For around 10 years, printers looking for increased margins have been hastily shepherded towards a door marked ‘Niche Offering’. And, for many, stepping through this door and honing their service to a single expertise has brought those promised benefits.

 But for those in the B2B sector, things aren’t as straightforward. Here, the client base is not necessarily after ever-more specialised offerings, or rather not those specialised offerings in isolation. Instead, the economic situation has focused B2B clients on driving efficiencies and, for the most part, this has seen them looking to reduce the supply chain by buying as many services from a single provider as they can, saving on time, logistics and cost.

 For B2B printers, this means that print is no longer enough. Far from moving towards a niche, printers in this sector are diversifying in ever more random, non-print directions, searching for added-value services to become the one-stop shop of their client’s desires. The problem is that, while a bit of design or marketing on the side looks simple to offer on paper, getting added-value services right is actually a very tricky proposition.

The B2B market is arguably at the forefront of the commoditisation of print – it is where the turnaround competition is keenest, the products most formatted and the differentiation between providers more centred on price than in other sectors. Hence, it is also where the margins are slimmest and, according to Paul Banton, managing director at Lincoln-based Ruddocks, this means seeking other revenue streams is a must.

"If you are just selling print, business to business, you will be struggling," he states. "Anyone who says they are making a decent mark-up in this area is either working in a niche or they are not telling the truth. So the margin has to come from elsewhere and the best route to that is through additional services."

Multitasking
It is the best route currently because time- and cash-conscious businesses are increasingly seeking economies in the supply chain. By adding services, the printer can cut the hassle for those businesses by fulfilling a range of requirements, and the more services a client holds with a printer, the more likely that client is to stay with that printer. It benefits both.

What form these additional services should take is an interesting question: do you want something that will feed into the print business, hopefully generating more printing work, or do you want something unrelated that will stand alone as a revenue stream without the preoccupation of the print business stifling progress, or do you want something in between?

Most printers would opt for option three: an autonomous, self-serving, added-value service that operates in isolation to the print functions of the business, but which complements it. And the vehicle which they would choose to pursue this option is almost invariably in the establishment of a design studio.

Of course, use of the term ‘design studio’ can be rather liberal in some instances. A true design studio is somewhere that caters for all a company’s design needs – from basic branding and logo creation, through to creative solutions across the whole spectrum of media portals. It’s not just a question laying something out in Adobe Illustrator so that it looks nice. 

"Every printer in the country has a design element to it, but I wouldn’t call a lot of those services ‘design’," challenges Banton. "We have a creative team of three, and we’re in the process of recruiting a fourth, and they all come from creative backgrounds. Hence, they are doing everything from brand formation and management to designing logos and marketing campaigns, as well as creating e-shots and Facebook pages, and getting involved with Twitter on other people’s behalf."

Vario Press also offers design services of the ilk Banton describes. It started 30 years ago with a single designer and now has a team of 10 working on accounts with both print and non-print clients.

But, while design may be a common added-service choice, it is by no means the only one. Ruddocks offers marketing services as well as design, while Vario Press managing director David Clarke explains how his company also offers marketing and website building services, along with something slightly more obscure.

"We have a man who does picture framing and shop signage," he reveals. "We started by offering to frame some certificates we were printing for a kitchen firm’s training courses. It grew from there. When people realise you do picture framing, you’d be shocked how much work we get in."

Clearly, there is a broad scope for added services, but K2 Digital Print sales director Alex Killick believes that whatever you do, it has to be driven by demand. Picking a service at random, he believes, is a waste of time. His company provides a number of design and marketing solutions, employing two staff with a range of skills so they can react to any customer request.

"It sounds a bit of a cliché, but it is customer led; we try and make the customer journey as easy as possible and so we try and cater for what they need," he explains. "That can be help with a website, complete design, creative, branding – we have the skills to provide those services."

The acquisition of skills like these presents a problem for printers: skills and experience costs big money. Already suffering under tighter margins, going out and hiring an experienced designer, or marketer, or framer for that matter, looks very expensive and for this reason many go into additional services half-heartedly, not investing in the skills required. Vario Press’s Clarke believes this makes the whole endeavour pointless.

"Of course setting this stuff up is expensive, but it provides a great return on investment," he says. "Doing it half-heartedly is really a waste of time."

While buying in experienced people is one option, Woking-based Repropoint took a slightly different tack. It has a creative agency called Round and Red that provides design, marketing, data mining and a whole host of other creative solutions. Instead of buying staff in for this service, however, Repropoint integrated an existing business into its own.

"Two years ago, we acquired a design services business," explains managing director Steve Hallet. "It meant we had in place a service that was established, that had the skills and the experience necessary to make this arm of the business a separate identity, with its own business plans and strategy. The latter we believe is crucial if an added service is to be a success."

It’s true that added services are not going to be a success if they are seen purely as a sales conduit for the print operation – to be taken seriously as a supplier of design, marketing, frames or anything else, that service has to be the focus, you have to be seen as expert in it; it cannot play second fiddle to a print obligation.

