Draining the Pond . . . and Print

For the longest time, printers have been swimming in the protected pond of advertising. For most of our years, the GDP went up, print sales went up. The GDP went down, print sales went down. As Dr. Joe Webb pointed out in 2007, not true anymore. And just this week, he's clarified how this is playing out at WhatTheyThink.com.

The full article is subscriber only, but here's one of good parts:

but there are still owners, executives, and managers who still insist in their belief that print demand follows GDP. This means that they constantly misdiagnose what is really happening, attributing changes in demand to economic factors and not to other influences. These other influences have been powerful, to say the least. If our industry followed GDP growth for the last 15 years, it would be about $175 billion in size; this year we may be relieved to be $97 billion.

Meanwhile, many printers retreated to being an output service of the advertising industry. Now the buzz is about being "marketing partners" for advertising.

I've been on a soapbox for a while, saying the real growth market is in education, health and government EHG. The advertising pond is getting lower and lower. It's not the printer's fault. It's not Print's fault. It's just hard to be a big fish in a small and getting smaller pond.

Here's a post I found today.

A beautiful experience: When you decommodify, advertising becomes irrelevant.: "Here's what Stephen Berkov, the executive director of client strategy for Edmunds.com (and former innovation director for Audi) has to say about advertising and ad agencies:

There needs to be less focus on the advertising and more on the relevance of the products and services themselves. When that happens, the marketing takes care of itself. So, I see a smaller role for advertising and therefore ad agencies in the years ahead.

Kind of reminds me of the famous quote by the founder of the Geek Squad:

Advertising is the tax you pay for being unremarkable"

Feature-list or elegance? and Print

There's a lot of talk in our industry about "one-stop shop" and printers being "solution providers" or "communication providers". We're told that we have to learn the web, and buzz marketing, and ... the feature-list can get pretty long.

I don't think that makes sense for most printers, most of the time. Instead of learning a little about more things, focus on learning more about less things.

Think Google, instead of Yahoo.

Strip out all irrelevant costs by stripping out all irrelevant features. Eventually you will get to the thing that is easy for you and hard for someone else. Find the someone else's who are willing to give you money for what you can do faster, better, cheaper than your competition. Become an "elegant one-trick pony."

And if your customer needs something that you don't do, network with someone who does do it - very, very well. And stop worrying about how much to "mark it up" or "will the customer find a new contact" or "who will own the customer." The days of "owning" customers is long gone. There's a longer story in here about Printing Brokers. But that's for another day.

I found this article in the New York Times.(I hunt,gather and talk on the web. But close reading needs paper. So sorry, you'll have to google it yourself if you want to see it the whole thing and go for the $1.50 if you want paper.) The article is titled Nontechies, This One's for You. The writer is David Pogue. You can find it on page C1 and it jumps to Page 8 of the Business Day section, on Thursday, September 11.

Mr. Pogue writes:

...in consumer technology, (there are two kinds of people) features-listers/elegance appreciators.

Feature -listers judge a product by one criterion: how many features it has, no matter how clunky the design. ...Eleganc-appreciators, on the other hand, prefer something that does less, but does it better.

Make way for another elegant one-trick pony: a pocket-size doodad called the Peek, which sends and receives emails.

...It will follow the usual cycle of simple, elegant techn products. 1) universal scorn by feature-listers online; 2) quiet, gradual popular acceptance by normal people 3) bafflement on the part of the feature-listers, who still don't get that there are two kinds of people in the world.

. . .It costs $100 and $20 a month for unlimited email services. . . .Each charge of the removable battery lasts two to five days. . . . The first time you turn on the Peek, you're asked for you e-mail address and password.

Then you start getting your email to your shirt pocket. Less really is more.

"Lean Retail", Sales Efficiency and Print

Counter intuitively it turns out that the most sustainable business is retail. By retail I mean the sale to ultimate consumers. The logic of 21st century business is the relentless focus on the ultimate consumer. In that specific sense the winning firms are all in the retail business.

