Top 5 Reasons Print Brokers P.O. Printers
Printers who let their hostility get the best of them are fools,
because printers who are likely to survive this recession and move successfully forward must find ways to reinvent their relationships with Print Brokers. Brokers hold the key to doubling or tripling your business without creating additional expense. The problem is that most printers don’t know what to do with print brokers. They aren’t part of the sales team and they aren’t customers either. What are they? Any attempt to pigeon hole them into either role will end in failure and frustration.
The first thing to do is embrace brokers and stop kicking them in the teeth. I know this may not make sense to you. Some of you are going to accuse me of overreacting, after all your company doesn’t mistreat brokers — right? Some will say I’m whining, and some won’t consider the issue of print brokers at all. There are a lot of misguided printers who staunchly refuse to work with brokers. That might have been okay in the past, but it won’t serve you well in the future. You can’t afford to turn your back on sources of instant new business.
Haven’t you noticed how tough times are? Printing, particularly offset printing, has been besieged on all sides. I’m sure I don’t have to tell you how the pigheaded, self-serving banking industry has hurt all of us. Have you tried to get a loan lately? Nor do I have to explain about the impact of digital printing, foreign competition, and the Internet. You already know about these things. You are experiencing unprecedented cash flow problems and shrinking markets. Even your best customers have cut back with no real promise that they will ever be at former levels again.
I hear moaning from the Industry that good sales representatives are hard to find and that your sales people keep pressing for ever lower prices to make them competitive. You get upset and believe that they aren’t really trying. A really good sales rep can sell even under the most adverse circumstances — right? If you truly believe that why don’t you put on your salesman’s hat and find out for yourself? Maybe you did. Maybe you took a day, or a week, and went into the field. Maybe you proved to yourself that it isn’t so bad, but let me tell you, selling in this economy is like fighting an uphill battle day-after-day-after-day. It can wear down even the heartiest rep. Your sales team, is running on fumes, and another sales meeting, another motivational talk, and another seminar isn’t going to dramatically change anything.
What can you do? I would like you to take a moment, if you will, and consider re-vitalizing your sales efforts with the help of Print Brokers. Why Print Brokers, because they are FREE! Printers don’t have to house them, pay salaries, benefits, or reimbursements. That should be incentive enough. FREE, FREE, FREE — what’s better than that?
The problem is that most printers I’ve talked to either barely tolerate brokers, or despise them. Why? I think there are five main reasons for this:
- Print Brokers own their own customer list. The printer doesn’t. Suppose a house sales rep brings in an account, since they were working on the company dime the customer technically belongs to the company. This isn’t true with brokers. In fact if you go after the broker’s customer it can lead to a nasty fight.
- Print Brokers are legally a middle man. Printers fume if the broker can’t pay them because the customer didn’t pay the bill. On the other hand, how can you hold the broker responsible when they don’t receive the product? You don’t punish your in-house sales team like this. You must find a compromise. How difficult can it be to secure your interests in transactions without leaning on the party who is least likely to have the means to pay you? Think about it.
- Print Brokers can take the print jobs to someone else if they want. Usually they move things around to save money, time, or be more convenient, but they don’t even have to have a reason, they can just do it.
- Print Brokers are employed by their customers — not the printer. In the event of a disagreement the printer has little leverage over the broker. The broker knows which side his bread is buttered on and is most likely to defend the customer’s point of view over the printer’s.
- Print Brokers are not constrained by territories. Printers often feel threatened by brokers because they see their own customers as potentially vulnerable to the broker. Sales reps especially are very protective and guard, as they should, from any possible threat.
In my next post I will give printers some ideas that will allow them to work around the conflicts and make better broker relationships which will benefit both printer and print broker.
Tags: Banking Industry, Brokers, Cash Flow, Company, competitive, Conflicts, Convenient, Customer List, Customers, Digital Printing, Economy, Foreign Competition, FREE, Internet, Loan, Motivational Talk, New Business, Offset Printing, Print Brokers, Printers, Relationships, Sales Efforts, Sales Meeting, Sales Representatives, Sales Team, Salesman's Hat, Save Money, Save Time, Seminar, Shrinking Markets, Tough Times, Uphill battle
Print brokers are not Free!
As you stated they work for the customer, not the printer.
The broker will try to get the best price for the customer, but will not sacrifice their own margin.
The brokers, therefore use their position as holders of contracts and close relationships with large portions of the print customer market, to restrict direct access to the market for suppliers.
In a similar move to supermarkets in the UK, they then use this position to drive down the supplier prices while maintaining their own margins. Ergo, the supplier pays for the brokers existence!
