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Has Xerox hit on a scheme that might effectively cap consumables prices in the channel as well as drive customers towards original supplies?

Issue #1303 – Describing it as a ‘fun’ way to buy printer supplies, Xerox launched a new loyalty program a couple of weeks ago that seems to include a number of potential implications at the same time as seeking to encourage customers to buy original supplies and protecting against counterfeits. For instance, ‘Will large companies allow employees to participate?’, ‘could the program have the effect of actually capping prices in the channel?’

‘Genuine Xerox Rewards’ is said to be the first promotion of its kind in the office hard copy industry. By registering for the program, a customer can accumulate points for every supplies purchase made (1 point per dollar spent). In fact, there are 1,000 points available just for enrolling in the program and 100 points for registering each piece of eligible hardware! Points can then be traded for gifts such as: movies; books; gift cards; music downloads; electronics; sporting goods; travel and – even – Xerox equipment! There are said to be more than three million items to choose from – there must be something in there for everyone.

My guess is that the program will prove to be very popular with Xerox customers – for the supplies buyers at any rate. But what of the company figureheads, those who determine company policy and those who own the company?

This is where we begin to run into the pitfalls:

Firstly, in Great Britain, members of the Royal Family have to declare any gifts they receive from foreign heads of state, or other sources, when on official business and, in the US, government employees are strictly barred from accepting any item from a supplier that may be considered to be a gift. In the same manner, many companies also require employees either to declare gifts, hand any gifts in to the company or even forbid them from receiving gifts at all.

Secondly, in the context of the ‘Genuine Xerox Rewards’ program, I wonder how companies that have a policy for buying third party supplies would respond to the knowledge that employees are able to claim gifts for their personal use and enjoyment by spending more of the company’s money!!

Thirdly, the program could easily engender jealousy and bad feeling between employees where one employee is reaping personal benefit from the company buying genuine supplies that all employees use.

In a similar vein, where there is a group of employees that fulfil the purchasing function, Xerox recommends that they each enrol and share out registration of the devices owned. There could easily be discontent resulting from an imbalance of supplies purchasing value between several employees’ devices. For instance, one employee might be lucky enough to register a heavily used device with high value supplies while another only has a small, light usage personal device to register.

Because “Rewards can be directed as gifts to family and friends or as charitable donations”, the benefits extend well beyond the customer company itself. How would colleagues feel about the cousin of the purchasing employee receiving a free gift when they receive nothing?

Interestingly, with all of these pitfalls in mind, Xerox does require that all participants obtain approval from their employer before joining the program. In addition, any gains from the receipt of points or goods are taxable, with the individual responsible for paying the taxes.

On the other side of the coin, because points are accumulated for Dollars spent, Xerox has had to peg the points received to a specific price for each supplies item. Ummm … “But what about the different prices customers will pay for items bought from different suppliers?”, I hear you ask! Precisely! Xerox has pegged points to the ‘Xerox Estimated Retail Price’ (ERP) – which means that customers may receive either more points or fewer points than the price they paid for an item, depending on where they bought that item.

What effect will this have on the market? By my reckoning, any savvy supplies buyer will shop around to pay as little as possible but gain as many points as possible. More specifically, this stands as a benchmark for customers to determine whether they are being overcharged for supplies by their reseller! Although the ERP already exists, most customers are not aware of it and probably do not have easy access to it. This program will make the ERP much more visible and transparent (if those two concepts can co-exist!).

Therefore, the program could have the effect of capping prices to the Xerox ERP and/or prompting a major shake-up of dealer/reseller pricing strategies. Who, after all, is keen to pay over the odds for anything?

Pricing transparency and, more specifically, transparency of Total Cost of Printing, is something that CharisCo Printer Labs and TCPglobal have been championing for more than a decade – perhaps this program from Xerox has the ability to be the catalyst that starts a groundswell of action to bring genuine transparency to the industry.

Xerox Rewards
Authentication LabelXerox Rewards Authentication Label

Finally, there is a degree of protection against counterfeit supplies products inherent in this program. When they buy supplies, to claim points, participants must enter an authentication code into the Rewards website. This code is found on an authentication label on the supplies item. Without this code, points cannot be claimed. Xerox’s advice is that, if the code is not legible or the label missing, customers should go back to their supplier and request an exchange. Also, the codes would be unique, further highlighting whether supplies are genuine or counterfeit. Mass registration for the Xerox program would seriously hamper the distribution of counterfeit products (there would be no inferred protection for government bodies from inadvertently buying counterfeit supplies though!).

Just a quick comment on the program itself:

  • currently, it is only active in the US, Canada and Puerto Rico
  • it is open to both businesses and individuals (over the age of 18)
  • there are, of course, a number of people-groups that are unable to participate. Essentially, this includes all employees, and family of employees, of Xerox itself and its subsidiaries, agents and contractors as well as all government customers

Also, one thing I can guarantee is that the program will not be popular with the third party supplies industry!

Given my experience with testing original and third party supplies, I will be amongst the first to agree that using original supplies is far and away best for your printer – especially if that printer happens to be an inkjet device (which Xerox is not involved with, of course!) – and I would happily join the Genuine Xerox Rewards program if I were running Xerox devices consistently.

I just hope that the program proves to be a success and that the pitfalls can be overcome so that Xerox can extend the benefits around the world. If this does sit well with customers and there prove to be anti-counterfeit and price control benefits, we may well see other manufacturers following suit in due course.

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