Cary Sherburne, a writer for “What They Think” is a well-known author, journalist and marketing consultant whose practice is focused on marketing communications strategies for the printing and publishing industries.
During last week’s AlphaGraphics conference in Tucson, Arizona, Cary interviewed our CEO, Kevin Cushing about the future of the AlphaGraphic franchise. Here are the questions asked by Cary, Kevin’s responses, and in some cases, my comments on the question from the franchisee standpoint. The original article can be found at What They Think.
AlphaGraphics Unveils Bold Plan for Network Growth
NetVision 4 calls for transformation of all AlphaGraphics Centers to Marketing Services Providers
During its annual owners’ conference, franchise operator AlphaGraphics unveiled the next phase in its strategic plan for the network. CEO Kevin Cushing kicked off his opening talk at the conference by saying, “Without leaps of imagination, or dreaming, we lose the excitement of possibilities. Dreaming, after all, is a form of planning.” This was a lead-in to his introduction of NetVision 4, which outlines a bold and aggressive roadmap for franchisees to transform their businesses to what the company is calling “The New Now,” with a goal of 20% of network revenues being generated from marketing services by 2015. Cushing talks about the strategy.
Cary: Kevin, you just concluded your annual conference in Tucson, celebrating 40 years since the AlphaGraphics franchise was founded in that same city. What’s different about this conference as compared to others in the past?
Kevin: It is more about what is different in the marketplace. We have had our NetVision program in place for a number of years. The NetVision document is our roadmap and strategic plan for growth and development of the network. Five years ago, we brought NetVision 3 to our franchisees, and this year we are launching NetVision 4, themed “The New Now.” The purpose of NetVision 4 is to set out an aggressive roadmap for our network to address today’s new market realities. In addition NV4 is a “living” document, updated regularly rather than a plan that is set in stone for three to five years at a time.
Steve: One of the great things about being part of the AlphaGraphics system is the leadership, planning and direction that is given by the franchisor. A lot of thought goes into our current and future operations by AlphaGraphics and its franchisees. Each of our NetVisions in the past has been timely and has resulted in a more homogeneous sytem of separately owned operations. We, as franchisees, pretty much march to the same drummer.
Cary: As part of NetVision 3, you made it a network standard to do things like offer wide format printing and become ISO certified. Where does NetVision 4 take you?
Kevin: For one thing, we have created NetVision 4 as a digital document. Certainly, we will have printed copies available for our owners or the files to enable them to print them themselves. But by making this a digital document, we can more easily keep it up to date as market conditions change, as well as link to a myriad of resources that will help our owners educate themselves and navigate the aggressive roadmap we have laid out for the network and for individual centers.
Steve: It might seem weird that a printing company does not print its own strategic plan. That is our New Now. We understand the changes that are incurring and we understand that it is futile to fight the changes. A working digital document that has links, videos, audio streams and current samples is a more relevant and usable document.
Cary: Can you share some of the key roadmap elements?
Kevin: At present, we have just under 270 centers with network revenues of about $250 million. Our long term goal is to grow to 500 centers and $500 million in network revenues.. In order to do that, we realize that we must begin to offer a wide range of new products and services, while still growing and protecting our copy/print/mail legacy business. This sets us, as a network, on a path of transforming our business from print service provider to marketing services provider. We’ve had our sights set on “500-500” since we introduced NetVision 3, but no one could have predicted the impact of the “Great Recession” and restrictive access to capital.
We have some great momentum towards the goal, however; system sales have been rising since February, 28 centers have extended their expiring franchise agreements, and we have something like 28 more owners in the pipeline at various stages in the opening process from just signing, to in training, to build-outs. Brazil is on fire for us now as well. We are most proud of our renewal rate, 100% of qualified and invited owners have extended their agreements. No better testimonial as to the strength of your system than that!
Steve: We are no different than the rest of the nation and the rest of the printing industry. Our individual center sales were down in 2009 and we had to make some reductions in order to survive the declines. With that said, it is a positive statement that, while we have been adjusting at the franchisee and franchisor levels, we continue to sell new franchises, successfully transfer ownership for those franchisees that want to do something else, to convert independent printers into Alphagraphics franchisees and to renew expiring franchise agreements. The goal of 500-500 seems like a reasonable goal when you consider how we survived and thrived through one of the roughest economic periods in history. Our system grew when the other print franchises contracted.
Cary: As with any network, I am sure there are different levels of competency in your network. Does NetVision 4 take this into account?
Kevin: Certainly. We are developing a robust set of training and services through the AlphaGraphics Service Center that will help our owners make this transition. We have identified a number of products and services categorized at various levels, and have provided a timeline by which centers should be competent in delivery of these products and services.
Steve: This is the beauty of the AlphaGraphics system. Not only do we have a plan, but we have a reward system that assures that almost all of our operations obtain the level of service dictated by the plan. As new owners come into our system, AlphaGraphics assures that they have the qualities neccessary to lead us forward.
Cary: In your press release, you mention social media, QR codes, augmented reality and personalized URLs as some of the key services your centers should be using to promote themselves and to improve the value of their services to customers. Are any of your centers already doing these things?
Kevin: Yes, we have over 25% of our network actively engaged in some, if not all, of those activities. Our Social Media Summit, held the day before our conference, had over 80 attendees including franchisees and staff. We also have centers that are conducting full integrated marketing campaigns that include QR codes, personalized URLs, a mix of email and direct mail, and telemarketing to promote their own services and well as for the benefit of customers. One of our owners recently quipped that when customers have received one of his multichannel promotional campaigns and ask whether it works, he tells them, ‘It got your attention.’ That opens the door for us to share with clients the kinds of results we are achieving for ourselves, and it gives us the credibility to do the same for them.
