Artgrafix Blog

In a past post, I noted that you “can’t assume your competition is standing still” and that we are always looking for ways to add more value.  One of the ways we identify opportunities is to look at others and see what we like and try to replicate that in our way.   Perhaps that is not the classic marketing way to approach product and channel development, but for us it is cheap education and usually a sound way to go.

I don’t want to name the companies I really respect because I do business with a lot of folks and some companies are just way too big for us to emulate.  But I want to share a couple of observations we have seen and thought were neat.  If you are in those companies, you will probably recognize yourself.

The first company was going through some difficult times a couple years ago.  They decided the best way was to develop a new adhesive which stuck to a much wider range of surfaces and papers.  As you know with introducing a new product, it takes a long time to get sales traction.  But they stayed the course, and promoted their new adhesive aggressively.  As new papers and boards came out which had adhesion properties, they had the solution.  So while many folks outsourced products and became more “me too”, they developed their own strengths which became a more valuable resource for us (because I can get the “me too” products anywhere).  We also have some items which are unique to us.  We fabricate them in-house and it furthers our internal knowledge of mounting and laminating.  Like this partner, they take time to take hold, but we know that if you need to depend on us, we must make a commitment to these products and we do.  So just like this partner, we think this builds trust with our customer’s and further’s our knowledge which is also a valuable commodity to our customers.

The second observation comes from a company which is really “tight” with their customers.  They identify needs and have developed the resources to source those needs and satisfy their customers.  As such, their customers have no where else to go.  To communicate this, they put a lot of information on their website and are very generous with their knowledge with me and others.  Knowing that they are forthcoming with information, makes me want to call them first when I have a need, and I do call them first.  We try to replicate this by also putting a lot of information on our web-site and will help people secure what they need.  As a custom house, we are often accused internally in our fabrication area of being like Burger King (”Customers, Have it your way”) and all the demands that puts on us.  But without questions, it keeps folks coming back, focuses on value added and not price and is a good model.  The company we took this from does this really well in their area and we look at them frequently to see if we can do something better.

There are a lot of other observations I like too but I do not have time enough to write about them.  We do not hide who we do business with and will always tell our customers the adhesives, boards and laminate manufacturers we use.  I think it gives us more credibility because we partner with some outstanding companies and reflects well on us.

When we look at new products, we usually are looking at ways to streamline the mounting and laminating process.  And to be fun, that is fun and we like to do this.  But this month we have been working on a new concept to combine equipment and supplies purchases and by combining the revenue streams, help to lower costs for our customers and give us a more secure annuity on supplies business.  We have termed this program our “Purchase To Own” (PTO) Laminator program.

The  PTO program allows customers to receive a Free laminator by making a 2 year commitment to buy supplies from us and buying a certain level of supplies.  We built-in a deposit on those purchases up front to secure the 2 year commitment and amortize that at a 25% rate over their purchases.  This gives the customer a very tangible reason to stay “loyal” to us and insures the supply stream.  When compared to the cost of sales calls, customer attrition rates and alike, this helps to justify paying for a laminator to secure that business.

We also needed a partner to build a program around and be comfortable that we were not going to hurt the market pricing on their products.  D&K worked with us to do different things such as free good and extended warranties.  This insured the equipment performance which of course is needed to consume the supplies.   In what we offered, the value was significantly higher than the cost which further helped the customer’s value proposition.

The major challenge is in communicating the program as not some form of black magic (although I always liked magic and believe you need some in business).  The key is that an average customer’s volume on mounting and laminating supplies is worth a lot.  For example, the average proseal customer sells $20K worth of mounting and laminating services a year.  Based on a 4 times mark-up, their average purchases are $5K a year - hardly an insignificant sum.  To secure that business is worth a lot to me.  And for larger laminators the averages are even higher.  And this values is actually worth much more than the cost of a laminator.   So what we are trying to do is have our customers understand how valuable their business is to us.  We think this would be better than any loyalty program we could create.

We are also looking at this angle from our purchasing side and seeing what reaction our key vendors may have to blanket 1-2 year commitments and what that would be worth to them to secure our business with them.  I think this may be a way for us to stay very competitive over the long term - both securing our volume of business and procuring supplies at competitve prices to support that.

We have all heard the observation “you can never train enough”.  Being the slightly cynical person that I am, I always thought that was a philosophy of those neer do well HR people who always wanted to justify someone’s poor performance by blaming me for not training them well enough.  And when I sat in their training sessions, all I was really thinking was that my competitors were calling my customers saying “I can get you the same thing as Stover only cheaper!”  Needless to say, training was never high on my agenda.

But that being said, I do attempt to keep everyone relatively well informed on our new products and programs.  What I missed however was that most of the things we do here build on our previous experience and knowledge.  Our basic product drive is to analyze how mounting and laminating is done and try to fabricate products which take steps out of that process.  So what we think we know (always a questionable commodity!) is critically important.  And as much as you as you document and communicate, you still make assumptions.  And as we all know, assumptions can lead to some very bad results.

What brought this home was we were fabricating a board we have made for 4-5 years and we had to change the adhesive to be compatible with a certain paper.  When we went to process the order, we ran the board in an opposite orientation to how we always have processed it before.  When we had issues and we talked about it, it was noted that the order details did not mention orientation and the notes in the file were for other the adhesive so folks did not think that was important.  And remembering things is difficult as everyone wears several hats and is doing more than I ever asked them to do.

So, being humbled and understanding that I have been that 1950’s type of boss (and need to change yet again!), we have asked all of our major suppliers to come in and work with us to provide a training review of their products.  They have all been very agreeable to supporting us in this and while I may have glimpses of a relapse to see my competitor talking to my customers while we train, I know we will be more competitive as we will minimize the expense of mistakes and provide more consistent products going forward.