Make friends in profitable markets

By Jez Abbott, Monday 08 May 2017

Be the first to comment

Plastic Card Services (PCS) recently teed up another overseas contract, a three-year deal with one of Scandinavia’s biggest supermarkets, Coop Denmark.

pcs-bus-insp

Language barriers notwithstanding, cultural differences overcome and currency issues sorted, it was in the bag – a job worth a substantial six-figure sum.

Overseas markets can be as competitive as our own and are invariably more complex. For that reason, breaking into those further-flung markets will never be easy, says PCS sales director Adam Unsworth, whose company nevertheless did just that, but smoothed the journey by using an agent.

PCS produces more than 80 million plastic cards a year for clients including major retailers, FTSE 100 companies and the public sector. Pushing business into new export markets has been a success, but it was 15 years after the company was formed, in 1993, before it dared venture aboard.

The challenge

It started with an email from Mette Jacobsen, a senior retail professional, who spent 10 years in England earning discounts, reward points or simply free stuff using the flexible friends in her wallet. She was an avid loyalty card user, whipping out everything from her trusted Boots Advantage Card to good old Nectar. Back in her native Denmark, she spied a gap in the market. 

That was in 2008 when the loyalty card sector in Scandinavia was way behind the UK’s. If the prospect of money-off deals is tempting, modern technology has made loyalty cards irresistible to millions, if not billions, of people enjoying more speed, convenience and security when they swipe. 

And yet PCS, which along with its partners is at the forefront of many of those technological advances with plastic cards, has seen previous attempts to conquer overseas markets thwarted. Not even helping to pioneer paradigm-shifting systems such as e-shields to prevent the skimming of information from cards and passports could help it crack expansion into the wider world.

Unsworth explains: “We tried a number of different export routes that never gained traction; there are language barriers and it’s always hard to understand local cultures. And having failed to break into overseas markets we didn’t have an established reputation in those territories. We just could not push the success we enjoyed in the UK into export markets.”

Jacobsen had in fact emailed not one but four companies; a punchy one-paragraph missive, recalls Unsworth, who picked up the email explaining the gap in the Scandinavian market and how she aimed to fill it using a UK supplier. While the other three firms dithered, PCS seized the moment.

The directors immediately booked a flight and went to meet her to discuss the next, and possibly biggest, new development for PCS. It was a defining moment, just like when Plastic Card Services was established in a back room above a shoe shop by current directors Rob Nicholls and Tim Holt after they were made redundant from the DataCard Corporation during the recession of the early 1990s. 

Then, just like now, they saw an opportunity in the commercial card market and resolved to use their 20-plus years of combined expertise to storm Europe and offer their service, which includes card manufacturing, card personalisation and mailing, data processing, artwork and design.

The method

It took time, remembers Unsworth. Jacobsen’s sales agency is called LogoCard and drawing up a contract involved lots of legal groundwork. PCS is exclusive manufacturer for LogoCard across Scandinavia, but Jacobsen’s business has to sell the product, for which it earns commission. Selling not just a product but an idea to a region where loyalty cards were in their infancy was a tough call. 

“We had never been successful in the past in selling overseas, but with Mette as an agent we had someone on the ground who knew the business etiquette, and this started things moving,” says Unsworth. “It took two years, from 2008 to 2010, for results to start filtering through.

“In this time Mette had seemingly endless sales meetings with potential clients in Denmark and quoted for a lot of jobs that weren’t coming to anything. But she kept reassuring us to bear with it: ‘you can’t speak to that many clients at this level without something happening’, and in 2010 it did.”

Before the job for Coop Denmark, involving 1.9 million cards and key fobs, for which PCS won a print and design award for best mailer, came successes with other leading supermarkets. Another early coup was to produce 4 million cards for Denmark’s largest health and beauty retail chain Matas.

But the route to Europe has had costly setbacks, most significant of which involved currency and highlighted the company’s early naivety, says Unsworth. PCS agreed a large contract on a fixed rate of Danish krone. At the time the krone was stable against the pound but, “as luck would have it”, as soon as PCS took an order sterling “dropped like a stone”, he says.

“A contract is a contract and we were committed to it. We lost a lot of money and learned a lesson the hard way. A better way of doing it is to forward buy currency at a fixed rate over a period of time to ensure you get paid what you have been quoted for. Better still, many of our clients are multinationals and willing to quote and pay in pounds.”

The result

One of the most recent successes for PCS and LogoCard came late last year with a contract for more than 21,000 e-Passport shields for Danish insurance company Alm Brand. The e-shields featuring logo and colours use patented technology from Voyager Blue (VB) to block the signals RFID readers use to access data on biometric passports, therefore keeping users’ details secure.

“Since 2010 the export market has gone from strength to strength and now about 10% of our turnover comes from sales to Denmark. In the last three years business has really jumped and our biggest rise over a month was 28% hike in turnover. Right now it totals £5.56m but in a year we hope it will break the £6m mark, and exports are now a significant part of our growth plans.”

PCS also aims to move into Sweden and Norway with a supplier-agent model that is a “no brainer”, insists Unsworth. Using an agent means PCS needs focus only on manufacturing the product. It has no infrastructure in Denmark: no offices and salaries, and minimal risk, as the legwork on the ground is done by the agent. If only there were more people of Mette Jacobsen’s calibre, muses Unsworth.

“As far as PCS is concerned we’d like to replicate this model in Ireland, France, Holland and Germany and we are continually looking. But we want to find another LogoCard; we need the right person and have tried a few times.” 

But the success of growing sales in overseas territories working with an agency has turned full circle.

“Mette is adding between 8% and 10% a year to overall turnover, which is significant. But it’s not just the trade she brings, but the overall effect to business at home. If you export to big brands in Europe it gives you credibility and kudos. We can tell the story to our UK customers and it gives us international cachet. It’s hard to quantify the benefit, but it’s a very welcome addition to the mix.” 

Vital statistics Plastic Card Services (PCS) 

Location Macclesfield, Cheshire

Inspection host Sales director Adam Unsworth

Size Staff: 50; turnover £5.65m 

Established 1993

Products More than 80 million cards a year for clients including FTSE 100 companies, public-sector organisations and big retailers and household names including Slimming World, Booths, Showcase Cinemas and Ikea 

Kit Five-colour KBA Genius 52 UV waterless offset litho press, Svecia silk-screen press with Natgraph UV drying bridge, Smart 70 dual thermal printers, Canon Océ laser printers, Oasys collating, laminating and punching kit 

Inspection focus

Growing sales in overseas territories by working with partners or agencies

TOP TIPS

Define your objectives Spell out what you are hoping to achieve by entering export markets in terms of sales, turnover and profitability, and weigh up the costs.

Get the right agent Finding an agent or partner with a good reputation, track record and language skills will help ease your journey into export markets.

Get the territory right Your geographic reach should depend on your company’s level of “resources, objectives and product competitiveness”, says Unsworth.

Visit that export destination “Visiting the country will help you learn more about not just the business culture but your agent and competition,” adds Unsworth.

Sort out currency/payment methods Measures include forward buying currency at a fixed rate over a set period of time to avoid falling victim to currency fluctuations.

Be realistic Choose markets that offer you scope for growth and, above all cautions Unsworth, “ones that you understand”. 

Share this

This Issue

Latest comments