Allegra Network : Printer to Marketer MantraFebruary 2012 By Erik Cagle, Senior Editor
There is a strong case to be made for the idea that Mike Marcantonio was the perfect candidate to assume the reins of Allegra Network, the Plymouth, MI-based franchisor whose members provide printing and now marketing services to the small- and medium-size business (SMB) community.
After all, Marcantonio—the recently minted president and CEO—is also an investor in three other companies. Not only does Marcantonio understand the needs of the clientele who patronize Allegra Network’s 310 printing and 185 Signs Now franchisees, he is also aware of their frustrations and limitations.
“All of the changes occurring in technology today are also changing the marketing tactics needed by small- and medium-sized businesses,” Marcantonio observes. “But, as a small business owner, you can’t afford an ad agency, and they wouldn’t want to work with you anyway because your spending isn’t worth their while. So, you’re left to deal with a very fragmented industry of freelance marketing consultants.
“When you own a small business and you don’t know anybody or have a good referral, where do you turn for (marketing) help? For us, the answer became that ‘a-hah’ moment.”
The epiphany that Allegra Network’s membership is ultimately well-positioned to provide marketing tools and acumen on an appropriate scale to address their clients' needs served as the launching point for a five-year journey toward transitioning the franchisor into a marketing services provider. It was a natural progression undertaken at the height of an unnatural time—amid the worst economic slump since the Great Depression.
It was a move both bold and necessary but, then again, the company has a history of keeping its feet moving (and its address, as evidenced by a new 67,000-square-foot headquarters). In the last 10-plus years, Allegra changed hands—purchased by an investment group led by Marcantonio, Domino’s Pizza founder Tom Monaghan and its management team (including Chairman Carl Gerhardt and the Chairman Emeritus Bill McIntyre)—and also acquired Insty-Prints (2002) and Signs Now (2005).
The quintessential small printer franchisor, the Allegra Network (2011 sales of $291 million) has been undergoing fundamental changes. It launched the Matchmaker program in 2004, which paired unaffiliated printers looking for an exit strategy with buyers who would bring the business into the franchise. The program was a success, as upwards of 50 businesses came under the firm's umbrella.
Just last year, Allegra Network unveiled its Advantage program. Advantage seeks out unaffiliated printers to become full-fledged members of the network, reap the benefits of franchise membership (more on this shortly) and enjoy economies of scale.
“With the Matchmaker program, we come across a lot of printers not ready to sell their businesses yet, but who need help in taking them to the next level,” explains Steve White, COO. “That drove the development of our Advantage program.”
But, there's a twist. Allegra Network brought in InfoTrends consultant Barb Pellow, and she concluded that the franchisor—backed by its new marketing initiatives—should also target printers in the $3 million to $10 million sales range. Its previous sweet spot had been in the $1 million to $3 million ballpark.
Gerhardt, a respected industry player and popular blogger known for his innovative approaches—such as combining Allegra’s 2011 Technology Expo with AlphaGraphics' annual gathering (see December 2011 Printing Impressions)—feels the franchise landscape in recent years has caused potential members to rethink the value proposition of joining a bigger concern.
“With the heavy need for diversification, particularly the need to move into the marketing communications area, it’s changed that perspective quite a bit,” he explains. “There’s a lot of talk about printers getting into marketing services. But, quite frankly, as Barb Pellow points out, they’re not making the trip. Experts like her believe that we now offer what they need.”
The 2012 value proposition for Allegra Network—which now flies the Allegra Marketing•Print•Mail brand flag—is this: The network uses the royalties it receives from franchisees to develop programs its members can then leverage. Small independent printers, particularly those below the $1 million range, typically cannot afford to offer comprehensive marketing programs.
But, with integrated, multi-channel marketing solutions now a must-have in today's business climate—for both the printer and SMB—it comes down to a printer A.) either developing its own marketing proficiency or B.) joining an organization that already boasts marketing tools and intelligence.
In 2009 Allegra Network hired Bob Milroy, a veteran with 35 years of marketing experience, to become its CMO. At that point, the company was already knee-deep in developing its own marketing services program. Having dealt with printers for decades, Milroy was eager to sit on the other side of the desk.
“I had lusted after the profit that printers were making on the files that my agency created, but didn’t have a good way to get the annuity business (printers) get on reprints and revisions,” Milroy recalls. “So, this notion of a printing company forward-integrating into marketing and creative services made good sense from a revenue diversification standpoint. And, it also gives small- and medium-size businesses the kind of one-touch access that most agencies don’t provide. The printer, as a single-source party, became an attractive value proposition to the market.”
Here's a rundown of Allegra Network's marketing programs that enable its franchisees to offer integrated services:
• Training. Its two-tiered program begins with Allegra Network University's Marketing Central, a 12-track, Web-based certification program that incorporates strategic planning, media overview, best practices and creative execution. Once completed, members can come to Allegra's headquarters for marketing specialist training, what Milroy describes as a three-day, "deeper drill" into strategic planning. The face-to-face meetings feature case studies, coaching and counseling on the sales process, and how it differs from selling printing.
