Day 3, Bill Ruesch recession recovery diary

Dear Reader,

In my headlong rush to create a diary of my experiences in recession recovery, my wife says that I’ve been revealing T.M.I. She says that it is no body’s business how much I used to earn in the pre-recession world. Maybe she’s right. Probably she is right. She usually is.

My only excuse is that I want my readers to know that I’m not a rank amateur who has garnered a little information and decides to pass himself off as an expert. I’m also not a flop at selling printing who is now trying to make money in some other way. It often amazes me to see “experts” who have never actually done the job making tons of money selling real sales people their secrets. This may sound bitter, but my impression is that their secrets are nothing more than keeping their buyers from knowing how little they actually know based on their experience.

If they looked like this no one would be duped.

It doesn’t matter if these brazen showmen are selling on the Internet, at conferences, or at seminars. The show is what matters and I’ve never been good at the show. I have always tried to provide valuable service at reasonable rates. How about you, dear reader?

I’ve been employed full-time in printing sales for 35 years. For twenty of those years I’ve been self-employed as a printing broker or as I’ve begun calling myself an Independent Printing and Mailing Manager. For some unknown reason that I have never been able to fully understand, customers always think that my services as a Print Broker are going to cost them more. That’s just not the case. I find better ways to do their jobs and that frequently results in lower costs. Plus I negotiate to get better bids so that I can create a margin that I can live on. Whether my customers went to the same sources for bids or use my service, they’ll pay roughly the same price.

Whether you are a broker or a captive sales rep, what are your thoughts? I’d like to know.

Have you ever been woken up by cold water splashed in your face? That was what happened to me when I read a blog post on another site the other day. To paraphrase (because I failed to bookmark the site and can’t find it again–drat) he said that those in the printing business should not hold expectations that 2010 was going to improve the state of the market. Furthermore he said that there were only two things companies could do to remain viable during the coming year. The first, was concentrate on customer retention. In this market losing customers is like losing blood. Do whatever you have to do to stop the loss. The second thing  was steal customers from the competition. Honest to goodness, steal was the exact word used. It wasn’t attract new customers, it was steal customers.

Part of me understands his point while another part of me is revolted. In a down economy new customers are rare. Prudent people rarely start new businesses during hard times. Banks are loath to loan and entrepreneurs are careful.  So if new customers aren’t springing up that only leaves current customers. If they aren’t your customer, then they are someone else’s. There is something very distasteful to me about targeting some other company’s livelihood knowing that if you win you may be causing their demise. That is what the emotional side of me says.

The pragmatic side says that you have to face reality. If it takes stealing a customer to keep your company afloat, and allow your employees to put food on their tables, that’s what you have to do. Strike first before they strike you.

Is that cutthroat? Maybe, but business is a jungle and it is survival of the fittest. Don’t we benefit as a society if those moving the bar up are the ones surviving? Don’t we get better goods and services? For the sake of all shouldn’t those weaker companies be weeded out? For the good of the garden thinning has to take place. OK, I’ve managed to mix at least three metaphors in the previous sentences, but you get my point–right?

Stealing customers might be a correct term even though it’s hard to swallow (yet another metaphor). I remember talking to a travel agency some years ago about their marketing. They got tired of fighting for position in the middle of the pack and decided to break out by being unique. What they did is identify ten commercial accounts who did large volumes in travel. Then they determined how much they were already spending on newspaper and magazine ads. They totaled their radio expense. In short they added all of their marketing costs and put it into an imaginary pot. Then they looked at those ten prospects again and divvied up the pot ten ways. During the next year they focused all of their energies on the golden ten. All they had to do was get three and their business would increase. When the dust settled, and the year was over they had six out of ten, and business more than doubled for them.

Those ten golden commercial accounts had been buying travel services from someone else. In effect, the upstart travel agency stole their customers. Or as I like to think of it they won the business. Because they were focused on only ten, they could service the businesses like they had never been serviced before. It wasn’t theft, is was a reward for a job well done. To not reward them with business after this effort would be criminal.

To stay afloat, and even improve during an economic downturn find a way to earn more business. Whinning all day long that business is bad won’t do it. No that won’t do at all.

Are paper prices going up, or going down? You might expect that the recession would force them down, but it isn’t that easy. Why even worry about it? The simple answer is because paper is such a large part of printing. Dick Stahle of Spectrum Press, a web printer, says that they are doing jobs where paper eats up 75% of the bid. Even on sheetfed jobs 50% to 60% paper expenses are not unusual. So, if as you might expect with the recession and all, if paper is going down, shouldn’t you expect to see much more favorable pricing?

