Increase Profits by Going In Through the Out Door
Comprehensive print management of outsourced work can boost sales and increase volume.
Faced with stiff competition from major direct-selling manufacturers and the onslaught of rapidly advancing print technologies, many distributors have been looking for a magic arrow to slay the beast of increased competition. However, some distributors have figured out that this competition is not going away. One alternative, then, is to beat the majors at their own game by providing comprehensive, or start-to-finish, print management services.
Unfortunately, not all distributors see it that way, and many others are unwilling to gamble their reputations in an unfamiliar area. But distributors who have successfully delved into print management would say they have not only increased their business but have flourished as a whole.
Warner Mason, president, Webb/Mason, Hunt Valley, Md., has built a $45 million company largely by offering his clients these kinds of services. For Mason, offering comprehensive print management is a way to increase his bottom line while also expanding the kinds of products and services his company provides. "Comprehensive print management increases a distributorship's volume dramatically because not only does it provide account penetration, but it al-lows the distributor to handle everything from beginning to end," said Mason.
As more and more companies look for ways to trim the corporate fat, outsourcing print work has become increasingly popular. Rather than worry about the headaches involved in designing, printing and distributing a direct mail piece or membership letter, many companies prefer to contract the work out to one experienced distributor.
The distributor, then, shepherds the piece through the print-and-fulfillment process, saving companies both time and money. What the distributor gets is a satisfied customer and a bigger piece of the overall pie.
Jim Feldman, president of FORMost Graphics, Rockville, Md., pointed out that when distributors offer print management, they're also opening up two much broader revenue streams—personalization and fulfillment.
"It's very easy to become a full-service distributor because many times the print portion may be the smallest part of the billing process," noted Feldman. "Personalization and mail shopping are where the bulk of the revenue comes from."
Another reason to consider offering print management services is because it differentiates distributors from their competition. With thousands of print providers in the marketplace, distributors need to offer more than just a price. By taking a company's printing needs off of its hands and managing them time- and cost-effectively, distributors separate themselves from the multitude of businesses competing on price alone.
Webb/Mason built its full-service distributorship based on three components—print management capability, back-end distribution and front-end inventory control. To compete for large single-source orders, Mason said it's absolutely necessary to have all three of those pieces in place.
But companies don't necessarily need their own warehouses and a large tech staff to win big accounts. At FORMost, Feldman said his company outsources its warehousing needs and that experience is the real key. This is because of the increased chance for financial calamity due to the large sizes of these orders.
"The only requirement to get into this business is knowledge," said Feldman. "I think the reason more distributors don't get into it is because they're afraid of making a mistake."
Art Collins, president, Northern Printing Network, Wheeling, Ill., agreed, saying risk comes with the territory, specifically when dealing with contracts.
While some kinds of print business can be cemented with a handshake, print management deals require closer scrutiny. If the forms a distributor is warehousing suddenly become obsolete and this is not covered in the contract, the distributor could be left holding the bag, Collins explained. "Distributors can't offer comprehensive print management on trust," he argued, "because when they print and warehouse without setting up terms beforehand, and that work obsolesces, they own the inventory."
Nevertheless, as more companies scramble for fewer dollars in a contracting print market, offering comprehensive print management services may be the only sensible strategy for long-term survival.
In that case, the best places to start are membership organizations, which often send mailers to their membership. Collins suggested targeting philanthropic and charity organizations for direct mail work and hospitals and insurance companies for warehousing jobs.
For distributors lacking commercial printing or direct mail experience, Feldman advised approaching a company they already do business with and asking it to take on some of their other print work. Distributors should also spend some time with their suppliers to inform them of their plans and to learn about what each printer has to offer. While many distributors may balk at stepping out of their comfort zones, the alternative is to wait around until basic forms and labels distributors are obsolete.
Of course, it's important to note that numerous multi-million dollar companies like Webb/Mason and FORMost Graphics started out as simple forms distributors and have grown into huge operations. "We're a $15 million company and we've been offering this kind of service since we were less than a $1 million company," said Feldman. "Sure, the risks are greater, but so are the rewards. The way to do it is to take expertise to the clients and become an invaluable part of their teams."
Finally, distributors should know the benefits their clients will earn by switching to a comprehensive print management system. In addition to streamlining the ordering, distribution and billing processes, companies that allow distributorships to manage their print needs also receive the advantage of the latest technology. Since distributors don't have to worry about filling time on company iron, clients also know their work is being produced by the most efficient printer available.
"We get everything from soup to nuts through offering our print management services," said Feldman. "Our clients love it because they don't have to worry about finding 10 different manufacturers—they only have to deal with one."
By Allan Martin Kemler