* Success in health care and security documents. Standard Register was hurt when Irving, Texas-based Novation, the country's largest medical group purchasing organization (GPO), didn't renew the company as a preferred vendor for printing and forms management in 2001. (It had held the account since 1978.) But the firm remains strong in the niche, recently winning a 5-year contract to be the sole supplier of document solutions to Phoenix-based Banner Health. The company also is a leading provider of pharmacy prescription solutions to independent chain drug stores, supermarkets and mass merchants, and acute care pharmacies. In April 2002, Standard Register launched its Positive Patient Identification System™ for patient admissions. The product includes bar coded information that can be scanned to identify patients and ensure proper medication and billing. Also, many medical clients rely on the firm for security documents, a product area in which it's an industry leader.
* SMARTworks e-business platform. By allowing online connectivity between customers and print providers, SMARTworks enables organizations to reduce costs associated with designing, procuring, distributing and managing printed and electronic documents.
* Declining revenues. Standard Register's annual sales dipped 14.1 percent in fiscal year 2002. The company reported a net loss of $1.6 million for its third quarter of 2003, primarily the result of restructuring charges. Revenues for the quarter were $222.1 million, down 12 percent from the same period last year, and revenues for the first nine months of fiscal year 2003 were down 10 percent. The firm, however, has consistently paid dividends to shareholders since going public in 1956 (average of approximately 4 percent for the past 10 years).
* Vague growth strategies. In its 2002 Annual Report, the company includes a bulleted list of growth strategies that any company could substitute for its own: "Continuously innovating to provide leading products and services that improve companies' business results" is one strategy. "Expanding business in target industries by sharing our broader value proposition and flawlessly executing to make Standard Register a delight to do business with" is another.
* Improved customer loyalty stemming from new technologies. Standard Register acquired two firms in July 2002 that added $43 million in revenues and enhanced the firm's technology offerings. Toronto-based InSystems provides an e-business portal to more than 350 insurance customers, who can use the system to automate web-based insurance forms. Minneapolis-based PlanetPrint, which provides consulting, software development and integration services, as well as a suite of digital, on-demand printing and outsourcing services to Fortune 1000 and medium-sized clients. In 2003, Standard Register introduced its ExpeData™ suite of digital information solutions, including imaging services, intelligent e-forms, and digital pen and paper technology that automatically converts written input into digital information. Initial applications include drug and sample tracking, emergency department triage and others where efficient, accurate data capturing is critical. The company is working with Microsoft, Hewlett-Packard and other companies to take these new solutions to market.
* Heavy focus on document management. During the latter part of 2000, Standard Register analyzed each of its product lines and every customer with more than $5 million of annual revenue to determine levels of profitability. Management eliminated portions of business that it deemed couldn't provide acceptable returns, representing $225 million to $250 million in annual revenues. The restructuring program also included consolidation of regional sales offices, manufacturing plants and warehouses, as well as other cost-cutting moves. The firm's document management unit accounts for 76 percent of the company's consolidated revenues, while its fulfillment (11 percent) and label solutions (12 percent) units aren't growing as quickly as similar divisions of other firms.
* Detailed relationship marketing. When Relizon began in 2000, it operated a respected direct marketing production facility and output services, but "we lacked depth in creative and analytic services," says Patricia Howe, vice president of Strategic Marketing at Relizon. That changed in 2001, when Relizon acquired Epsilon for $189 million in cash. Epsilon provides data analysis, database management, marketing communications and creative services. It can identify patterns in customer behavior, enabling marketing departments to determine which customers are likely to buy specific products. It printed and mailed more than 230 million pieces of direct mail last year and helped Relizon sign 32 marketing-solutions deals in the first quarter of 2003. Those clients are worth an estimated $45 million over the next three years, according to Rodney Hedeen, Relizon's president and CEO, who often calls Relizon a "business process outsourcing" company, or "BPO."
