In 2016, sales of promo products contributed less to distributors’ overall revenue than it has in the past. This continues a multi-year trend, likely the result of a changing market that includes online sellers accepting razor-thin margins. But all is not lost. In fact, distributors are successfully adapting and boosting sales in other profitable areas.
“It seems like more and more clients are asking us to provide additional services including design, print and kitting. We have always had these services but we’re starting to market them more actively to our existing clients,” says Shamini Peter, COO at Axis Promotions (asi/128263). “It is a natural offshoot of our traditional business that is now supported by many of our suppliers.”
Axis has just begun to dip its toe into the print market, but Peter estimates this newer segment will comprise about 2% of her company’s sales this year, at margins that run about 8%-10% higher than product sales do. “This will include everything from traditional print, packaging and other specialty print items,” she says. “The margins are slightly higher since each job is custom.”
Beckie Diltz, owner of Proforma Solutions for Printing (PSP, asi/300094), says roughly 60% of her company’s business is outside the standard promo products realm, in areas that include printing, social media, event displays, media buys and design.
“We made a commitment last year to go after website design and social media, something our clients had asked us to do for years but we felt was not our strength,” she says. “We partnered with another company who was willing to join us for meetings with our existing clients and walk through how we could support them and improve their business by updating their site.”
Diltz says promotional products and printing services go hand in hand, as evidenced by what she provided a new client headed to a trade show in Palm Springs. She outfitted the client’s team with logoed shirts, new business cards, sunscreen packets and pens to give away in their trade show booth.
“We have another client that is planning for field days, and we’ve put together ID badge holders with different colored lanyards by region, a notebook that fits inside, a pen, ChapStick, a personalized chocolate bar for a snack, and a microfiber sun hat for 550 people,” Diltz says.
PSP’s margins in brochures, booklets, cards and mailings are at about 40%. Diltz says the key to the print/promo crossover is to present all of your company’s offerings at the initial meeting, and explain how they complement one another. “The material we provide shows them all our capabilities, and before we leave, we ask them if there are any current projects,” she says.
Jesus Hernandez, owner of Clear Graphics and Printing (asi/517503), says promo products only comprise 15% of his business, a decrease from recent years. He says online competition, companies that sell directly to end-users and firms with larger budgets have all led to that shift. But that’s not to say Clear Graphics and Printing doesn’t take advantage of upselling clients on promotional products when possible.
“Conferences are a great example,” Hernandez says. “On the print side, they need programs and registration forms. On the large format side, they need signs and banners. On the promo products side, they need bags, pens, shirts and notepads.”
You can even sell the organizers on items for the conference itself, Hernandez says. Options include a table cover for registration, a directional sign for attendees on where to register for the conference, name badges and lanyards.
As part of its work portfolio, Clear Graphics and Printing designs and prints fliers for an annual Cesar Chavez Youth Leadership Conference. “As they got older, they had a bigger budget to do bags and shirts. I was able to upsell them on this,” Hernandez says.
Hernandez believes festivals and expos present another great cross-selling opportunity. He has a client, for example, who puts on a Juneteenth festival in Sacramento. “Initially, I started out just printing his program and flyers. Then, I started to upsell him on shirts and directional banner signs,” he says.
Hernandez says the profit margins for print vs. promo vary based on quantity and items, as well as the amount of price shopping the customer does – but if you do the job right, margins in both areas can be quite healthy. “Overall, I think the profit margins on print and promo items are almost the same on a competitive edge. But I still think that you can make a higher margin on print if you sell it right,” he says.