The Benefits of ‘Value Add’

One of the favorite buzzwords in our industry is “value added.” The ideal of value-added services for our customers is one we all attempt to achieve in the various segments of our businesses.

But just what does value-added service mean to you? Or more importantly, what does it mean to your customers? And ultimately, is the value-added service you provide actually perceived by your customer as something valuable? Let’s attempt to define just what value-added service might be.

Rules of engagement
Some of us use the notion of “value” in a misguided attempt to avoid focusing on price or to justify a higher price on a given product. That just doesn’t work. This begs the original question: If what you call value-added service doesn’t seem like that to your customer, then price will likely become the driving force in determining whether or not you get a particular job or retain a customer. That’s not really a place you want to consistently find yourself.

So how do pricing issues and valued service interact? In today’s difficult economic climate, it generally feels like we are at war, and in many ways the rules of engagement have changed. Pricing now has to be part of the equation, no matter what.

In our own company, we have had more pricing-related discussions with our customers and vendors in the first part of 2009 than we probably have had in the last three years combined. I’d have to say that we are now functioning in an environment unlike any we have ever experienced. And in this environment, costs are critical to everyone. So if you grant me that assumption, we can now ask ourselves: Is price going to always be the most important issue we deal with? I firmly believe the answer to that question is “No.” Providing consistent value to a customer can still trump the pricing game—but you really must approach your customer with both value and pricing in the equation.

Case in point: Last October, one of our key clients flew to our facility to discuss product options, production issues we might have had during the previous year, and any changes to our pricing structure for 2009 so she could, in turn, pass those costs on to her clients. We agreed on some modest percentage increases on most of the products we produce for them and were set for the upcoming year.

Then in November, the effects of the economic problems began to really hit our industry. As a result, we had another conversation in early December in which she notified us that, due to the rather dramatic changes in the economic environment, her company felt like it really was not in a position to increase prices to its customers (the end users), and wondered what we could do to help. As you might suppose, it didn’t take long for us to decide that we would do the same, and hold the 2008 prices good for the upcoming year.

The point of this example is that we have established a relationship with this client (and hopefully many others) that enables us to discuss pricing, but also other aspects of future business like product options, green initiatives, turnaround times, packaging and other important issues. So in this case, we discussed value-added services we can continue to provide our customer while making critical pricing decisions that strengthen our customer-vendor relationship. If we aren’t offering additional value to this customer, our discussion may very well be reduced to an e-mailed RFP where we find ourselves drilling into the numbers and driving as low as possible to land a job. Again, that’s not where you want to be in any economic environment, let alone in our current one.

Avoiding a race to zero
So how do you get your company to the point that you’re actually providing value-added services to your customers on a regular basis? I believe you accomplish this by establishing your business as something other than a print provider.

One way we’ve achieved this is by characterizing our business as a provider of customer solutions, not prints. If you’re like me, it feels like the print-for-pay model is a race to zero at times. There’s always someone who is willing to go lower—sometimes until they go out of business. But if you are providing solutions to your customers, the prints
just become a part of the whole package.

Providing solutions will have a number of different looks. For instance, you could offer your customer-installation services. You can partner with them in a green program that extends beyond the printing of earth-friendly materials by assisting them in the eventual disposal of the materials through a recycling program. It may be something useful such as online proofing, online tracking for shipments sent on their behalf, packaging specific to their company brand, automated proofing systems for color and content verifications, free local deliveries or other useful services.

Another effective way to connect with clients is to utilize your personnel with special skills, whether they are digital, engineering, financial, etc. as consultants to your customers for complicated projects. Make their problems your problems – and then help them solve them. If you can pull that off, it’s safe to assume the next problem they have, they will be calling you.

The partnership goal
As you are able to provide value-added services, I am convinced that pricing will continue to be a regular part of your discussion, but it won’t be the most important one. Your customers will always demand a fair price from you, but, more importantly, they will continue to demand your services.

When I was talking prices with that key client last fall, there was a point in the conversation when she commented that she really enjoys our business partnership. That should be our goal: Get to the point where our customer relationships are perceived as partnerships, not just buying and selling prints. Then you can consider yourself a provider of value-added services.

Marty McGhie is VP finance/operations of Ferrari Color, a digital-imaging center with Salt Lake City, San Francisco, and Sacramento locations. [email protected]