This Month's Spectrum Summary:

(The following is an excerpt from the February 2008 issue of Spectrum, a proprietary monthly briefing published exclusively for the clients of I.T. Strategies, Inc. © 2008)

How to Sell a Half-Million Dollar Printer
The 10-year approach to a changing market

Most of the major equipment vendors are readying the launches of their fastest and most innovative inkjet printers and presses. They are driven by robust front ends, consume vast amounts of paper, run at astonishing speeds, and are doing the work once done using analog presses and screen printing systems as well as high speed electrophotographic printers. They rely on new and emerging digital technologies and bear price tags that start at $500,000 and soar as high as $5 million. Yet for all their impressive capabilities and potential for transforming the printing industry, to be successful they must be up and running in a wide range of print operations. And that is what raises this month's topic: how to sell a half million dollar printer.

To sell one, vendors must first decide who are the best prospects. There are three primary types of print providers, but only two are actually strong candidates to buy.

Traditional analog printers have still not found a compelling reason to shift to digital technology. These may be conventional commercial print shops with sheet fed or web offset presses or screen print operations. Some have been in business for decades. However, most lack employees with the skills and knowledge to successfully operate digital printing systems, and more importantly, the ability to sell digital printing. Although there are about 40,000 analog printers worldwide, only a handful might be candidates for a digital press costing half a million dollars or more.

Digital printers that offer only digital printing. Some are former offset shops while others have been all digital since opening their doors. Although totaling about 120,000 worldwide, most are smaller-sized businesses (under $2 million) that don't have the print volume or financial means to justify the purchase of a machine costing half a million dollars or more. Still, there are about 100 digital printers with sales revenues of $10 million dollars or more and that have the skills, expertise and type of customer applications needed to justify buying a half million dollar press.

Hybrid printers are those offering both offset and digital printing. There are a variety of models for this in commercial, print-for-pay and large format graphics printing, and the successful ones have found the right mix of capabilities and services to drive a successful business. There are about 5,000 of these worldwide with about 400 having revenues of $10 million or more, plus another group of about 1,000 sites with revenues between $2 million and $10 million that have the necessary volume and infrastructure to support a half million dollar digital printing system.

These combine to form a total market of about 1,500 print providers worldwide.

Selling to any of these customers is a significant challenge because the sales cycle is long (12 to 18 months) and the time to money for both the print provider and the equipment vendor may be 36 months or more.

A different sales strategy, called demographic profiling, can shorten the sales cycle and time to money. This approach focuses on learning which potential customers have the sales and print volume needed to justify the new machine, and which also have ownership and management that is inclined to take a risk and invest in new equipment and technology to gain an advantage in the market. This requires a sales team with the skills to gather and act on the information in ways that shorten the sales cycle. They must be backed by a strong, customer-oriented CEO on the vendor side who can help ensure the customer is happy. Finally it requires demand generation programs to help drive business to the new press to shorten customers' time to money.

The most successful customers will very likely wind up with three, four or more machines, gaining a very low total cost of ownership that gives them an advantage in the market over competitors with just one or two machines. This will put pressure on vendors to have less costly machines for smaller customers.

For equipment vendors, selling presses costing half a million dollars or more is really a ten-year program. It will likely involve supporting new applications, and in the case of some machines, actual offset replacement, further changing the dynamics of the market for the machines and even the companies to which they are sold.

Vendors have completely underestimated the costs for getting this ten-year program up and running and to be successful as a vendor and for their customers to be successful. But for now, all the new machines are going to be exciting and it's going to re-energize this market. There's a lot of excitement and enthusiasm. 2008 is going to be a fascinating year.