Falling margins are driving a diversification boom. An increasing number of printers are concluding that they need to wear many hats if they're to survive in a challenging market. The logical step is to identify a major customer’s ancillary needs and develop a business around those. For example, print companies providing booklets might discover clients looking elsewhere for diecuts and POS material.
But the really clever thinking comes from identifying your customers’ not-so-obvious requirements. For that, you need to really understand their business and their objectives. What does their ad agency say? Are they planning a multimedia pitch? Perhaps there’s an opening to provide electronic content.
Of course, you need to identify your strengths and capabilities. Do you have the capital and human resources to leap the gate? What’s the cost of machinery, training, perhaps additional floorspace? You absolutely must conduct a cost-benefit analysis and bring your accountant in on major purchases. And your techies need to do due diligence on your kit options.
But even before that, you need to ask some fundamental questions. Do you have a sufficiently wide and stable customer base for those new services, or would one or two clients’ change of course – or defection to a rival printer – sink your diversification? How ‘crowded’ is this sector already? Will you have enough elbow room to offer quality at sustainable prices, or is this corner of the playground already affected by commoditisation and downward price pressures? Remember, you’re trying to escape the margin crush, so don’t leap from the frying pan into new fires.
Stephen Ball, industry marketing manager, graphic communications, at Fuji Xerox Australia, cites two examples of companies that have diversified using Xerox technology.
Digital Logic, a Melbourne-based provider of cross-channel marketing, began as a pre-press bureau in 1990. It took on cross-media marketing in 2002 and now uses XMPie personalisation software to integrate data with multiple marketing channels. For output, it uses two iGen3s and a Color 1000.
Also in Melbourne, Direct Mail & Marketing, which had its origins in trade web offset, uses XMPie and its in-house Integrated Direct Marketing (DMMI) software for cross-media marketing, alongside two Color 1000s, two DocuColor 5000 APs, a Color J75 and four Nuveras.
“Without a considered, well-structured business plan, no printing business will be able to achieve its expansion goals and mitigate risks such as client loss, investing in the wrong capital equipment and resources, or ultimately, business failure,” says Ball.
That said, don’t let caution unduly impede your spirit of entrepreneurship. There are plenty of inspirational expansion stories in Australian printing.
The cyber upsell
At Print Storm, a digital print business at Gulgong, east of Dubbo, New South Wales, it’s been all about diversification. Managing director Paul Cavalier is well known locally as a station commander with Fire & Rescue NSW (he was recognised as its youngest-ever captain). Last year, he was elected as a local councillor.
Cavalier had an early fascination with graphics. At 12, he developed a budding web design business and in later years established an ink supply venture that taught him the industry. He founded Print Storm seven years ago with his father, Henry, a mining industry engineer, as co-partner and director.
While Print Storm provides essential printing services in the district, Paul Cavalier believed there was potential for lots more. Around two years ago, he got the ball rolling in a compelling way – he asked his customers.
“We began finding that a number of our customers who use our design and print services were often asking us where they could have their websites developed. A few of our staff had prior experience in this area, and it seemed only logical to begin offering this as a service to complement our graphic design and printing services,” Cavalier tells ProPrint.
“The demand for this type of service was particularly high, and our capability to provide the service was there. For us, web development was a no-brainer. A surge in demand for web development services made it difficult at times to keep up with the work. But we built a good network of freelance developers and designers we can call on in the event we simply can’t keep up.
“Some additional software and IT infrastructure was needed, but in terms of the overall project, there was very little work involved in the diversification,” he says. Nor was there any retraining. "We simply hired additional staff that specialised in this field.”
Word of mouth spread widely, as did Print Storm’s reputation for quality and reliability. And some sweeteners. “We also offer clients incentives for using our web and print services, such as ongoing discounts.”
Two years on, Cavalier assesses ROI on the expansion as “high”. “There are very few competitors. It’s easy for clients to use us for all of their marketing-related services.”
Making it with mail
In 2010, southeastern Queensland sheetfed printer Mark Osborne wanted to use the trade services of a local Toowoomba mailing house but when the owner told him he was retiring, Osborne decided to buy the company, expanding his Greenridge Press into a diverse print and mail operation.
It was a brave move, with the GFC still knocking on the window, but Osborne tells ProPrint he was determined to transform Greenridge into a business servicing all the requirements of its customers, while adding newcomers.
Acquiring Downs Mailing Service and its direct mail customers throughout the Darling Downs region paid off handsomely. Greenridge Press and its mailing arm, Greenridge Mail, grew by an impressive 30% in financial 2011-12 and has been tracking strongly in the current financial year. Projections are for further growth of 20% in the print division and 30% in the mail division by the end of financial 2013-14.
“We do all sorts of different services for different clients, such as transactional mail in the form of monthly statements for credit unions, data-merge and mail of client-submitted files, and we have clients who use us as a marketing tool, wanting creative pieces designed and mailed,” says Osborne, the managing director of Greenridge.
The metamorphosis came with a hefty bill for new kit, “a fortune”, he admits, but all worthwhile. “There’s no resemblance to the business we took over. We invested heavily in software and in new, intelligent machinery [including a Heidelberg guillotine line and Horizon folder]. That combination enables us to handle anybody’s files.”
