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Commentary & Analysis

The Annuity Relationship

By Frank J.

By WhatTheyThink Staff
Published: November 16, 2006

By Frank J. Romano November 16, 2006 -- Gutenberg started out as a Bible publisher who needed printing, not a printer who had a customer with a Bible job. As a printer, Gutenberg had one customer--Gutenberg. Over time, printers were either pure services or partial publishers. They either had a product that they needed to print--like Ben Franklin's almanac or his newspaper, the Pennsylvania Gazette--or they waited for someone to come in the door who needed something printed. Or they had one big customer. In 1900 the largest printers in America had one or more big accounts that kept them in business--Theodore DeVinne had Century magazine, Charles Francis had the Zane Grey books, the Donnelleys had the Sears catalog, and the McNallys had maps. The cost to re-set hot metal was very high, so many printers more or less owned their accounts because they owned the metal. Job printing was done by small newspapers throughout America who supplemented their newspaper income--but the newspaper was the primary moneymaker. Hot metal typesetting and printing engendered long-term relationships between printers and their customers because pages set in metal were sometimes saved for reprinting. The cost to re-set such material would have been very high and thus many printers more or less owned their accounts because they owned the metal. It was only into the 1950s and 1960s that printing became much more of a service. Commercial printers as we know them came into being during this period as offset lithography increased in use. The entry cost into offset litho was lower than hot metal and the number of firms in the printing industry grew overnight. That is when we transitioned from a printing business based on annuity accounts to one based on purely competitive services. Fortunately, there was enough print volume for almost every print service. An annuity is a contract that guarantees a series of payments for some period of time. A print customer whose account requires printing, mailing, fulfillment, and other services is an annuity account. Their account is not just a job--it is a longer-term relationship that guarantees a revenue flow. The rep said "We do not quote. We will do the job and if you are not pleased with the quality or price, it is free." To acquire an annuity account requires a whole new way of selling. The printer must understand the potential customer's business as well as the customer does. The printer must understand its own costs and then create a workflow that works. Many years ago, I went to a printer in Lowell, MA, for a quote. The printer was Sullivan Printing. The rep said "We do not quote. We will do the job and if you are not pleased with the quality or price, it is free." Turns out that Sullivan had the contract for horse racing publications. They had all the metal type for every racehorse (I said it was many years ago) and updated it after every race. They owned their market and filled in with commercial work. I am not recommending their quoting approach, but I think that we need to be more active in seeking and building annuity relationships. And it all starts with selecting and analyzing print markets.



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