WHEN COMPANIES analyze how to save money, promotional and print costs are often an easy target. In many organizations it’s common that print buyers are given a mandate from management to cut last year’s budget by 5 percent or more.
Just as most buyers are not given proper training on printing technology, they also are not given training on financial tools and tracking. Most organizations don’t know how much money they are spending on print, don’t know how much they are spending with each of their printers, what their AA costs are, or which costs are controllable. Without sound financial information, some buyers may have a knee-jerk reaction to cutting costs—they bid out jobs to a few more printers and go for the lowest price.
This cost-reduction process can actually be a great opportunity for print solution providers. While, at first glance, it may seem counterproductive to help customers reduce their costs, it behooves you to get involved. Think of it this way: Would you rather have your clients go through this process on their own (or even with another printer), or would you rather be part of the process?
Help Clients Track Costs
Consider these ways in which helping your customers track and reduce their costs can strengthen your relationships and potentially increase sales:
• Build trust. Buyers want to work with a print provider that is sensitive to their needs, and not one that just wants to sell them another print job.
• Create differentiation. Very few printing companies get involved with their customers at this level. This is an opportunity to provide a value-added service that’s extremely important to your clients.
• Build “high and wide” relationships with management and other decision makers. It’s important to establish relationships with other key decision makers, not just print buyers. The needs and concerns of management may be different from those of the buyers. Management is more focused on the big picture. Involving your company in the cost containment process allows you to provide a more strategic role. Your unique perspective can help key decision makers understand the impact of cutting costs to the client’s brand and service to their customers.
• Learn the critical factors that play into your client’s decision making. When you work at this level with customers, you will not only learn their trigger points, but why they do the things they do. Here’s a great opportunity for you to learn more about their marketing strategies and how they track return- on-investment (ROI).
• Negotiate the issues that are important to you. You may be more willing to cut your costs in certain areas if you can gain agreement to increase volume, or if the payment terms can be shortened. You will find that customers will be more flexible in giving you what you need, if they can see how it will benefit them financially.
• Discover additional sales opportunities. As you gather data for your client, and then look at the information in aggregate, you will likely discover some additional opportunities to work together that will benefit both of you.
• Earn valuable “face-time” with the buyer. Many printers find that even their best clients have little time to meet with them. And it’s difficult to build value if you have little quality contact with the customer. You will be able to earn more frequent meeting time as your visits become more valuable to the buyer.
• Show your customer that you are handling your own business well. By delivering relevant financial information to your customer, you are demonstrating that your own financial house is in order. This builds a level of trust and respect with pricing and billing issues.
• Be seen as a resource. Partnerships with customers have become increasingly important. In fact, in a survey that my company Print Buyers Online.com conducted with print buyers, more than 30 percent of respondents said that printers have to be on an approved list even to quote on projects. Being a valuable resource keeps your company relevant. It’s not just about delivering the job on time and error-free, it’s about helping your customers succeed and conduct their business better.
Managing the Project
Buying organizations need to know that things are under control. When they feel confident that you are tracking and managing the delivery of a project, the process becomes stress-free for them, and they are more likely to send the work to you. It’s the same with pricing and cost issues. The better you communicate and control the costs of the job, the more the buyer comes to rely on you and trust you.
One way to get started is to set up “cost containment meetings” every six months, or at least once a year. Your service becomes more valuable as you analyze costs and buying strategies over time. There is a fair amount of work involved, so you can’t provide this service to all of your accounts. Start with your top accounts or customers that have the potential to become a top account.
Some clients may be more forthcoming than others about their budgets and the other print suppliers that they work with. Some customers may want help with their overall budgeting issues; others will only want to discuss work they’ve done with your company. Start by creating a document review of the past year’s work and propose ideas for cost containment. Even basic information about their jobs, such as peak order times, can be very helpful.
Provide a report that contains the number of jobs that your company produced for them over the last year, and the total costs of services. Then provide the following:
Break down costs per month. Help your customer identify peak order times that can help them deal with scheduling and workflow issues. This information can also be beneficial in forecasting next year’s budget.
Compare the quoted price against the final costs. What is the cause of the variance? How can they avoid those costs in the future? With this information, you may be able to offer advice on how they can provide clearer specifications up front. Or you might be able to identify areas where your clients typically incur additional charges and show them how to avoid those charges.
You can start providing assistance by making your clients aware of the AA and change-order costs associated with their jobs. AA and change-order costs can account for 5 percent to 10 percent of the cost of a job, so this is a great place to start looking at opportunities for savings. To provide more value, tell your clients how they can avoid those additional costs in the future.
In addition to helping customers track and justify AA costs, you can help them track and analyze their annual costs. This helps them to understand the big picture and make decisions that are smarter overall.
Analyze the “Hit Ratio”
Compare the number of jobs quoted vs. the jobs won. When you analyze the “hit ratio,” you’ll be able to identify additional opportunities that otherwise might be missed. If you look carefully, you’ll be able to see patterns with the types of jobs that you consistently win and consistently lose with the customer. This can help your customer understand how to utilize your company better.
Make recommendations on how costs can be reduced. By looking at the big picture, you should be able to identify opportunities for changing specifications, gang running jobs together, adjusting quantities for better efficiency, etc. Detail these recommendations. Put them in writing.
You also might want to send a copy of your analyses and suggestions to the managers and “influencers” at the buying company, if they are not directly involved with this process.
Look for opportunities to make suggestions outside the job specifications. There could be ways to reduce inventory or shipping costs. And remember, money isn’t everything—costs may even become less of an issue if you can reduce the production cycle time and help them get to market faster.
Be part of your customers’ processes to track and control their costs, and you can safeguard your accounts by gaining the competitive edge in service, value and trust. PI
About the Author
Suzanne Morgan is president of the annual Print Oasis Print Buyers Conference (www.printoasis.com) and Print Buyers Online.com, a free e-community for print buyers and suppliers (www.printbuyersonline.com). PBO, which has 11,000 members who buy $13 billion a year in printing, conducts research on buying trends and teaches organizations how to work more effectively with print suppliers. Morgan can be reached at email@example.com.