Commentary & Analysis
Start with Mining Your Current Customer Base By Barbara Pellow August 23,
By WhatTheyThink Staff
Published: August 23, 2006
Start with Mining Your Current Customer Base By Barbara Pellow August 23, 2006 -- Gone are the days of business as usual for graphic communications firms focused on the B2B market. Competition has heightened, niches have emerged and business resources have been reduced in response to economic conditions. As a result, strong market focus is essential. Segmentation links strongly with a strategy to achieve a sustainable differentiated position It takes more than leading edge print and software technology, product or competitive pricing to be successful. Companies need a business-to business-marketing strategy --a way to identify, segment, quantify, locate and target their most important business-to-business customers and B2B marketing prospects to reach their present and future goals. Segmentation and Strategy In business-to-business markets, the objective of segmentation is to arrive at groupings of like-minded companies. Segmentation links strongly with a strategy to achieve a sustainable differentiated position. B2B market segmentation typically starts with an understanding of your current customer base. You should have a clear understanding of current customer companies in terms of their NAICS (North American Industry Classification System) classification, size, geography, uses of products, organizational structure and new versus repeat usage of products. You should list customers by total sales, average dollars spent per customer, sales efficiency by customer, light versus heavy usage of printed materials, market stability and long-term potential. You should also see what they are buying from other suppliers. Market statistics say it can cost up to five times more to win a new customer than to keep an old one. Rather than chase prospects 24/7, many graphic communicators are assessing their current customer base to understand if there are potential programs they could deploy that increase the "share of wallet" within current customers by expanding service offerings. Service expansion lets firms expand "wallet share" of the existing customer base as well as attract new clients The trend toward expanding relationships and services with existing clients is obvious in evaluating acquisition strategies of market leaders. * New England Business Service, Inc. (NEBS) was acquired by Deluxe Corporation in June 2004 and has been combined with Deluxe's former small business segment. To better focus on small businesses, they blended the strengths of both firms to create DELUXE PINPOINT to maximize small business print market share and transaction value with each customer. * Last October, EarthColor, Inc., the largest privately owned commercial printer in the New York Metropolitan area, announced the acquisition of Applied Printing Technologies (APT). According to press releases, the addition of APT increases EarthColor's capacity and capability to service existing marquee clients, including AIG, Bloomingdale's, Novartis, and New York Life. * This past April, RR Donnelley acquired Office Tiger. This was RR Donnelley's second acquisition of a leading BPO provider in less than a year. In June of 2005, RR Donnelley acquired Astron, a UK-based BPO provider. OfficeTiger's transaction processing services are closely related and complementary to RR Donnelley's existing document-based outsourcing resources. In concert with Astron, OfficeTiger will enable RR Donnelley to expand its already deep relationships with Fortune 500 companies in both the U.S. and Europe. And firms are looking at extending relationships through the addition of new technologies and services. Commercial printers are adding large format capabilities, extending warehousing and distribution support and adding database services. Marketing organizations are adding printing and fulfillment capability. In 1979, Pasadena, California, based Castle Press generated $300,000 with a linotype and letterpress business. According to owner Susan Kinney, "Today, we employ more than 60 people with revenues in excess of $7 million. The key to our success was expanding service levels to clients. We were an early adopter of digital technology; we purchased a Xeikon press 11 years ago and began offering variable data services. We added computer to plate (CTP) eight years ago. We built a web-to-print system. We resell mailing lists through a partnership with USADATA and have incorporated list acquisition as part of our web-to-print offering. We have added large format capability based on customer demand." It is this type of service expansion that lets firms like Castle expand "wallet share" of the existing customer base as well as attract new clients. Increasing sales by targeting existing customers is one of the easiest ways to grow your business Denver based Annex Print and Mail Solutions started in 1958. When Jim Albany took it over ten years ago, the firm was a letter shop with two ABDick presses for two color work. Jim listened to his customers and realized that his mailing clients wanted to merge variable date with pre-printed shells. He made an investment in a TR Systems (now EFI) MicroPress. The next move was to full color with the addition of a CLC 5000. Within six months, volumes on the CLC 5000 exceeded 100,000 pages per month. As Annex exceeded the capacity levels on the Canon device, Jim realized it was time to make an incremental investment in digital technology. Annex made an investment in HP Indigo and today serves mailing clients with its three HP Indigo digital presses. Today, Jim employs more than 30 people with revenue projections well in excess of $5 million. B2B Market Expansion…Targeting Existing Customers Increasing sales by targeting existing customers is one of the easiest ways to grow your business. You already have a head start with this growth strategy since you surely have regular customers. The key to success is leveraging those customers. There are five critical steps graphic communications service providers need to take to increase revenues from their best customers. 