Navigating the Learning Curve from PSP to MSP
Written by Lorrie Bryan
One of the most common recurring dreams people report is the one where they are a student, they show up for class and are surprised to find out there’s a midterm or final exam for which they are not prepared. Sound familiar? You arrive for class a few minutes late, the teacher is handing out exams and you’re anxiously wishing you had studied, wishing you had come to class more often, wishing you had at least remembered to bring a pencil to take the test.
Dream interpreters often associate this dream with feelings of coming up short and being unprepared for life. Even if you dismiss the notion of dream interpretation, you likely see the parallel dynamic prevalent in the print industry today. Rapid acceleration of digital technology and the global economic recession have necessitated a need for transformation in the print industry. Although there is ambiguity about what the emerging successful business model should look like, industry leaders generally agree that printers who aren’t preparing—doing their homework and showing up with tools—are not going to pass the test and make the grade.
“The transformation of the industry based on market conditions is underway and is no longer in dispute. As in other industries, the acceptance and rate-of-change for the print industry is varied,” affirms Yishai Amir, vice president and general manager, Indigo and Inkjet Press Solutions – Americas. “Many forward-looking printers, including startups, have embraced the changes and structurally adapted their business model, hired or trained staff with necessary skills, and aggressively partnered with industry partners. On the other extreme, many printers have focused on the core legacy business only, and in some cases are outsourcing significant amount of digital print to other providers.”
No Printer Left Behind
As print leaders grapple with the new reality and explore various business models on the marketing service provider (MSP) spectrum, increasingly the consensus is that doing nothing is not a sustainable plan and transformation is needed to survive. Jim Daly, director of Digital Services at PBM Graphics, gives the industry a C- for embracing change. “Too many printers want to be rewarded for putting ink on paper and are not focusing on the new reality,” says Daly. “They need to be deciding whether they want to be infrastructure providers or provide marketing campaigns, and if they want to develop internally or partner.”
Transformation is not easy. When the federal government decided to transform the country’s struggling schools, they proposed standards-based education reform. Two basic principals are at the crux of the landmark No Child Left Behind legislation: setting high standards and establishing measureable goals. As print moves from a manufacturing model to a comprehensive service model, measurements of quality, cost and delivery are no longer appropriate performance indicators. What should be the goals and the new rubric for MSP assessment? Amir suggests that for printers to be successful today they must position themselves as result-oriented, value-add service providers. “In a manufacturing environment, printers competed for “print jobs” and did not require an intimate knowledge of their clients business, or business process. The emphasis was on the output. Today the emphasis is increasingly on the outcome rather than the output.”
Back to School
Tom Obrien, co-founder and partner at AccuLink, points out that printers have a strategic advantage in the MSP market because they’ve had a first look at PURLs, QR codes, and other cross-channel marketing tools. But he doesn’t give the industry high marks either. “By and large we are more accustomed to dealing with purchasing departments rather than marketing departments, yet we were the first industry to be exposed to a lot of the new marketing tools. Unfortunately many in our industry look at the tools as an end, but the shiny new tools are worthless without strategy and the expertise to use them optimally.”
Homework, research and development begins with the new products and services in the market. But that’s not where it ends. To make the grade, print leaders need to also be studying and experimenting with new business models and endeavoring to change the prevailing cultural mindset within the industry. “Simply printing PURLs and giving a client keys to a data gathering dashboard does not equate to being an MSP. To excel, leadership needs to change the culture and commitment of the entire organization to recognize this new focus on MSP instead of the old process-oriented enterprise,” adds Lindsay Gray, co-owner and vice president of AccuLink. “The most difficult lesson for printers to master is that the client expectations are radically different from those of the traditional print buyer in the past who bought transactions rather than programs.”
As Amir notes, “The real challenge is for the large majority of printers who have made a financial investment but have not yet effectively addressed the requisite aspects of sales, marketing, value-add services, and realizing the profitability benefits of an MSP based business model.”
Perhaps to succeed as MSPs, printers need to revisit some fundamental lessons. Here are a few curriculum updates suggested by industry leaders.
ScienceIn addition to an intimate knowledge of their client’s business or business processes, Amir suggests that for most commercial printers, the traditional manufacturing orientation needs to be augmented with a web-savvy marketing mindset, and strong IT competency. Key science lessons should include: strong IT development and management skills, web marketing competency including cross-media campaign development, management, and ROMI (Return on Marketing Investment).
Math
Daly says that printers need to rethink the math and the formulas by which they measure profitability. “We tend to see production as unique transactions rather than a process. We apply rules of profitability that don’t have any bearing in reality. Costing standards were created from a guess, but they become unchangeable dogma. We have to quit thinking in terms of cost-plus and learn how to create value and evaluate what our costs are relative to customer opportunity.”
Language Arts
“It is absolutely critical for printers to understand that marketing decision makers operate under a completely different perspective than print buyers. The language and expectations could not be more different,” says Gray.
“To survive, printers have to stop thinking like printers and start thinking from our customers’ perspectives. We have to learn how to make a sale with multiple stakeholders at the table; speak their language, know what their metrics are…ask different questions, help the customer define their objectives. We have to learn to bring ideas to market rather than just asking customers if they need anything printed,” Daly adds.
“This is the critical starting point,” agrees Amir. “It is not enough anymore for printers to just deliver the print service they are asked to deliver. Printers need to understand their customers’ business plans—how they go to market, and what their biggest opportunities and challenges are.”
From the School of Hard Knocks
Daly suggests that one of the most important lessons that printers need to learn is how to leverage their current customers to create new opportunities. “It’s a new market that requires a new and different mindset, but, by and large, our customers are the same customers we’ve always had. You spend years earning trust, learning about their business and building a relationship, and it’s important not to squander that. Our customer relationships are the most valuable part of the whole thing,” Daly affirms.
“We need to learn to enrich and leverage those valuable relationships. Years ago my wife and I created a typography company. We were very successful for about 10 years. Then I saw the end of professional typography coming, ahead of my colleagues, so we sold it. The giant mistake I made was that I didn’t understand that I had relationships with a very good customer set that I never leveraged. I let it all go away—all that trust that I’d built, all that understanding of their businesses went away. I squandered it,” Daly explains.
Daly suggests that printers should look to their customers for help navigating the learning curve on the way to becoming MSPs. “Printers need to stop thinking like printers and start thinking about their value to their customers. The customer relationships that they have will drive those new business models a whole lot faster. So they should look at their current customer set continually to get an idea about which direction they should take, which services they should add, what business model leverages their core strengths.”
There are those who say you can manipulate your dreams while you are dreaming. When you get to the part where the teacher is handing out exams and the anxiety and dread start setting in, you just look at your hands then tell yourself that you know this material, and magically you do…perhaps. But you might sleep better and avoid this recurring dream altogether if you do your homework now. Create a business model that leverages your strengths and your customer relationships and prepare for the future now.