It's a much longer story, but for now, I hope it helps you understand why I think the article in yesterday's Wall Street Journal should be interesting and how it might apply to selling Print. The title of the story is Retailers Reprogram Workers in Efficiency Push. The date is Monday September 10 and the author is Vannessa O'Connel. It starts on page one, then jumps to A11. Here's some of what Ms O'Connel has to say

Retailers have a new tool to turn up the heat on their salespeople: computer programs that dictate which employees should work when, and for how long.. . .(the computer program) displays (the sales person's) 'performance metrics': average sales per hour, units sold, and dollars per transaction. The system schedules the most productive sellers to work the busiest hours.
. . .
Such workforce-management systems are sweeping the industry as retailers fight to improve productivity and cut payroll costs.
. . .
The systems stand to have a broad impact on the work lives of Americans. Some 15 million people work in the U.S. retail industry, making it the nation's third largest private sector employer.
. . .
Wal Mart Sores, Inc. just completed a year long roll out of a computerized scheduling system for 1.3 million workers. It cited 12% labor productivity gains as a key reason for improved results in in its fiscal quarter ended Jan. 31
. . .
AnnTaylor spokeswoman Maria Sceppaguercio says the company's goal was 'having the right people in the stores at the right time, and about being more productive with the store labor hours. It was not about cutting the payroll.
. . .
Because the system awards more-productive salespeople with favorable hours, it gives employees an incentive to persuade shopper to buy things.

Here's the payoff in changing the culture on the selling floor:

In the Langhorne store, after sales-per-hour figures became the determining factor in scheduling, the atmosphere changed dramatically, current and former employees say. When a customer entered the store, employees would angle to get credit for a sale, and thus boost their sale-per-hour numbers.

There's more about the size of the "human-capital management" industry, how it generates savings that go to the bottom line and many other details.

Now consider this scenario:
Mr and Mrs ABeeCee were looking at the cost of getting new customers (customer-acquisition costs) for ABC Printing. They were getting about about 300 estimate requests a month, but only converting about 6%. It seemed like a lot of wasted time and effort. Were their prices too high or were these the wrong customers? They didn't know.

Plus they had some salespeople who were great at opening, but couldn't close. Others who loved the hunt and hated the follow up. Others who loved to farm their book of business. Meanwhile, the sales people always seemed busy and often whined about how slow the market is. This just wasn't working for anybody.

Given that it was broken, they decided to try a different approach. They analyzed the strengths of each sales person. They set up a bunch of easy to calculate performance metrics to get some view of the right bin for the right salesperson. The three bins were hunters, farmers and high value CSRs (those who loved to manage the relationship, but hated hunting or farming).

Then , every other day at the 10:00 coffee break all the customer interactions were evaluated by a team - made up of Mrs ABeeCee and two of the top producers. At first the two producers complained that this would cut into their sales time. But eventually they were convinced that getting a very close look at ongoing customer interactions was the worth the time invested. Plus they got extra gas mileage allowances for each meeting they attended.

Every customer interaction -face to face meetings, estimate request, first job and couple of jobs was looked at every other day. It only took a couple of minutes on each one to decide the best next step for this potential customer . . . give them to a hunter, are they ready for a farmer, or do they need a customer relationship manager? Based on the team's collective judgment and past performance, the right person was given to the right customer at the right time.

While the experienced productive pros could do it all, the less productive could only do one thing really well. Mr and Mrs ABC figured out a way to fairly compensate everyone involved with the customer. The normal commission was broken down between the hunter, the gatherer and the CSR. That, and getting the sales people to share their information about a customer, was the really hard part. It was a voluntary system, but if a salesperson decided not to play, they didn't get a piece of this new action.

At first the sales people whined and complained. But after a couple of months every one was focused on the part of the sales process they liked to do. Amazingly, they all made more money with less stress with a relentless focus on what they were great at. And felt secure about handing off the part they were not great at.

AnnTaylor spokeswoman Maria Sceppaguercio says the company's goal was 'having the right people in the stores at the right time, and about being more productive with the store labor hours. It was not about cutting the payroll.

Mrs ABeeCee says the company's goal was 'having the right people interact with the customer at the right time, and about being more productive with the people on their selling staff. It was not about cutting payroll costs, it was about generating more revenue for everyone.

"Lipstick on a Pig" and Print

As the folks who read this blog from time to time, it's probably pretty clear that I love print and am deeply fascinated with how communication works. That goes part of the way to explain my personal focus on following what is going on with Newspapers. From my point of view, newspapers are at the apex of the print communication pyramid.

Of late newspaper business models are shattering before our eyes. There is a lot of hand wringing. Sound a bit like our industry?

As is normal with any business under severe stress, the first explanation is that it is someone or something's fault. In newspapers (and print in general) step one is "blame the customer," as in "people don't read in the internet age". The next step is usually to blame the staff, "as in my people are stupid, untrained, a waste of money." Then the big one, "it's the Internet." as in "we've got to be more like the Internet." Of course, someplace in there is the "brutal competition" as in "how we can compete with savage underpricing or free newspapers or news for free on the net."

