Even the best-run companies have hidden margin

In our experience there usually is hidden margin, even in the best-run companies but you’re going to have to look a bit harder to find it and this will involve looking in many different areas.  This is why we developed the RAISEITUP methodology to help look for these pockets of extra profit. Think of it a bit like a road map which guides you where to look and what to look for.

To see how this works, take a look at just one area of the RAISEITUP roadmap, ‘Unplanned Activity’. In simple terms, this is work you’ve  done or costs you’ve incurred that you haven’t built into your selling price and probably aren’t being paid for.

When we carry out this work for our client we have the luxury of ‘fresh eyes’ and so we see things many company managers sometimes miss because they are too close to their own business. This is why we are proficient at finding things that print businesses do but don’t necessarily get paid for.

What are the causes? Sometimes it is unforeseen work or can be expensive activities or costs that just don’t get passed on.  Extra costs for transport, amending poor artwork, rescheduling due to late clients, unplanned overtime worked and even paper cost increases are all examples of these and you’ve guessed it. They all add up

Why isn’t the customer charged?

It’s an obvious question we ask all the time and we hear recurring answers, “The client won’t pay extra”, “We’ve always done this without charging so we can’t start now”, or how about “We didn’t even know we were doing this extra work”?. More alarmingly, a common reason is that the client hasn’t been approached “In case they say No!”

We all know that there are times when customers expect these little extras or favours without charging as ‘part of the overall service’ and this is all fine provided that you know how much you’re giving away and why. Maybe, you choose to score the relationship ‘brownie points’ to use at a later time or will remind the customer that you may ‘have to charge the next time’ or maybe you just won’t charge because it’s a difficult conversation. There are strategies that help to deal with these scenarios that deliver cash results and without losing clients but these are only easy if you know how.

You could be missing out on much-deserved profit

What if the client has done nothing wrong and the extra costs are caused internally? This is the time to take a closer look and decide whether a better process is needed or this is just a one-off event to be written off.

Whatever the reason, there is one certainty. If you’re not looking at these unplanned activities then these questions will go unanswered and you could be missing out on some much-deserved profit.

This is just one of 9 areas you can look at. Find out more about unlocking the hidden profit in your business .

Click Here to find out how

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Does the print cost of your in-store POS leave a sizeable dent in your overall marketing budget? For many retailers, the cost of this essential but expensive media is much higher than they would like. It is often just seen part and parcel of being a bricks & mortar retailer. Until speaking to us, some believe that reducing these costs is difficult or almost impossible.

What makes controlling the cost of POS print different from other types of print? In our experience, these are the main ones:

• Physical size of print
• High levels of variation
• Retail is reactive – short leadtimes
• High cost of packaging and distribution
• Propensity for requirements to fall outside a pricing structure

Let’s look at some of these in more detail.

Physical size

POS is large and covers vast surface areas of a store estate. If you were to calculate the surface area installed into your stores you could well be in for a surprise.

Imagine your campaign includes 7,000 AO posters. If these were to be laid side by side they would cover a football pitch. Consider the amount of board/paper, the physical printing and then handling, packaging and distributing to each store you will begin to see the scale of the work.

It would be unthinkable to have little or no cost control of such an expensive project and yet this is not uncommon.

Variation

Most stores have set sizes of POS due to the ‘furniture’ that is in situ which defines many of the print sizes – at least in 2 dimensions.

However, there are plenty of other variables that come into the equation such as substrate, thickness, coatings, die-cut shapes, items that require assembly, metallic foiling, mounting & hanging mechanisms to name a few.

Quantities often vary considerably due to different requirements for each store, store layouts and ranges changing periodically and so even if you had a detailed database of what each store needs this can quickly become out of date.

Reactive campaigns

Each time you need to produce a campaign quickly then you face the risk of ‘off meter’ production costs as your supplier needs to re-plan their factory, perhaps lay on extra shifts, temporary labour to pack the mountain of items and have to arrange faster and more expensive transport. Due to the scale of POS print, these costs can escalate very quickly.

Worse still, we frequently find that clients don’t receive the price from the print supplier until after the job has been printed.

Controlling your costs

A good place to start is to focus on the main cost components of the end-to-end creation of POS. In simple terms these are typically:

• Design, Artwork and Reprographics
• The pricing structure that you have agreed with your print suppliers
• Distribution costs
• The information, data and artwork your business feeds into the process
• Print production including specifications, quantities, timings.

Significant cost savings can be achieved if these areas are understood, quantified and controlled.

By adopting this methodology we have helped Retailers reduce their overall POS costs by 15% to 25% and, due to the high costs involved, the ROI has been impressive.

