Staples Teams with Xerox to Offer Toner Savings Plan, But Who Benefits?

For the past few months, Xerox and Staples have quietly developed a program called the ‘Never Out Toner Savings Plan.’  In a nutshell, this program works by allowing customers to pay up-front for their expected monthly print volume.  A customer’s printer is connected to a monitoring system that recognizes when toner is low and automatically schedules delivery to the customer’s home or business.  This program is primarily run through Staples.com, but recently began piloting at select Staples brick and mortar locations as well.

This is not a managed print service, per se.  There is no service included or any sort of printer fleet management.  However, the ‘Never Out’ plan is similar to MPS in that is targets two big customer pain points: cost and convenience.

Cost –  Since a customer is purchasing a number of prints (or ‘credits’) rather than purchasing actual toner, they can print full pages of text and pictures without worrying that they’re wasting toner.  And, because a customer has already paid for all their print expenses up-front (excluding paper and power), it makes it easier to predict a business’ print costs.

• Xerox claims that customers can expect ‘savings of up to 40%’; however, this savings is based on a customer purchasing a standard capacity toner vs. toner received through the ‘Never Out’ program.  In reality, if a customer purchases a high capacity toner and compares their cost against a customer with modest page coverage using ‘Never Out’ the savings will be negligible.  That said, there is still value in the convenience of automatic toner replenishment, not to mention the value for customers with higher-than-normal page coverage.

Convenience – First, a customer pays for the service, sets up their new Xerox printer, and installs the desktop monitoring software.  Once up and running, Xerox can monitor a printer’s toner levels and automatically replenish it without customer intervention.  This means no figuring out toner part numbers, no last minute runs to the office store, and easy monitoring of print volume through Xerox’s desktop software.

Xerox’s MPS continuum already spans most size businesses with its programs such as eConcierge, PagePack, and XPPS.  Although eConcierge already targets SOHO and microbusiness customers, Xerox’s ‘Never Out’ program is a unique way to expand some basic MPS components to the SOHO and microbusiness companies that do business with office supply chains.

Obviously, Xerox’s primary motive for introducing ‘Never Out’ is to sell more hardware and OEM consumables.  A secondary but still very important motive is to grow Xerox’s install base of clients with a Xerox monitoring agent on their network.  ‘Never Out’ allows Xerox to monitor and manage a customer’s printers and to build a relationship with that customer as they (hopefully) grow.  While some customers will stay small, Xerox certainly hopes that a few ‘Never Out’ customers will increase print volume and eventually require more advanced and more profitable services from the vendor.

For Staples, the benefits of facilitating Xerox’s ‘Never Out’ program are less clear.  Staples likely has a role in the sale of hardware and consumables, although the role and/or incentives remain unclear.  Staples will also benefit from the fact that every ‘Never Out’ customer must also be a Staples Rewards member.  Staples Rewards is a free customer loyalty program that encourages customers to purchase more ink, toner, and paper by offering 10% ‘back’ with an eligible purchase.  However, if it is true that Xerox wants to eventually introduce their ‘Never Out’ customers to more robust MPS offerings, then how does Staples protect itself from losing those customers?

It appears that, for the time being, the ‘Never Out Toner Savings Plan’ is still a small test program for Xerox and Staples.  Yet it is not far-fetched to expect that more of these ‘MPS-light’ programs will target SMBs in the future.  For the printer maker, it means building a relationship with the customer and the potential to add more lucrative services in the future.  Unfortunately for brick and mortar chains, there is a growing danger of becoming a showroom for products that are purchased elsewhere.