1. Build a database. Solid customer data is the foundation of successful marketing and selling activities. It is vital that you know who your best customers are and what, when and how often they buy. This allows you to adjust product and service offerings; assess manufacturing capacity and understand when you might have a customer at risk based on a disruption to historical ordering patterns. As you build your understanding of your top customers through good data, you can more effectively fulfill their needs. 2. Develop a comprehensive customer contact strategy. To augment direct selling, direct mail and e-mail to in-house lists, two of the most cost-effective methods of relationship building, can be added. Use these tools to share new products, services and offerings with companies that know your organization. Several savvy graphic communication services providers are leveraging monthly newsletters and direct mail alternatives to broaden client relationships and extend their reach into different departments within their client base. Corporate Press is the employee-owned flagship of the print communications companies of Corporate Press, Inc. based in Landover, Maryland. A key element of the company's direct mail advertising and marketing strategy is effective utilization of direct mail. As you build your understanding of your top customers through good data, you can more effectively fulfill their needs Corporate Press prospects and existing clients can register for a free subscription to a monthly newsletter, What's Cookin', an informational newsletter designed to help clients with design, direct mail, and increasing response rates. The August 2006 edition provided education on the difference between "reader spreads" and "printer spreads," had information on effective use of metallic inks to enhance images and introduced the company's new book factory. It also had a great recipe for a citrus salad (which I personally recommend!). Cost effective direct marketing techniques are an example of how B2B graphic communications organizations are improving "customer share." 3. Get Customer Feedback. Do you know what your customers like about your company and its products and services? How about what they dislike? Do you understand the breadth of the print products they are procuring today from you and other suppliers and how you could alter your offering to expand the business relationship you have with existing clients? It's essential to formalize the way you listen to customers by conducting focus groups and customer councils; initiating surveys, online or off; and inviting feedback through your website. Customers appreciate this one-on-one connection and you'll gain valuable information to guide future marketing direction. Cleveland-based Great Lakes Integrated formed a customer council called the "Digital Widgets Users Group in 1997-98" to understand the emerging requirements for content management and implications of the Internet on service delivery. They identified primary users, the content creators that wanted a solution for maintaining high-resolution images. But of equal importance, they focused on the secondary user, field sales representatives, manufacturers' representatives, and agents that needed documents and images for PowerPoint presentations and proposals -- the actual consumers of content. The result of their analysis of customer needs was the introduction in late 2000 of AKSESS, a powerful Internet-based solution for creating and managing marketing and brand building resources. This has had a tremendous impact on Great Lakes Integrated's ability to expand share of existing customers. Get Customer Feedback. Do you know what your customers like about your company and its products and services? How about what they dislike? 4. Provide Customer Incentives to Try New Services. In the retail industry this, is a simple concept. If you sell music CDs, for example, you might reward your best customers with a free CD after 10 purchases. While this can be a little more challenging in the world of graphic communications, Corporate Press used this tactic to get key clients to try digital printing and variable data. Last Christmas, Corporate Press sent out cards personalized with the customer or prospect name and company name, and a picture of the sales person for the account behind a die cut ornament. When the card was opened, a picture of the entire customer service department was displayed, captioned with their names. The offer drove customers to the Web site where Corporate Press provided visitors with the opportunity to order 10 free Christmas cards using four different images and text changes. This provided broad exposure to new services from Corporate Press and built understanding of the ease and simplicity of template-driven variable data solutions. 5. Multi-channel communications. Customers are very accustomed to shopping via multiple channels, ranging from direct sales to online order entry. The B2B client working at odd hours wants 24/7 access to your organization. They want convenience and in-depth information as part of the procurement process. If you don't have a good customer-facing web site, now is the time. B2B customers are looking for partners that are easy to do business with. And In Conclusion A focus on increasing sales in existing markets is well worth the effort. The goal is simple--to get your existing customers to buy more. Some organizations are acquiring firms and others are listening carefully to their existing customer base and developing new products and services. Sometimes the best way to grow your business is with the valuable customers you already have. Don't overlook this opportunity.