Print Solutions November 2006
COMPETITIVE LANDSACPE
This series focuses on thriving or up-and-coming companies in the print
industry. Many of the companies featured won't fit the traditional distributor or manufacturer model. Some are investor
darlings, others have created industry buzz with technological innovations or
with a new approach to selling print. If you have suggestions for companies
that should be profiled in this series, email them to abrown@PSDA.org.
Next Month: VistaPrint
Courting the Ranks
AlphaGraphics offers independent printers incentives to franchise
By Andy Brown
The quick printing segment faces pressure to evolve and grow. Its success
depends on many of the same factors affecting the distributor-manufacturer
segment, including the adoption of cutting-edge technology and product
applications. AlphaGraphics, an international franchise system based in Salt
Lake City, is tackling the challenge head on, and its strategy may affect
yours.
Strategy: Digital Business Centers
AlphaGraphics is already a leader among quick printers. Its locations average
$996,010 in annual sales per store, the highest of any franchise, according to
the April 2006 issue of Quick Printing Magazine. The company plans to double
its size to 500 locations during the next five years.
To reach this number, AlphaGraphics has crafted a strategy that lowers
franchisees' barriers to entry and takes industry trends into account. AlphaGraphics’ new locations are conceived as digital business centers. These locations
feature digital printing equipment only. The lack of traditional offset presses
lowers franchisees' initial investments, in part because they open stores with smaller physical
footprints.
“In the past, the cost of entry for an AlphaGraphics franchise was substantial,” says Keith Gerson, vice president of sales and marketing. “That has changed with the advent of digital technologies. We’ve been able to focus on a lower cost of entry model that works superlatively
within our network.
”
The focus on digital printing attracts franchisees because it requires less
investment, and digital printing, including variable data printing, continues
to attract the interest of more end users. At the same time, the company still
supports traditional printing through its network. Franchisees outsource jobs
to one another or to independent vendors when they can't produce the jobs themselves.
Strategy: Conversion Model
AlphaGraphics franchisees typically are successful businesspeople with
management or financial experience who decide to strike out on their own. They
rarely have experience in the printing industry. This acquisition model has
worked well, but in its next growth phase, AlphaGraphics wants to attract more
printing industry professionals. Given the industry's rapid pace of change, Gerson sees an opportunity for qualified independents to
partner successfully with the franchise system.
“We find that a number of independent printers are volume- and
resource-constrained,
” he says. “And they just don’t know where and how to get started [with a new strategy].”
Printers who lack the resources to re-invest in their businesses find themselves
falling behind. Their technology is outdated and the services they offer are
fewer than their competitors.
“They have to offer more of a solutions and full-service focus. We offer our
customers mail service solutions, list management solutions and document
management solutions,
” says Gerson. “So many independents just feel like they’re never going to get there.”
Independent printers who haven’t found a way to adapt may see AlphaGraphics as a way to enter the next
generation. The company actively courts independent printers and distributors
who have the skills, contacts and capital to make successful franchisees. In
turn, these business owners acquire a brand with national marketing power and
upgrade their equipment with reduced investment.
"We offer our
customers mail service solutions, list management solutions and document
management solutions. So many independents just feel like they’re never going to get there.”
Keith Gerson, Vice President of Marketing and Development AlphaGraphics, Salt Lake City
AlphaGraphics is well aware of what makes independents tick—their independence. The company offers independents control over pricing and
local marketing, as well as an uncomplicated opt-out agreement in case the
partnership is unsuccessful. Furthermore, franchisees are not restricted to the
types of accounts or products that they sell. If a distributor wanted to own a
limited amount of equipment, he could franchise but still rely on his network
of vendors to produce products that he couldn't. If a manufacturer wanted to add digital printing capabilities, AlphaGraphics’ purchasing power might put the equipment within his price range, in addition to
sales, training and marketing support.
VDP and Visual Communications
Another component to AlphaGraphics’ strategy is one familiar to many in the forms industry. The company is shedding
its traditional identity for one more relevant to its customer base. That
includes re-branding a community of quick printers to that of visual
communications experts. In many ways, AlphaGraphics uses variable data printing
as the bridge between those identities.
AlphaGraphics is as far ahead as most trade printers, if not further, with its
knowledge of VDP and its potential for 1-to-1 marketing solutions. Custom
salutations and addressing on direct mail pieces is such a basic application
that more sophisticated users barely consider it VDP.
“Variable data is an initiative, but it’s not really the point,” says Gary Korn, director of imaging and finishing services at AlphaGraphics. “Yes, you can do VDP and you can charge more, but the goal is to help customers
get their message across.
”
In other words, the technology isn’t fully utilized unless it’s part of a cohesive campaign that reaches across platforms to include print,
online, list and database management, fulfillment and other services.
“It’s not just doing the printing. It’s about helping customers reach a wider range of opportunities within their
market,
” says Korn.
Even though AlphaGraphics establishments are housed in local storefronts, they
compete nationally as solutions providers. One owner recently secured the
printing business for Dale Carnegie Training.
“He’s beginning to do the variable data printing for all Dale Carnegie franchises,
customized to their locations,
” says Korn. Another AlphaGraphics owner, Chuck Stempler, says that VDP accounts
for less than 10 percent of his franchise's sales, but “the rate of growth is astronomical compared to other departments.”
Andy Brown is managing editor at Print Solutions magazine. Email your comments to abrown@PSDA.org.
AlphaGraphics
Founded: 1970
Headquarters: Salt Lake City
Principal: Kevin K. Cushing, CEO
What makes this company an emerging competitor? AlphaGraphics has robust
incentives to convert independent printers and distributors to franchisees.
During the next five years, it plans to add nearly 250 locations with
state-of-the-art digital printing equipment. The franchise system is also
successfully transforming its identity from quick printer to visual
communications provider.
|
