Direction Is More Important Than Speed!

Published in: Georgia Printer, October 2005

Most companies are in a race for printing dollars. They’re out chasing orders rather than focusing on the kinds of clients that could bring them the stability and revenue they really need.

I often encounter organizations experiencing a "team high." They may have just saved a job or figured out how to keep a key customer happy in the midst of nearly impossible turnaround requests. While these moments can certainly be important in bolstering morale during day-to-day struggles, I'm left feeling that management training in such frequent scenarios is often too limited — and headed in the wrong direction. As one time-worn cliche in our industry goes: "People who go around putting out fires every day are really arsonists in disguise." Just how could time be better invested by senior management?

Most companies are in a race for printing dollars. They're out chasing orders rather than focusing on the kinds of clients that could bring them the stability and revenue they really need. In fact, most companies completely lack market direction. Their self-promotion programs and supporting services lack strategy and market focus. And most companies cannot even identify their target customer market! Where focus and direction should be paramount, speed has taken its place! But, direction is always more important than speed!

Do You Know Your Customer Market?

My first question is: "Where is the written profile of customers your company should pursue? Second: Where is the written profiled customers your company should avoid?" My experience is that fewer than 1 percent of companies have a written profile of customers they want to become important to. And, of similar importance, they do not have written profiles of those types of customers they do no? want to invest their time or effort in. The result is the traditional pattern: "Every salesperson is supposed to sell if they want to make a living, and it's production's job, if we can get the order, to produce it." My point here is that too many graphic communications organizations are chasing random businesses for their print dollars rather than focusing on the kinds of organizations that are inherent to their business success.

Become a Specialist

Everywhere we turn in our professional lives, there are opportunities for specialization. Because people have less time and expect more value for their money, there are more opportunities — not less — to become a specialist and, therefore, create value for one's organization. In fact, when we talk about targeting our customers through written profiles, we're talking about specialization.

Today, consumers are electing to invest their hard-earned dollars with folks who can make their life easier and hopefully provide them with more time to do what's more important to them. Certainly yard maintenance personnel, cooks, house cleaners, nannies, and seamstresses are examples of specialists.

Why should it be any different in graphic communications? If a company is to develop value with its customers, then like the yard crew or chef-for-hire, there's an inherent targeted group of customers it can serve better than others — while at the same time improving the performance of their businesses' internal resources. If you accept those issues as logical — even undeniable — then doesn't it make sense to examine the profile of the organizations that will make a difference to your bottomline — and then pursue those types of clients? Your business development resources (sales reps, CSRs and estimators) can run with this profile and pursue those fire-resistant print dollars that will pay off big in the long run.

Determine the Written Profile of Your Preferred Customers

The following issues can be drafted into a written profile of "who you want to pursue," and "who you do not want to pursue." Please note two items: First, any profile draft you develop should be reviewed, updated, and disseminated to "the troops" at least every six months. Second: Notice how many of these issues can significantly impact a supplier's profitability — albeit they do not show up in any form in either the income statement or the balance sheet.

Customers who have specific objectives and goals may be tough, but they appreciate suppliers who understand their issues.

I hope the following list offers you a provocative reflection on what issues deserve to be reviewed to:

  • improve your customer targeting,
  • improve your perceived customer value, and
  • improve your production performance.

Granted, no one customer will ever "fit" all the following criteria (and there are always exceptions to everything), but the bulls-eye this profile can create for your business development personnel can become priceless for predictably guiding your sales reps and CSRs toward those they should invest their time in and away from those they shouldn't.

1. What companies are we already important to that want us in business come Monday morning — and why? (Of similar importance, who doesn't care whether we are in business or not?) Evidence can include letters or notes of appreciation, a high "estimating quote ratio," credits, pricing pressures, predictability of work, and customer attrition.

2. Orderliness of work received. Determine those customers who do not have a sense of order in their files or whose work routinely costs your organization money in ways that cost sheets and shop floor cost systems can't possibly track. It's not so much what a given customer costs you as it is how much business they disrupt.

