Branching Out for Profitability

In recent years, the prepress segment of the graphic arts marketplace has been feeling the squeeze from clients and printing companies that have been assuming many of the tasks once provided only by prepress service providers.

To help prepress firms flourish in this climate of change, the International Prepress Association (IPA), Edina, Minn., recently commissioned a research report on prepress companies' efforts to diversify into other product and service areas. The report, entitled "Profiting from New Revenue Streams," is the result of in-depth, confidential interviews with executives and managers of prepress firms.

Key market segment areas highlighted in the report include creative/design services, e-commerce, digital printing, facilities management (FM), and digital asset management.

The creative/design services segment offers much opportunity for prepress providers. Many executives interviewed for the report said that the foray into design and creative services—which includes a variety of offerings ranging from print advertising and promotion to broadcast and multimedia production—was an evolutionary process that started with something as simple as making text changes. Other participants stated that they launched such services after determining a need in the market.

Given that creative and design work is completely different than that of prepress, it requires a different approach to selling and pricing strategies. Says the IPA report, selling creative and design services requires that sales people focus on the client's goals, not solely on the product they are selling. The report recommends that prepress executives split the sales tasks of prospecting and relationship building into two separate job functions.

"Take the responsibility for identifying and qualifying prospects out of the salesperson's frame of responsibility," says the report. "Often, those who can build great relationships are horrible at cold calls, and those who enjoy cold calling are poorly equipped to sustain relationships."

The selling cycle also is different. According to the report, "While one company indicated its design and creative services sales cycle is as short as 60 days, most indicate that the larger accounts can take a year or more to close. This elongated sales cycle impacts workflow and sales compensation. In response, many companies are shifting to sales compensation structures that have a comfortable base salary augmented by value-added bonuses or commissions."

Creative and design services should be priced based on a client's perceived value of the job to their company and to their bottom line, notes the report. Also, price is only one dimension of what customers value. Equally important are product quality, delivery speed, and relationships.

Before entering any new product category, the report advises decision makers first to evaluate clients, then determine what additional services to offer.

Notes the report, "When considering new products, prepress companies have a broad choice of new services that could be offered. Selecting the right product is a key to success. Any company launching a new product should thoroughly research the market, the financial potential, and the competition as part of its due diligence process.

"However, most companies interviewed did not investigate a variety of services," the report continues. "Nor did the companies conduct any extensive research into the selected products. Most, for example, gravitated toward creative and design services as a response to their customers, since those services seemed to be a natural extension of the existing prepress business workflow."