June 1, 2009

Seven Helpful Tips -- Marketing on a Shoestring

By William Lynott

GPO Work: No Fancy Campaigns Required

On average, print suppliers have 30 percent idle production capacity and are constantly seeking short-turnaround projects to fill schedule gaps. These projects are readily available in secondary markets such as the U.S. Government Printing Office (GPO), and no fancy marketing campaigns are needed. However, you must know what you are doing to be successful in complex government markets.

One key is low pricing without establishing precedent that affects future price expectations or an ability to bid on future projects. This strategy is called “contribution pricing,” because any income above out-of-pocket costs “contributes” 100 percent to the bottom line.

When contribution pricing is applied consistently and strategically, profitability will jump from an industry average of 3 percent to 17 percent or more, even when fill projects are sold at prices reduced by 25 percent to 50 percent!

Using the following assumptions, look at what happens to a printing company (with a 3 percent operating profit) that applies contribution pricing during a week when it sells 70 percent of its production capacity at “normal rates.”

Work week: 40 Hours
• Capacity utilization: 70 percent (or 28 hours)
• Hours reserved for maintenance: 5 percent (or 2 hours)
• Bonus hours available: 25 percent (or 10 hours)
• Normal selling rate: $2,000/hour (includes all equipment)
• Low contribution selling rate: $1,000/hour (includes all equipment)
• Out-of-pocket materials are charged extra at cost

Profitability without contribution pricing would be:
• Normal weekly revenue: $56,000 (28 hours x $2,000)
• Industry average profit: 3 percent or $1,680 (3 percent x $56,000)

Add contribution pricing, and profitability would be:
• Additional weekly revenue: $10,000 (10 hours x $1,000)
• Exceptional profitability: $11,680 ($1,680 + $10,000)
• Profit leader status: 17 percent ($11,680/total of $56,000 + $10,000)

By selling its unused production capacity (in this case 10 additional hours, allowing 2 hours for maintenance) at a 50 percent discount from a normal selling rate, the printer contributes $10,000 directly to its bottom line. This improves operating profit for the week from $1,680 to $11,680 or from 3 percent to 17 percent.

Rather than being a “shoestring” approach, contribution pricing is a smart way to fill downtime and optimize profits. Of course, this has to be coupled with the best marketing tool—producing top quality work, on time.

—William Gindlesperger

IT'S NO secret. Today's economy is filled with uncertainty. One day, consumer confidence is up and things look promising. The next day, some bad economic news casts a pall over the outlook. With a tiny advertising budget, it can be difficult to find ways to boost your bottom line.
In uncertain times like these, it may seem natural to pull in your horns—take shelter until things look more promising. But that's exactly the wrong thing to do. The economy may look gloomy, but there are still plenty of customers in need of printing out there.

Your job is to ratchet up your marketing efforts while your competitors are slacking off. When the smoke clears, you'll be stronger than ever and the competition will be wondering what happened.

Here are seven ways to build your business on a tight marketing budget:

1) Take action on something that most of your competitors only talk about. The printing business is a people business; you sell your services to people, not to objects. All of the Harvard Business School expertise in the world is no substitute for an understanding of that basic business principle.

The most effective and the least expensive marketing technique for any small commercial or quick print shop owner is an uncompromising commitment to customer satisfaction. As you know from your own experience, it's a pleasure to do business with a firm that keeps customer satisfaction at the top of its priority list.

Making certain that every one of your customers goes home with positive feelings about you and your shop will turn those clients into walking advertisements for your business.

2) Harness the power of the telephone. Independent studies consistently show that the telephone remains one of the most underused business tools. In one study, researchers called 5,000 Yellow Page advertisers to say, "I saw your Yellow Page ad. How much does your service (product) cost?" The responses clearly indicated lost opportunities.

More than 78 percent didn't bother to ask for the caller's name. More than 55 percent took eight rings or more to answer. According to the researchers, many spoke so rapidly that the caller had a difficult time understanding what was said. Less than 10 percent answered the phone in a way that made the caller feel welcome.