Converging streams
However, that’s not to say one cannot feed into the other. Clarke says his added services all run into each other and drive business across all revenue streams. He says having this range of skills is something to be promoted, not something to hide.

"If we are doing the design and marketing, we will get the best out of a sheet of paper as we understand print," he says. "We can design the job to fit in with our kit. A design agency is unlikely to do that."

Killick adds that moving away too far from the printed product is a dangerous game to play. "We always maintain that we are a printer first and all added services are born from a print relationship," he explains. "If you’re a printer you can’t call yourself a web designer, people aren’t stupid. You have to genuinely add value. You can’t claim something you can’t deliver. You’re treading a very dangerous line if you go down that route, you will struggle and I have seen people suffer doing that."

Ruddocks’ Banton and Repropoint’s Hallet disagree. Hallet says that right from the off he accepted that although many conversations the design agency had would involve print, there would be just as many that would not. Barton, meanwhile, does not see a problem in there being no print element to the job at all, in fact, he even goes as far to say that his design arm is so autonomous that the work it produces has been known to be printed elsewhere. Both believe that if the additional service is to be successful, this has to be the pay-off.

And it’s a pay-off that, currently, has more money in it than a lot of print. Clarke says people are much more willing to pay for an hour’s creative work than they are an hour’s press time. Barton agrees that the margins are better away from the core print offering. However, with more and more printers heading in the added-services direction, Banton also has a plea to make.

"I think if printers start to get involved in this, then it has to be priced properly," he explains. "We can’t be in a situation whereby, in two years’ time, people are saying there’s no money in design anymore. We, as an industry, seem to like to cut our own throats when it comes to pricing, and we can’t do that again."

Whichever direction you take your additional services, and however closely you align them to your core print business, this point is one to bear in mind: if B2B printers are truly going to make use of this revenues lifeline, the added service has to be provided properly and wholeheartedly, and it has to be priced sensibly. Fail in any of the three and there aren’t too many options for cash gene-ration left out there to plunder.

BUSINESS DIVERSIFIER ROLE MODELS
The following three entrepreneurs have tuned business diversification into a very profitable art

Richard Branson Is there anyone better than Richard Branson at taking a business into new areas? The Virgin Group began as a record mail order business in 1970 and then a single record shop on Oxford Street in 1971. From these humble beginnings, Branson expanded the core offering with new stores and the establishment of a record company, Virgin Records. However, he also took the business into so many new markets, entirely unrelated to the original business, that it’s impossible to list them all, but a selection are: air travel (Virgin Atlantic), communications (Virgin Mobile and Virgin Media), train services, beverages, health clubs and comic books. Not all have been a success, but as he’s now worth around £3bn, it’s fair to say diversification has, in the main, been a smart move.

Carlos Slim The oft-cited richest man in the world, Mexican Slim was taught business principals by his father and bought his first shares when he was in his teens. He now presides over a massively diverse business empire under the parent company Grupo Carso. Starting his business career in construction, retail and mining on the back of wealth earned trading shares, he soon added a whole range of other industries to his name, including food, telecoms and chemicals businesses. In 2010, he was estimated to be worth $53.5bn (£33bn), with the diversity of his portfolio playing a massive part in his success.

James Dyson After five years and 5,127 prototypes, James Dyson changed housework forever with the Dyson vacuum cleaner. Initially rejected by UK manufacturers, Dyson licensed his product to Japan where it proved so successful he was able to afford to manufacture the product in the UK himself. Much more aligned to his core offering than the other two in this list, nonetheless Dyson too has diversified from his core offering. His Airblade hand driers are now to be found in many hotel, restaurant, office and public toilets, while his stylish bladeless fans have become a must-have accessory for the overheated executive. A failed journey into washing machines aside, diversifications have cemented and reinforced the Dyson brand as a leader in design, boosting the core product and helping their inventor on his way to an estimated £920m fortune.


TOP TIPS FOR BUSINESS DIVERSIFICATION
• If you’re going to do it, do it properly… A half-hearted approach to adding supplementary services is likely to do more harm than good as the service will fail to accurately fulfil what it promises and what clients expect
• Do your research… If you’re intending to provide a complementary business, make sure it’s something that your customer base is actually asking for. If you’re intending to set up a stand-alone business, make sure you can bring something to the table that can compete without bankrupting yourself – if you can’t compete, there’s no point
• Be aware of the costs... To be able to deliver additional services in a professional and competitive way, you will need staff who have the specific training for that work – asking your press minder to become a designer overnight is likely to end badly – and experience costs money. Your new staff will also need the right tools for the job and, with design especially, those tools can rack up quite a hefty bill
• Keep sight of your core offering... If print is to be your core product, ensure additional services do not infringe on the print services to the detriment of customer service or quality levels
• Don’t be afraid to try something completely new…  As VarioPress has shown with its picture-framing service, if you do a job well, any service, no matter how seemingly random, can be a great addition to the business