3. Testimonials and referrals that lead to additional business. Referrals increasingly demonstrate a significantly shortened sales cycle.

4. Payment practices. If cashflow is critical, then predictability of customer payment practices can either lift or lower your organization's operating performance. (PIAG provides a significant buying-power service in this area. You can purchase industry-specific credit reports on prospective or current clients from Dun and Bradstreet at significantly discounted rates. Call Denise at PIAG at (800) 288-1894 for more information.)

5. Flexibility and reasonableness of proof and delivery schedules, as well as quality expected or received. Some customers are inflexible and impractical. Others are not. Customer flexibility and reasonableness can make the difference in how much work a supplier can produce and even in obtaining or keeping other major customers. Yet "individual customer flexibility" or "reasonableness" is not captured in the company Profit and Loss (P&L) statement — but probably should be.

6. Revenue potential. It takes about as much time to develop a customer who's growing their business as one that is not. Additionally, growing customers want performance from a supplier that supports their growth. Static customers tend to focus on "low prices" from suppliers.

7. Market reputation. Most customer markets operate like herds. There's always a "lead cow" that everyone watches. Sell to the leaders and others will be open to your presence, curious about your company, and easier to obtain as a customer.

8. Clarity of what they want to accomplish. Customers who have specific objectives and goals may be tough, but they appreciate suppliers who understand their issues and can support the customer's sources of pain and objectives. Customers with vague or "loosey-goosey" performance objectives tend to focus on "price" only. (You know which ones to go after, and which ones to avoid.)

9. Value-added contribution. Profits are important, but most CFOs and financial advisers say that "value-added is what keeps the lights on." Additionally, try to remember that where the value-added shows in the job cost report may not necessarily be where the value-added for the customer was created. Several clients repeatedly report that their proofreaders and delivery people receive more thank you notes and invitations to Christmas parties from customers than anyone else in the company.

10. What we learn from doing their work. This is probably my favorite: When a supplier focuses on a target group of customers, what is learned with one demanding customer can often be used to benefit other customers in that market. Services developed for one demanding customer can add value to the other target customers — with a win/win scenario for the supplier. Look for customers willing to share information and teach you what's needed that you didn't previously produce.

11. Servicing costs. This is an area that has many potential dimensions, including: estimating, proofing, press checks and certainly, frequently changed specs and delivery dates. Again, these are issues that don't show up on a P&L, but can either lift or sink your organization in hundreds of scenarios.

12. Predictability and regularity of work. One customer brings you $100,000 of business all at once. But, you're unable to predict when this work will arrive — or worse — it always arrives during your busiest season. A second customer sends you an average of $8,000 of work every month. The second customer is worth far more to you than the first, but I've never seen a P&L statement that distinguishes between the two.

13. Mutual importance. Many organizations want to sell to General Motors, but almost no one will ever be important to General Motors as a supplier. The same is true for Wal-Mart. Pursue the customers you can be important to. It's not as "jazzy," but it can lead to stability and long-term economic health for everyone.

"It's customers who will determine what our great industry looks like and who will stay in business in the future."

Summary

Experienced, professional customer organizations want to find ways to increase their value to their suppliers — without paying higher prices. At the same time, suppliers are, or at least should be, looking for ways their target customers can increase their contributions to the supplier. In the process of creating this "mutual relationship equity," doesn't it follow that a supplier should share with its target customers the key potential contributions that they look for from target customers? We've repeatedly encounter clients who share their "Target Profile" with their target customers, and they almost always develop additional ways for their customers to contribute to their economic welfare.

If you believe suppliers and buyers share a common ground when it comes to these issues (and I do), then isn't it in your organization's interest to:

  • identify these target customer profile issues,
  • share these target customer profiles with the business development (and production) teams, and then
  • use the target customer profiles to influence your customers' understandings of what's important to your organization and how they — the customer — might become more important to you?

Finally, as we all go forward, let's remember, "It's customers who will determine what our great industry looks like and who will stay in business in the future."