Boosting Revenues: Value-Add Service Offerings

Changing customer communication needs and demands have many printing service providers pursuing a broader range of services beyond print. Expanding services offers print providers many opportunities: growing customer bases, boosting revenues, enhancing profits and differentiating from the competition. According to an InfoTrends' survey of Printing Impressions readers, print providers that are expanding services beyond ink/toner on paper are experiencing an 8 percent to 10 percent boost in annual revenues and winning new customers.

The survey is part of an ongoing partnership between NAPCO Media and InfoTrends to monitor emerging market trends among print service providers. The latest survey, conducted in September, focused on value-added services and 65 print service providers participated.

The survey asked respondents a series of questions to identify what services were being offered, as well as key strategies, tactics and business approaches that were yielding results.

Overall, respondents reported that the top benefit gained from offering value-added services was access to new revenue streams. A closer look at benefits by type of services offered revealed print-related services enabled more cross- and up-selling; digital media services expanded customer bases; and marketing services offered competitive differentiation and strengthened customer relationships.

The New Service Offerings

InfoTrends' ongoing research finds the firms with the highest growth are focused on competing across the entire communication services value chain—from strategy and creative to fulfillment and electronic distribution.

Printing Impressions' readers reported offering a wide variety of services that enhance the value of print and expanded the breadth of communication products. The survey was structured around three core areas: print-related services, marketing services and digital publishing. Here is snapshot of key services offered in each area and resulting revenue results:

• Print-Related Services. The most frequently offered services were finishing (89 percent), mailing (77 percent), personalized communications (75 percent) and fulfillment (74 percent). Offering these services resulted in year-over-year revenue increases of 10.3 percent.
• Marketing Services. Top marketing services offered today are design services (86 percent), data preparation (58 percent), content creation and management (51 percent) and cross-media marketing (45 percent). Top services that respondents plan to add included data mobile marketing (30 percent), social media marketing (25 percent), data analytics (19 percent) and marketing strategy (14 percent). Respondents offering these services reported year-over-year revenue increases of 8.3 percent.
• Digital Media Services. Leading services offered included Website development (49 percent), hosting (28 percent) and digital signage (26 percent). Key services that respondents plan to add include social media (20 percent) and mobile application development (15.4 percent). According to the respondents, digital media services resulted in year-over-year revenue increases of 10 percent.

Across all three service areas studied, print providers reported winning new customers in the past year as a result of offering these services. Firms offering print-related services (i.e., finishing, mailing, online ordering) gained, on average, 14 new customers, those providing digital media services gained 11 new customers, and companies offering marketing services gained six new customers.

It isn't surprising that the addition of customers through print-related offerings was the highest, because these services support most providers' core product: print. What's interesting is that the average number of clients added as results of digital media services was a close second. This finding is an indicator that communication buyers value print providers that offer a broad array of innovative services.

The Internal Challenges of Adding New Services

Adding any type of service presents hurdles that must be overcome. The biggest challenges print providers reported in offering services across all three areas related to training sales staff and resource constraints. Firms that added marketing and digital media services reported greater challenges in having the right internal expertise and educating clients on what the new offerings were.

When asked to pinpoint challenges in pricing value-added services, respondents reported—across all three areas—that determining true costs and developing accurate pricing estimates were fundamental challenges. Print providers are accustomed to pricing work based on standardized manufacturing costs. While some elements of pricing value-added services are standard, the amount that service providers charge needs to be based on the value of the work as opposed to the time and baseline manufacturing costs that are required to complete the work. Determining the right price and communicating the associated value of services can help service providers migrate from producing print jobs to supporting more complex communication products.

Make Investments in Technology, Promotion

Across all areas, investing in technology and developing campaigns to promote services that included social media were key actions taken by respondents in expanding services. Promoting new services is essential to their success, and print providers are using many promotional tools to ensure that prospective purchasers know who they are and what they do. Trade shows, direct mail and other forms of traditional marketing are still valid, and being combined with digital marketing. Public relations, establishing an effective Web strategy, networking with prospects, educating customers and establishing a social media strategy are essential tools for generating awareness and demonstrating a company's ability to deliver new services.

Another key strategy reported by respondents was to test services by offering them to select customers, before rolling them out on a large scale. A few respondents hired staff to support new services and those that did mainly added sales or IT staff, reflecting the need for different skill sets.

Sales Cycles Are Linked to Complexity of Service

Sales cycles for value-added services varied based on the complexity of the service and customer confidence in the print provider's ability to offer a service. Ancillary services that supported print, such as finishing, mailing, data preparation or design, were reported to have lower sales cycles. More complicated services like Website hosting or development and marketing services have longer sales cycles. Understanding the sales cycle duration of different types of services is a valuable tool to guide company managers in sales planning and setting reasonable sales goals for services.

Nearly three-quarters of respondents made no changes to their sales compensation plans to incent sales staffs to sell new services. There was little variation by print-related, marketing or digital media services. Among those respondents who had made changes, the most common action was to increase bonuses. A small number of firms selling cross-media (15 percent) reported offering a separate compensation plan for selling these services. InfoTrends believes that sales compensations plans need to be adjusted to offer meaningful incentives that account for a longer sales cycles for more complicated services.

Print service providers have long acknowledged that they need to deliver value-added services to differentiate themselves from competitors and are taking actions on many fronts. Expanding and adding innovative services is not without challenges as firms report that resource constrains, pricing and longer sales cycles are key hurdles.

The rewards, however, are big. Firms that are expanding services are gaining new customers, competitive advantage and higher sales. PI

About the Author
Lisa Cross serves as associate director, Business Development Strategies, at InfoTrends.