It is easy to hear the success stories of businesses that have gone to the moon, but most of these business owners have lived through tough times as well.  Just read a book on Edison’s life and you will see the # of failures he had before his great invention.

Recently a business owner closed his doors, but shared his lessons learned with “What They Think”, an organization focused on sharing lessons with the printing industry.  Below is an interview and details.  Any business owner dealing with this economy can take some valuable lessons from this.

The Rise and Fall of Mallard Press

By Cary Sherburne
Published: October 12, 2009

The recent closure of Mallard Press caught our eye. While I don’t know Bob Gay or the company personally, a review of its web site revealed a company that appeared to be on the right track and making the right investments for the future.  Bob Gay was kind enough to speak frankly with us about the factors that led to the demise of the company.  Perhaps there are lessons here for others in the industry who may be teetering on the edge or worried about the future. Mallard Press was an independently owned and operated commercial printing business that had been in operation in the Chicago area for 30 years.  At its peak, it brought in revenues of over $5 million.  Here’s what Bob had to say. In Part One of the article, he discusses what happened; in Part Two, we move to what perhaps should have happened.

WTT: Bob, what would you say was the major contributing factor that led to closing the business?

BG: My biggest problem was that I had taken on too much debt.  I had made investments that were required to take my business where I wanted it to go, and I had about three and a half years to the finish line.  We were doing fine until about December of 2007, which was our first bad month, with sales off 18%. I remember seeing those numbers as if it were yesterday.

WTT: What were some of those investments?

BG: We had invested in Canon color and black & white digital to the tune of $10,000 to $15,000 per month.  We were into Komori for about $14,000 per month.  And the KBA press, which is a marvelous press and probably the most versatile printing press in the world, bar none, was an $11,000-per-month investment.  That is a lot of debt service for a company with $5 million in revenues.  We were building to grow, but any downtick in revenues was painful because of that debt service.

WTT: When you saw the December 2007 results, what actions did you take?

BG: We did make some adjustments to the business, and as a result were able to go through the spring of 2008 fairly strong, although the June through September period was below average, down 15-20%.  It gets tough to recover from four months of consecutive losses.

WTT: To what did you attribute the revenue decline?

BG: To a change in customer buying habits.  We did an analysis of our client base.  We were not losing clients; they were just spending less, due to the economy and possibly to more use of electronic media.

WTT: So what did you do next?

BG: We then looked at increasing our client base through acquisitions.  AGS, a die cutting operation, was basically closing its doors and we made a deal with them that would keep their company together, because the services they offered were services we were outsourcing anyway. There was also another company that was closing its doors and we purchased some of their assets as well. This was about $2 million in business and we took 10 of their 18 employees on board. As a result of all of that, we had a terrific December.

WTT: Then what happened as the new year began?

BG: From January through now, everything tailed off.  Sales were down 27%.  We again looked at our customer base, and it was the same Top Ten customers, but their sales volumes were down.  We even had some loyal print brokers that were getting less work for the same reason—their customers were also dialing down.

WTT: I am sure all of this must have led to some painful decisions.

BG: Absolutely.  We made some first quarter adjustments to get things in line, but I knew that it wasn’t going to be enough.  After the second quarter, I really needed to make some deep cuts.  This was extremely painful, because people who had done nothing wrong were losing their jobs.  The remaining staff took pay cuts to keep their jobs.

WTT: In hindsight, would you have made staff cuts earlier?

BG: Yes, but I was slow to do so because it is just not in my nature.  These people worked hard, and I was optimistic that the services we provided would help bring the business back.  This is how we had always survived before—because of our diversification.  If one area was not performing, the other two areas could pick up the slack.  But with the decrease in sales and additional 10 employees, I increased payroll by $400,000 but only increased sales by 1.5%. I was operating as a man in business, not a businessman.  A businessman would have made the cuts sooner, but the man in business had hoped it would come back.

WTT: What else did you do to try to salvage the situation?

