PS: How can your trade partners add further value to the supply chain, and in what ways can your vendor relationships be strengthened?
Mason: It's not about price, it's about service. End users want products tomorrow--or today, for that matter. Some vendors are reluctant to provide that service. We're a hell of a lot more willing to do business with the ones that do, and those projects aren't as price-sensitive. We love doing business with vendors that have a can-do attitude.
Verheye: Suppliers need to listen to what customers want, and anticipate what they need. We've spent quite a bit of time trying to make our presses retroactively valuable to existing customers. We've tried to not abandon what's out there and just say, "It's time to buy a new one." Instead, we're bringing improvements to future presses and making them adaptable to the current base. That's a type of a decision as a supplier that can go both ways--it's relatively costly to "retrofit," but we know customers appreciate a bridge to the future. Also, suppliers can concentrate less on print components and more on providing an entire service solution that involves data management, finishing and mailing. Doing that would shorten order times and improve cost savings for everyone. We want to be a consultative integrator.
Short: We have to keep in mind that we're not just selling a widget--we have to think, "OK, how can customers best use our assets?" Ink on paper is a wonderful thing, but we have to provide much more than a way to get ink on paper. We need to ask ourselves how to get more volume, more output and more productivity out of our plants.
Dust: We operate on the same principles on the purchasing side as we do on the selling side. We've always been a big proponent of preferred purchasing agreements--not necessarily single-source agreements, but close to them--and those help increase trust levels and make strong relationships. Also, we can provide education. The digital printing market, for instance, is fairly immature in terms of applications and knowledge. We developed a series of seminars that addresses variable printing, and it's our job to want to take a couple of hours and pass out samples about digital applications. One of our initiatives for 2004 is to do more of that.
Sarkans: Certainly by working closer together, distributors can gain credibility when going after large accounts. The biggest obstacle is a cultural bias built into the industry over the years: Distributors want to maintain control of customers. For distributors and manufacturers to work together on service-related projects like fulfillment or digital printing, a distributor essentially has to turn a customer over to the manufacturer because of the intense interface required between the producing organization and the end user. Many companies are still leery about doing that.
PS: The line separating "distributors" and "manufacturers" continues to blur. Many companies that are mainly distributorships operate equipment, and many companies that are mainly manufacturers have sales forces specializing in certain markets. Does classifying your company into a category matter?
Dust: No, and we've never felt like it has mattered. When we established a distributor sales channel 18 years ago, a number of traditional manufacturers in the industry had a problem with our approach because we weren't trade-only. As things evolved, it became more difficult to tell who was a distributor and who was a manufacturer. Today, some of our customer base--especially ad agencies--won't buy from businesses that don't provide direct service. Two years ago, we developed a direct arm to go into larger metro markets and call on those agencies. Some distributors weren't happy with that decision, but looking back, it was a good business decision. What matters most is understanding your target customers and offering them great solutions.
Sarkans: The line has blurred, but it still matters from a perspective of strategy. Manufacturers are bound by equipment--they must sell what they can produce, and that means they have less flexibility. Distributors can sell whatever customers ask for. Some move into manufacturing, but when they do, they have to start looking at a dual strategy.
Short: One byproduct of this trend is we have a much larger range of potential customers. Years ago, we were not talking to distributors and didn't perceive ourselves as having something they'd want to buy. Today, as the majors are outsourcing more, we're talking to companies we previously didn't go after. That has been a real change, and it has changed the way we perceive ourselves at RDP.
PS: Partnering is a hot topic in the printing industry. Why are more companies banding together, and in what ways has your firm benefited from partnering?
Dust: "Partnering" is probably an overused word. A true partnership involves a great deal of honesty and trust. It also means sharing resources like marketing initiatives, financials, technology and people. Our industry is nowhere near where we need to be with partnerships. The distributor/manufacturer marketplace hasn't put enough emphasis on them. As the industry has evolved, there has been a requirement to work closer, and I think too much emphasis has been placed on low prices. Four years ago, we developed a true partnership with Prograde, a growing distributorship in Cincinnati. We started talking to them about our business philosophy, and they're now our largest distributorship. We're co-marketing, co-selling and co-planning. We share financials and sales plans, and at the moment we're doing a direct mail campaign together.
