SEM is Latest Offering at No. 1 AlphaGraphics Franchise
By AlphaGraphics |
AlphaGraphics Seattle succeeds with a disciplined approach to the business and a passion for ﬁnding a way to say “Yes” to customers. By Derrick Doi
You know something amazing is going on when a print shop develops a successful search engine marketing (SEM) business. AlphaGraphics Seattle has offered SEM since 2009, and today it is among the firm’s three fastest growing offerings, accounting for nine percent of overall revenue.
It’s the kind of unconventional thinking that has always had a role in the success at AlphaGraphics Seattle, the No. 1 franchise in AlphaGraphics worldwide and No. 6 on the 2012 Quick Printing Top 100.
While their offerings mirror those of many of today’s marketing services providers (MSPs), they self-identify as a “printer.” “I don’t believe MSP resonates with our clients, yet I do feel comfortable that we’ve already significantly embedded marketing activities into our work,” said Chuck Stempler, AlphaGraphics Seattle president, CEO, and owner. “We’ve chosen to add these value-added services without pushing the phraseology.”
A considerable part of that value comes from data-driven, multi-channel marketing campaigns developed for customers—and from data-driven decision making about how to run the business. The franchise recently upgraded its MIS system to improve centralized visibility into operations at all six locations. “We see our greatest opportunity to bring value when we perfect the manufacturing side of what we do within the context of being virtually 100 percent customer-focused,” Stempler said. “We try to always find a way to say ‘Yes’ to our customers.”
Disciplined Approach to Manufacturing
AlphaGraphics Seattle began operation in 1989, and Stempler bought it in 2001, after 20 years in the garment industry. He brought a new, manufacturing-based discipline to the production floor and immediately bucked convention by swapping out nearly his entire fleet of digital printing and binding equipment. It paid off, and he’s been one of the leading AlphaGraphics revenue producers ever since. He’s also been a Xerox customer ever since, counting Xerox as a “foundation vendor partner,” he said.
The firm has generally had annual percentage growth in the mid to upper teens—partly organic and partly through a steady stream of 11 acquisitions in 12 years—also the source of the firm’s multiple locations. Headquarters in Seattle is a 30,000 square-foot manufacturing hub. The satellites house sales, design, and convenience printing in locations that are far enough from downtown to attract incremental business.
Last year, the 94-employee firm grew about 18 percent to revenue of $12.2 million—22.6 percent from digital color, 17.5 percent from offset, and 12 percent from the bindery. The rest is from digital black-and-white, grand-format, design services, SEM, and jobbed-out work.
Thoughtful Strategic Growth Choices
Stempler is as systematic about targeting growth opportunities as in optimizing the production floor. Digital color printing has been a growth area since he acquired the shop more than a decade ago.
The franchise initiated grand-format printing in 2011. “We saw it as a serious opportunity to grow the business with good margins, much like digital color,” Stempler said. “We grew from $30,000 per month to $125,000 in less than a year.” Now he’s seeing similar opportunities in digital labels and plans to build a plant from scratch next year, leveraging existing staff expertise to enter that market. The SEM business was more opportunistic.
A local firm that provided SEM services to AlphaGraphics franchises went out of business. Stempler hired one of their analysts and re-established the business, which now serves 155 customers nationwide, mostly AlphaGraphics franchises. Customers buy ads that appear at the top of the first page of local searches for print products and services, based upon 10,000 combinations of keywords and other factors. “I have yet to see anyone who sells paid search with the companion expertise on printing,” Stempler said. Results are tracked in a system that runs on software from XMPie, A Xerox Company. Clients typically generate three to five times more in revenue than their monthly spend, and the lifetime return on investment is usually 10X and more, Stempler said.
Perhaps the service isn’t so unconventional after all. Like AlphaGraphics Seattle’s general business, it combines strong data skills with a deep expertise in printing. It’s yet another way to grow the business by saying “Yes” to customers.
Derrick Doi is vice president, Quick and Franchise Print Segment, Xerox Corporation, Derrick. Doi@xerox.com.