Have Just the Rules Changed? Is it a Whole New Game?
Over the past couple of decades, several industries have been rocked to their core. Some are nearly extinct. Others are permanently changed: booksellers, the record industry, the office supply industry, travel agencies. What is happening now to the promotional products industry? Have the rules changed, or is this a whole new and different game?
Think about the travel agency industry. Back in 1990, there were many locally owned and operated travel agencies providing their owner-operators and employee agents with a great lifestyle and a generally decent income. In 2010, the travel agency industry is alive and well and strong. Not only did the rules change, the game is entirely different. In 2009, there were over 60 travel agencies doing more than $100 million in annual sales. However, the independently owned, mom-and-pop travel agency is now hard to find. The third largest travel agency has never had a brick and mortar business and it had sales in 2008 of over $21 billion. (As a point of comparison, the entire promotional products industry sales are estimated at around $16 billion.) Expedia started as an internal department at Microsoft in 1996 and was spun off to TicketMaster and now operates a fairly large conglomerate of travel-related websites.
The Internet was a game changer for the travel agency industry. Shortly after Expedia came into existence, the travel suppliers—led by the airlines, but including hotels and auto rentals—began lowering and capping commissions. Commissions were cut from 10% to 8% in 1997, to 5% in 1999 and then eliminated completely in 2002. Travel agents had to play the new game which meant:
- Retire or find a new way to make money;
- Charge for their services, knowledge and expertise;
- Find niches and specialties and differentiate;
- Merge, be acquired or become part of a larger organization.
Can it happen to the promotional products industry? Is it happening now? For those of us who are strictly selling "stuff": yes, it can. If the first option of retiring or finding a new line of work isn't appealing or achievable, and you're not ready for option 4, what can you do?
Everyone in our industry must be defining their value proposition and living it. What is a "value proposition"? It is the unique value a business offers to its customers. It's why your customers will want to do business with you. This is an exercise that requires deep, hard soul-searching and thought. It's not a "one and done" exercise either. Here is your challenge—come up with five ways that you and/or your company is different from anything your clients and prospects have ever experienced before. When you can do that, you will have accomplished the two things that will allow you to flourish in any economy, in any market. You will have totally differentiated yourself and you will be awesomely relevant to the needs of your customers.
Can you charge for your services, knowledge and expertise? Yes, but only if you have the knowledge, expertise and skills and only if you value it and only if you are different enough and relevant enough for your customers to want to pay for it. No one continues to pay for something they can get for free. Check your website and your marketing materials. Does it look just like your competitors? Does it communicate that you sell stuff? In this new economy, people will not pay a premium price for a commodity.
Become the expert in a product niche, a service niche, a program niche. Set yourself apart by being very, very good at solving specific business problems. Find the pain points and be the aspirin. Here's the thing: Problem solvers always make money. There are many problems that need to be solved. Your clients need to increase sales, market share and profits. They need to recruit and retain the best talent and create a culture and environment where people can thrive and deliver. They need to turn their customers into raving, loyal fans who love the experience and want to come back and tell others about it.
Just because the promotional products industry is experiencing the shift and is going through transformation, does not mean the industry is shrinking or going away. What is going away are the old rules. What is going away is the old game. The industry will continue to grow. Opportunities in our industry will continue to explode. Promotional products will continue to be highly relevant and extremely powerful advertising, communication and engagement tools and vehicles. We can be a part of this exciting growth industry and we can invent, define and play this whole new ballgame.
Change is the new normal. Get used to it.