Managing Through Adversity

Despite a brutal economic and competitive climate, some printing company managers are mapping a course to profitability based on directions and insights supplied by their customers. By using their customers' feedback as a compass to guide them in developing their product and service offerings, deciding on equipment and technology purchases, and tailoring services to meet individual customer needs, these managers are helping to boost their companies' profit margins by enhancing client perceptions about their firms.

The companies solicit customer opinions via mailed surveys, telephone interviews, feedback forms enclosed with finished jobs, focus groups, and client relationship meetings.

While the obvious goal of most customer surveys is to evaluate client satisfaction—discovering how happy they are with service, product quality, delivery, and overall experience with a vendor—in actuality the benefits derived from this "ask the customer" approach are many.

Later, we'll cover the important issues involved in customer survey programs.

1. Identify unhappy customers before they leave. The information gathered can signal customer relationships that are in jeopardy. "If your research effort reveals accounts that are in trouble, then you can put into place individual customer retention plans to salvage those relationships," explains Pam Conover, principal of Conover and Associates, North Cadwell, N.J., a graphic arts consulting firm that focuses on sales and marketing.

"Most dissatisfied clients walk away and never tell you why," adds Suzanne Morgan, president of Print Solutions, Arlington, Va., a consulting firm that conducts customer research for printing firms.

Customer research alerted managers at Arbor Press, Royal Oak, Mich., to a potential customer departure.

"A client survey revealed that a particular client was not fond of its sales representative. We changed the salesperson and expanded that client's business to $600,000," reports Jim Russell, president of Arbor Press, a $11.5 million, 60-employee company that offers offset printing, digital printing, Web site development, and multimedia services. Another key revelation uncovered by customer research, says Russell, was that his company's perception and its customers' perception in an important market niche were not in sync.

"We didn't know we had built a great reputation in a particular niche, and we almost pulled back on our marketing effort. But as a result of research, we refocused our marketing effort to aggressively pursue that niche," says Russell.

2. Pinpoint the products and services that customers actually want and need. As print has become a commodity product in the eyes of many customers, the strategy most business observers espouse is for individual printers to differentiate themselves from competitors. But the trick is uncovering products and services that competitors can't easily replicate.

"Surveying customers is a great way to identify new business opportunities, and assess what customers think you offer," says Conover. "They may not be aware of all the services you offer."

"By documenting customers' needs, you can assess how well you are meeting those needs and what you need to do if you're not," adds Dennis Castiglione, president of ProCom Management Group, Inc., Highland Heights, Ohio, a graphic arts consulting firm that focuses on marketing management.

Castiglione adds, "As an industry, we are challenged by other forms of media stealing available marketing dollars. We have to determine how we position ourselves for success; we can't do that without talking to customers in the marketplace."

3. Solidify relationships with customers. Asking customers their opinions shows that they matter and goes a long way in forging strong relationships, says Conover.

She explains, "The process shows customers that you are committed to satisfying them, while at the same time it uncovers what customers don't like. A customer may love your printing but be annoyed by such minor things as how long they're placed on hold, how they're treated by the receptionist, or how finished jobs are boxed. These are issues you may be clueless about."

4. Assess your competitive standing, and explore the correlation between perception and profitability. Customer surveys can reveal how a company compares to its competitors in the eyes of customers.

"Like it or not, customer perception of your company is reality," notes Morgan of Print Solutions. "If the market's perception is different from yours, you won't get the work you're pursuing. If the market's perception is not accurate, you need to know so you can make adjustments to change it."

This is an important point because there's a close correlation between customer perception and profitability, contends Dallas Dort, president of eKG Research Associates, Flint, Mich. Among its services, eKG offers a written, quantitative survey that measures customer satisfaction and a printing company's competitive position in the eyes of its customers.

"The profit leaders in the industry tend to be perceived by customers as superior performers," says Dort. "Competitiveness in the eyes of customers is a key piece of information if you're trying to improve or protect profits."

Given this revelation, Dort argues that measuring customer perception is as important as measuring expenses. "In reality, controlling expenses has less bearing on profit, yet most printing managers focus extreme attention on managing expenses. By the way, the net result of these efforts is an average industry profit margin in the neighborhood of 3%," says Dort.

He adds, "I'm not saying don't manage expenses, but it only gets you so far. However, managing your competitiveness in the eyes of your customers can boost profitability up to the double digits."

He reports that the average profits of eKG customers are about double the industry average. "I'm not saying we got them there," adds Dort. "But we find that the companies that conduct customer research routinely double or triple the average profit level."

(Arbor Press uses eKG's survey and reports that it experienced growth last year in both sales and profits.)

Still, many printing companies do not conduct customer research, observes Castiglione. He says, "Most managers believe that, after years of working together, they know what their customers want. It isn't until they get into trouble or decide they're facing some obstacle that they think about spending the money to see what customers have to say."

Also, the decline in the economy, says Castiglione, has everyone looking for ways to cut expenses, and unfortunately market research is considered expendable. "I'm passionate about this because I've seen research yield results: our clients can boost their share of customer," he points out.

The cost of customer research varies greatly depending on the type, scale, and detail of the effort.

Nonetheless, says consultant Morgan, "I think it's more important to spend money on customer research than to produce a new brochure or buy new machinery because you're bound to get more sales from customers by adjusting your service to meet customers' actual needs."

Printing company managers interested in surveying their customers should keep a few caveats in mind.

• Define the goals before initiating a customer research effort. Typically, customer surveys are used to gauge satisfaction on an overall or job-by-job basis, identify a company's strengths and weaknesses, assess its competitive standing, gauge client interest in select products or services, and more. Given this breadth of purpose, managers need to determine clearly what the effort should accomplish.
• Acknowledge that third parties may solicit more honest results. Hiring a consultant or other third party to conduct customer research may yield more fruitful results.

"Customers are more open and honest with a third party than with a vendor they work with on a regular basis," says Jim Russell of Arbor Press.

Morgan agrees, saying, "The customers you are closest with are sometimes the least likely to criticize you face to face."

• Allow clients to speak freely. "When customers offer criticism, resist the urge to defend your company," says Morgan. "Let them tell their story."

Adds Conover, "A great survey will get people to complain and tell the truth about how they feel without fear of repercussions."

• Don't take survey results personally. The fact is, surveys invite customers to criticize so that a company can improve.

"Customers that complain the most and the loudest and tell you when there are problems are your best customers. Addressing those complaints builds a strong relationship because it demonstrates that you care," says Conover. "You really don't want clients that don't complain when they have a problem; the risk is that they'll just leave and never discuss it with you."

• Act on the information gathered. Asking customers for feedback builds an expectation of a follow-up report or that some type of change will occur based on the survey results.

"It is absolutely crucial to let clients know the results of the research effort and how issues will be addressed," says Morgan. "Clients will stop providing feedback if you don't demonstrate that you're listening and taking action. I estimate that close to 99% of the companies that do customer research fail to do this, and thus lose credibility with clients."