Surviving in Challenging Economic Condition

The worldwide economy is in a slowdown and there are significant signs of a recession especially in the U.S. market. The economist’s state that near term outlooks for our economy will have a negative impact on businesses and the consumer alike. CEOs and CFOs need more strategic and rational strategies with solid metrics to offer a positive return on investment and increased customer value. InfoTrends has indicated six critical strategies that graphic communications firms and print service providers do implement that will enable a thriving growth in these challenging economic conditions.

There are clear implications that the printing industry will face. According to InfoTrends and NAPL, the number of print service provider establishments is declining. From 1998 to 2006 the number of establishments declined by 6,901, which is an 18.3 percent decrease. Some of this is due to consolidations and mergers. Also the number of employees dropped by 170,000—a 22.4 percent decline. There is a single graphic arts segment which has shown an increase, digital printing.

Digital printing has grown 300 percent in establishments and 250 percent in employees. How did they achieve such growth? This has been accomplished by offering savvy graphic communications and developing a significant value-add portfolio of products and services. This is a strong strategic business strategy. These services offered are effective use of digital technology and a streamline unified workflow. This will allow benefits to the customers of reduced overhead, improved managed costs, and effective business communications with customers.

These six strategies, according to InfoTrends, are:

1. The use of Internet-enabled sourcing customer programs that serve small and large businesses. These programs cover digital asset management, Web-to-print collateral, promotional products, and support material management, distribution, and fulfillment.

2. Leveraging multi-channel communication programs with demonstrable return on investment;

3. Emphasizing online, automated ordering processes for print products in a B2B and B2C market;

4. Focusing on markets minimally unaffected by recession;

5. Emphasize “lean manufacturing” and automation;

6. Leverage the use of SaaS (software as a service) solutions.

Utilizing these six critical strategies will enable graphic arts providers to not only withstand these challenging times, but experience growth at the same time.

In these times businesses are looking for strategic partners that can help them reduce their costs and provide non-core processes such as printing, document management, warehousing, distribution, and fulfillment operations. Creating and establishing a Web-to-Print solution to manage these processes has been quite successful for print service providers.

There are benefits of this strategy reported. Print buyers have seen a 14.4 percent savings using a Web-to-Print solution. Other benefits reported from the InfoTrends study indicated reduced turnaround times, improved job tracking, reduced errors, and improved corporate brand management.

The “eEnablement” study also indicated that 60 percent of the respondents saw 54 percent margin improvements, with margin up over 7 percent. Also PSPs saw an 8 percent increase in print volume levels and an 8.1 percent in increased revenues. Twenty-five percent of PSPs achieved more than 10 percent revenue increases. These increases are directly related to the e-print offering. Another question that was asked was how an e-business solution has impacted your business. The results were positive. PSPs attracted new customers, and 90 percent of them were digital printers. Also, expanding the PSP’s geographic reach was a significant benefit.

Multi-channel communications with demonstrable ROI is another strategy for print service providers to implement. Marketing budgets are getting cut at all levels. As a first line of defense, provide a measurable ROI-driven program. Having the right customer dialogue, using the right target channel is essential to keep and enhance those marketing campaigns. InfoTrends has indicated these are direct marketing channels used by the percentage of survey respondents.

A significant point to note based on this survey is that to achieve favor results to a marketing campaign is to utilize multiple channels, target the right audience, and have a compelling offer. Your benefits will surely be positive. You must also have a tracking vehicle to measure these results. In many case variable data printing should be used. Personalized URLs are also quite popular to drive customer successes.

There are many firms that have utilized print to drive customers to non print product or services. These are Web-based interfaces. The product or service is then delivered to the end user customer. Some examples of these are a targeted postcard to promote books, photo books, or magazine subscriptions. The targeted postcard is delivered to an end user. The end user goes to a Web site to place his order. The printed piece is there delivered directly to the customer. This process is being used by both business to business and business to consumer models.

There can be a focus on the somewhat recession-proof markets. History has demonstrated that the following markets have withstood economic recessions.

Pharmaceutical

Healthcare and Medical

Services

• Utilities and Energy
• Environmental Services
• Educational

Any type of manufacturer and retail staple company such as food, groceries, and clothing companies are also sustainable. Once again, you must show the deliverance of measurable ROI that can be filtered to the company and its’ customers.

Many PSPs are adopting Lean Manufacturing and Automation to their companies. These are operational strategies to help cut costs, but also to improve productivity. These savings can add up to big bucks for the printer. The customers will also see benefit with better high quality products, shorter lead times, and a great improvement in turnaround times. This is where digital printing and a unified workflow shine. In a recent study entitled “The Future of Commercial Printing in the United States” shows how printer will spend and invest over the next 12 month.

Clearly digital printing and unified workflow are recognized as a need to rely more heavily upon.

Software as a service (SaaS) solutions is also another leveraging strategy for PSPs “SaaS is a model of software delivery in which the software company provides maintenance, daily technical operation, and support for the software they provide to their client.” These are Web-to-Print solutions covering to models, the Host and the Alternate Service Provider (ASP). ASP solutions are quite economical to start with and eliminate overhead and infrastructure costs.

Host solutions have simple to complex capabilities which are module and can grow with you. In most multi-channel marketing campaigns these SaaS solutions are necessary. One huge benefit is improving the time to market. Also to offer your customer a streamlined way to do business with you. If you are venturing into Purl campaigns a SaaS solution is a must.

Negative economic pressures are not going to correct themselves. We must be forward thinkers and search out new processes. What is clear is that our investments in technology are become a necessity to sustain and ensure our growth. This will result in higher profits, better margins, satisfied customer, and delivering a favorable ROI for you and your customers.

Ed Bokuniewicz has 29 years in the graphic arts industry. Ed is a senior marketing & business development manager for Ricoh Print Production Business Group and an Adjunct Professor at the New York City College of Technology (CUNY), teaching print on demand to graphic arts students.