• The Marketing Resource Center (MRC). The Plymouth, MI, headquarters staff combines veteran marketing services strategic planners, as well as subject matter experts on the implementation end (i.e., copywriters, graphic designers, Web developers and programmers). Members who have received certification can avail themselves of this treasure trove of agency-level expertise and receive guidance on sales, strategy, planning and executing initiatives, from creating print ads and developing television commercials to preparing an e-mail blast and launching a Website.
• Staffing. The process of staffing up with marketing professionals is quarterbacked out of Plymouth. Headquarters assists with creating help wanted ads, conducting personality/aptitude profiling and job interviews. Allegra Network's sales support team will then suggest two top candidates for the franchisee to perform a "chemistry test."
• Program archive. A cure for reinventing the wheel, Allegra Network has more than 100 industry-specific program plans that can be accessed, along with scores of already executed creative campaigns that can be downloaded. For example, if a franchisee in Delaware provided a program for a local dentist, now a Colorado franchisee can leverage that same creative.
• Marketing technology tools. Franchisees gain access via strategic alliances with e-mail services company Constant Contact, data providers AccuData and InfoUSA, advocate marketing firm Amplifinity, and other equipment and software vendors.
• Dedicated marketing and sales consultant. New members are assigned a headquarters-based support person who guides them along the way. “We’re not trying to build an ad agency,” Marcantonio notes. “But ad agencies have failed at serving small- to medium-sized businesses. We’re solving that problem by delivering quality marketing services at a price they can afford and at a price where we can make some money. That’s what we’re fully committed to doing...failure is not an option.”
Not all Allegra Network franchisees will be able to go “all in” for the full marketing monty, but Milroy believes there is a degree that can be reached by most, if not all, membership. Even the smallest of franchisees, for example, can focus on strategic projects, such as Website development, and learn about the ins and outs of Search Engine Optimization (SEO). But, a few dozen members have sold multi-dimensional, fully integrated marketing communications programs that incorporate public relations, advertising, direct mail, e-mail blasts and social media, to name a few.
In her InfoTrends case study on Allegra Network, Pellow gushed about the creative space of the new offices, saying it “feels like a sanctuary for the migration to the world of cross-media marketing services.” It seems that every nook and cranny of the space offers havens for collaboration. Talk about multipurpose; the Plymouth headquarters also houses the franchise business, a corporate-owned Allegra Marketing•Print•Mail and a sign center. Also on-site is a firm that provides corporate art, architectural signage and environmental graphics, of which Marcantonio is a part-owner.
“We want people who enter this building to feel like they’re walking into a marketing services company,” Marcantonio explains. “We felt it was important to generate a level of excitement and enthusiasm about our new initiatives among our franchise members. We also wanted it to be a vibrant and exciting place for prospects to visit. Our hope is that visitors leave here with a feeling that they want to be a part of this organization.”
Also, from an economies-of-scale standpoint, is Allegra Direct, the franchise’s official online ordering system. The company invested more than $250,000 in a full XMPie license and created a full-blown Web-to-print system. Allegra Network sub-licenses it to franchises at a cost that makes it viable for even the smallest centers. Alternatively, franchise members can assign projects to the MRC, which employs Web-to-print programmers.
“Franchisees know they’re implementing it with people who have a depth of experience in this area, and who can keep them on the right track and avoid making any big mistakes,” Marcantonio says.
The Allegra Network brain trust feels the MRC is a key distinction in the marketplace for its franchisees, separating them from other franchisors and the independent small quick/commercial printer space. "The vast majority of printers out there are simply investing in the deployment tools, waiting for a client to bring them a project," Milroy notes. "They are not occupying the space of becoming strategic counselors.
“Small businesses don’t know whether they need a PURL, a GURL, an e-mail blast or a newspaper ad. They’re confused—they don’t have a lot of money, there are dozens of ways to communicate and they haven’t got a clue as to what to do. That’s where we can help.”
Mining down to the franchisee level, White sees strong capex investments aimed at growth in 2012, most notably in the areas of wide-format output, mailing services and new software.
Since many SMB clients are in consumer-based products and services, they will be seeking to gain better traction online, leading Milroy to believe Website development and enhancing will become a lucrative area of need going forward. Direct marketing, both hard copy and electronic, also figures to play a prominent role in 2012 for Allegra Network's membership.
Most importantly, the executive team understands that making the conversion to marketing service provider is a process, and it will take a while for the network as a whole to embrace what truly could be the future for many of those printers at the lower dollar volume end of the printing pool.
“We don’t only measure success in terms of sales dollars,” Marcantonio remarks. “We realize, to make the kind of changes we’re asking our members to make, that it could take a while to reap the benefits. Our members have successful printing businesses that they’ve built over the years and we need to make sure that, during the transition, they don’t throw the baby out with the bath water.
“They need to strike a balance between continuing what they’ve done to be successful in the past, while evolving into what will help them be successful in the future.” PI