Wide-Format Specialists: Key Metrics That Matter

Earlier this year, InfoTrends and NAPCO—the publisher of Printing Impressions—developed a cooperative survey asking professional wide-format print shops a series of questions about their operational and financial performance to establish some industry benchmarks for some key metrics for the wide-format market. The value of benchmarking is that it gives companies a bearing: Either a goal to shoot for or a reason to appreciate strong performance along some of these parameters.

There are a lot of ways to look at this data set, but InfoTrends has summarized the findings in Table 1. The important thing to remember about these metrics is that they come from about 60 print shops from around the United States; and many have offset and digital, as well as narrow and wide-format, printing capabilities.

Year-over-year sales are an important metric for every company, printing industry or not. It is important to note that respondents to this survey were not asked year-over-year growth; they were asked to report sales in 2012 and 2013. InfoTrends then measured those numbers to calculate the 8 percent growth year-over-year seen in Table 1 above. There are a lot of other sources that say that the printing industry is not doing well or is getting smaller, but this group of respondents reported some nice growth. This could be partly because those shops that saw growth were happy to report it, whereas shops that had sales declines were less likely to do so.

Revenue per employee is a common corporate measurement, as well. In this case, the survey specifically asked the respondents how many employees their company has and to include everyone who works at the company. We did not ask them revenue per employee; we asked 2013 revenue and current employee count, and then did the math ourselves to get an average of $174,000 per employee.

This is important because a lot of other "revenue-per-employee" benchmarks only count production and sales employees, and not all administrative staff. Wide-format print shops tend to have a lower revenue-per-employee count than commercial printers, probably because fewer processes—such as media handling and finishing—are automated in the wide-format business.

Another metric that we could derive through the survey is revenue per sales rep, and the average revenue per sales rep is $965,000. That number may be "interesting" to printing establishments more than particularly "useful" because a salesperson in a small city simply does not have the revenue opportunity that a sales rep in New York or Los Angeles does. Therefore, the measure of a salesperson's effectiveness should be based on the size of his/her opportunity.

It should be noted that this survey also asked some questions about sales programs and approaches to sales compensation to measure how wide-format print shops are implementing these programs in line with how the company's production capabilities are evolving.

One thing that InfoTrends finds very interesting is that it seems that a targeted approach to sales management is not really occurring the way it is occurring from an outward marketing or production standpoint. What we mean is that companies invest in wide-format digital printing equipment to produce certain applications, but then report that they do not incentivize their sales force any differently to sell specific applications.

This is what we would call a "press and pray" approach to business development. If your company wants to get into new markets, develop new services and find new customers, you really should make that part of the plan for the sales force. Nevertheless, the finding from this research is that less than one-third of the shops do so.

InfoTrends' resident expert on sales management and training, Kate Dunn, is not surprised by the lack of a concentrated sales plan. Dunn says that "many shop owners simply don't have the right tools, such as Print MIS software or even back-end accounting software, to be able to develop a complex sales plan based on new business, new services or even on higher-margin sales."

Getting back to the metrics that matter in Table 1, there are some important cost elements to consider: labor cost, materials cost and total cost of goods sold (COGS)—all as a percentage of sales. Here, it is very important to recognize that, in the wide-format digital printing business, there is a lot of "hands-on" kind of work in terms of moving prints, finishing, packing and shipping. As such, labor costs in the wide-format sector may be higher than what readers would expect. Similarly, a lot of wide-format print media, substrates and inks are quite expensive compared to plain paper and offset, as well as screen printing inks, so the materials costs may be higher than what many commercial printers experience.

Benchmarking is a useful exercise for any company because these things have to be measured to be effectively managed on the cost side and in terms of reinforcing the positives from a sales and operational standpoint. PI

About the Author
Arianna Valentini is senior research analyst, Digital Marketing & Media, at InfoTrends.