It's Costly to Concentrate on Price
The following is a response to a question posted on DMIA's members-only broadcast email system regarding an end user who asked his distributorship to work for a flat rate or on a fee schedule to "make a print broker arrangement work." The client, which had ordered a high volume of printing from the distributorship for several years, had a new marketing vice president and director. The new person wanted the distributorship to get three bids on all projects and choose "the best vendor for each." He also wanted the right to review bids, and wanted to pay manufacturers directly. He said the person responsible for procuring printing (the distributor) couldn't have a financial interest in the outcome of vendor selection. In return, the distributorship would handle the company's total print volume for a specified period of time.
If "making a print broker arrangement" work means "lower prices," you're headed in the wrong direction. I haven't heard you say that you've given the customer a reason to let you be a true "provider." I simply see you here as a print supplier. Each of the issues your clients wants relates to price: He wants to pay this guy directly, he wants you to work on a flat fee, he wants to see this invoice directly, he wants three bids, etc. Where in the equation did he ask you to actually lower his costs? Does he know, or have you told him that you can actually lower his costs instead of "getting him a better price"?
You need to give him a reason to need a print brokering arrangement rather than simply wanting one--to show and tell that he needs you! It sounds as if, in his mind, print brokering equals lower prices. You need to prove to your client that price is only a small part of your equation. Ask him for three of his forms, then ask 20 questions about each one. Talk to the people who actually print them, the people who drive the delivery trucks and the warehouse people who pick the orders. Then, find a better way the client can use the forms, or a better form for him to use. Show him a new presentation folder or brochure construction that might make four brochures become two. Present a new ad specialty that will make him money and drive customers to his web site. In other words, make yourself an irreplaceable supplier in the customer's eye.
Don't fear lower prices, direct manufacturers or technology. Be afraid of not providing value that someone else in the supply chain might.
Mike Fisher, CDC
President, PrintConcepts
Allentown, Pa.
Cost Plus
Based on the criteria the customer is specifying, it sounds like the old "Cost Plus Scenario."
If the customer is prepared to pay a fixed rate service fee for the work the distributor is asked to perform, I don't see a problem. Typically, a professional distributor is going do what has to be done to provide the best value, i.e., shop the market and establish relationships with vendors that will give the customer that "best value."
Naturally, the distributor is part of this "best value" equation, along with the customer and the vendors. I learned a long time ago, that regardless of how ill-informed a customer seemed to be, they were still right. I always make it a point when interviewing new clients, even today, to ask them how they want to buy. If they can articulate this, then if I want to be part of the relationship, I must obey their rules.
In this case, the customer already has made a purchasing decision -- he likes our distributor and wants to do business with him if the terms and conditions are right. Using a Cost/Plus scenario does give the customer the right to see the quoted prices, if required, but if the customer has the confidence he/she appears to have in our distributor, the only thing now is to negotiate the percentage service fee based on the cost price chosen.
Hugh Maksylewich CFC
Proforma Maksylewich & Associates
Brampton, Ontario, Canada
Correction
The web site and email for Performance Business Forms, Omaha, Neb., is www.formsguys.com and steve@formsguys.com, respectively. The information appeared incorrectly on page 84 of the December issue.
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Question of the month: End users want customized products faster than ever before. What applications are ideal for digital printing that includes variable information?
