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Marketing is a Profit Center
By: Thaddeus Kubis
The print services market has changed so much in the last few years that the number of sheets run and quantities printed has little interest to the buyer. And quality -- once a defining line between printers -- has been reduced to a secondary consideration, not a defining one. It is now a “given.”
The buzzwords today are return on investment (ROI), accountability, and tracking. Whatever you sell (digital or offset, sheetfed or web), these three words will make all the difference in the long-term health of your business.
A single-use medium may fit within your clients’ needs and your capabilities, but multi-channel and integrated marketing that exploits a mix of online and offline technologies is the trend of the future. If you’re like most printers, your future is tied to your ability to say “yes, you got it”; you can measure ROI, provide accountability and track the programs’ success. You need to begin to think about engaging the customer and using new media that provide measurable proof that marketing efforts are paying off.
Linking customer needs to what you as a printer can offer is the key to expansion for your business base and increased profitability. You may need to find the correct balance of creative and marketing services partners, or become a marketing services provider yourself in order to seamlessly offer the marketing workflow to your existing or prospective customer base.
How do you sell marketing in an economic downturn? You can’t ignore the “limited marketing and advertising budgets” and the constant “no-we-are-not-spending” comments when you pitch your firm.
Your success in overcoming these issues hinges on your ability to sell the end result of your services, not the services themselves. In short, you need to convert from selling the media (whatever media it may be) to selling the value and profit of that effort and how it relates to your specific services.
In short, your new business mantra should be “Marketing is a Profit Center.” Let me explain how:
Know Your Customer
If you think what you did last year or last month is still valid, and that your customer is comfortable with your existing knowledge level and sales technique, think again. The marketplace is changing fast and what you did yesterday may be in question. Rethink your customer’s needs; survey the customer base to find out about their “pain points” and what they see as the critical issues for the next few quarters. In short, engage them in a dialogue.
Know Your Media
Selling the value and profit of the media used means you need to have a clear and concise understanding of offline and online media, interactive and interaction tools, and the latest trends and forward-thinking concepts. Today, things like tracking, ROI, accountability, and marketing automation are critical to marketers, and equally critical to you if you plan to survive and thrive through this period of change.
Know Your Market
You have undoubtedly heard this before and walking into any business presentation with a sound understanding of your customers – and you customer’s customers – is essential to securing some very powerful economic gems. If you know your customers’ market, you have a great start in changing your sell.
We have become, for better or for worse, a society of numbers: profit/loss, cost/expenses and, most importantly, return on investment. Perhaps the three most important letters in the marketing world today are ROI.
Know Your Numbers
Following is an example of a real-life program’s ROI before the program was even developed. I call this a “Reverse ROI”, or RROI.
Program #1: New Business Generation—Medical Manufacturing Vertical
The cross-media program was estimated to cost $175,000. Traditional response rates to this type of program within this segment have run about 1.1%, including all media used. With an that in mind, we can safely estimate a response rate of 3.5%. Based on an average sale of $75,000 with a profit rate of 35% or $26,250.00, this program would have to achieve 6.7 sales across the scope of the program to break even.
Even with a reduced profit percentage (15% vs. 35%) and extending the effort of the sales cycle of the program, you can see the justification to move forward is strong and well presented.
Actual Program Results
Final program cost: $187,500.00
Response rate 3.75% or 562 leads
Conversion of leads to meetings 42
Sales after 3 Months - 5
Sales after 6 Months - 9
Sales after 8 Months - 11
Total Units Sold 11
Total Sales $825,000.00
Actual ROI: $288,750.00
Within an 8-month period, meetings over the course of the sales cycle actually reached 42 face-to-face sales meetings, many from referrals.
Program #2: Customer Relations Management — Luxury Market Vertical
The estimated cost was $45,000.00 for a personalized communication effort designed to extract information from the customer, which included family members, key dates and business associates. The program consisted of a secure personalized marketing effort linked to a set of Internet surveys. The surveys queried lifestyle, past purchase history, and future purchase plans across a variety of key areas.
Once the information was received, sorted, reviewed and analyzed, a customer database was developed. Birthday announcements for other family members were sent to the customer 6 weeks in advance. Graduation, celebration and key events reminders were also sent to the customer (if accepted via SMS).
The program was not expected to yield a profit, but within the first 4 weeks after the communication program began, 6.85% of those customers who replied purchased a new product from the firm. An e-brochure (customized and personalized) was developed and sent to the customer. Average sale was just over $5,750. With a response rate of 2.75%, the 309 responders provided 105 referrals, plus more than 250 family and business associates’ names.
Based on an average sale of $5,750, a direct (not via the retail store network) profit rate of 25% or $1,437.50 per sale, the 22 sales provided an immediate ROI to the program of over $31,000. The sales cycle and sales timeline were controlled in part by the manufacturer with an upswing in sales expected as the graduation/wedding seasons begin.
Actual Program Results
Final program cost: $35,000
Response rate 2.75% or 309 leads
22 immediate sales credited to the program; $5,750.00 = $126,500, with a profit of $31,625.
Sales after 3 Months 6
Sales after 6 Months 10
Sales after 8 Months 15
15 additional sales over the 8-month sales cycle based on average sale of $5,750.00, totaled $86,250.00
Actual ROI: Strong and Moving Upwards
Demographic and psychographic segmentation has advanced to a point that you must capture more than the name and address of your prospect or customer, you need to capture lifestyle, buying cycle, marketing pain points and potential marketing demographics and other critical use information. It does not matter if you are a B2B or B2C marketing support firm...data drives the program and you must control and maintain it.
What does this new data have to do with printers? The old adage is those who control the data control the market spend.
Branded content, personalization, versioning, database management, along with Web 2.0 technology (social networking marketing, mobile marketing are coming of age) must be considered in any marketing plan. This blended approach will not only generate viable and active leads but will reduce marketing cost while increasing the return on investment. The printer must begin to understand that engaging the customer is a needed and vital service that must be included in the printer’s marketing plans.
Past program results and responses need to be data mined and surveyed to determine if they hold future potential sales. The marketer must build a valid business case that provides the lowest cost-per-lead and is linked to an after-lead program that will convert the lead into a sale and an after-sales effort (CRM) to keep that customer happy. With reduced staff and limited funding, the marketer’s partners may be asked to “link” many of these needs into a seamless proposal that supports added activity perhaps even added profits for the printer.
Cutting the marketing budget is a knee-jerk response. The smart money goes with a plan to allocate marketing dollars with a business plan in hand. No one wants to waste money -- it is simply too hard to come by these days -- so measuring the cost against the return and beginning your plan with a profit-generating response rate in hand has never been more critical.
Print and traditional media are far from dead. Recent surveys indicate that they have declined, but when linked and integrated with other media these, “dinosaurs” gain new life, an ability to sprint forward, and reap the rewards of our mobile and diverse society.
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For nearly 30 years, Thaddeus and NAK Integrated Marketing Inc. have developed into an internationally known, innovative, integrated marketing resource. Addressing the highly sophisticated B2B and B2C customer, Thad and NAK have developed successful offline and online strategies, linking traditional media with emerging technologies into a highly effective integrated marketing and communications program for some of the world’s largest and most successful corporations.
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