The REDUCE^©methodology is a proven way of breaking down the cost drivers into the component parts. It addresses the costs in two ways; simplifying the way the retailer organises its POS and secondly, by creating a pricing structure that ensures the supplier is always working within defined pricing structure. Do this well and you can avoid costs caused by inefficiencies and minimise those biting extra costs when the unexpected happens.

The commercial pricing structure is the critical component of any supplier contract and it is must be constructed to suit the individual needs of each retailer. You will almost certainly need specialist support to do this well and avoid your costs creeping up.

The REDUCE methodology can be deployed as a stand-alone programme for marketing teams or can be used as support to the retailer’s existing Procurement teams to ensure these critical specialist areas are well-covered.

Contact us to find out more

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As the leader of your business, you invest time, effort, cash and resources in fine-tuning your company to produce the perfect product, cost-effectively and on time. With all this great progress are you enjoying the rewards of higher sales revenues, greater profits and great customer retention?

If not, there will be a reason so let’s ask another question… What have you done to fine tune the way you engage with your customers?

In the same way that things change quickly in the world of production, efficiency and technology, things also change quickly in the way customers operate. This means that it’s just as important – some say more important – to refresh the way we manage the relationships with our customers.

Unlike the machines and the technology in your business which behave consistently and predictably, your customers vary greatly in terms of their needs, expectations, behaviours and drivers.  As a supplier, your company’s ability to manage these variables to the benefit of your business is critical. We call this the “Critical Edge” and it requires constant honing to stay sharp.

Companies that manage this well have customers that place more business with them, pay higher prices and are more likely to endure the occasional error or blip in service. Customers like this are more likely to help you out when you need it because they value their relationship with you. Companies that don’t do this well are compared on price, service, quality and frequently fall down the pecking order in the customers’ eyes as being a commodity supplier.

Make a STRIDE^© in your customer relationships

Just because the customer relationship is full of variables and intangibles this does not mean that it should be left to chance. It requires a process just like other aspects of your business and this process consists of distinct parts that can be improved.

The first of these elements is “Satisfaction” or in other words, “Understanding and Meeting Expectations”.

Outstanding Account Managers have a clear understanding of what is expected of them. This includes what their clients expect such as a faultless service, speed of response, expertise & advice, trust, integrity, leadership, commerciality, approachability, a trusted partner who looks after their interests and let’s not forget being enjoyable to work with.

Let’s look at what is expected from your company’s perspective. You will expect your team to grow their customer business, win profitable orders, accurate forecasting, have great customer knowledge and to be an exemplary ambassador of your company.

Many companies do not clearly communicate these expectations to their teams and most do not remind them of these and simply leave it to the ‘experience’ of the individual to have this clarity. Unfortunately, this clarity gets lost over time and periodic reinforcement of this is critical to hone this “Critical Edge”

Our STRIDE© Customer Engagement programme covers all of the key components of customer engagement including how the role breaks down into tasks, how your company wants to be recognised, what impression your customer has of you, what makes you different (and better) and what evolution looks like for your long-term relationship with each of your main customers.

We share with you our expertise in modernising this ‘Critical Edge’ of your business by embedding techniques, tools and methods to help you become the supplier of choice for your customers. It revolutionises the way you interact with your customers and helps you to become that supplier that wins the more attractive orders, at higher prices and that benefits from the preferential light in which your customers see you.

The STRIDE© program forms part of our wider ADVANCE methodology and is a great introduction to the strategic development of your company.

Fine Tune your client relationships –  Contact us to find out more

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Two of the main ways you can improve your profits are to reduce your costs or increase your selling price. It’s not complicated but the latter is often seen as a risky option and companies rely instead on reducing costs where every penny saved drops straight to the bottom line.

This might seem like the easy option but when your business has already made cost reductions, efficiency gains and investments to produce faster, better and leaner; finding that extra gain becomes increasingly difficult.

Many companies are reluctant to increase their sales prices for fear of losing business and, as result, find themselves selling at the same price – sometimes for a few years.  But labour, energy, rates, and general costs have all tracked inflation during that time and it doesn’t take an economist to know that this margin erosion cannot continue indefinitely.

It is not unusual for print companies to have strategies around productivity, investment, sales and growth and yet little or no strategy on pricing. If this describes your business you should read on.

The good news

The good news is that clients do accept higher prices over time. For example, your business already supplies at a higher price than you were ten years ago – otherwise you would almost certainly no longer be trading. Maybe these price increases have taken place through need, paper increases,  change of product mix or even different clients but the result is the same. Your clients are paying higher prices. This is indeed good news.