BG: We went to the equipment finance companies, Wells Fargo, GE and IKON Financial, and working with them was tremendous; they were all on board to help us. We were able to negotiate six months interest only payments to help us weather the storm and work to get our sales up.  We also went to our landlord to see what they would be willing to do.  We let them know that others were participating and we weren’t just coming to them for help.  They were a bit reluctant to help and I basically had to sell my soul a little to get their cooperation.  They gave us six months at half rent, but the negotiations gave them the full right to kick us out if they didn’t think I was going to perform after these six months.

WTT: I take it that resulted in the crowning blow, then.

BG: About three-quarters of the way through the process, we provided the landlord with a financial statement per the agreement.  It was a bad June and we were not making any headway.  They performed their fiduciary responsibility to their shareholders by exercising their right to evict.  We looked around for other spaces and looked to our lender for some additional support.  Even though we eliminated 12 employees and took some other steps that brought us back to break-even, our lender decided not to extend our line of credit or to provide us with the funding to move the business to a different location.

WTT: Why was that? Presumably you had been doing business with them for a long time.

BG: Yes, but their position was that we were maxed out on our line of credit with no good outlook for being able to pay it all back, and they were simply not in a position to lend us the $100,000 or more it would have cost us to move.  This was on a Friday afternoon, and rather abruptly, the next Monday, per the request of the bank, the company went into receivership in order to pay down the line of credit and the other creditors as well as take control of all receivables.  That obviously brought the business to a screeching halt.

WTT: Why do you think the banks took that position after working with you for so long?

BG: I have probably always been the exception when they have discussions in their board room.  I can just hear the discussions:  “They are out of factor, but Bob has a passion for the business and we believe in what he is doing. He has built a unique company that has advantages over standard printing companies, and he will be a survivor.  He has done it before.” To be honest with you, in 2008, I was swinging back and forth between being three to five months behind in rent.  I never thought 2009 sales would still just not materialize. Clients are simply buying differently, and I don’t know if those levels are going to continue to decline or whether they are even going to continue to use print in many cases.

WTT: What about all of the government talk about bailing out small businesses, stimulus, TARP and all of that?  Did you try for any of that money?

BG: Sure did.  I asked about an SBA loan that could spread the short-term debt over a longer term with a lower interest rate and I couldn’t even get that. Now 38 people are without jobs. So much for economic stimulus.

Read the second half of this interview

Recently there was a discussion between business owners who were concerned with surveying their customers and causing a negative reaction. They shared how much they hate getting surveys. In a Business to Consumer relationship many times we get pounded with surveys and get numb to them hitting “delete” as quick as we can. But, I would warn you not to generalize. Know thy customer!

Depends on the relationship one has with the specific supplier, how important that supplier is to their business, how long the survey it, and most importantly if the company responses quickly the first time the customer shares their thoughts. If I have a good ongoing relationship with the supplier as a partner, they are important to my well being, the survey is short and covers points most interesting to me and not you, and the company responds quickly maybe even call me, then I feel it is a way to get things changed and get a reaction. I will fill out surveys for them.

Example, if I have a partnership type relationship with my printer, rely on them to perform to drive marketing efforts, the survey takes a minute, and they call to discuss, then I DO NOT get survey burn-out.

If you are just another printer, who puts out average work with no skin in my game, the survey doesn’t respect my time, and you do nothing when I gave feedback of any kind in the past, then I hate to get your survey, wouldn’t take it, and WOULD get survey burnt out quickly. I would be burnt out the first time I got a survey and maybe even use it as an excuse to stop using you because I was thinking of moving on anyway and needed a reason.

We get so many surveys, but the ones I take are the ones where I respect their business, enjoy working with them, they know me, or I know they will do something with my information.

I would argue that burnout is an indication that the supplier is missing something in their relationship with the customer or they lack an understanding of how frequently to go to the well for feedback or how to approach customers for feedback.

