Lost Two Clients...

[kdw75]

Got the news recently, that we had lost two large mailing accounts, that were from two divisions of the same parent company. We were told that it was a new regional manager's decision to go with a cheaper company in a large city several hundred miles away. We were given the exact cost that the new printer/mailer was giving them and it was quite a bit cheaper, but the service wasn't as good, and the customer service, we are told, isn't as good as what we provided, partly because we were just a few blocks away. The people we dealt with said they fought tooth and nail for us, but the new regional manager was all about saving a buck anywhere he could, regardless of the consequences.

We were fortunate enough to have been given a breakdown of the pricing the other printer/mailer is charging them, and it is just insanely cheap. We could match it, but it would mean little if any profit after covering wages and overhead. The mailings have variable data on both sides and there is monetary risk to the printer if a mistake is made. They other printer, must be relying on massive monthly volumes, and only making a couple cents on each sheet, because otherwise I don't see how they are doing it.

Just drives me nuts, how cut throat printing seems to be. Every bit of profit has been rung out of the industry and people are practically begging to do work for next to nothing. Meanwhile I see other businesses, with insane markups, having customers beg to get the product. We recently looked at new beds, and I was just floored when I saw that a top of the line Sleep Number bed, and frame was over 20 grand!

I know people say that you don't want the customers that only care about price, but it is really depressing when one of your customers that was happy paying for fantastic service, and knowing that you had done hundreds of mailings for them, without any mistakes, runs to the cheapest guy they can find, because of one big shot making a decision from his desk hundreds of miles away.

It makes me wonder how it will pan out, as this client would regularly have updated lists, or changes, multiple times, at the last minute. I would regularly spend an evening, or a weekend, running their jobs and getting them mailed to meet their deadline.

 

[johntheventer]

You know what? I predict these guys will be back - I've seen this type of thing happen many times, and I've been on both sides, corporate and supplier…

Also - I agree - people and companies have become very price sensitive, not thinking through prices properly etc, but like I mentioned in a post the other day, I've started charging for what my work (as a designer) is really worth and also as a printer (digital) and am amazed at how much more respect you get - fewer clients but bigger jobs, more chance to build a proper relationship with the client.

Gordo mentioned in some post a while back … something like "If you offer what everyone else offers, you have to charge what they charge, or you have to find a reason why you can charge more"

 

[almaink]

We get the same thing with offset now. Bids go out for state jobs and we get back an email telling us who won the job and what they bid. Our company is always in the middle price wise but the winners are priced so low they have to be giving it away, or stealing the ink and paper and paying illegals below minimum wage. Another thing we are seeing is companies sending their printing out of state, especially for postcards. We used to do a whole lot of postcards but now those customers send them to some place that does them for 1/2 our cost although the print quality isn't anywhere near as good. People don't seem to care about anything but lowest cost these days.

 

[chevalier]

I'm sorry for the hit to your business. I don't know the specifics of your shop but I'll share my POV.

I was an estimator for a number of years interfacing directly with buyers, sales, management, production and accounting. It was an eye opener. It is amazing how much and how quickly bad or ineffective management can sink a company. If management decides to rest on laurels and aren't constantly striving to cut costs, improve productivity and maintain standard quality expectations your dead quick these days.

To be cliche there's a new paradigm.

There has been an ongoing cultural shift in buyer attitudes and printing is being treated as a commodity. I agree with this logic and I actually implemented it with the vendors I used for outside purchase. Everything was bid to a minimum of 3 local vendors but price wasn't my only consideration. If I couldn't find local I went regional. This made serious waves with upper management who stated things like "we've been doing business with X for 20 years!" to which I responded "Z has been in business for just as long but can beat them on price and speed with no discernible difference in quality. If X has decided to be less efficient we can't subsidize it." The problem is when intangibles aren't considered (like that time that vendor X really saved your ass). It takes nuance (and having a soul) but at the end of the day the bottom-line is the bottom-line.

A lot of what drives this has to do with budgets. Budgets were slashed at a lot of companies due to the economy. Those budgets have not been reinstated and probably won't. The days of backslaps, handshakes and loyalty is mostly over. Standardization (Read: negligible difference quality between vendors) is a good thing in the macro but will cause significant pain in the short term.

almaink,
If this is true you should report it to the proper authorities. Those entitled to bid should be audited and verified to be operating within full legal and standards compliance in regularity. Our bids for state work had very clear language stating that only raw materials may be sourced out of state and that if you were subcontracting production to an out-of-state vendor it must be clearly stated. If your working with small municipalities that may be another story but that's where graft loves to live.

 

[MailGuru]

Don't get down in the dumps, kdw75. It happens. But, be of good cheer! It really is true what they say about "when one door closes........". And, like johntheventer said, they may very well be back after the new company screws it up, that's happend to us a couple of times.

Years ago, as a consultant to print & mail shops, I would "shock the sh_t" out of some of my clients with my opening statement: "Regardless of your service level, quality, and pricing, you WILL lose every client you have at some time or another. Ususally, through no fault of your own (new management pulls the account and places it with his brother-in-law in another state, the campaign has run its course and the program is being discontinued, your client shuts down that part of their operation and moves into something else, new corporate policy dictates that it must go out for online bid, etc."

