Awards & Engraving

June '18

Issue link:

Contents of this Issue


Page 50 of 84

48 • A&E JUNE 2018 If you revisit the aforementioned bullet points, I think you will see how promo- tional products have outstanding attri- butes in all five areas of value and impact. These are excellent reasons why awards and engraving shops ought to integrate promotional products into your external and internal marketing plan. ARE PROMOTIONAL PRODUCTS BUOYS OR ANCHORS? Meet Frank Crowe, president and owner of Indianapolis-based Artistic Awards. His state-of-the-art shop and team have been offering ad specialty items for years. Crowe shares with me some of the insights he's gleaned from his experience selling pro- motional products. "Bringing these types of products into the fold is easy … The beauty of it is we don't have to make and embellish the pen, garment, USB drive, or bag ourselves. We just take the order." Crowe goes on: "It didn't take us long to realize that promotional products generate much smaller gross profit margins than our core business — exquisitely designed customized service, and recognition awards … It is not uncommon for an award (job) that we design and manufacture in-house to have a gross margin of two to three times greater than a promotional products order." From what I know of the stiff competi- tion in this marketplace, I would concur with him. So, it is important to know what your shop's overall gross profit margin is. Grab your most recent consolidated income statement — a.k.a. the profit and loss (P and L) statement — and calculate your gross margin; simply find the dollar amount of gross profit and divide it by your gross revenues. If adding promotional products to your mix at between 30 and 40 percent gross margin will dilute your already-healthy gross margin of, let's say, 55 percent or greater, then be careful how heavily you promote and make known that you enter- tain a promotional products order. If the sale of promotional products will reap gross margins nearly the same as the rest of your product offerings, then advertise and pro- mote them. On another note, take a look at how you compensate your salespeople — assuming you have some and offer them incentive pay. If there is a significant difference in the profitability of your core bread-and-butter offerings — custom gifts, recognition, and award items — and that of promotional products, be certain not to pay the same commission rate on sales of both. Have one commission rate for high-profit goods and another for lower ones. Impress upon your sales team that the reason you offer promotional products in the first place is two-fold: one, for the one-stop shopping convenience of your current customers; and, secondly, to improve the sales revenue stream for your business. BALANCING RISK AND REWARD When I've spoken with awards shop business owners — and I try to do so regu- larly — the conversation often migrates to the challenge of striking a healthy work-life balance and time management. Eventually, most entrepreneurs come to the epiphany that they spend too much time in the busi- ness and not enough time working on the business. The choice to blend promotional products into your current offerings is a "working on the business" decision, but only if you hone a keen appreciation for — once that trigger is pulled — how much time, resources, people, and effort have to be dedicated to ensure its success. Enter the risk-reward conundrum. Business owners come to the realization that playing it safe usually doesn't pay off. If you revisit the aforementioned bullet to have a gross margin of two to three times products, be certain not to pay the same not to pay the same not If the sale of promotional products will reap gross margins nearly the same as the rest of your product offerings, then advertise and promote them. IMAGE COURTESY JDS INDUSTRIES

Articles in this issue

Links on this page

view archives of Awards & Engraving - June '18