How Printers Are Getting Their Differentiation Back
This article is adapted from the article “Differentiation Is Back!” by Paul V. Reilly, Partner, New Direction Partners, published in the 2014 FORECAST Part 1: Trends and Tactics. Reilly is a featured presenter at the 2014 Print Leadership Summit, June 2–3.
Technology can be like a double-edged sword. We use technology to increase print quality and differentiate our company. Then, as competitors eventually acquire these same technologies, differentiation decreases, and we’re left right back where we began. You could say that technology is so good, it’s bad!
So the question is: How can printers today distinguish their company when they’re using the same technology that is available and comparable to their competitors’? The solution is customization.
You may have heard of Proprietary Customer Interface Technology (PCIT). Our industry has developed this new customization tool to solve the technical differentiation problem. Here Paul V. Reilly of New Direction Partners explains how adopting PCIT can help you multiply your sales.
What is PCIT?
PCIT is a computer application that facilitates the interaction between the printer and customer—what some might refer to it as “Web-to-print on steroids.” But PCIT is much more than Web-to-print, providing a high level of customization for each customer’s individual needs. PCIT is usually a combination of acquired and custom code, but it always includes custom code. This allows a company to differentiate itself from a competitor who has similar software.
PCIT fully integrates the flow of data between the printer and customer, whether data is stored on the customer’s or printer’s servers. PCIT, similar to all solution sales, transfers risk held by a customer in a transactional sale to the printer. Examples include delivery time and accuracy, versions, proofing, etc. The image shows a schematic of how PCIT works.
How can PCIT help increase profits?
When commercial printers achieve 50% or more in sales processed through PCIT (often referred to as “programmed sales”), overall top-line growth becomes positive. This is pure mathematics. Programmed sales grow 10–15% per year, and such growth overcomes traditional transactional commercial sales, which are decreasing 5–10% per year.
Firms with a majority of their sales as programmed sales have approximately 2% of employment dedicated to customer development, and their most recent hires are programmers (not factory personnel). Such a level of commitment is required to write software code for customer “on boarding” (the process of writing code for new customers) and to manage continual customer requests for enhancements.
What effect does PCIT have on retaining customers?
Most advanced users of PCIT are fully integrated in the back end of production and accounting. The success in utilizing PCIT derives from enjoying a high level of customer “stickiness.” This printer/customer integration makes it difficult for print buyers to move the business to a competitor for price—the incumbent is so far ahead with customization, the competitor can’t match the product offering. Price is difficult to measure. Printers may not experience higher pricing, but profits increase throughout the customer life cycle as efficiencies develop and users of PCIT move up the learning curve. In fact, upon achieving 50% or more in programmed sales, PICTs usually carry the benefit of Printing Industries of America Ratios profit-leader-level profits.
Is there any evidence of success rates of PCIT users?
Travel North America and the globe touring printing plants and analyzing their financial strengths, and you’ll see a high correlation between the adoption of PCIT and profits. This correlation is evidenced in the most recent Printing Industries of America’s Ratios study where analysts have noted a correlation between adoption of Web-to-print technology and leading-level profits.
Simply put… Within the commercial print space, there is a development of “Have” and “Have Nots.” The “Haves” utilize PCIT and are growing and profitable. The “Have Nots” are stuck in the malaise that took over our industry in the 2008 recession. Many of the “Have Nots” are struggling to stay in business as they lose market share to the “Haves.”
What advice do you give to printers on adopting PCIT?
- If you’re going to do it, do it now. Early adopters will be difficult to unseat!
- Participate in the many seminars that explore the Web-to-print space.
- Buy a software package that you can customize.
- Hire a geek who can speak “Techie” and “C-Level.”
If you’re eager to learn more on customization with PCIT and other leading technology trends to differentiate your company, you’re not alone. Paul V. Reilly will present his much anticipated session, Emerging Technologies in the Printing Industry, at the 2014 Print Leadership Summit, June 2–3, 2014, in Dallas TX. This event focuses on Leadership, Sales, and Technology for today’s industry leaders. For more visit www.printing.org/PrintLeadershipSummit.