Sarkans: Expect more partnerships in the future--it's a great way for companies to grow without adding overhead. Distributorships are typically regional, and partnering gives those companies a chance to go after national accounts. A partnership typically starts with some kind of major sales opportunity. We're also seeing distributorships partnering with database specialists, e-forms specialists and fulfillment specialists. As order sizes in the printing industry shrink and more sales reps concentrate on program selling, orders are getting more complex. Larger distributorships might be able to handle those themselves, but smaller ones will partner to complete those orders.
PS: "Get it here faster" seems to be a rallying cry of end users. What has customers' need for speed meant to your business?
Verheye: It has meant an increased interest in digital printing. When we talk about 1:1 marketing, and when we look at studies being done to support that concept, it's impressive. Basically, it has taken the better part of 10 years to sort out the "wow" factor of digital printing from the profit potential. There are a number of digital applications involving variable data that are making money for companies. Most of those companies have found niches and specific applications that are ideal for the technology, and most of those companies offer web-based order entry systems that can automate the process. The digital press is just at the end of the process. What's in front of the press channels the workflow and drives value in digital printing. In the future, whoever can control the data--not just use a press--will be in driver's seat.
Dust: Speed matters, but probably not as much as customization. Digital color certainly allows you to produce projects more quickly than traditional printing, but I think the real value comes from the ability to customize. We've had computer-to-plate technology in our traditional commercial plant for five years, and the digital infrastructure in that plant allows us to drive speed. If you're in manufacturing, you have to be up on the latest technologies to compete because customers demand fast solutions.
Sarkans: As a society, we're conditioned to get fast food, so why not fast print? Customers are demanding immediate production because they can get it. Everyone wants to carry less inventory. They want to change their materials more frequently. They want targeted direct mail. As a result, lead times are shrinking. If we look at where printing is growing, it's where projects are done fast and customized. That's really the No. 1 trigger to growth. If a project involves something that's slow and not customized, that segment probably isn't growing.
PS: One self-proclaimed weakness of many printing companies is lack of marketing prowess. How can firms market their offerings more effectively?
Verheye: In our instant world, most of us struggle with how to package our differentiating capabilities. It's even harder for a traditional supply chain. Print is often the smallest contributor in a project, so the whole solution requires a considerably different marketing hat.
Sarkans: If a distributorship is a collection of sales reps that has no real marketing strategy beyond each rep's comfort level, there's a great chance that distributorship is having a problem getting its message out. I agree that marketing is a serious problem for trade manufacturers. They're mostly isolated from end users and get market intelligence secondhand. They might have a great technology and great products, but can they find distributors willing to sell them?
Dust: We've never been a great marketer, but last year was a breakthrough year. We sat down and told ourselves marketing had to come to the forefront. Our business development manager came up with a concept for a direct mail campaign, which we launched in February. It has been the most successful campaign we've had here. We purchased a list of the top 250 customers best representing our core competencies. We qualified the list by calling the companies and getting the appropriate CFOs', marketing managers' and purchasing managers' names. Then we developed three collateral pieces: The first was an intro piece customized in our Digital Center with each recipients' name. It talked about our total solutions approach and included a tear-off card they could mail back for more information. That information came in the form of a mailed game set with the slogan, "No Games. Just Solutions." The second piece was a description of at least one of five successful case studies representing five industries--banking, health care, gaming, ad agencies and manufacturing. Recipients received different ones based on their type of business. We followed up the second piece with an email. The third piece was a letter and a 10 percent discount coupon for a first order. So far, we've achieved a 33 percent response rate and $1.5 million in new business resulting from the campaign.
Darin Painter is managing editor of Print Solutions. Email him your comments at dpainter@PSDA.org.
