Matthew Parker, consultant and director of Print and Procurement, provides strategic steps to help you increase print profit margins by over 12%.
Do you find print sales a hard slog? Do you feel that buyers are only interested in the lowest price? Do you feel that there is nothing you can do about this?
Having undertaken a lot of research for ‘The Print Industry Negotiation Handbook’, I was surprised at the number of situations where buyers did not choose on the lowest price. Why?
It may seem odd at first, but let’s consider how this might work. Let’s say that I am buying a marketing brochure. The brochure is a vital sales tool for an important exhibition. The trouble is that the exhibition opens in a couple of days. And no-one told me that the brochure was needed for the exhibition until this morning.
Of course, I could just try and find the cheapest price for the brochure. But let’s say that I found a printer for the brochure who offered me something a little different. Let’s say that this printer was willing to:
- Deliver an early sample copy for the marketing team tomorrow morning,
- Make a 7am delivery to the exhibition to make sure that my company had everything they needed before the doors opened,
- z Guarantee no charge if delivery wasn’t made on time.
Wouldn’t that peace of mind be worth paying a little extra for? Wouldn’t it be worth giving a slightly higher price in order to win these benefits?
Some of you may feel that this is an unrealistic scenario; don’t ideas like this fail in the real world? (and of course it’s not wide-format but the principle remains the same!)
Well, that example allowed a printer to charge me 12% more than they would normally! And I have seen a number of other examples where print companies have put together similar solutions. Solutions that ended up with much higher profit margins.
But to get a result like this the print company has to have salespeople who are skilled negotiators and who can come up with creative solutions. They will be able to control the negotiation process with their clients. This will lead to higher revenues. So they will be more likely to achieve or exceed their sales targets.
But there’s another thing that they will achieve too. They will also achieve better partnerships with their clients.
Which client is going to regard you as a close supply partner? The one bought on price alone? Or the one who paid more because they needed the extra solutions that the printer threw into the negotiation?
Of course not all printers negotiate well and those who don’t will struggle to achieve their sales and profit targets. So here are seven strategies to help you with your negotiations. And you need to think about the first one before you start talking to your customer.
Preparation gives a negotiator a real edge. It can be very tempting to get involved in a negotiation straight away. But even five minutes preparation can make a real difference to the outcome of a negotiation.
For major negotiations I have a checklist of 21 areas that I will consider preparing for. And I will work on those areas before I talk seriously to the other party. Or before I set my goals. One thing that I always prepare is a list of concessions that I can make.
Think about what you can give in to
Negotiation is about giving as much as getting. If you don’t have something to give you won’t get the same results. Some buyers simply demand a lower and lower price, but they end up with suppliers who are not engaged with them. And they also have nowhere to go if the print company refuses to lower their price.
So it’s important to make sure you think of what you can give in a negotiation. What can you do to help the buyer? What can you give that is more likely to make them help you achieve your goals? Of course, what you don’t want to be doing is giving way on price. So that means you need to take care when setting your negotiation goals.
Focus on more than price
Print sales people who focus only on price end up selling print as a commodity. And many people set a price goal and nothing else. But that means that a negotiation will remain stuck on price.
In order to be able to open up other areas of negotiation you need flexible goals. I use a system of goal setting called NICE. It allows me to make sure that I know exactly all the different factors that I can bring into play. It allows me to move the other party away from price. And it allows me to set goals which get me a good deal, even if I have to move on price.
Goal setting and preparation are important areas to focus on but they only work if you are prepared to ask for what you want.
Tell them what you want
Many negotiators think that knowledge is power when negotiating. But this is rarely the case. The best negotiation outcomes that I have seen happen when both parties are open. It is much better for the other party to know what you want. Then it is much easier for them come up with a solution that works for you.
And you also need to understand the other party. You must ask them to be open with you. Then you can work to help each other - and that creates a successful negotiation.
But when you work together, it can be easy to lose control of a negotiation. So when it’s time to start trading with your customer, you need to remember an important rule…
Get in there first
If you make a negotiation proposal before the other party, you are in a strong position. Your customer has to react to your proposal. You have set expectations in their mind.
As part of your proposal you can include elements such as the schedule, delivery time and guarantee of delivery. If the customer tries to beat your price down then you can remove those elements.