Steve: At AlphaGraphics, we walk the talk. Every day, I see more and more mentions of AlphaGraphics in the daily Google Alerts. We are quickly coming to the point where every center has its own Twitter account, LinkedIn account, FaceBook Fan Page (as well as a personal page) and has claimed its own Google Places, MerchantCircle, Bing and Yahoo listings. I am even seeing more and more centers posting their own blogs. Using QR Codes, PURL’s and Augmented Reality is quickly becoming second nature to us. We manage email marketing campaigns for our customers and some of us help our customers with their SEO and SEM activities to help promote their websites.
Cary: You have a fairly aggressive roadmap laid out through 2013, with quite a bit for franchisees to digest and implement over the next 18 to 24 months. What was the overall reaction of owners at your conference to NetVision 4 and the roadmap?
Kevin: Overall, a great sense of pride in being a part of a brand that is so forward thinking and deliberate in its strategy. At the same time, leading isn’t easy and there’s some anxiety around that. Many of our more concerned owners are taking great comfort in the stories shared by owners that were in the same place a year ago and have jumped into marketing services with both feet, with great results. We have centers that have landed campaigns worth more than $200,000 and others getting contracts for $5,000 or more a month. It is a lot easier to achieve that when you have the resources of a network backing you up.
Cary: Sometimes when businesses are making this type of transition, they neglect legacy revenues that are needed to develop new businesses. What are you doing to protect against that fatal error?
Kevin: Design, Print, Finish and Mail is what brought us this far and will be a fundamental part of our business for a long time. Also, we do not expect a huge shift away from legacy products immediately. We anticipate that 20% of our revenues will come from new marketing services by 2015. As we begin to offer these new marketing services, we also anticipate it will bring in more legacy work – prepress and design, printing, finishing, mailing – that we would not even have been considered for in the past. By taking this path, we are redefining ourselves in the marketplace, changing the perception of the customer, and partnering with them as a member of their team in a larger swath of the marketing supply chain. We are also reaching out with similar services to other departments and lines of business within our client companies. The value of integrated campaigns and new media communications extends beyond the marketing department for most companies.
Steve: Believe me, we will not be forgetting our legacy revenue areas. As Kevin said, we look upon this as a way to supplement our legacy revenues and at the same time enhancing these areas by providing the print for the multi-channel and cross media campaigns that we help to design. We understand that there is a longer lead time in selling these projects and we have to be careful not to devote all of our sales effort in the new communications areas to the detriment of what is currently putting food on our tables. It will be a balancing act before we really figure this out but, in the end, we are entrepreneurs who pride ourselves in figuring this stuff out.
Cary: What process did you go through to develop this plan?
Kevin: It was not developed in a vacuum in Salt Lake City! We did a significant amount of research, both ourselves and using third parties, as we began developing NetVision 4. We wanted to understand market trends, how quickly things were changing, and dig into media such as social media and mobile communications to understand what others are doing in those areas, how rapidly the market is moving, and what role we might reasonably play. We interviewed owners, customers, industry experts and consultants. We also took a close look at both traditional and non-traditional competition to understand where they are and where they are heading, as best we can tell. We learned a great deal during this process, much of which we shared with our owners in the NetVision 4 document and at the conference. As a result, we believe that our plan is not only viable, but a necessity for our network to not only survive, but to meet the growth goals we have set.
Steve: As a member of the AlphaGraphics Network Leadership Council, I can assure you that this plan was not done in a vacumn. We used the insight and intelligence of the best industry consultants and the best owners in our system. The plan may or may not be perfect but I believe that we are going in the right direction.
Cary: Will you be changing your branding?
Kevin: Yes. The first thing we will change is our tagline. From there, we are working with an agency to refine the AlphaGraphics brand to align with The New Now. Much of this work will be done over the summer, and our owners will be very involved in the discussions prior to any changes being made or announced. Most of our owners are enthusiastically embracing these changes and see the value it will bring to their centers and to the network as a whole.
Steve: Top Secret, no comment. Well, maybe a little. I believe that the AlphaGraphics brand represents a brand of quality, personal service and knowledge. The brand also represents copies and printing which may be a detriment to our planned transition. I am not part of the committee that is looking into the brand, but I am sure that any change will be done with a lot of thought.
Cary: What are some of the first things customers will see change at the center level, other than possibly the branding?
Kevin: We expect to see centers making more frequent use of agDirect, our customer-facing web order entry interface. Most centers are using this, but not as actively as they could. We also expect our centers to become FSC certified by the end of the year. In terms of new skills, data competencies will play a central role, and we will be working with our owners to ensure they continue to enhance those skills in their centers. All of these will lay the groundwork for moving quickly along the rest of the roadmap. And, of course, many customers will see the evidence of this work as they begin receiving increasingly complex self-promotional pieces from their local AlphaGraphics Center.
Steve: They will also see how smart we are in the marketing and communications areas. We will continue to change their perception of us by our continued conversations with them about their entire marketing budgets. The new decor that we installed under NetVision 3 was designed with the anticipation that we would become more consultive over time. Our front lobbies already look like a lot of advertising and marketing agencies.
Cary: Kevin, thanks for sharing your insight on NetVision 4 and the future of AlphaGraphics. Is there anything else you would like to add before we close?
Kevin: It’s an exciting time to be a part of the AlphaGraphics network, we’re GROWING places! Just watch us, better yet join us! We have had over 100 owners join our network in the past three years. That provides a healthy pipeline for retiring owners and new location growth as well. We just signed an agreement with a very capable owner to add three locations in the San Francisco market and independents are also showing a lot of interest in joining our network.
Steve: Amen again!
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