A new Pitney Bowes Rival inserter was also added. Greenridge Mail general manager Luke Osborne, Mark’s son, says the Rival’s file-based technology is an advance on the previous optics-based line. It makes the company more competitive with mail giants Salmat and SEMA. The new machine arrived only a week before ProPrint called, but news of the switch to file-based insertion had already drawn new customers.
The evolution of Greenridge Mail had its challenges, says Mark Osborne, but the transition was helped by long-term former owner Adrian Meston staying on for 12 months. Osborne quips: “He knew more about Australia Post than Australia Post employees did.”
Greenridge, which employs some 30 staff, took over Downs' employees, with Luke Osborne joining the business as mail general manager. The family outfit also has Mark Osborne’s wife, Fran, as a director and son Kyal as printing general manager. Greenridge Mail has more than doubled since its inception and staff added.
Greenridge Press, meanwhile, has added an Agfa Anapurna flatbed and levered open a new sector in large-format UV inkjet, producing signage, coreflute printing, banners, posters and vinyls for existing and new customers. Another training curve, but worth every ounce of the effort.
The company continues to service the production digital needs of its customers, with an A3 HP Indigo 3550 added recently to handle shorter runs. “That’s seen our digital work increase by around 30% over a 12-month period,” says Mark Osborne.
Offset customers continue to be serviced through Greenridge’s quartet of two-colour Ryobis, two of which are A2 sized and two of which are A3. Not bad for a $300,000 company acquired 20 years ago with just a single-colour press. Mark Osborne sums it up: “If our customers want something, the first thing we want them to think of is Greenridge.”
Polishing your lists
When ProPrint caught up with Luke Pearsall, general manager of Active Mail, he was scouting larger premises for his thriving operation located in Sydney's south.
The Caringbah-based company began as a small print enterprise with some mailing, telemarketing and list rental in commercial and industrial property. As for Pearsall, he cut his teeth at Security Mail, then at Mailroom Express, where he grew its new iGroup brand. When Pearsall became Active Mail's manager in a buyout plan, he integrated the print and mail activities and began hunting new opportunities. He offered lists to wider markets, including the booming not-for-profit (NFPs) sector. The company also provides its telemarketing to NFPs and retail. And it has introduced a web-to-print hub.
“They had the services there. That’s what Active Mail was built on – supplying records from a database to a targeted market, printing a brochure, stuffing it, mailing it, and then following it up – basically a direct-mail model. The business just wasn’t being utilised as it should have been and I’ve changed that,” he says.
Business is now healthy. On average, the company is picking up a new client each week, broadening services to existing customers and becoming what he describes as “a well-known, medium-sized mailing house”. The staff of 18 includes four new hires. While he will not divulge figures, he says ROI is up since the expansion.
Active Mail invested heavily in updating its B2B data set. “We’ve also created a new custom-built database system. We’re launching it online, so there’ll be a portal where customers can enter their selection criteria and will even be able to rent or purchase their lists online with a credit card and have them in real time.” There is also a new US-sourced MIS developed specifically for mailhouses.
The company has maintained its traditional print component, running a Ryobi SRA3 press, two single-colour Ryobis and four digital presses. “I don’t think any mailhouses have offset printing internally, but it’s a huge leg-up,” says Pearsall. “It’s easy to convert clients. It’s all about the cross-sell.”
Adding digital
One traditional Brisbane offset enterprise has ventured boldly into commercial digital printing. Kuhn Corp Press, located in Virginia, has recently added a Xerox Color J75 press to handle straight and variable data jobs.
Chief executive Walter Kuhn tells ProPrint that around two years ago the eight-staff operation identified a demand from retail majors for booklets and catalogues specific to various states or 200-300 branch stores, with variations in pricing and product availability.
“Clients have a need [for variable data] but they basically don’t know it until they get involved. You cultivate that need. At the end of the day, you want to make sure the customer gets what they want at a realistic price,” he says.
Kuhn Corp's production line-up also includes a six-colour Komori Lithrone and a Heidelberg GTO 46. Until it went digital, Kuhn Corp outsourced its digital jobs. “We’ll start by utilising external partners, and then we’ll look at the cost of doing it in-house, buying machinery, hiring staff and so on. Once we get our break-even point, we have to make a decision.”
That also allows the company to gauge the best technology. “Obviously, things change, we know that. But it does enable you to set up a benchmark plan as to how to approach it, in terms of time, cost and staffing.”
During its digital research process, Kuhn Corp sent a file to a wide range of press vendors and asked them to print it. “We then looked at the results compared to an offset job we’d run from the file, so we could gauge what would complement offset. And it had to be at a price point as well. We found the J75 was the best value for money and best quality for that sized machine.”
Kuhn Corp moved to self-owned premises at Virginia mid-year after renting for many years at nearby Geebung. The new site allows more space for its packaging activities. The Xerox press was delivered to Virginia after the move. The installation included several days’ training. “We purposely built an area for it first, with features like air-conditioning. The whole thing had been planned for eight to 12 months.”
Printing digital under its roof has enabled the company to more fully service existing customers and attract new clients, says Kuhn. However, he says it will take another six to 12 months to properly assess the return on investment.
The company is no stranger to spreading its wings. In 1999, it ventured beyond its sheetfed roots to develop a packaging business. “From that point of view, we have a lot of knowledge on how to attract new markets,” says Kuhn.
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