To harness the power of the telephone as a marketing tool, you and your employees must regard every ring of the telephone as a marketing opportunity. Here are three simple steps that will help you create that profitable first impression:

a) Try to answer the phone by the second or third ring. Taking too long to answer creates an impression of disorganization and lack of interest.

b) Speak slowly and clearly giving your name, your business name and a phrase like, "How may I help you?"

c) Most communication experts agree that a smile on your face translates into a smile in your voice. That's why some shop owners place a mirror next to the phone so that they can see the expression on their own face when they answer.

3) Make use of cross-promotion. Smaller printers are ideal candidates for cross-promotion, an inexpensive and effective way for non-competing businesses to help each other. Here's how it works: John, a printer, works out a cross-promotion arrangement with Laura, a small retailer in the same town. Each agrees to display copies of the other's business brochure at their businesses. The cost? Nothing more than the cost of printing.

There's no need to limit the participants to any specific industry. The combinations for cross-promoting are limited only by the participant's imagination. Depending on the nature of the businesses involved, cross-promotion may include such methods as window signs or posters, discount coupons or personal referrals.

How many businesses in your community are cross-promotion candidates? Probably many. Why not take the initiative and suggest a cross-promotion program with your favorite local business owners?

4) Put networking to work for you. People prefer to do business with people they know. Think about it. If you need a plumber, an attorney or any professional, whom are you most likely to call? Will you call a stranger from a listing in the Yellow Pages or will you call someone you know—perhaps a neighbor or the friendly fellow you met at last week's Rotary meeting?

Service organizations such as Kiwanis, Lions or the Chamber of Commerce are populated with entrepreneurs and professional people, and most are as anxious to meet you as you are to meet them.

5) Tell your story through an attractive brochure. Printers in particular need some form of printed material to provide information to prospective customers. A skillfully designed brochure is one of the easiest and lowest-cost ways for you to grab and hold the attention of prospective customers. Brochures have a longer "shelf life" than many other forms of business advertising, and are often passed from person-to-person and kept for future reference.

A word of caution: While desktop computers and the latest printing technology have made the physical job of producing a promotional brochure a simple task, creating an effective selling message is not a job for an amateur. If you do the job yourself, you should enlist the help of a good copywriter and graphic designer. While this will add to the initial cost of your brochure, the results will make the additional investment well worthwhile.

6) Get more mileage from your business cards. Business cards are among the most inexpensive, yet most underused, shoestring marketing tools. A carefully designed business card functions like a miniature billboard.

Held at arm's length, it registers in the viewer's eyes as apparently the same size as a 30-foot billboard viewed from a distance. And a good business card contains more useful business information than many full-sized billboards. That's why you should make sure that your card is professionally designed and printed on good stock.

Use every opportunity to get your card into the hands of anyone who may be a prospect. Don't wait for someone to ask for your card. Ask for the other person's card, take the time to look it over and then present your own.

7) Grab your share of the best publicity of all—free publicity. Advertising professionals know (but usually won't admit) that free publicity can be just as effective as the best paid ads. Most of your prospective customers will be far more receptive to a simple news item about your business than a typical advertisement.

So, how do you go about getting a piece of the free publicity pie? First, you need to learn what makes a good story. Then you need to learn how to sell it your local news media.

Your news item doesn't have to be of monumental importance to gain a free spot in the media; it just has to be "newsworthy." That simply means there is something about you or your business that the public might find interesting. Here are some newsworthy story ideas about your business:

• Employee news. Many neighborhood papers run columns dedicated to residents of the community. Potential topics including hirings, promotions and special awards are ideal candidates for submissions to these columns. Another area of interest is employees who have unusual hobbies or who have performed public service within their communities.

• Changes in your business. Most newspapers are anxious to run newsworthy items about local businesses. Any time you make a change in your business you have an opportunity for some free publicity.

• Your own activities and accomplishments. Don't be shy when it comes to publicity for you or your shop. If you are involved in community service, invited to speak to a local service club, have an unusual hobby, operate your printing business in an unusual way or participate in any events that have news potential, don't hesitate to grab a spot on the free publicity bandwagon.

You have to seek free publicity actively. The media isn't going to come looking for you. While it isn't necessary to have a "contact" in the local press to get your share, it doesn't hurt. That's another reason to put networking to work for you.

Shoestring marketing techniques such as these may not seem as challenging or exciting as more sophisticated methods for building your business, but they can be an effective and inexpensive way to add dollars to your bottom line. PI

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