That's why it it so important to not get comfortable and content with your current client-base. For your own longevity, you must continue to add new clients and new accounts to compensate for the inevitable loss of your current ones.

Now, I like to think (and, my clients agree), that we do a very good job with digital print, mail, and customer service. In fact, the average tenure of our current client base is 15 years or over. And yes, this past year, we did lose a very large "theme park" client (think -- Orlando, Florida), through their corporate-mandated online RFP process. And, yes, it did hurt. HOWEVER, between adding new clients, and, the fact the our current clients are increasing their volume, the net financial affect of the client loss is negligible.

Keep Your Chin Up!!!!

Best

-MailGuru

 

[mwc]

Yeah, regular crap continues. Value added service just doesn't work for the folks that don't understand value.... example: Just lost a $7200 bid on a job (we have produced before) because we were $95 too high. Really?.... but c'est la vie....and caveat emptor!

 

[Mark]

We see this alot and the "too cheap to make a profit" guys usually go under.

 

[gordo]

Sorry to hear of your loss. The story is not new. It's been the same since I entered the business in the 70s.

Differentiate or capitulate.

 

[kdw75]

I do tend to have an optimistic outlook. It makes me feel good when our clients tell me how much they appreciate our going out of the way to take care of their needs. What really keeps me scratching my head though is how these guys can be making enough money to cover their overhead. And as Mark stated, they may not be, we have seen this a couple times recently.

On the other hand, I am sure Vista Print does great work, and if someone is only worried about price, I don't see how a local guy could compete, if personal service is taken out of the equation.

 

[UK Printer]

Feel your pain, we're seeing the online market place becoming far more competitive and almost completely price driven. MailGuru makes some awesome points there, get yourself a plan to grow your client base, as invariably some will go and new ones take their place.

Drill down with your costs, continually quarter by quarter asses what costs you could save, how can you lower your overheads and it'll help you go toe to toe with your competitors, its all about price now, no getting away from that.

Best of luck with it all.

Tim

 

[MailGuru]

Here is the secret to business success and, enormous profit margins. It's very simple. Gordo has already said it in several posts. His one in this thread ".......Differentiate or capitulate...... " is short, sweet & to-the-point.

I've used this technique successfully in the past to go up against the "big guys" and win. It's all about "INGENUITY"

If you do what everyone else is doing, you can only charge what they are charging.

BUT, do what NO ONE ELSE is doing, and, you can charge whatever you want -- even 3-digit markups.

But, don't get lazy. Once those "big guys" see how much profit and money can be made with what you are doing, they will spend whatever it costs to figure out how to do it also, and they will eventually succeed. But, you don't care about that, because, you are already working on something else that NO ONE ELSE is doing, and, the cycle continues.

It's really awesome!!!! You don't have to have more money or better equipment than the "big guys", you just have to be able to out-smart them. It's a lot easier than you think. Most big corporations are not able to move as fast as you can, and, believe it or not, they are so top-heavy with bureaucratic administration, that creative ingenuity gets lost in the mix.

All The Best

-MailGuru

 

[chevalier]

Most big corporations are not able to move as fast as you can, and, believe it or not, they are so top-heavy with bureaucratic administration, that creative ingenuity gets lost in the mix.

This, this and this.

 

[kdw75]

Here is the secret to business success and, enormous profit margins. It's very simple. Gordo has already said it in several posts. His one in this thread ".......Differentiate or capitulate...... " is short, sweet & to-the-point.

I've used this technique successfully in the past to go up against the "big guys" and win. It's all about "INGENUITY"

If you do what everyone else is doing, you can only charge what they are charging.

BUT, do what NO ONE ELSE is doing, and, you can charge whatever you want -- even 3-digit markups.

But, don't get lazy. Once those "big guys" see how much profit and money can be made with what you are doing, they will spend whatever it costs to figure out how to do it also, and they will eventually succeed. But, you don't care about that, because, you are already working on something else that NO ONE ELSE is doing, and, the cycle continues.

It's really awesome!!!! You don't have to have more money or better equipment than the "big guys", you just have to be able to out-smart them. It's a lot easier than you think. Most big corporations are not able to move as fast as you can, and, believe it or not, they are so top-heavy with bureaucratic administration, that creative ingenuity gets lost in the mix.

All The Best

-MailGuru

That makes me think of the largest printer in our small city. The print shop is a side business of a media empire worth hundreds of millions, so they can lose money on every job they print and not care. They of course have the best equipment, and the latest technologies, but they struggle to set a decent looking piece. They don't understand proper spacing or the concept of margins. Their advertising campaigns are all about beating any other printers price.

 

[Possumgal]

Some of these places with the low prices offer them by not only slashing their profit margin, but by hiring the cheapest labor they can. With something as convoluted and detail oriented as mail service, these bargain basement, non-experienced employees are bound to mess up sometime. If this is the case here, you'll get your clients back sooner or later.

 

[cosmo]

How long have these other guys been in business? Its funny how people will just shit on you in this game to save money but sacrifice good relationships, i predict you will get them back. This is a sneaky tactic, but, set up an alternative email address and id and send the competitor quotes to see how you compare, underhanded yes, but thats how it is now.