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Editor & Publisher - 2021-10-01

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Ensuring Commercial Success: Clear communication with outside customers may be the key tofinancialsuccess

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► By Jerry Simpkins

Ensuring Commercial Success: Clear communication with outside customers may be the key tofinancialsuccess As newspaper organizations rapidly transform, we are forced to embrace that change to survive and maintain profitability. Unfortunately, many properties are finding limited options for survival. One popular option is to consolidate operations within a central print site. This is a growing trend and can be one way to turn a profit in this challenging market. A second option for robust production operations is to take in outside printing jobs —commercial print. Gone are the days when small standalone newspapers could print only their core products and stay profitable. Unfortunately, post-pandemic price increases, coupled with a struggling economy, are eating away at margins, and we need to react quickly or continue falling further behind. Nevertheless, outside printing remains one of the most effective ways to shore up operations. Our relationships with external printing customers should be a partnership, with both sides benefiting. We must provide customers with quality reproduction, reliability and fair pricing. At the same time, our customers must understand that our expenses continue to rise, and as a result, we need to occasionally adjust pricing to remain competitive. I recently spoke with a commercial customer about price increases from vendors. It started as a mutual gripe session on the economy and an exchange of ideas on operational economizing. To my surprise, the customer recommended I consider a price increase. They understood the need for their printer to remain profitable. As you build relationships with clients, a good customer will understand your challenges as you understand theirs. These are the strong bonds we need to develop with our customers. Now is a smart time to take a look at your margins and make reasonable adjustments. Take a look at your costs for building repairs and operational expenses, including things like replacing HVAC filters, changing light bulbs, or fixing a broken overhead door. These expenses add up. Costs for fuel and vehicle maintenance do, too. Consider your costs for equipment repairs and routine maintenance. Additionally, there may be major capital investments when equipment needs upgrades or replacement. Your cost for utilities and service providers has also been on the rise. These should factor into your pricing structure. One of the most significant expenses is labor. The employment picture has changed post-pandemic, like nothing I’ve seen during my career. Many experienced workers have dropped out of the workforce because of COVID-19 or the opportunity to retire or some other personal reason. Companies have found that the remaining workforce has a new bargaining chip, and competition between companies for qualified employees is driving the hourly wage up. These increased costs also need to be shared with your outside printing customers through appropriate price increases. Plus, we have our consumable costs, such as paper, plates and ink. I’m not sure I need to say much about how newsprint prices have changed over the past year. Newsprint producers aren’t missing any opportunity to pass their increased costs on to our industry. Paper price increases are somewhat different from many of our “other” costs, in that these increases need to be adjusted with our customers as they occur. These increases are not something that we can absorb even for a short period and pass on upon renewal of a commercial contract or at the end of the year. When we incur these expenses, they immediately impact our bottom line and should be shared with our customers as they occur. Hopefully, most of you have provisions for paper increases written into your agreements. The cost of printing plates has significantly increased over the past six months and needs to be considered. As ink companies incur increases in raw materials and labor to produce their products, those price increases have found their way into our struggling operations, as well. Unfortunately, the list goes on. On top of the big three of paper, plates and ink, we continue to see increases in press chemistry, blankets, rollers, press parts, and other consumables throughout the industry. As I was writing this article, I received an email announcing an increase from our freight elevator service provider. It details many of the same cost challenges I’ve outlined here and says they’re increasing the maintenance price by 5.05%. They offered thanks for the continued business. Over the years, we’ve become pros at cutting costs within our operations. So why not use all this expertise and some of the painful lessons we’ve learned to help our partners? Here are some ways you can mitigate costs, and they can, too. Suggest web reductions. I can’t tell you how many times I’ve heard, “We’ve always been this size and don’t want to change.” However, when shown the cost savings and logic behind a reasonable web reduction, many customers quickly change their tune. Unfortunately, some of our customers are set in their ways, so we must show them the long-term benefits. Getting a customer to change web size also has internal benefits to our organizations, as well. When we can group press runs and avoid paper changes, we can reduce waste, improve efficiencies, and save time and money. These minor improvements can, in turn, reap benefits for our customers by reducing their paper costs and allowing us, perhaps, to become more efficient in our operations. Discuss paper stock. Is there a really big difference between 30-lb. and 27-lb. newsprint to your customer? Or is it something for which 34-lb. looks just as good and saves them a sizeable amount of money over time? Introduce them to color spread costs. Don’t assume your customer knows color positions on your press or the implications of using various color positions outside of a common spread. Instead, provide layouts and clear explanations outlining the financial benefits of keeping color on the same spread. Guide your customers to press configurations that benefit both you and the customer. The right choice can usually result in less waste and better quality, reducing costs along the way. Negotiate flexible deadlines. This may be tough to manage, but the benefits are many, and some customers may jump at the opportunity to save. We all appreciate how grouping press runs on the same stock and web size can save us money, yet how often do we discuss this with our customers? If you can reduce expenses and save your customer a few bucks by grouping them into other runs, they might go for it. Talk to them about changing their web size and deadline so you can run them in a convenient spot and save everyone money. Schedule group inserts. Every time you run your inserting machine, it results in labor costs, utility costs, plus wear and tear. All that results in higher costs to your operation and additional expenses for customers. I’ve encountered daily commercial newspaper customers who don’t manage insert days, having multiple inserts on one day and follow with a single insert the next day. I realize it isn’t always possible for our customers to steer their preprint customer to a specific day, but I’ve seen it done many times. Grouping inserts saves your commercial customer money and saves dollars in your operation as well. You might be surprised how many of your customers are unaware of this. Also, group your delivery runs. Most customers want their product turned around quickly and delivered to their door immediately. Any good delivery service knows planning routes and delivery times can be the difference between profit and loss. Don’t manage your delivery fleet like an add-on; manage it to be profitable. Work with customers to understand that grouping deliveries allows you to pass savings on to them, and they may be more flexible with drop times. If delivering product isn’t profitable for you, recommend customers pick up their order to avoid price increases on delivery. The option is then left for them to decide. There are many ways to improve customer service and manage cost increases. Their continued financial health helps us in the long run, and we need to be an active part of that budgetary management. Value your customers, and make sure they understand and value the benefits of having you as their printing partner. ■

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