* Securing mid-sized accounts while focusing on ROI. Relizon's client focus includes smaller companies than Moore Wallace and Standard Register, enabling the firm to serve a broad range of industries, including financial services, insurance, manufacturing, retail and telecommunications. Relizon focuses on helping customers of all sizes achieve measurable results through business processes in document management, billing and marketing, primarily by calculating customers' returns on investment. The firm's goals revolve around improving clients' cash flow, revenue growth and bottom-line savings.
* Technically savvy sales force. Industry consultants and distributors say Relizon's sales force is knowledgeable and skilled. Many document sales representatives began at Duplex, a former major manufacturer in the printing industry that Reynolds & Reynolds acquired in 1996.
* Name recognition. Many printing pros say they're confused about the relationship between Reynolds & Reynolds and Relizon. (In August 2000, Reynolds & Reynolds sold its Information Solutions Group (ISG) to The Carlyle Group for $360 million in cash to focus on selling document systems and e-solutions to the automotive industry. Reynolds & Reynolds manufactures forms for the automotive industry, and ISG became Relizon.) ISG reported revenues of more than $730 million in fiscal year 1999, accounting for nearly half of Reynolds & Reynolds' sales. Relizon aggressively has transformed from a unit of a forms manufacturer to a document services and customer relationship management provider. The company seems more like a startup than a firm with tradition. (Reynolds & Reynolds' roots extend back to 1866, and the company created the first standard forms accounting systems for the country's Chevrolet dealers in 1927.) "If you're talking to someone who needs key solutions we offer, it becomes clear to them quickly who we are," Howe says.
4 TIPS TO COMPETE WITH THE BIG BOYS
Gaining (or gaining back) business from the majors isn't easy, but distributors "have a tremendous opportunity to compete with them," says Robert J. Cronin, a managing partner in The Open Approach, a Westmont, Ill.-based print consulting firm specializing in strategic planning, marketing, sales training, product development, corporate direction, recruiting, business brokers, alliances, acquisitions and new business opportunities.
Cronin should know: He was CEO of Wallace for eight years, growing its business from $400 million in annualized sales to $1.5 billion and defending the company from a hostile takeover attempt by Moore in 1995. "To compete with the majors, distributors must establish a strategy and a story that end users can relate to," he says.
Ron Seavey, also a managing partner at The Open Approach and Wallace's former sales vice president, says distributors should realize that "now is an ideal time to enter the large-account market because there's so much confusion and turmoil going on with large companies in the printing industry." Clients often buy from the majors, he says, because they don't realize they have other options. The majors' size, image, infrastructure and financial strength trump the average distributor's. But printing pros that have substantive capabilities can use these strategies:
1. Start by targeting mid-sized accounts. The majors, especially Moore Wallace and Standard Register, now aim almost exclusively for large corporate accounts they can sign to contracts. "Many smaller accounts with significant document needs aren't getting the attention or service levels they're used to" Seavey says.
2. Form alliances and consortiums. Distributors can benefit from banding together with each other and with trade printers to create national distribution and manufacturing capabilities. "Companies in the independent segment should partner toghether more effectively," Cronin says. "Bringing competitive forces together could be extremely effective.
3. Realize it takes time to find key decision-makers. "Sometimes distributors give up too easily," Seavey says. "They go into an account with the attitude of, 'Well, I'll call on them, but I'm not really capable.' A positive, persistent attitude is necessary because it takes a longer selling cycle to sell to large accounts. It's an investment and often a search mission."
4. Don't fear "sole-source" providers and preferred vendors of group purchasing contracts. "Just because and account is officially tied up with a vendor doesn't mean you can't serve an important role," Seavey says. "More than 20 percent of the business that majors do aren't produced by their facilities anyway. The majors outsource a lot of products. Distributors buy as well as anyone in the industry, so why not explain to end users that you can have products produced more effectively?" Also, many group purchasing contracts allow organizations to farm out a percentage of total annual printing to companies that aren't stipulated vendors.
For more insight into competing against the majors or other printing topics, visit www.theopenapproach.com or call (630) 323-9700.
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