What the printing industry can learn from craft brewing
Part 6 of 6 lessons about selling print learned from a visit to the pub
Do you have a volume based business or a high margin business?
The pub that my friend and I went to was definitely based on volume. It is a big building in the centre of the city that is expensive to run. They need a lot of customers to keep the venue busy and profitable.
In order to attract enough business they also need to keep their prices keen. Selling extra premium expensive beer is not going to win them enough business. They sell good quality beer at an affordable price.
Running a volume business is not always easy
There are a lot of printing companies that are based on the same business model. They need a lot of print to keep their presses busy. The only way that they are going to keep those presses busy is by charging affordable prices. Just like the pub that we visited, they need to make sure that they keep the competition at bay.
The trouble is that there are a lot of other pubs and printing companies that have exactly the same business model. Everyone is competing for the same customers. It can be hard to differentiate between different offerings.
In Bath, where this pub is located, there are a lot of good places to have a drink. I don’t always go to this one. If they started serving bad beer or making other mistakes, I could easily find an alternative place for regular visits.
It’s the same in the printing industry. There are a lot of good printing companies to choose from. There is always a lot of competition for work from the average customer.
Let’s look at the high margin business
I have to admit that when we visited this pub, it wasn’t my first drink of the evening! We had gone to another venue first. This place was a craft beer bar. It had a very different business model.
The whole bar was focussed on serving premium quality (and premium priced) craft beer. It was also a much smaller venue. They didn’t need nearly as many customers. In fact, they were very specific about the type of customer that they wanted. If you wanted a standard beer at a cheap price, this bar was not the place for you. It focused on attracting customers who liked the best beers and were prepared to pay for them.
As a result, they did not have to sell nearly as much beer. They made a much higher profit on the beers that they offered. They had a smaller building so they needed less customers. They also had less stock management issues as they only offered four beers at a time.
This is a model that can definitely be applied to the printing industry
Many companies focus on growing capacity, offering cheap price and making their production as efficient and lean as possible. However, in a marketplace where volumes are declining, it is difficult to sustain this model if everyone is working to it. It leads to price wars and commodity buying.
Many printing companies might do better to focus on fewer customers and making more money from them. This means focusing on a small group of premium customers. It means specialising in the products and services that you offer. It also requires people to sell and market well and to make sure that they walk away from work that is priced purely to keep presses busy.
I know a couple of printing companies that are concentrating on this model and they are doing very well out of it. Most importantly, life is generally much less stressful for them! Rather than investing profits in new machinery they have made a choice not to grow print volumes. They look at other more profitable services that can be added to their print offering. If they fill up their capacity, they look at firing their least profitable clients so that they can win more profitable ones.
There are plenty of highly competitive online print offerings for people who want cheap print. These companies will expand ever further into the territory of the traditional printing company. But there are also plenty of customers who need a premium service or product. They are prepared to pay for it. However, sometimes they struggle to find the right company that can give them what they need.
“Do you have a volume based business or a high margin business?” https://t.co/nhoOtWPGED
— Matthew Parker (@PrintChampion) February 27, 2017
Here’s how the premium market got me to spend money
In craft beer bar, I spent almost as much money as in the second pub. But I spent less time in the craft beer bar (sadly, my drinking companion is not so keen on craft beer) and I drank a lot less beer.
I’m not prepared to admit just how much I spent on one beer there. Let’s just say it was around four times more than the average beer one buys in a pub. But I enjoyed it and considered absolutely fair value for money. There were plenty of people at the second pub who would have completely disagreed with me. But they weren’t the clients that the craft beer bar was looking to attract.
Here’s an action point for you to carry out
Have a look at your list of top ten customers. Do you see any premium clients in there? You might be surprised at what you find.
What can you do to attract more customers like these?
The change from volume to premium is not instant. It is a gradual journey. You will start to try and deliberately attract more of these customers. You will become less interested in clients that offer less profit margin. But this journey starts by considering what is the type of customer that is best suited to your business.
This is almost the end of the lessons that I learned about selling print from my visit to the pub
Next week I will be writing my final thoughts (for the moment) on pubs and the printing industry. I will draw some conclusions from this series of articles. I have one last thing for you to think about. Look out for “Why pubs and printing companies have more in common than we might think” next week.
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