Overcome the fear – manage the risk

Recognising that most clients pay more over time, it becomes a much smaller step to decide how you can take more control of how your business is rewarded for its efforts. What stops most businesses from increasing prices is the fear of losing business to a ‘cheaper’ competitor – a common symptom of an industry that has endured over-capacity for many years. It is easy to forget about the risks the client may face if they choose to switch supplier and you can  balance this against the fear of losing business.

Strategy and confidence are key

Having a robust strategy and confidence are critical to make the right pricing decisions whilst managing any risk. Part of this strategy is understanding the value of what you do for your clients and it is difficult to have this perspective from within your business. This is where we come in.

Using proven techniques, we help you to manage this balance by developing a strategy, tailored to your business, that allows you to make sound decisions on pricing. A sound strategy manages risk and, in turn, boosts confidence. Do this well and your business will see an increase in its margins.

Contact us to find out more.

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We all know that excellent customer service and delivering good value for money are critical to the success of any business.  However, if you wish to retain and grow your clients and become part of their future plans you will need to do more.

Printing businesses have a reputation for providing high levels of service and response for their customers. Unfortunately, this quality of service is not always rewarded with customer loyalty and the relationship can appear one-sided.

The relationship you have with your clients is critical to ensuring you retain their long-term business and widen your service offering to them.

In this article, we share insight into how you can strengthen your client relationships and move things onto a strategic footing so that your business is treated as a business partner and enjoy long term stability and growth.

Lead the relationship – 7 key steps

There are reasons why clients treat some suppliers like partners and others as just loyal servants. One of the main reasons is that they believe their supply partners offer them something unique and of value that they can’t easily get elsewhere.

Look at how clients hold in high regard their chosen agencies, consultants and advisors and you’ll easily see the difference.  This behaviour is driven by the client’s belief that these companies have a positive influence on their business. If this is the type of relationship you want then it is critical to be seen as a positive influence on your client’s business.

Here are four of the seven key steps you can use to drive the relationship in a more strategic direction.

1. Change your mind-set about what you offer

If your mind-set is that your company is a ‘great product supplier’ then this will drive the behaviour of You, your teams and your business and you will absolutely be perceived as a ‘great product supplier’.

Unfortunately, there are many great suppliers out there and if you want to be treated differently, finding ways to be more valuable to your client is a great place to start.

2. Think what you can do to help your clients become more effective:

• Ideas – Are there ways you can improve your clients’ communication to their audience?
• Simpler process – Can you simplify the front-end process to make your client’s job easier?
• Better control – Using technology, applications, providing greater visibility to help your clients manage their campaigns?
• Faster, easier, lower cost – What can you do to help get your clients get more from their budget?
• Technology – Is there anything you can do or offer to automate, streamline your client’s workload?

3. Make ‘friends’ in higher places

If your contact within your clients is with senior stakeholders it is likely that your relationship will be more secure. Having a clear strategy of adding value, ideas and business intelligence for your clients will help you to attain and retain these senior relationships and pave the way to selling a wider range of services.  Of course, this approach will seldom earn you face time with the CEO of your client but will help foster closer bonds with board members as they see you as an enabling partner.

4. Be ‘IN’ your client’s business

By imagining you work in your client’s business, it becomes easier to understand the difficulties they face, come up with ideas and ways that you can help them address these difficulties. At the very least, try and find ways of helping them get more out of their budget.  Every department head has a budget and your help with this is a great way to build trust.

That’s the foundations in place

Having covered these four steps you can then begin to work on how you structure your day to day interactions with your client and embed these techniques with your client-facing teams. In later articles, we will cover steps 5-7 including

5. Techniques to align your account management with your strategy
6. Successful engagement with Marketing and Procurement professionals
7. Using formal reviews to develop strategic engagement with senior stakeholders.

Some Dos and don’ts

For those businesses that are already doing many of these things we recommend running through a check list, review your original objectives and assess your progress so far.

Be willing to adjust modify as you see fit as this is an evolving process. Even businesses that are doing many of these things usually fall short on some so you are bound to find something that needs more attention.

On the other hand, if you are just starting out on this process then try to avoid the common mistake of trying to run before you can walk. For example, using all the right words without making sure the day to day delivery is consistent with your message will create a mismatch that your clients will easily spot.

Another common mistake is shying away from reaching out to the senior stakeholders in your clients’ businesses. This is linked to having a clear strategy and offering and there are many tips to help your teams gain the capability and confidence to do this. See our ADVANCE^©programme for more details.

You can start right now

You can begin developing your own strategy right away with the help of our ADVANCE^© supplier evolution programme. In this programme, we cover client engagement in more detail together with six other essential steps that will transform your business by evolving into the marketing services arena.

