UNDERSTANDING PRICING FOR CREATIVE SERVICES
How do you find the right creative approach to reach end users when your marketing strategy is founded on supplying trade customers?
When a successful entrepreneur with a proven track record moved into a completely new business area, he was naturally hoping – and expecting – to replicate his previous success. He had not, however, counted on discovering just how many differences there were between supplying trade customers and supplying a fickle and increasingly demanding public. Methods of production, warehousing, distribution and accounting were all brought into sharp focus, but most of all, the new business highlighted shortcomings in marketing and communication. How was it possible to reach the right audience, convince them that they should buy, and keep up a conversation with them to encourage future purchases – all at a realistic price that would make it all worthwhile?
WHAT SPARKED THE REQUEST FOR OUR HELP?
After a few years of pursuing a conventional route to reach customers for this up‐market home décor product line, our client was becoming increasingly concerned at the size of his marketing spend and the relatively poor return that it achieved. He was producing regular mail‐order catalogues, with all the associated costs of design, production, print and postage, and in an attempt to broaden his customer base, he was also buying in new mailing lists. We were introduced to this client through a contact at one of our associated companies, at a time when his costs were spiralling out of control and his active house list was shrinking rather than growing. His rudimentary website was barely functioning at the time, and was regarded as an annoying ‘must‐have’ rather than an essential marketing and order‐processing tool. Drastic action was needed to set the business on the road to recovery and success.
OUR SUGGESTED PRACTICE AND METHOD
This situation presented us with a clear case for our ‘Evaluate’ practice. We very soon realized that our client was paying over the odds for his marketing, and that a new approach was needed to all aspects of his interface with his customers. A lack of up‐to‐date knowledge about creative processes and the printing industry had led him to accept eye‐wateringly high prices without question, but armed with the most basic information, we were quickly able to see what needed to be done. Cosy relationships with suppliers would need to be dissolved to make way for a new breed of marketing specialist who understood our client’s market and knew exactly how to tap into it, using the very latest techniques of online marketing, social networking, and generally thinking ‘outside the box’.
We started out by undertaking an audit of all our client’s existing marketing invoices to see exactly where the money was going. This included costs from mailing list suppliers, order processing houses, photographers, catalogue designers, repro houses, printers, web designers, fulfilment houses and postal service providers. In addition to arriving at an accurate ‘cost of sale’, we were also able to advise on the quality of services and value for money provided, based on current market rates.
We then went on to examine in detail our client’s website, from its set‐up and legal framework to its functionality and effectiveness in retaining and growing business. This involved a detailed analysis of the software platforms used, the interface with the order processing house, and the client’s stock control systems, order fulfilment and dispatch.
We organized and attended meetings with all major suppliers in order to assess the quality of services provided. In addition, we approached a number of alternative suppliers and provided comparative quotes for all work currently being undertaken. We invited our client to many of these meetings so that he could gain a clearer understanding of the issues, and benefit from an unbiased, third party approach from ourselves.
From the outset, we asked our client to copy us in on all email correspondence with existing suppliers, as well as requesting copies of all relevant agreements and commissioning letters.
We provided all findings to our client in regular updates and via face‐to‐face meetings, and after a period of around eight months, we submitted a final report suggesting the way forward.
As we were able to highlight several areas where costs could be cut dramatically, our client was soon persuaded to revise his roster of suppliers and consider a completely new approach to his marketing effort.
Tenders were invited for a new website provider, and a completely new website was designed which not only looked much better but which did away with the need for a separate order processing function.
Rather than buying-in further mailing lists, our client was persuaded to concentrate on providing a better service to his existing customer base, using the website as a new tool for growth.
Without the reliance on a regular printed catalogue, our client was free to explore other areas for marketing his products, resulting in a hugely successful partnership with a TV channel which has since brought about a complete change to the business model and secured the company’s future.