As managing director of PrintWeek’s reigning SME of the Year, clearly Prime Group managing director Jon Tolley knows a thing or two about running a successful business. However, it seems that one of his most valuable lessons, the power of sharing knowledge, came relatively late.
But Tolley is clearly making up for lost time and as chairman of Dscoop EMEA, the HP user co-operative, in many ways he’s the poster boy for knowledge sharing. That’s not to say he thinks he knows it all now, in fact the only thing he knows for sure is that he will probably never stop learning – especially if he wants the £4m, 42-staff ‘marketing production’ business he runs with his brother Adrian to take on the ‘super printers’ of tomorrow.
Darryl Danielli How did the business come about?
Jon Tolley It was set up in 1988 and owned by three directors. My brother Adrian joined as manager in 1989.
So it wasn’t a Tolley family business originally then?
Not then – it was only a tiny little litho operation originally. It came out of the back of a larger engineering design business called Prime Design. They used to get a lot of random calls about print and one of the directors had some connections in the industry and decided to set up Prime Litho, but all of the admin, finance – the business behind the business if you like – was taken care of by the parent Prime Design.
So when did you get involved?
Well Adrian left to go travelling in 1991 and I had just finished my BTEC National Diploma in print at South Notts, so I took over as manager for a year.
They let an 18-year-old run the business? How come?
Clearly I was brilliant...
Well, okay, I was working there during my college holidays and for whatever reason they trusted me to do it. You’ve got to remember, this was a tiny business then: three staff including me, a 180m2 unit and a Heidelberg Kord 62, a Multilith 1250 and an AB Dick 360 and sales of less than £50,000.
I’m impressed that you can remember all the kit.
I even remember the first job I ever printed was five spot-colour job for a nursery on the AB Dick.
So you were on the presses then?
We all did everything: sell, print – this was back in the day when I could still print of course.
It was a lot or responsibility for an 18-year-old?
I really enjoyed it, though. Anyway, I did it for a year and then Adrian came back and we both ran it for a couple of years. Then we had a knock at the door one day and it was the bailiffs, they had come to take the machinery away. We were churning through the work so the first question we asked was ‘why?’ We asked for some time and luckily they agreed. So we asked the directors what was going on.
So it was a complete shock?
Completely. We just got the work, did the work and then handed over the job bags for invoicing. However, after the visit from the bailiffs I quickly taught myself basic accountancy and realised very quickly that nothing was being done behind the scenes. We were doing the work and then maybe six months later it was invoiced and then perhaps three months after that it was being paid. So cashflow was non-existent.
Was the parent business in trouble then?
No, not at all. It was just that nothing was being done. So we spoke to the directors and said that they could either sign the [print] business over to us and we would sort it out or we walk away and it would go belly-up. They agreed, because the main business had a good reputation and they didn’t want to damage that. So we untangled the crap and turned it around.
Presumably the print part was a separate limited company then?
It was. So we took it on officially in 1994 for £1 and cleared the debts.
You make it sound easy?
I suppose it was, in some ways. We were still young and lived at home, so working for six months without a salary wasn’t a big problem. But it was hard work.
In a way, I guess it was an easier way to get started in print, as no one would have lent you the money to start from scratch.
Precisely. Even later, though, every time we were expanding, getting finance was a nightmare. Getting finance when you’re in your early 20s, with no real assets behind you is really hard. In fact, when we wanted to buy our first two-colour press – an AB Dick 9810 XC2 seeing as you asked – our dad ended up having to lend us the money. But he made it clear not to come back and ask for more, and to be fair we didn’t because we never looked back after the two-colour went in – that step up was the making of us.
You were still Prime Litho back then though, when did you get into digital printing?
2004. We saw the Indigo 3000 at Ipex 2002. Around that time we were sending a fair amount of digital work out to a firm down the road, but the quality wasn’t great. Then, when we saw the 3000, we thought the quality was sellable, so we started to investigate the market.
And the rest is history.
I don’t know about that, but from when we added digital the business really took off. We saw digital for what it was and from day one set out to be experts in variable data. Around 2004 I remember listening to Tyrone Spence of Colour Quest speaking at a BPIF event and he mentioned the 3000. Some people in the room kept referring to it as a glorified photocopier and that really annoyed me. But afterwards I realised that it was a good thing, because it meant that a lot of people still hadn’t really grasped the potential of digital – if much of the industry wanted to think of digital presses as glorified photocopiers, that was fine by me.
Going back to the beginning, though: the business is 50/50 between you and Adrian – how did you decide who was going to be the managing director?
I think it was fairly easy really, because he is much more hands-on than me and very production focused. You need different skills to run a business and I like to think we have a good mix between us, and at the end of the day he’s my brother, so while we fight like cat and dog sometimes, I trust his opinion implicitly on things like technology – and we each know how the other thinks.
What is the long-term plan for the business then?
It’s all about growth. The industry is changing and the skills required to run a print business are changing too. After moving production to the new unit last May, we’ve got head room to grow to £6m relatively easily.
Do you have a growth ceiling in mind though as part of the master plan?
Not really; £6m is the next target and then continued growth after that, because I don’t ever want the business to stand still.
If you could start again, would you still be in print though?
Probably not. I know and love print, but if I were starting today I would probably look at creating a marketing or maybe data business.