Future proof your client relationships – Click here to find out more

Margin Improvement are experts in helping Suppliers of Print services to increase their profitability, benefit from stronger relationships with their customers and deliver strategic growth.

We tailor our proven methodologies to your business to ensure maximum benefit. We deliver these programmes as hands-on specialists or can guide you and your team through a mentoring process so you can decide which is the best option for you.

The post Are you part of your client’s future? appeared first on Margin Improvement.

We explore the common challenges that face many print businesses and share with you some concepts that help you to take much more control of the profit levers within your own businesses.

“That’s it. You’ve closed the month on time. All those last jobs completed on the system, price issues resolved, Purchase orders chased, prices checked and the invoices all raised. The monthly routine of the final push has paid off and you’ve beaten the sales forecast. The month’s profit figures should be a great result – so long as you don’t get caught out by the product mix again. “

Does any of this sound familiar?

Is your main barometer for profits based simply on the volume you produce?

If your answer to either of these questions is “Yes” then this article will share with you some concepts to help you gain more control.

So, what’s the problem?

Too many companies continue to trade on the basis that if they reach a certain sales revenue they can cover all fixed costs and the business makes a profit but if the sales drops below a certain level then the business makes a loss. This leads to a degree of desperation when sales volumes look light and where this gets really dangerous is when this influences the prices that are quoted for new projects.

Surprisingly, many businesses still have only basic commercial information on the jobs they produce, what they cost to produce and whether they could have sold them for a higher price. At the other end of the spectrum, many businesses aren’t totally certain that there weren’t some jobs produced in the last month that cost more than they were sold for?

This worked out fine in the heady days of high print prices but it doesn’t work so well in more recent times and this ‘race to the bottom’ has ruined many a good business.

There is a better way!

There are three key steps to begin to taking commercial control in your business. Firstly, simplify the problem, then identify where you need to focus and, only then, can you look into the detail.  We will explain this in more detail.

1. Keep it simple – Focus on the Contribution

Monitoring sales, productivity and revenues is the just about the easiest thing you will ever measure in your business and that’s why so many companies do just that.  Distractions such as protracted assessments of apportioned overheads, amortised capitalisation, depreciation rates and other accounting protocols can cause confusion, consume time and energy and often end up in prompting decisions that just don’t help. For example, it’s not much help to know that your finishing department needs to increase its hourly rate by 20% if charging more will cause you to lose orders.

It’s a fact that some of your clients pay a high price and some pay a low price for the products or services  they buy from you. You probably have an idea which clients fit into these categories but you probably do not know to what extent this costs your business.

This is the time to become more analytical with the data that passes through your business so that you can understand how much each product contributes to the fixed costs of your business. Having this information and then knowing what to do with it is extremely liberating and, in all cases we have encountered, had a profound effect on the future profits of the business.

2. The good, bad and the ugly

Once you know what these products or services are in your business you can start to make pivotal decisions. For the ‘Good’ products, the big question is what can you do to win more sales like these?

For the ‘Bad’ jobs, what can you do to correct these in the future no you know which ones they are? There are often options open to you to redress poor margin jobs.

And as for the ‘Ugly’ jobs – the ones that are bad but can’t easily be resolved. There are other options you can take to stop these being such a drain on your business which we will cover in future articles

3. and now it’s all about the data

Now that you have put to one side for a moment all thoughts of depreciation, energy bills, business rates, labour increases etc. it is easier to then focus on contribution from everything that your business does. In simple terms, adding your prime cost (material and outwork) to direct labour (machine and manual) will tell you all you need to know about roughly how much is left from the selling price that contributes towards your general overheads. This does not need to be 100% accurate but will give you a clearer and simple view.

So, if you are producing jobs with a 45% contribution then it’s likely that this is a good product for your business. Conversely, if a product has a contribution of 20% then, in all probability this is not contributing sufficiently, although decisions will need to be made about whether, in the short term, it is better to have 20% of something rather than 45% of zero.

Some advice

If your business is already down this path and ready to re-think your selling prices it is really important to overlay any actions you take in conjunction with your overall commercial strategy. This strategy takes into account many aspects such as your customer relationships, size of customers, dependencies, loyalty, contract terms, nature of your service etc. We will cover this in future articles.

If you are just starting out on this journey it is important to avoid some of the mistakes others have made such as looking at inaccurate data, misjudging the market rates, underestimating the client’s options and convincing yourself a particular product fits your business when maybe others are better suited to produce it.

What you can do right now

You can start today by taking control by implementing a robust commercial strategy that is right for YOUR business.

Click Here to find out more 

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