Applying Smart Customization to Publishing
In 2003, custom publishing was again the fastest growing publishing activity for academic and professional publishers, with most enjoying double-digit sales growth.
But some publishers saw little or no profit margin improvement in their custom publishing activities. Why, then, do some custom publishers continue to outperform the industry in sales and profits, while others lag in one or both of these key performance indicators?
A Booz Allen Hamilton study, titled Smart Customization, Profitable Growth Through Tailored Business Streams, provides insight into how some companies convert incremental revenue from custom products and services into a better bottom line.
Companies who were 'smart customizers' "focused simultaneously on value creation strategies and delivery alignment outperformed industry peers 2-to-1 in revenue growth, and had profit margins 5% to 10% above competitors."
It also reports companies that don't align the value of variety with the cost of complexity are five times as likely to grow at rates below their industry average."
Smart customizers, the study found, consistently used three best practices: One, they understand the sources of value that customization provides their customers. Two, they find 'virtuous variety', the point at which customization adds value to both the company and customers alike. Three, they tailor product development, marketing and sales, production, distribution, customer service and align them to meet customer demand and provide customer value at a low cost.
We've observed situations where the costs and complexity arising from custom publications and services is greater than incremental revenues from publications and services, resulting in poor margins.
In many instances, these publications and services were added quickly to 'meet the competition', without truly aligning them with the publisher's editorial, marketing, and production activities.
Custom publishing can be an expensive activity. If it is not organized and executed properly, the result is the new economies of scale that publishers have acquired over the past 10 years are actually diminished by custom publishing.
If a publisher determines that its custom publishing activities are under-performing, the publisher should look at the types of customization offered, and eliminate publications and services of little value to customers.
Many custom publishing offerings are added over time. Once the initial need is addressed or replaced with lower-cost offerings, these offerings should be eliminated. A common example: cutting apart and rebinding existing books to make a derivative work.
This is labor intensive, expensive work that adds new cost to the title, and usually results in a book that looks worse than the original, yet sells for the same amount. Database-driven custom publishing can eliminate most of the need for cutting and rebinding books, and yields margins at or near those of the original title.
Secondly, the publisher should review its custom publishing program to understand which customers they can profitably offer custom publications and services. Again, over time and to meet competitive threats, publishers often roll-out custom publishing services to low-volume, low-margin customers, as well as high-volume customers.
By aligning their custom publishing offerings and services to their customer base, publishers can ensure more profitable custom publishing activities.
Lastly, publishers should align editorial, marketing, production, and distribution activities to provide customers the highest value at the lowest cost.
Custom publishing is often seen as a sales or marketing activity. Sales or marketing, therefore, ends up with the responsibility for custom publishing. What often happens is production managers get involved too late in the sales process, adding costs to what could be an otherwise profitable sale.
Making custom publishing an integral part of the publisher's editorial, design, and production processes, makes it a value-added product and service.
- Tom Delano
Tom Delano is a business development executive at Ames On-Demand, Somerville, Mass. He can be reached at TDelano@AmesOnDemand.com.