Paper prices are a true commodity item and are generally ruled by the law of supply and demand. Currently we have a situation where several paper mills have closed. Mill floor inventories were sold at bargain prices. The printers who took advantage of those deep discounts could lower their prices, at least temporarily. Unfortunately we aren’t seeing much of that inventory in the market currently.

One of my local printers found themselves in a difficult situation because they took advantage of a great paper buy and passed the savings along to their customer. The sales rep admitted later that he didn’t discuss the reason for the low price with the customer. Big mistake. Shortly thereafter the customer came back and wanted to reorder. The mill closeout stock was no longer available and to say that the new price upset them would be an understatement. No amount of talking could persuade them that they should have been grateful for a previous bargain. Tempers flared and the customer took his printing business elsewhere because he, “could no longer trust them!” Wow, you’d think that once the situation was explained the customer would have been happy. No way. They get a big discount because of a windfall paper buy, then they expect it all the time, even if the printer loses money–how is that fair?

The truth is that mill closings decrease supply, which should in turn, increase the price. Prices however, haven’t changed much lately. They aren’t trending up or down. Why? Because demand is also down. It is also true that  the printing industry has been taking it on the chin during this recession/depression. Some say that nationally printing sales are down by as much as 40%. The decrease in supply plus the decrease in demand, equals status quo.

Supply and demand doesn’t tell the whole story. Print customers have also been suffering during this economic downturn. When there’s less capital coming in there is less ability to pay out, so they cut back on marketing. We don’t need that brochure right now, or the direct mail package can be simplified, or let’s squeeze  the printers for better prices. 

Printers all over the country have responded to this demand by lowering prices, often to dangerous levels. Some take no-profit jobs just to keep the presses busy. Once one printer cuts costs, competitors follow suit, or else risk losing business. In this scenario no one wins. The printing customer loses, because even though they might get a temporary advantage, in the long run they are unwittingly contributing to driving their suppliers out of business. When the recession ends, they will find that their choices of vendors have shrunk and prices will go higher than ever. The printer loses because lowering the prices to the bone removes any margin for error.  Printing as I’ve discussed in previous blogs such as Quality, Price, and Service–Pick Two (link), is a low profit, equipment intensive business. To leave a press idle is an enormous drain. Thus it is better to run it at break even, at least for awhile, than it is to go dry. No printer can survive long working at break even because break even doesn’t really exist. Sooner or later someone is going to make a mistake that will require a reprint. Since there isn’t any buffer, the bottom line quickly shifts from break even to loss.

For those print buyers out there, let me say that we know that things in this market are tight. There is a real temptation to make up for your slim profits by riding your suppliers or changing to new ones. Please be cautious and reasonable. Just because a desperate printer offers a great price doesn’t mean you should take it. The reason for that price could be that they are on the brink of bankruptcy, or some other problem that you don’t know about. The danger in this reckless pricing is that it establishes low water marks that can’t be sustained. You will want to keep the lower prices and maybe insist on it.  That’s just the nature of business, but resist the temptation. Try and work with printers and other vendors who run lean but still profitable businesses. Trust me, pardner, you won’t like your options if at the end of this downturn all the guys in white hats are gone, and the ones in black are all that’re standing.

When I became a broker, I dreamed I could serve customers best by hand-carrying their jobs to printers who were the best fit, instead of attempting to bend their jobs to fit the printer where I was employed.

Regular readers may have noticed that it has been a few days since I made a post. Please accept my apologies. I do have an excuse. My solution to battling  printing economic woes is to develop additional income streams. I reason that if my livelihood isn’t dependent on just one source, should one be down, the other streams can still keep my boat afloat. The problem is that I’ve spent thirty-five years developing the print broker income stream and barely three months working on the others, and since my other income ideas still revolve around printing, there is no guarantee that there will be any better payoff–is there?

There are thousands of financial gurus out there who promise to teach one, for a fee, how to make big bucks during an economic downturn. They have the secret and it’s always easy, fast, and guaranteed. Blah, blah, blah. The way you learn how to get rich is to buy what they are selling. You give them money, and they get rich. You can’t fault them. They deliver what was promised. With your money they do demonstrate the number one wealth building principle–get someone else to give you their money.

