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Jul 1, 1995 12:00 AM
Down-and-dirty work?" Uh-uh, not anymore. No longer does that phrase describe the work of quick printers, many of whom are intent on adding sophisticated services to enter new markets and better satisfy current customers.
These days, shops provide service bureau functions and mailing services, as well as direct imaging and on-demand printing. Some intrepid souls also have tiptoed into such corners as telemarketing.
But, shops can't just naively venture into any arena that catches their (or their customers') fancy, armed only with optimism and a penchant for hard work. Instead they must ascertain buyers' needs, examine market entry costs and carefully pluck new services from an ever-deepening pool of possibilities. Then they must train their staffs and, most important, earn a profit on these offerings.
Although some hard-luck cases exist, when executed carefully these efforts can be highly successful. One firm generated $500,000 a year in new revenue from customers it hooked due to a new service. Another shop's "extra" mailing services have become the source for 85 percent of its profit margin.
The prediction for shops that don't seek out new markets isn't as promising. "Those companies won't be around," warns expert after expert.
Providing an array of new services makes it more difficult to define the already nebulous term "quick printer." An estimated 42,000 such shops exist in the United States, with each typically employing five workers and tallying $350,000 in annual gross sales, according to the National Assn. of Quick Printers' (NAQP) 1995 industry profile.
For years this $14.7 billion segment has experienced an identity crisis, as has the rest of the printing industry. In fact, NAQP execs have contemplated a name change for the association. "Are we printers or are we in the information business?" asks one member.
How shops choose to answer this question will help decide which services they'll provide and which markets they'll enter. Today's typical markets include retail, manufacturing, medical/health care, education and more. Instead of actively seeking new markets, many quick printers seem to adopt services to suit current customers - it's simpler and less expensive.
"We always ask ourselves what other products and services we can sell our existing client group," comments Pat Leamy, owner of Econoprint Madison (WI). "We don't work as hard on developing new buyers because it's much easier to sell to current customers than start from scratch."
Quick print services range from black-and-white and color offset printing, black-and-white and color copying, and desktop publishing to graphic design, signmaking and facsimile services . . . the list goes on.
Ask veteran quick printer Elwood Smith about adopting new services and he'll take you on a quick tour of the past. "Twenty years ago, we'd go to a show and if we liked a certain machine we'd just purchase it, then go home and try to develop a market for it. You can't do that anymore," relates the owner of Speedy/Swifty Printing and Copying. "Today," he says, "you have to make a profit from day one because most of the new equipment you buy will be obsolete in two or three years."
Steve Voecks' mailing services were profitable in their second month. His firm, 11-employee Western Press and Copy Center (Los Gatos, CA), handles insertion work, database management, CASS certification, ink-jet addressing, sorting and delivery to the post office.
While Western has provided mailing services for nine years, within the past two and one-half years it has concentrated on CASS certifying, in which mailings are coded to be read by the postal automation system. This way, clients receive a hefty discount on postage with first- and third-class presort mail, according to Voecks.
Western currently mails for 25 percent of its account base. "The mailing section provides 85 percent of our profit margin," he adds. "Also, knowledge in this area gives us a definite edge on the competition since customers find it confusing to deal with the U.S. Post Office."
These services obviously are lucrative ones. "Our biggest growth is in mailing," enthuses Mitch Evans, partner in 46-employee, $4 million Print Tech (Westfield, NJ). The firm handles list management, labeling, sorting, addressing, inserting, etc. Sales from these offerings have burgeoned 40 percent over last year.
Western Press also dabbles in telemarketing, according to Voecks. "It's a natural lead in - if you handle customers' lists, you want them to get the maximum results from what they mail. A simple phone call asking recipients if they received the piece and their opinions of it will cause response rates to increase many times over."
Western discovers what results clients want from their mailings and does follow-up phone calls to recipients. "We don't want to be a full-line telemarketing service in which we generate leads or sell over the phone; we lack the expertise for that," Voecks adds. While he can't divulge potential profits, he believes this service will contribute to the firm's competitive edge.
Another advantage to adding new services is generating more jobs. "We're creating new work," explains Leamy of Econoprint Madison, which recently invested in a five-color Heidelberg GTO-DI press that images directly onto plates on press with no film required.
"For instance, a couple of our large accounts require product sheets with process color on one side and black on the other, in quantities of 500 to 600 sheets," he explains. "Previously, we couldn't tackle those jobs because our presses couldn't run process color in one pass."
The firm houses a two-color Itek press and traditional A.B. Dick equipment with Townsend T-51 heads. Econoprint handles process color on the GTO-DI, then runs the black portion of these jobs on a single-color offset press.
Currently, the GTO-DI runs half a shift. "We have no problems turning out a beautiful product, no difficulties in pre-flight or on press, we just have to get our speed up; we're mastering the system and internal workings," Leamy continues. Econoprint is one of the first non-franchise quick printers nationally to own this press, according to the owner.
In a similar vein, Copytech Business Systems (Canton, MA) maintains that two and one-half years ago it was the first printer in New England to accept files over the Internet, which it does via file transfer protocol (FTP), explains representative Jeff Rothstein.
"This way, clients don't have to record data to disks or tape. They just press a button and send us files." Clients download information into the firm's SunSparc station, and every hour a system checks for files and alerts production professionals via E-mail when a new file has arrived.
