Thursday, June 01, 2006
One-Stop Shopping, No; One-Stop Implementation, Yes
Outsourcing is still a very strong business trend despite corporate profits taking a strong upturn. In fact, the first quarter of 2006 was 24% higher than the first quarter of 2005. In a year of energy price paranoia, concerns about world political stability, threats of offshore competition in all industries, and worries about interest rates, the spending restraint of corporations has been combined with a stronger-than- expected economy, resulting in buildups of cash. It's not likely that corporations are going to start spending lavishly and begin adding staff. Those business concerns are still there, and the desire to further outsource to all kinds of small businesses to retain budgeting flexibility remains as well. The more connected businesses are by broadband, the greater their capability to outsource and do so productively.
The greatest beneficiary of outsourcing has been small business. The economy is adding on average more than 70,000 new small businesses a month. Yes, a month, and that's after deducting the businesses that close. This is why companies like Staples and Vistaprint have been doing well; there's nothing better than riding a strong, secular demographic trend that lasts for years. The rise of in the number of small businesses and the concurrent lack of employment growth in large businesses has been well-documented. Small business is where the action is in this economy for the past two years or so, and it's been an under-reported story in the business press.
A primary application of data bases is to manage the high costs of the sales prospecting process. There is nothing more costly in sales than a sales person who has no idea whom to call. The next highest cost is a sales person who knows what kinds of businesses to call on, but who has to do further investigation to uncover the right contact person and their requirements. Data base providers offer a means to deal with these problems. Sales prospecting has often involved printed materials, especially brochures and other hard copy product information. The use of data bases actually reduces the aggregate amount of printed materials needed. Good data bases allow companies to narrowly focus their sales prospecting efforts to their most likely new customers. Therefore, printed materials are not wasted on unlikely prospects. This also means that office-printed materials are more likely to be sent, avoiding use of commercial print providers for much of the content. But data bases do stimulate the use of other kinds of printed materials.
Data base providers can reduce the costs of sales and marketing management by coordinating the implementation of prospecting and promotional campaigns. They know how people use data bases, of course, and know that direct mail is a primary outlet for data bases. They also know that time-strapped sales and marketing executives no longer have the staff, and perhaps the expertise, to work out the details of direct mail and other media in an era of corporate penny-pinching.
This brings out the most important and unrenewable management resource: time. Time cannot be replaced. Outsourcing implementation tasks creates time for corporate management because they can apply their managerial time elsewhere, and access expertise in implementation that they could not acquire personally or would have to hire at great cost.
Printing companies have significant opportunities to lift burdens and create time for their clients. Knowing how their clients use print, or would use print if they could, and what other information distribution methods they need to tie into, has been hard for many printers to understand. It's essential to focus not on getting ink onto paper, but on translating client ideas into actions. It will be quite interesting to see how (or if) Harte-Hanks expands their services in this way. It will be also interesting to see how many printers also view this as a core strategy for their own businesses. There are hurdles: clients typically do not think of their printers in this way.
The Harte-Hanks article http://members.whattheythink.com/news/newslink.cfm?id=23239