Heck, even in my own advertisement next to this blog I promise to reveal a secret that will teach printing buyers how to save money. It isn’t really a secret at all, but it does work. All of the marketing experts I’ve read say that you have to have some sort of hook to draw people in. Can I really teach methods to cut printing expenses? Yes, I believe that I can. So please forgive me if I use a little teaser to call attention to my message. All I’m attempting to do is utilize my long career in printing to help other people. If I can teach them a few techniques to help make smarter purchasing decisions, then I’ve provided a needed service. How do I know that it is needed? I meet people all of the time who have the responsibility of handling printing for their companies and they don’t even know the difference between digital and offset printing. If you don’t even know the basics you are in over your head. How many art and marketing students graduate with an understanding of printing? Not many, I can tell you. If the schools don’t teach it, how are they to learn?

So am I trying to present myself as a printing guru that will swoop in and give you a magic elixir that will fix all of your printing woes? Oh G_d, I hope not. I’m not flashy (just ask anyone who knows me), I don’t swoop, and I don’t promise anything I can’t deliver.

I hope you readers aren’t too bored by this point. I’m going somewhere with this train of thought and it isn’t just self-promotion, although it may sound like it. President Bill Clinton was quoted as saying, “Ah feel your pain.” In his position he wasn’t sharing the pain. He was above it. I have to confess that I am sharing your pain. My business is off too. My wife and I are in a position we haven’t been in for thirty years. We are struggling to make ends meet. We share your pain.

What are we doing about it? We are trying to implement some, and I hate to trivialize it with a cliche`, out-of-the-box thinking. We are attempting to establish multiple income streams and redefining our service. Would we have done this if we weren’t faced with the current difficulties? Nope. Adversity is the mother of invention, not to take anything away from Plato who said, “Necessity is the mother of invention.” And when the dust settles, what will the printing industry look like? Truly, I don’t know. I can make some guesses which may or may not be right, but I am optimistic about the future. Upheavals present challenges, challenges lead to new thinking, and new thinking leads to improvement. The printers who survive will be leaner, more efficient, and I hope, more prosperous. It’s not that that we have a choice. Innovate or die. That’s the only choice.

Yesterday’s blog Keep Those Cards and Letters Coming spawned a response from Mel Edwards http://www.votrevray.com. She observed that, “You make the same point several times, but with no solution. What should a buyer be asking or looking for instead of the big three that all printers claim to have?” Mel is right. I was making an assumption that the answer to the question would be obvious to the readers. Dumb assumption. Honestly I do know better and will strive to propose solutions whenever I pose problems.

To answer Mel’s question, I didn’t mean to imply that quality, price, and service were not the bedrocks of all printing.  The old printing adage is quality, price, and service, pick two. But, as a buyer of printing you should strive to get all three. The point I was trying to make was that all printers will claim to provide all three, but where does that leave you? It’s like insurance companies. They all say they are the best at one thing or another, and they back it up with volumes of statistics. If you get mired in the statistics you will never be able to choose one company over another. So, if you can’t rely on their advertisements or what their sales reps say, what can you do?

1. Ask to see samples of work they’ve printed that is similar to your job. Keep in mind that you will only see samples of their very best. As it should be. I mean, who but a total idiot would give you a sample of a job that bombed? Look carefully at those samples to determine if there are flaws that were acceptable to the printer, but wouldn’t be acceptable to you.
2. Ask other businesses who have used the services of that printer. If you ask, many printers are proud to give you some of their best customers to contact. They are often very excited about their customer list and want you to speak with their happiest customers. If they won’t tell you who to call, consider it a red flag.  Remember–your job will be to read between the lines. Since you’ll only be given the contacts that have an excellent relationship with the printer, it is imperative to listen to what they don’t say, more than what they do.
3. Check with organizations like Better Business Bureau, or  Dunn and Bradstreet. This is just normal due diligence, but is it overkill? I don’t think so. Once you choose a printer you could be forming a relationship that could continue for years. How much do you think you could be spending with that printer, thousands, tens-of-thousands, hundreds-of-thousands or more?
4. Continue shopping around or make sure your broker is getting multiple bids. Things change. Just because a printer has served you well in the past it doesn’t mean that they will always be the best choice. I like to tell a story about a local clothing chain that invited me in to work with them. The printer they had been using was a well-known, quality conscious firm, with a sterling reputation. The problem wasn’t with the printer it was with their equipment. Their presses were small and fit the needs of the clothing company when their customer base was smaller. Over twenty years the clothing company had grown, and grown. Print runs were now much larger. By switching them to a different printer, with larger presses, I was able to cut their printing expense by thousands on one job!
5. Visit the printer’s plant. Take the time to go there and have them show you around and introduce you to people who will be involved in your work. A face they recognize is likely to get better service than someone unknown to them.
6. Use your gut. What do your instincts tell you? If it doesn’t feel right, don’t do it.
7. Consider employing a print broker. Brokers are not directly connected to any printer and often work with many. A good broker knows the printers and who would be the best fit for you.

