One of the challenges in making the transition from a print service provider to a marketing services provider lies in understanding how to charge for—and sell—new services. This is not an issue that is exclusive to the printing industry by any means. Anytime a company makes a business shift such as this, there is also a cultural shift that must happen.
Conventional printing sales are generally priced using a cost-plus model. That is, all of the costs are added up, a margin is added, and voila! You have a price. The cost elements are fairly straightforward, and the margin is determined by taking a number of factors into consideration, including how competitive the bid is.
While this model can certainly be applied to cross-media services, companies who do so are likely leaving money on the table. Why? Because deployed right, cross-media services bring more value to the customer than a simple printed piece. What’s more important is that the value is measurable. Can you double or triple the response rates the customer has been receiving by deploying a personalized, multichannel campaign? There is certainly value in that. Can you improve the customer’s return on marketing investment (ROMI)? There is significant value in that as well. These and other metrics can generally be improved when cross-media campaigns are deployed.
When deciding how to charge for these services, it is important to first calculate ALL of the costs associated with the program. As the CEO, are you involved in customer strategy sessions? There is a cost associated with that. Are you providing data-related services; storing and managing data and images; providing reporting on results; paying software license fees? There are costs associated with that, too—and significant value. That’s the next step: determining the added value you will be providing to your customer through these programs and what it means to them in terms of meeting their business objectives. Can that be translated into dollars? In this type of sale, you should not only be getting paid for what you do, but for what you know.
One example I ran across recently involved an auto dealership who was trying to increase his service business following a period of declining traffic count. His service provider worked with him to calculate what it would take to return him to profitability, and together they arrived at a goal of getting traffic count up by four cars per week. This was determined by calculating the average ticket sale, what the dealer expected in terms of profit from each job, and performing an ROI calculation that showed that reaching that four-cars-per-week goal through a cross-media campaign would result in about a 500% ROI on the program being proposed. Needless to say, the customer jumped at the deal, which had terrific value to him, while at the same time delivering a generous profit margin to the service provider. It also has the potential of becoming a programmatic relationship; that is, the dealer is not likely to stop with one campaign when he sees the promised results being delivered. This means the service provider has a loyal, long-term customer generating annuity revenue with little added cost of sales for each program deployed.
The cultural issue lies largely with the sales process. Traditional print sales reps can have a difficult time asking customers to pay for these high value services, especially when they are used to explaining print sales in a cost-plus model. They don’t believe the customer will pay more, and they don’t want to risk the relationship by asking for more. This is a huge mistake, and it is totally a myth that customers won’t pay for these high value services. Our auto dealer example, and hundreds of similar transactions that are happening around the country and around the world every day, debunk that myth. In fact, if you charge too little, it can have a negative impact, actually devaluing your services. Work with your sales team to find the right balance. Sometimes this might require seeking new sales talent. I have been told many times that only one or two out of ten traditional print sales people can “make the trip” to selling marketing services.
I am not saying you should necessarily take these people out of the business—they certainly have value for your company, especially if you are depending on conventional printing sales to fund your business transformation. If they have difficulty closing these new types of sales, in most cases they can get very good at uncovering the opportunity. That’s when you bring in the solution sales specialist who can not only get the deal done, but make sure it is structured in a way that will deliver recurring revenues for the long term.
Don’t sell yourself short. Make sure you are getting paid for what you know as well as what you do.
To learn more about how you can actually make money by offering cross-media marketing services, watch the recorded webinar on-demand.
in Coach's Corner