If the customer reached us directly, we (as printers) could maintain our margin, and still save the customer huge amounts of money!
Frustratingly, some brokers I’ve had experience with (not to be named) appear to do little for the money. I’ve had instances where their job basically involved changing the “action by” column in a spreadsheet from our company name to theirs and forwarding this to the customer. This was only realised when the customer began contacting us directly. – The customer also disclosed the broker’s fee, which meant we could see (but not tell the customer) that broker was earning more for the job than we were!
…That being said, brokers are not all bad. We worked almost entirely through brokers for many years, so have had good experiences too, but had to start going direct to avoid having our margins erased by pressure from brokers & the exclusivity of their customer lists.
There are some alternative “middle men” who actually work for the supplier.
E.g. “The Clear Partnership” in the UK with it’s “Global Print Alliance” about to launch.
I’ve not worked with them personally, but it strikes me you’d get a fairer deal as a supplier with a middle man on a retainer to you, rather than a traditional broker.
Your comment that brokers are not free, proves the point I am trying to make. You haven’t taken into consideration how much you really pay for sales.
Your in-house sales people earn a commission usually 8 -10%. In the USA, the employer has to match their Social Security contribution. Then there are other benefits like health insurance, and expense reimbursements. Finally, there is an overhead expense that the company has to cover. Add it all up and what do you really pay your sales team?
If you take all of your sales costs into consideration, you’ll have plenty of room to negotiate without dipping into profits. To make this work however, you have to treat brokers as house accounts. Assigning a sales rep to a broker eliminates the margins. Remember a print broker has to earn a living too. Resenting them because they have to find a way to survive isn’t helpful, but rethinking a reward system for brokers could reap great benefits for your company.
Just like any business arrangement, if you spell out the details in the beginning you know what you are getting and how to deal with problems in the future.
We have a standard terms sheet we use with our printers and to date, have had few if any problems being a middle man.
We are very loyal to our customer and will try and negotiate price and problems on their behalf in order to add value to the sale. HOWEVER, a good printer is just as difficult to find as a good customer and we treat our printers with respect and predictible business behavior so they know what we are doing and how we are likely to handle different situations.
If the customer submits files full of errors, the printer is entitled to extra fees. If the printer doesn’t match the colors of signed proofs, the customer is entitled to a rebate. This is all explained in advance of any quote request and follows standard industry terms of sale.
I think the real benefit for the printer is that we act as experienced print buyers, we understand the jobs we are getting bids on and provide feedback on each and every price quotation.
While we are pretty good at matching the job to the right printer, we do successfully find the printer incremental business without the upfront fixed cost of establishing a sales force which may or may not produce enough revenue to cover its cost. For us, the startup costs are the expense involved in generating a few quotations. Since the printer receives feedback, they can quickly determine if they can comfortably sell their services at the price points we are able to gather in the marketplace.
David
http://www.rjco.com
But the loudest oint you made in the entire piece was (and I quote):
“Why Print Brokers, because they are FREE! Printers don’t have to house them, pay salaries, benefits, or reimbursements. That should be incentive enough. FREE, FREE, FREE — what’s better than that?”
Actually, our general policy is not to pay commission to the inhouse sales team, but retain them on salary. Their jobs include customer relations, after sales support & providing continuity of relationship between the customer and directly to the relevant parts of the business.
We do pay commission on specific products (generally new ones) that need an extra push, but these products generally require some marketing, which benefits the profile of the company and the product/brand, rather than just the sales figures for the individual salesperson.
I’d also argue that maintaining a sales team within one commercial entity, has a lower overhead than maintaining the 2 separate commercial entities (of supplier and broker), with the inherent overhead of infrastructure, Legal, Commercial, Logistical & Managerial staff.
I appreciate you can strip out the duplication of a sales team from a print company to reduce costs as a supplier, but you’re still having to fund a duplicate corporate structure, which has to be paid for – either by driving up prices for the customer, or driving down prices at the supplier.
Putting specifics aside; in terms of my view of functional markets, I believe transparency of supply chain makes the market leaner and healthier by allowing the customer to choose to bypass middle-men and build relationships with suppliers directly.
The additional demand for the best positioned suppliers means not only can the rest of the market evolve, but those better positioned suppliers can invest in the tools and people that make direct relationships both workable and sustainable.
Without a middleman, there’s a reduced risk of accusations of “the old boy’s network” and exclusivity clauses restricting the freedom of the market & possibly abusing their position of power within a market.
To answer your final point; “they have to find a way to survive”, Brokers do not have to find a way to survive.
If the market deems them unnecessary they will cease to form a part of the market, and the wealth of sales and commercial talent they contain will move on into either new industries, or new positions within print.