I am not going to get political here, but I hope this entry educates people on how “not” to ask questions.  This survey is an example of how questions can lead or push people into a direction you want them to take.  It frustrates me when I hear on the news about polls and surveys and don’t hear how the question was asked or who was asked.  When you see the results of this newest survey out of Washington I hope you discount the results.  This weekend I recieved in the mail a very offiicial document from Washington wanting my opinion.  In big letters it said “Obama Survey”.  Here is the list of questions that were asked and all were “Yes/No” answers.

1. Do you agree with Barack Obama and the Democrats that taxes should be raised for the sake of “fairness” regardless of the negative impact it is likely to have on the economy?

2. Do you believe that the best way to increase the quality and effectiveness of public education in the U.S. is to rapidly expand federal funding while eliminating performance standards and accountability?

3. Do you support the creation of a national health insurance plan that would be administered by bureacrats in Washington, D.C.?

4)  Do you believe that the quality and availability of health care will increase if the federal government dictates pricing to doctors and hospitals?

5) Are you confident that new medicines and medical treatments will continue to be developed if the federal government controls prescription drug prices and sets profit margins for research and pharmaceutical companies?

6)  Are you in favor of reinstituting the military draft, as Democrats in Congress have proposed?

Wow!  I wouldn’t expect more than 1% to pick “Yes” to any of these questions if they read the entire question.  I wonder who is managing this “objective” study?  I wonder what the statitical signficance will be when they publish it?  In research it is easy to get the answers you want “to hear” if you just ask the questions in the proper way.   OK, I am a little sarcastic here, but beware of published results without seeing the actual question and who the questions were asked to.  I am considered a conservative so my guess is that they felt they would get the data they wanted.  Sorry, but this datapoint will not be included in this study.   The survey is now carefully being placed in the round file.

Jamestown, RI– September 9, 2009 – Survey Advantage Inc, announced today a partnership with printLEADER, the developer of commercial printer MIS solutions. printLEADER users now have the ability to generate referrals, identify areas to expand client share, and preserve recurring revenues through continuous customer feedback and reporting. By developing the necessary functionality printLEADER has enabled customers to implement the Survey Advantage Printer CustomerPulse™ program. On-line reports are delivered daily with sales leads, performance indicators, and printer customer loyalty benchmarks.

Survey Advantage’s services enables printers to keep a “thumb on the pulse” of each print buyer, and alert management when a print buyer is dissatisfied, is open to discussing other opportunities, or shares a referral. printLEADER offers a full suite of integrated print MIS modules for the commercial printing industry and is considered one of the premiere vendors of print MIS in North America. Survey Advantage focuses on the printing industry and their products give printers and graphics communications businesses a complete customer feedback process. CustomerPulse™ streamlines the entire process.

(more…)

Print ’09, the largest printing show in North America, will be in Chicago from September 11-16th.   Survey Advantage president Michael Casey has been asked to lead a presentation on Monday, September 14th from 2:15PM to 4:00PM.   Please read the overview below or visit www.myprint09.com for more details.  

Topic: Creating and managing a customer retention strategy

On average 5% of a printer’s revenue is directed to the marketing budget to capture new customers through tradeshows, advertising, and get your name recognized on the cluttered field of printers.  Printer’s with an effective, deliberate customer retention strategy benefit from lower marketing expenses through higher client share and customer referrals.  Rarely does a printer lose an account completely, but many will lose client share if they don’t have an effective early warning system in place when a specific job goes out with a problem.  This session will discuss ways printers have implemented programs to retain customers by driving loyalty, proactively gathering print job feedback, customizing services, and making their customers feel unique and special.  Multiple studies have proven how much more profitable it is to grow revenues with existing accounts versus pursuing new accounts.  Retaining customers is the best way to keep your business healthy, reduce marketing budgets, and drive referrals to your door.

What you will learn
• Effective customer retention strategies
• Printer loyalty programs
• Printer referral programs
• Printer loyalty benchmarks to shoot for
• The importance of surveys
• Best practice survey techniques
• Low cost customer feedback process
• Customer service processes to consider

Presentation for Executive Management, Owners, Customer Service Directors and Managers, Sales and Marketing Directors and Managers

Yesterday I was speaking with the director of a state marine industry association who said something very profound.  He said that many have the wrong thought process because they are alarmed dealers are hurting and going out of business.  If they go out of business, they wrongly believe there will be less boaters. 

