Word of mouth is Proforma's top
recruitment ally, Campbell says. In fact, 55 percent of owners who joined the
network in 2001 and 2002 were referred by current owners or PLPs. The company
includes three types of owners--ones who understand the nuances of franchises
and compare Proforma's system to others' (Proforma calls this group
"traditional" owners); ones who have document industry experience but not as
owners ("industry-experienced"); and ones who own existing distributorships but
don't want aggravations associated with billling, marketing and other non-sales
tasks ("conversion"). Approximately half of the 59 owners in Proforma's
Million-Dollar Club--owners who achieve $1 million to $1,999,999 in annual
sales--are traditional owners. The former CEO of Stamford, Conn.-based personal
grooming products manufacturer Norelco Consumer Products Company is included in
the group. (Proforma also has a Two Million-Dollar Club and a Five
Million-Dollar Club. See photos on page 50.)
"Each Proforma owner has a dream,"
Muzzillo says. "That dream usually involves owning a business and creating a
nice lifestyle for a family. But then dreams differ: Some people want to become
millionaires, and others want free time for mission trips. We empower
independent distributors by giving them the tools and autonomy to turn their
dreams into realities."
Proforma owners make autonomous business
decisions, including vendor selection and product and service offerings.
"Franchising helps you run your own business, but you're never alone,"
Chippindale says. "People who concentrate on operational procedures often say
they're chasing their own tails. They're trying to gain relationships, but
billing is three weeks behind and cash flow is tight." As business people become
more focused, he says, they realize they can't do everything themselves. "Quite
often," Chippindale says, "people think they have to be on top of everything.
That's not control. That's out of control."
Benefits Versus Expenses
Tom Van Rens, owner of Milwaukee-based
Proforma Promotional Group and a DC, joined Proforma in 1999 as one of its
largest conversion owners. Prior to joining the company, Van Rens says one of
his largest clients told him, "We love your service, but you aren't
sophisticated enough to do the things we might need in the future." A few firms
made Van Rens offers to buy his business, but he wanted to retain ownership.
"More than anything," he says, "I wanted access to e-commerce technology,
excellent marketing and things that either were costing too much money or that
we weren't doing at all. I wanted to take my business to another level." He has:
Van Rens' customer billings totaled $181,612 in September 2002, ranking him No.
13 in Proforma's network that month.
Other Proforma owners cite access to
credit insurance, supplier pricing and succession planning as key reasons they
joined the network. "People might look at franchising and say, 'You're giving up
your independence,'" Muzzillo says. "But if independence is about the ability to
freely perform a wider range of activities, franchising does the reverse--it
allows people to become more independent. The idea that someone has more
independence without any tools is like saying someone in the Wild West was
fiercely independent but didn't have a horse or a gun."
Proforma and its franchise owners sign
10-year contracts, but owners can leave the network upon mutual agreement. (Six
percent of owners terminate their relationships with Proforma due to owners
exiting the industry or selling their businesses, Campbell says.) Soon after
owners join, they undergo a weeklong training program at the Worldwide Support
Center to become acclimated to the firm's sales and marketing tools. "Even
owners with lots of previous sales experience benefit from the training
program," Rigney says. "It involves product knowledge and role playing, and
people tend to come away energized." He says new owners aren't expected to
understand Proforma's tools immediately. Additional, customized training often
extends for two months, and "we'd rather have them meeting face to face with
customers the next Monday morning, instead of trying to figure out the nuances
of the tools," Rigney says.
Each Proforma owner pays a monthly
service fee based on the amount he or she bills customers--owners billing less
than $49,999 during a month pay an 8 percent fee, ones billing $50,000 to
$99,999 pay 7 percent, and ones billing $100,000 or more pay 6 percent. Each
owner also pays a monthly marketing fee--owners billing less than $49,999 during
a month pay 1 percent, ones billing $50,000 to $99,999 pay 3/4 percent, and ones
billing $100,000 or more pay 1/2 percent. New owners can choose a payment
structure in which they pay nothing until the third month, then gradual
increases until the 19th month, when regular fees begin.
"The benefits of joining far outweigh
the expenses," says Keith Beck, president of Proforma Pacific Systems in
Pleasanton, Calif., and a DC. When Beck joined Proforma in 1987, he had no
industry experience, sales experience or customer base. His background was in
human resource management. "One thing I learned almost immediately was all this
talk about dreams and family and togetherness was genuine," Beck says. "One of
the most exciting things about Proforma is they continue to give value to
franchise owners, especially with new marketing material."