Rethinking how a market operates can reap great benefits for a company, and it’s customers.
This was an enjoyable post. The last company I worked at did not embrace print brokers. In fact, the title print broker made the owners cringe. I personally have many good relationships with print brokers. As long as the print broker is fair and honest I have no problem working with them. I treat my vendors in a fair and honest manner and I expect the same from my broker clients.
Best of luck to you!
The equation above is not exactly valid when you consider the big picture. A print broker represents may vendors that produce many types of print products therefore one print broker expense can be applied to the cost of many vendors considering the corporate entity model. Then there is the cost on our client side to consider as well. They need one supplier instead of 10 if they buy from a print broker. Also consider this from a economic model point of view. Does it make more sense to consolidate the sales effort from many vendors to one print broker vs haveing a sales force for each of those vendors. I have heard but have not verified that 95% of all print sales goes through a print broker. If this is true then the market forces of a free ecomomy seem to verify the the value of the broker / printer / model.
Print brokers exist puley and simply for two reason only – they teart theor onw sale reps like the scum of th eearth, and most of their customers no differently – Print&It – your a classic case of an unethical theif in my opinion.
It’s none of your freaken business what a broker does for his money.
I came of the street (as a potentially huge new customer) to hand a printer 80K worth of magazine work (for starters), he wanted a clause in the agreemnet where by if my clients approached him direct, he could do their work.
Do freaken people think we came up the river in a bubble or what?
@Michael Christensen :
Valid point about the different print capabilities, but it applies to a far lesser degree for those of us with relatively wide capabilities.
I also agree that many customers will choose pay more to go through a broker as a one-stop-shop for their print outsourcing (hence the term Print Management is often used). But to imply brokers are free (as in the original post) is to mislead.
The general economic model point is that an extra layer in a market
1) obscures the real cost of a product, which can (and I stress can) breed profiteering.
2) generally moves some profit from the supplier to the broker, meaning greater investment is available in those sourcing customers and suppliers, and less for product and technological development in production, which could drive efficiency and innovation.
If the majority of print work goes through brokers then fine. But giving the hard-sell to printers by implying they are fools for going the direct sales route (as per the original post) doesn’t sound like an industry comfortable with it’s position.
Essentially, if a printer’s offering is wide enough, and they have resource enough to generate a strong brand, they will be able to compete with brokers.
So for brokers to truly thrive, they need be more transparent that they sell a procurement and supplier management service to the customer, they do not sell print products. This is where they should be adding value, rather than by squeezing supplier margins, or making unacheivable demands on their timescales (as the lesser among you seem to do).
Sincerely.
Print&IT
p.s.
not so keen on the “heard but have not verified that 95%” statement.
The quote “lies, damn lies and statistics” comes to mind. That’s not to say you intend to mislead. I don’t know how much truth’s in that statistic, but then neither do you.
@Philip:
not sure what to say to that.
At the risk of criticising typo’s/grammar (we all make mistakes), I’m not sure I understand your 1st paragraph. I think you’re trying (and incorrectly so) to represent my opinion through extremes in order do devalue the arguments I put forward, but it’s not exactly readable, so I could be wrong.
To Clarify:
We do not take business from brokers with whom we have contracts.
Nor do we chase their customers the minute a contract expires.
We do go up for tenders against brokers.
We do promote ourselves directly at trade fairs.
We do advertise.
We do develop networks of contacts.
We do spend time developing strong brands and cultivating relationships with our direct customers.
AND as much day-to-day contact from broker-sourced customers as part of the contract comes direct (at the request of the broker), our communication skills benefit the broker-customer relationship.
In my opinion, in some cases, it is our business what a broker does for their money. Those brokers who insist on lower price are essentially asking the printer to pay for their service (finding and managing new business). In such cases, printers should be treated as customers.
The confusion always seems to be over what the broker is selling & to whom.
Successful Brokers today, seem to concentrate on selling a service of provisioning and managing printing (not the print products themselves) to the customer (not a salesforce to the printer). The brokers should then approach printers with offers of business.
As an example:
If we advertise print prices, and a customer goes to a broker and says “but this pritner is cheaper”, the broker needs to make clear their selling a serivce, not the print product itself & can provide a level of supplier-independance to reduce risk and inrease flexibility. This is a prime way brokers can add real value for the customer that a printer cannot directly provide (although disaster recovery schemes do help with continuity & trust).
While we as a printer can, and do compete on price, service, reputation, branding, relationship management, data interfaces and client communication, we cannot deliver true supplier-independence as (even with full DR) we are just one supplier.
Sincerely.
Print&IT