He went on to say that service is what keeps people in boating, not having access to buying boats.  Most boats are used anyway and what makes people leave boating is waiting too long for the boatyard to fix the boat or not knowing what is going on with their boat.  He went on to say that many boatyards don’t comprehend they are in the service business and need to keep customers in the loop when jobs are underway and they need to hit deadlines.  In the northern regions if it takes two weeks to get a boat fixed, that is 2 or 3 weekends out of 16 that they have to use the boat.  On average, a 40 foot boat costs about $5,000 to $10,000 a year just to maintain, get dockage, winterize, launch, insurance, etc.   Losing two weeks can be a reason to just get out of boating and start camping, golfing, or get into some other past time or hobby. 

So a lot rests on the boatyard’s ability to turn jobs quickly and effectively or the boating industry will suffer from people getting out of boating.  That is the real issue, not selling more new boats.

From October 29th-31st, 2009 the National Association of Quick Printers will hold their annual conference in Austin, TX.  Survey Advantage has been asked to present a session and moderate a session.  Below is a summary of each session.  Please visit www.naqp.com for more details on the conference.

Session 1: “Leveraging Customer Feedback to Expand Client Share, Drive Referrals, and Preserve Recurring Revenues”  Mike Casey, Survey Advantage

Learn how printers have implemented processes to preserve recurring job revenues, drive referrals, and uncover opportunities to expand client share. Learn how to fully leverage your existing relationships to grow your business. This session will also cover ways to streamline the process by using technology and customer information you already have in your operation.

Session 2: “Panel: How to keep customers coming back for more” Moderator, Mike Casey, Survey Advantage

A prerequisite to being a printer today is producing quality on time. And everyone has solid customer service so there goes that differentiator! Your peers will share how they create and maintain loyal relationships by making their customers feel unique and special and change the game for competition knocking on their customer’s doors. Learn what successful, profitable printers are doing beyond shipping quality on time with great customer service. Learn the little and big things they do that keep customers coming back every time.

Without getting long winded on this issue, membership retention communications starts with truly understanding their opinion on a regular basis rather than when renewals go out. I may be biased toward the survey model, but I have seen this as very effective if resources are dedicated to watching for those answering neutral or negative on questions relating to future action such as rejoining, recommending, or overall value of the association. This can be done on your typical annual assessment, but it isn’t timely.  Short, 5 question surveys delivered after transactions, events, or any experience can uncover their feeling about the association at that moment. Why not address a membership need 6 months before renewal or right after a horrible experience so you can make it right immediately? Response time on issues is what helps retention, plus understanding what the expectations are and delivering on them.

Associations that understand membership needs and then hone their offerings to fit like a glove have the highest retention rates.  Not rocket science, but just throwing stuff out there without assessing the value is a mistake.

I am probably stating the obvious, but hopefully it helps someone.     Back to the coffee.     Take care,

Many associations conduct their own membership loyalty surveys and exit surveys, manage their own member satisfaction metrics and research studies.  Sometimes the response rates are low and difficult to understand why.  Here are a few things to consider when  running a survey or research study.

1)Keep surveys as short as possible and know your audience. 

2)Know both their appetite for the kind of survey you are doing and also how strong your relationship is with them.

3)Look at your e-mail invitation to the survey.  Messaging is so important to grab attention.

4)Look at the words used. You may be getting caught in spam and it isn’t being delivered.

5)Look at the subject line to make sure it is enticing and connects with the responder.

Most of the time you should only need to remind once and then you become an annoyance.  If you need to go with multiple reminders then something is going on.

NAPL releases Field Case Book, a new initiative to share best practices and innovations with printers.  In NAPL’s first  field book case study, a printer is highlighted for a creative customer retention strategy saving $130,000 in business within the first month of the strategy. 

Click here for complete case:  http://www.fieldcasebook.org/