Please understand that the printing business is very competitive, and operates on pitifully small margins. I once heard that nationally, the average printer earns 6% to 9% profit. That’s not much. Of course they are eager to secure your business. They have to keep those presses running. An idle press is a huge money drain. Currently in this unfavorable economic climate, printers are hurting. It’s been reported that in the US, the printing industry is down by 40%. What all of this means is that you will probably be contacted by more printers and more often than you have in the past. Each one of them will be saying they have the best quality, the lowest prices, and the finest service–I guarantee it. Don’t make rash decisions. If your printer or broker has served you well in the past be sure to give them extra points for service. Loyalty pays off. Just make sure your loyalty isn’t misplaced.

Dean Martin in his television show used to close with, “Keep those cards and letters coming.” We don’t do cards and letters much anymore, so I say, keep those comments and emails coming. You see, a blog works best when it is interactive. I love it when someone takes the time to tell me they are appreciating my work, or even they disagree with something I’ve written. I publish every comment, good, bad, or indifferent, except those I deem to be spam. For any readers that may have made comments that seemed to be spam, I’m sorry if I deleted it. Send me another and try to make it less spammy.

So why am I going on about reader comments, because a reader reminded me recently of something I haven’t thought about in a long time, that printers always say the same three things:

1. Quality:  I don’t know of a printer out there that doesn’t tell their customers that they are a top quality printer. Just check your local telephone book yellow pages and notice how many printer advertisements use the word “quality.” It doesn’t matter if they are printing on paper plates, with a 30 year-old press, and a part-time high school drop-out press operator, they still promise quality. Are they lying? Not necessarily, quality could be defined as  producing a product that meets the customer’s needs. What is quality to one customer may not meet the standards of another. The two customers would define quality differently but that doesn’t make either one right or wrong. Its all in how it is measured. What is the standard? In printing quality is often determined by customer satisfaction. If the customer is happy, we’re happy. If the customer is unhappy, nobody is happy.
2. Price: Again look at those ads. How many promise a good price or even the lowest price? Most people think that printing costs too much, so if you can make a case for bargain basement pricing you will get customers. In my 35-ish years in the business I’ve learned to be wary of customers who are only focused on price. They frequently turn out to be very high maintenance people who will nickle and dime a printer to death. A competitive price for a good job is more important to me than saving a buck or two.
3. Service: Every printer prides themselves on good service. What does that mean? Just like quality, service is one of those words that mean different things to different people. It depends on what you are looking for. Some customers need reassurance. Others need to know that their questions will be correctly answered. There are customers that get annoyed if contacted too often, and others that want to see you almost daily. Some want your billings and paperwork to be immaculate. Some judge service on how quickly the phone is answered, or how long they have to wait on line. I’ve had an upset customer complain about the clothing the delivery guy was wearing. Good service to them would have been satisfied if the delivery person was wearing a clean uniform.

Years ago I worked for a printer in Denver, Colorado. The sales manager was fond of saying, “A good relationship with a customer doesn’t just happen, you have to build it like a marriage. You must discover what their preferences are. If you squeeze toothpaste from the middle of the tube, and they roll it up from the bottom, you can guarantee future problems.”

The next time a sales rep from a printer comes by to ask for your business, notice how long it takes them to say, “We have the best quality, our prices are excellent, and we will provide you with great service.” I’m betting, not very long. If you work for a company that does a lot of printing you could hear the same thing coming out of different lips many times a day. You may tire of it, but they couldn’t very well come in and say, “We have poor quality, our pricing is terrible, and our service really sucks” could they? It might be refreshing to you, but it wouldn’t be very reassuring.

Now this is where I would like to see you keep those cards and letters coming. If you have any thoughts, all of you marketing geniuses out there, that you think would be a better approach please send it in. Whatever we do in this business it shouldn’t be mundane, or repetitive. Creativity is the name of the game. If you would like to hear something fresh from printers let’s give them some ideas. Are you with me on this?