All Copytech needed was an Internet connection, which it acquired through a local provider, in-house networking and an outside consultant to handle programming. Customers simply had to be hooked up to the Internet. If they use a UNIX machine, the ability for FTP is built in; PC or MAC users need FTP software.
How successful has the service been? Last year, the company pulled in approximately $500,000 in new revenue due to customers reeled in through its FTP capabilities.
No analysis of quick printers' services would be complete without a mention of the Xerox Docutech for on-demand printing. Once a novel piece of equipment, these machines have been snapped up in droves.
For instance, Copytech invested in Docutech technology when a facilities management contract required it. Today it owns seven, on which it runs black-and-white manuals and software and training documentation. The shop's turnaround time is two hours to "whenever the customer requires," and the machines produce 135 copies per minute at 600 dpi. Run lengths are between 50 and 750 copies.
"Work from the Docutechs is the fastest growing part of our business. But, while it's profitable, it's also becoming more competitive," Rothstein relates.
Copytech provides another service that's less geared toward boosting profitability - in-house disk duplicating. "It isn't a real high-margin area," he notes. "However, it will differentiate me from the next 10 guys that knock on a customer's door. I may not make a killing on disk duplication, because no one does, but I'll get that client's printing work."
Mailing services, telemarketing, direct imaging, on-demand printing - a kaleidoscope of choices exist for quick printers. The big question is, which to choose?
"To answer that question, shops traditionally did cost analyses and market surveys," remembers Smith of Speedy/Swifty Printing. "But, this business is moving so rapidly today there isn't time for those tactics. For instance, you may survey your customers today, but their needs may change tomorrow."
Perhaps the better way to discover the answer is to ask printers who've been there. Copytech studied its customers. "Our market (Boston) is very sophisticated technologically. Our buyers want to hear about all the new bells and whistles and want to be the first to climb onto the bandwagon," reports Rothstein. Therefore, the firm's Internet and Docutech investments made sense.
Voecks has a different answer, but one that also is client focused. He selected mailing services because of "the ease of selling them. The typical business we deal with perceives bulk mailing, presorting, etc., done through the USPS as an extremely complicated thing."
But, Voecks doesn't recommend all shops delve into this area - their suitability depends on their volume. In fact, he advises that $500,000 a year in sales is the breakeven point at which shops could add mailing services. "At that volume, they've acquired five to seven employees - enough hands to jump on a good-sized mailing job, which often is quite labor intensive," he relates. "Also, at that volume they'll most likely have the necessary space. After all, for a 5,000-piece mailing, which isn't uncommon, shops might have 50 trays of mail sitting around, which takes up a lot of room."
No matter what market quick printers aim to reach, there usually is an entry fee attached. The price tag depends, in part, on the type and amount of equipment involved.
The entry cost for mailing services varies depending on how extensive your system is, explains Voecks. He invested in a direct impression printer, computer and software. "To set it up right, you'll need at least $15,000. We outgrew our capacity within 30 days and invested an additional $15,000 for a higher speed printer. We outgrew that in six months and reinvested in a $30,000 printer."
Likewise, Econoprint invested $350,000 for a Docutech and another $100,000 for custom tabbing machinery. In addition, Copytech's disk duplication equipment dented the firm's bank account by approximately $10,000.
While it's easy to blithely state the costs of various items, capital often is considered one of the biggest roadblocks in entering new markets.
"Capital is the biggest challenge," concurs Smith. "All this new technology is expensive and rapidly becomes obsolete. You must be highly capitalized and make a good profit so you can upgrade this equipment every two, three or four years. Also, training is critical. This new machinery reportedly is easier to run, but it's computerized, and training is a constant."
For Voecks, the greatest challenge was information related. "It was gathering mailing information and getting to know the ins and outs of the whole system," he explains. "To do so, we made friends with all the postal professionals we deal with and attended the postal seminars they held."
Okay, so you've carefully selected an appropriate new service, invested in the necessary equipment and trained employees. Now how do you market the offering? Copytech marketed its Docutech capabilities through a package that contains, among other items, a videotape that features a cost justification example for going to print on-demand.
Leamy of Econoprint hand-selects customers and conducts personalized tours of the company that feature a slide presentation of the GTO-DI, pricing information, examples of work and meetings with the firm's technical people. "We're selective about our GTO-DI customers because we predict we'll have a capacity problem. If we oversell the press, we can't just go and buy another one because they're too expensive, so we'll only take in a certain amount of work and growth. The first criteria for these customers is that they output electronic files to film."
Express Press (Fargo, ND), which invests 3.3 percent of total sales on marketing, mails six different direct mail pieces every month, each targeted to a different niche, to tout its services. Apparently, they're successful - in its last fiscal year, sales were up 15.4 percent while profits climbed a whopping 54 percent, according to Mike Stevens, owner.
Not only does Stevens know which services to market, he also knows when to jettison those that no longer are profitable. "We eliminated self-serve copiers, for instance," he relates. "It was like pulling teeth to do that, but when we studied the equipment investment required and the amount of time spent waiting on those customers, we realized self-serve copying wasn't our most profitable market. We also dropped our wedding invitation and resume services, except for existing customers. These areas are so labor-intensive we didn't make a great deal of money on them."
There's always the danger of getting carried away and veering too far from your core services, of sticking your fingers into too many pies. "You have to be cautious about where you head," offers Voecks. "You need to do it right and not add everything. For instance, our main function currently is printing, copying and mailing. We know what our expertise is and we're trying to make that work first."