Then as things keep going downhill, it eventually gets to a question that may be at the heart of the matter. What can you do do it about it? My answer is do the job you are supposed to do. Play to your core strength. Do it better, faster, cheaper than anyone else in your market. Find the people who want to buy what you do.

Since printers can earn knowledge by watching the full communication ecology, I want to share what I heard on Morning Joe this morning. They were all involved in the blah, blah, blah about Sara Palin. Very heated. And pretty easy to do. Makes sort of ok TV. Most important it answers the question of what are we going to talk about today.

Then Chris Matthews said

"You know what the cable channels are. They are 500 lb gorillas looking for 100 lb burro. They ride the burro until it dies and then they look for another one."

So what does this have to do with printers? Cable TV has been growing very rapidly for the last 15 or so years. It's a new communication capability. It changed the communication ecology. With the full time coverage of OJ Simpson it found a great "burro" that they ran with for months and months. The best thing about the trial was that it was cheap, easy to do programming. Worked well for a long time. But the ecology continues to evolve. Cable TV is now trying to invent new ways to attract viewers. But that's a different post.

Back to newspapers. Here's part of an experienced editor has to say about it:

Newspapers have served as the public square in the communities they have served. As newspapers decline and morph into niche publications, the public square goes away.

The new media create virtual squares, but rarely around large geographic communities. And by their nature, new media are linear. The beauty of the newspaper's public square was that all views could be brought to the public's attention at the same time creating a shared base of knowledge and an understanding of conflicting values.

In the linear, new media people can easily limit the information they receive to ideas that coincide with their own. See the thread below on liberal vs. conservative for the proof of that. read more

A newspaperman was a writer. An author. The true, first voice of history. A newspaperman chronicled the life of his times on old Remingtons with faded ribbons. A newspaperman wrote on copy paper, one story in one take. If he wanted a copy, he used carbon paper. If it didn't sing, it was spiked.

That seems to me the unique value created by newspapers. Then consider how many journalists, either in print or broadcast, actually see themselves as the "true, first voice of history" or focus "on creating a "public square." Now, the big buzz is "social networking" and "local" news and blah, blah, blah.

But my opinion is that if they had relentlessly focused on their unique value they be in the situation of the railroads and the airline industries. The railroads thought they were in the railroad business. But they were in the transportation business. Oops.

Now printers are being told they are in the communication business, or the marketing business, or the trusted provider business. My take for the last couple years is that printers are an invaluable part of the infrastructure that supplies hard copy output. That's what they have doiing since the 1500's. Today, given the explosion of words on the internet that need to be output in hard copy, that's a pretty good business to be in, as long as you don't get distracted.

Mass Market Print - down. Hyper Niche Print - up.

In my non blog life, my professional practice is focused on developing Print products published for audiences of 30 and 150. The idea is that as the mass market fragments, an emerging value for print is to serve well defined niche markets. Newspapers and magazines continue to move towards niche publications. Digital printing enables hyper niche publications.

At the scale of newspapers and magazines, Stephen Glover, writing for the Independent shows how this is playing out in the UK.

Stephen Glover On The Press: A periodical reminder of why the press needs to get more serious

"Remarkably, at a time when nearly all newspapers are losing sales, and celebrity and men's magazines are reporting significant circulation losses, the cerebral weeklies and monthlies continue to grow. In the first half of this year the circulation of The Oldie climbed 15.5 per cent, to 28,862, compared with the same period last year. The Spectator rose 5.1 per cent, to 76,952; the UK sale of The Economist grew by 5.6 per cent year on year to 182,539. . . .

These magazines are evidently providing what many readers want, albeit in a smaller market than the newspaper one, and their success shows that the negative trend against the printed word on newsprint is not a universal one. . . .

They are more ruminative, and less time-sensitive, than newspapers, and there is no advantage in reading The Economist or The Week on-line. On the contrary, there are few greater innocent pleasures in this life than curling up on a sofa, or on a rug in the garden, or even on the train, with a decent magazine in one's hands.

But to bang on too much about the internet as the distinguishing factor between newspapers and magazines seems to me rather dangerous. If weeklies and monthlies are putting on sales while so-called quality newspapers are losing them, it is partly because they are doing something better.

These cerebral magazines provide more considered, and sometimes longer, articles, than are available in most quality newspaper supplements. Some are wittier, others simply more authoritative. They tend also to have a better sense of their readers.

The next thing is to locate the hyper niche markets that go past "cerebral." Then the trick is to figure out how to make money with niche and hyper-niche publications. Business models are becoming more clear, but I will leave that for another day.