The Power of Professional
Marketing
Nancy M. Valent, Proforma's chief
marketing officer, used to handle marketing for Pasadena, Calif.-based Avery
Dennison Corporation. The adhesives supplier enjoys 30 percent market share, but
"this job is much more exciting," Valent says. "I feel like we have a white
canvas at Proforma--endless room for growth. It's delightful to be a part of
that."
Proforma's marketing team and the
company's 12-member Owner Advisory Council are responsible for implementing ways
to spend the fund created by Proforma owners' marketing fees. The fund has
enabled the company to launch several recent marketing initiatives, including a
new logo and branding campaign, CD-ROM selling tutorials, owner and customer
surveys, and more.
"They're all competing for sales, and
succeeding takes three steps--awareness, trial and commitment," Muzzillo says.
"That's true no matter if you're selling soap or printing. The awareness step is
far more important than most distributors understand."
Proforma encourages its owners to use
the company's 4-color marketing pieces, including its five product capabilities
brochures, five companion pieces, eight direct mail pieces, a golf catalog and a
holiday catalog. (See samples on page 48.) Most of the materials include die
cuts and other eye-catching features. Proforma also offers customized marketing
collateral to owners targeting the health care, financial, manufacturing and
hospitality markets. Valent and her staff add new pieces frequently. Owners can
learn about new marketing tools
in Proforma's Connections monthly internal
newsletter and Success Digest e-newsletter.
Jessica Schuster, Proforma's
communications coordinator, writes most of the text for those publications. She
joined the company in December 1999 and focuses primarily on public relations.
She also works with owners to hone specific messages to local media outlets and
national trade publications.
Proforma's marketing team also handles
owners' needs that extend beyond the norm. Fred and Suzette Albrecht, owners of
Cincinnati-based Proforma Albrecht & Co.--the network's top-selling U.S.
franchise last year--have 25 years of experience selling promotional products.
Recently, Fred Albrecht said he would pay for costs associated with producing a
customized promotional products catalog for his customers. Upon completion of
the catalog, which included approximately 400 items from numerous PLPs, he made
the catalog available to other Proforma owners. "That spirit of togetherness is
hard to come by at most companies," Valent says.
Proforma's marketing initiatives often
merge with its information technology goals. In February 2002, the company
launched ProSMART, its sales, marketing and relationship system designed by four
in-house developers. (For details about ProSMART, plus two other features not
included in this story, visit www.printsolutionsmag.com and click on "Print
Solutions Online Exclusives.")
One Bite at a Time
Lockkeeper's Inn in Cleveland is a
sophisticated steakhouse located between the Ohio & Erie Canal and the
Cuyahoga River, near Lock 39. It seems fitting that Greg and Vera Muzzillo
picked this spot to dine--they both say the water relaxes them, and many of
their vacations have been to beaches worldwide.
Four months after this dinner, the
Muzzillos will travel to Cancun, Mexico, with Proforma's top owners, Coaches of
the Year and Most Valuable PLPs to celebrate their collective success. They're
not discussing that trip now, as they nibble on pan-seared calamari, but they
are talking about the company's top performers.
"Some people believed in Proforma from
the start," Greg Muzzillo says. "They were early adopters of the system, before
the critical mass came. They believed in Proforma even before they should have.
I owe them a debt of gratitude."
"I believe in collaboration," Vera
Muzzillo says. "I think it's a mistake to believe you know more than anyone
else. The owners who run their businesses have so much knowledge and information
that you have to trust them, believe in them and give them enough authority to
get their jobs done."
"If we don't believe in them," Greg
Muzzillo says, "we would be in a lot of trouble."
Three times during dinner, different
people come to the Muzzillo's table to welcome them to Lockkeeper's Inn. Greg
Muzzillo mentions to each of them that the food is terrific and Morgan Jacobson,
executive chef, "deserves a big old raise."
"You know what?" Vera says a few minutes
later. "This company will become even stronger after 2006. We'll reach--"
"We'll reach our goals and then some,"
Greg Muzzillo says. His eyes seem wider. The heartbeat seems to be racing. He
takes a bite of rib eye and looks serious. "We'll have 10 percent market share,"
he says. "That's $15 billion in system-wide sales. How are we going to do that?
I have no idea, and that's the fun of this business." He pauses briefly, takes
another bite, then continues. "I know how we're going to do it," he says. "The
same way you eat an elephant--one bite at a time. It's exciting to think we
could become the first billion-dollar company in 2006, but that's just a
stepping stone. $15 billion. $15 billion. That's where we'll go. $1 billion? A
stepping stone. Not the end of the story."
Darin Painter is managing editor of
Print Solutions. Email him your comments at dpainter@PSDA.org.
