Defining Your Value: It’s Time to Change the Conversation
A business is defined by the value it creates for its customers. Your price speaks volumes about your value proposition, more so than any other component of your firm’s marketing. As print/marketing services firms build out portfolios of value-added services, they frequently undervalue their offerings. Players in the printing industry have historically had a manufacturing mentality — they subscribe to the labor theory of value, which states that the value of a service is determined by the amount of labor that goes into production.
It’s time to change this pricing culture! Today, thousands of firms in a variety of industries price their services according to the external value created — as perceived and determined by the client — rather than the internal costs incurred in generating services. This strategy is known as value-based pricing. Here are four essential steps for successfully defining your company’s value and pricing accordingly.
1. Start with a 'Differentiated Offer'
Competing on price is a fool’s errand, so you must find a way to change your clients’ mindset and prove that you are different. The most effective way to distinguish your business from the competition is by blending value-added services with print. If you are providing a commodity that is not distinguishable from what your competitors are offering, the lowest price becomes the only logical choice for selecting one company over another.
Firms are pursuing a number of different strategies to increase the value delivered to customers, but they all relate to services expansion. Quick printers as well as commercial printers are adding large-format to the mix. As an example, earlier this year Sandy Alexander acquired Signmasters to further entrench its commitment to servicing luxury and high-end brands with wide-format solutions. Other organizations are expanding marketing services. Allen Press just announced the launch of its new marketing agency – Treefall Marketing + Creative. The full-service agency is focused on supporting businesses and organizations of all sizes by providing graphic design and creative services, digital marketing and marketing strategy services. Ultimately, these firms want to be a one-stop shop for the clients they service as well as attract new clients with increased value add.
2. Understand the Next Best Alternative (Competition)
What is it that sets your offering apart from the next-best alternative — the offerings of your competitors? When you’re thinking about the next-best alternatives, remember that these are not limited to printers and marketing service providers. As portfolios continue to expand, you might find yourself competing against an agency.
When print service providers make the move into marketing services, you are no longer competing solely against other printers — you are offering agency-oriented services. Print service providers understand the price of print, but effectively building out your business model in today’s market requires a comprehension of how agencies price more advanced marketing services.
3. Communicate Your Value
When it comes to value-based pricing, service providers must rely on good communication and interviewing skills as well as feedback from prospects to arrive at a fair price. You need to ask the client what results they want to see from the campaign or marketing initiative. The results will be a combination of quantifiable dollars saved or gained, such as headcount reduction or increased sales, plus intangibles like peace of mind, improved reputation and/or reduced risk. If you’re developing a new customer acquisition program, you will want to understand the value of an incremental sale. Once you understand the economic benefit to the client, you can translate that into a value proposition that can be delivered and priced accordingly.
Customers need to be educated. To get a client to understand the value of changing the way they communicate it is critical to have case histories, solid business examples and market research data to illustrate how and why personalized direct mail and integrated marketing will work for them
Kansas City, Mo.-based NextPage focuses on communicating the value of new marketing services and solutions to drive innovation and change. It provides a bi-monthly publication called Marketing Innovation Update. In this edition, the company educated clients on print automation, IP targeting and shape cut envelopes and how they could be used to enhance ROI.
NextPage also has a website that is well populated with case histories to illustrate how current clients are leveraging the value add the company delivers to enhance communications.
4. Translate Value into Business Results
Savvy print/marketing service providers have discovered that customers are often able — and willing — to pay a higher price for a bundle of products/services if they perceive an added value. Once you have established the economic worth of value-added capabilities or have at least initiated a discussion about what that worth might be, you will no longer need to justify any price premium for your offerings in relation to the competition. Instead, you can promote the services in concert with the associated added value that you deliver. You can also argue that your lower-priced competitors are actually overpriced because the lower cost of their offerings will not offset the value lost by not selecting your option.
The price of the value-added offering can and should be translated into a real dollar benefit for the customer. Service providers are figuring it out and using some of the following techniques.
- Web-based print-on-demand solutions to eliminate overprinting, maintain branding across the enterprise, and eliminate inventory management, obsolescence and waste. Service providers work with the client to understand current spending and how overall costs can be reduced.
- Customization and personalization to increase response rates. Service providers are leveraging case histories to show the results for similar clients and apply that to current marketing spend for the prospect.
- IP targeting improves the response rate lift. Specific examples can be applied to the campaign to ascertain the business impact.
- Demonstrating how omni-channel campaigns have better response rates than a single channel. Utilizing marketing statistics, service providers can drive a client to use more than just email and add print and mobile to the mix.
The Bottom Line
As today’s print/marketing service providers continue to expand their offerings, it’s critical to be paid for the added value delivered to customers. Service providers must clearly identify their value-added capabilities and create key points of differentiation from market competitors. The printing industry has historically relied on a manufacturing labor-oriented business model that sells based on price, but today’s business environment is different.
Service providers must shift the conversation from “print product produced” to “value delivered to the customer.” It’s time to change the conversation and the culture!
A digital printing and publishing pioneer and marketing expert, Barbara Pellow helps companies develop multi-media strategies that ride the information wave whether it is developing a strategy to launch a new product, building a strategic marketing plan or educating your sales force on how to deliver an effective value proposition. She brings the knowledge and skills to help companies expand and grow business opportunity. Barb has had a number of high-profile marketing and sales positions including Chief Marketing Officer for the Kodak Graphic Communications Group, Corporate Vice President of Marketing for IKON Office Solutions, and Vice President and General Manager for the Xerox Document Production Systems Group. She also served as the Gannett chair in integrated publishing sciences in Rochester Institute of Technology's (RIT) School of Printing Management and Sciences (SPMS). Most recently, Barb was the Group Director for Business Development at InfoTrends. She is currently the Manager of Pellow and Partners, LLC.
Barb can be reached via email at firstname.lastname@example.org (Mobile, 585-734-2228)