the equipment is on the floor of the pressroom.

Self says that for companies that know what they need, the sales cycle can take between four and six months, since it involves identifying needs, conducting investigation, and identifying and introducing the appropriate solution. About halfway through that process, he says, how the equipment will be paid for becomes a part of the discussion.

According to Pagliarello, the sales cycle can be longer or shorter, depending on the device. It can depend on the needs and conditions of the company, and if the projected ROI is compellingly short, he says.

Purchasing and Financing Options

Locating the capital to fund the investment is another task in which vendors can assist their customers. Most of the OEMs have relationships with printer-friendly banks and other lenders to which they can refer customers in search of cash.

HP, for example, works with HPE Financial Services, part of its sister company Hewlett Packard Enterprises. Rolando Martinez, worldwide products and solutions manager for HP, says the division is well attuned to the needs of the graphics industry and can structure leases to protect lessees against equipment obsolescence.

Other vendors lend and lease directly through financial services divisions within their organizations. In most cases, funding for capital equipment remains readily available to qualified borrowers at low interest rates, enabling the vendors to be creative in their financing arrangements.

OEMs such as Heidelberg, Ricoh, and SCREEN, give customers the option to acquire equipment by subscription in lieu of purchase, a method in which a monthly fee based on a cost-per-sheet calculation replaces a traditional price tag. The fee covers not only the use of the press, but also consumable supplies, software, parts, training, and support.

Under this pay-per-use model, printers don’t own the equipment. As a result, they can’t take advantage of write-downs for depreciation — a tax-reducing practice that most printers and their accountants have come to rely on.

When to Say ‘No’

Every vendor has a repertoire of sales and marketing techniques for persuading its customers to invest in needed new technology — it is the business that these companies are in, after all. But, they’re unanimous that there are circumstances in which they’d readily advise printers against acquiring equipment, even if it meant sacrificing an order.

The last thing a press manufacturer wants to do is sell a customer something “that potentially could put them out of business,” Milbourn asserts. He says that if the seller detects “red flags” against investment on the purchaser’s part, the effort probably should stop there.

It’s a vendor’s responsibility to steer customers away from acquiring anything that might be “beyond their means,” Frank concurs. Instead of over-leveraging, he says, the customer should be advised to start at a lower investment position and grow into that opportunity.

It’s just as important, however, to help customers move past self-created obstacles that keep them from proceeding with the investments they genuinely need to make — investments that could take their businesses to the next level of prosperity.

The objective, as expressed by Tim Stefl, commercial category manager, HP Indigo and HP PageWide Web Press, is to get customers “out of the commodity, red-ocean death zone, and into more of a value printing process” with solutions they know to be economically viable for their businesses.

“Concern about the long-term viability of their customers” also holds prospective purchasers back, according to Manley. Or, it might be, as Frank points out, that the torch is being passed to a new generation of ownership and the present owner isn’t ready to take on a major investment of this type.

With a large investment, according to Self, a great deal of time and money has been put into the sales process. If there are barriers to a final decision, he says, focus returns to the basics: the PSP's needs, the quality, service level, and more. He adds that the final question is whether the solutions offered will help the company meet or even exceed its goals.

Evidence and knowledge also speak volumes, says Schlimme. “Getting your financing options and experts engaged early can be a very important part of the process.” He says lenders, in particular, have completed many similar deals and can serve as valuable resources for creative ideas and expectation-setting.

And, when new processes like digital production inkjet enter the picture, there’s another kind of hesitancy to overcome. “Moving from a different technology to inkjet, there are a lot of hurdles,” Jansen acknowledges. With inkjet, “the world changed, and [printing] became more of a manufacturing process.” That means helping customers to find their places in unfamiliar new production environments.

Assets, Assuredly

When customers remember that good fishing starts with good tackle, everyone wins. “A company is most valuable when it has assets that can produce,” Frank says. “Printers are still investing in capital equipment.” A sign of their seriousness, he notes, is that the sales process is now more “laborious,” with vendor-customer interactions having become a “lot less emotional, and a lot more analytical” in character than they used to be.

The industry’s profit leaders, Milbourn notes, “are constantly investing in the most efficient solutions.” Their experience has taught them that “it’s probably more of a risk not to invest than to remain inefficient.”

That squares with Penge’s estimation of how printers should be thinking about capital investment. “The future is happening now,” he says. “The longer you wait, the bigger the change it will take to be competitive.”

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