Promotional Products: A Winning Margin

WHAT WOULD you say if we told you that you could earn as much as a 40 percent margin on a product you wouldn't have to manufacture, or need to inventory, and wouldn't require any ramping up funding? And what if we told you that this product would be desirable to the customers who are already purchasing your printed products?

By this point, your BS detector is probably going off louder than the most obnoxious car alarm. You maintain a polite smile, perhaps nod and add a impressed "hmm" for full effect. Be sure to furrow your brow to give the impression of focusing on what's being said.

Curiously, as much as the opening paragraph sounded like an intro to a cheesy cable television informercial, it also happens to be 100 percent true in the case of promotional products. Many commercial printers sell them to supplement their other product and service offerings. Relative to the balance of a printer's capabilities menu, promo products are uncomplicated.

It's hardly a well-kept secret, as different organizations estimate the industry at around $20 billion per year. But, for those not actively selling promotional products, there are some obvious questions. Are they easy to sell? Is there a learning curve involved? How do you go about selling them? Do you go through a distributor or do it on your own? What are the hottest products? What products should you offer?

We'll try to answer as many questions for you as possible, drawing on some prominent experts from the promo products industry.

Are promotional products easy to sell?

This is one area where printers can add a profit center without any capital investment, notes Gregg Emmer, vice president and chief marketing officer at Battavia, OH-based Kaeser & Blair, one of the industry's master distributors. "It's a natural because printers are typically involved in the early phases of a client's marketing/advertising campaign," says Emmer, who himself joined Kaeser & Blair after a long stint in the printing industry.

"Being able to coordinate a promotional component, along with a graphic component, puts you in at ground zero. You can coordinate designs, colors, etc., at a place where you can touch the fringes of agency work, because you're providing more than one component."

Printers that work with agencies, he says, likely have a month's head start on the competition when they inquire about promotional components of a marketing campaign.

Even so, Sherri Lennarson, board chairman for the Promotional Products Association International (PPAI), admonishes printers to carefully consider their decision to add promotional products. "It requires more than selling products. Successful campaigns don't just happen by chance. At first glance, it may appear to be not only a fun option, but an easy one. Fun yes, easy no."

Is there a learning curve involved?

As is the case with printing technology, Lennarson points out, promotional products require specialized knowledge of decorating methods, imprint processes and industry terminology. She encourages printers to acquire an understanding of top buyers, their challenges, objectives and industry trends. She also recommends printers join the PPAI, which offers a bevy of educational seminars and industry research.

"You may choose to either navigate these waters on your own or to partner with an established distributor in the industry," Lennarson says. "If you go it alone, be prepared for a steeper learning curve. Suppliers will no doubt require cash in advance and a solid list of references."

How do you go about selling promotional products?

The first thing a printer needs to do is seek out the proper contacts within his/her customer base, notes Greg Muzzillo, founder and co-CEO of Proforma, based in Independence, OH. Traditionally, they consist of sales, marketing and human resources professionals, as well as other executives, he adds.

Muzzillo sees value in developing relationships within the promotional products industry through the associations that serve it. "In addition, printers should consider aligning themselves with an organization similar to Proforma, which enables them to drastically expand their product and service offering," he says. "The final option would be to go into selling promotional products alone, which is not an advisable route."

Which brings us to...

Do you go through a distributor or do it on your own?

While there is a very entrepreneurial quality associated with developing your own relationships to manufacturers of promotional products, there is far more leg work involved when you do it yourself.

"The benefits of working with an established firm are many," Lennarson contends. "Line selection is easier, order submission is streamlined, credit terms are established and you'll benefit from an existing knowledge base of the promotional products industry. In the end, you'll save time and generate more revenues."

Emmer points out that the wide breadth of promotional products available to printers is staggering—about 4,300 vendors. It would require a good deal of time on the printer's part to establish relationships with these manufacturers of key chains, coffee mugs, insulated coolers and apparel. It can be done, but seller beware.

The beauty of a specialized distributor, according to Emmer, is the infrastructure, educational base and support it provides to print clients. "Independents need to be aware of credit loss and product liability, whereas Kaeser & Blair indemnifies its dealers from both. And while printers aligned with us don't need to carry inventory or perform collections, an independent will require 25 to 30 percent capitalization to get the best pricing and discounts available," Emmer continues. "Some people have used their credit cards for that purpose, with disastrous results."

According to Muzzillo, franchising offers entrepreneurs the opportunity to go into business for themselves, but not by themselves.

"Proforma provides distributors and brokers with the tools and resources necessary to accelerate cash flow and to have more fun," he notes. "Through a professional distributorship and brokerage model, Proforma enables owners to accomplish far more on their own as opposed to all alone."

What are the hottest products? What products should you offer?

Lennarson says some of the hottest products include stainless steel drinkware, fashion apparel, flash drives and technology tools, eco-friendly products and recycled PET shopping bags. Leading product categories are apparel, writing instruments, bags, drinkware, desk/business accessories and calendars.

The most popular applications include employee relations/events, brand awareness, trade shows, new customer/account generation, not-for-profit programs and public relations.

When it comes to selling promo products, however, it's not all about what's popular at the moment. Let the customer's needs guide you in your consultation. "Understanding the client's objectives, desired outcomes, target audience, budget and time line help determine which products to offer," she concludes.

"The discovery phase of the sales process is very important. Ask probing questions. Learn what the client has done previously. Ask how they measured their success. Product selection can begin after you know the answers to these questions." PI