You could still set up a marketing or data business though surely?
True, and that might be where the acquisition route takes us one day.
You’re shortlisted in the DataIQ Awards [Multi-channel Marketing Team of the Year], so would describe yourselves as data experts?
No, not really. We certainly know what to do with data and how to help clients get the most out of it, but I wouldn’t say we’re experts yet – no one is, because you can always get data to do more. The print industry is in a brilliant place, if you think where the marketing spend is going – nothing cuts through the digital clutter like print. As printers we see what works and what doesn’t, so we can help our clients maximise their investment and apply best practice rules. We see what tone works, what calls to action work – and that insight has huge value when you want to get the most out of your data.
Do you undertake jobs that have no print elements though?
All the time. Print is a consequence; if it’s not right for the project to use print then we don’t use it – simple as that. We’ve just undertaken a highly variable, data-driven, dynamic content email campaign for a client – with no print element whatsoever.
Do you see e-marketing as your major growth area, or will it always be in tandem with print?
I think it will be in tandem; our preference in the choice of output method is generally irrelevant, because it’s dictated by the campaign targets and the audience. We’re paid to deliver results, so we simply output based on which method will achieve those targets – more often than not that involves print, but it doesn’t always and we have to be agnostic.
Does having the digital/electronic side of the business actually improve margins in the print side too though?
It does, we work on results – in print and online. We recently took a client’s already great DM campaign, which was achieving an impressive 43% response rate and applied some of our own techniques to it and got it up 52%, which equated to a £900,000 revenue uplift for the client – so clearly that has value and cost becomes less of an issue.
But the flipside to that is that you sometimes, presumably, have to have frank discussions with a client and tell them that, based on your experience, their campaign won’t work.
Sometimes, but there are ways to go about it. We were doing a lapsed campaign for a client and it was delivering okay results, but we knew that with a few changes it would give a much stronger return for them. But they were doing a lot of erming and ahhing, so we just did it and posted it to the marketing team. After they received it, we got a call telling us to go ahead. The campaign only increased the response rate by 0.5%, but the average spend from the respondents increased dramatically.
Did it take a while to develop the confidence and skill set to have those kinds of conversations with clients?
Absolutely. It took a lot of listening and learning, a lot of reading and studying.
You mean books on marketing?
Absolutely. We all need to understand our clients’ businesses better. You need to put yourself in that arena, in your customer’s world to understand their pain points. PrintWeek isn’t the only trade magazine I read – there’s Marketing Week and Retail Week too.
I guess developing that acute understanding also engenders trust too.
I think so. If you phoned up some of the clients we work with – especially on cross-media projects – and asked them to describe their campaign, the client might not really know what exactly their print campaign was. They’d be able to tell you what their target was and all the other metrics, but not the actual mechanism that they were using – that it was a A5 postcard four-back-four or whatever. Some could, of course, but a lot couldn’t. They trust us to take care of all that.
What have been the tough times though?
Doing the build last year was a challenge; it generated a few sleepless nights. But you have to take the odd risk to continue to grow.
But the site move went okay?
It was difficult to start with, because we had a couple of crap months at the start of last year – which helped in a way because it meant that we weren’t too busy during the move – but it hurt cashflow briefly.
Not a big problem though?
Oh no, but it’s like any kind of big move or investment, part of it is funded through cashflow. It doesn’t matter how much you budget for something hitting you head on, it’s the sideways smack that comes from nowhere that catches you out. And more often than not it’s usually utilities, like when the power company tells you there’s not enough power in the street and you have to foot the bill for the upgrade. We needed the extra space though, especially during peak times, and not having enough room was starting to impact efficiency.
So does the new site have space for, oh, I don’t know, an Indigo 10000 perhaps?
When we were planning the digital room at the new facility, we did phone HP, and this was long before the 10000 was announced, and asked ‘Hypothetically, if you’re going to release a new digital press – how much space are we going to need?’. So our digital room now is about four-and-a-bit the size of the old one.
So there’s a little bit of room ready for a 10000 one day then?
We’re ready for it – but we’re sweating the assets we have at the moment and that approach seems to working fine. For now at least.
Is B2 digital the next logical step for the business though?
I think so, but we’ll see.
Aside from the site move, have there been any other major challenges? I guess the recession had a big impact on marketing spends...
It did, but that also created a lot of opportunity for us.
How do you mean?
Because it meant clients had to really focus their efforts, and what we do is all about results. When budgets are tight, it means that budgets have to work harder and we like making them work hard.
So you’ve never had any really scary moments where the business could have gone either way?
Oh yeah – big time. Every business has been through those moments, it’s part of the game – any director will tell you that you have to put a lot on the line. And it’s not just the business, it’s your home life too. In the last recession the whole team knuckled down. We kept costs down and margins tight and made the right investments and that saw us through.
What do you mean knuckled down?
Well, we had pay freezes, four-day weeks... we just managed it. We saw the situation coming and we made decisions early and that worked. Everyone at the business is part of a big extended family and when it’s tough we all suffer, but when it’s good we all benefit too.
Does that mean you communicate exactly how the business is doing then?
Yes. You can’t do it without the team and while it’s your responsibility to protect them and their livelihoods, they also need to know that you’re in this together – because we all need to pull in the same direction. When you communicate clearly it can only be positive, it builds trust. That said, you have to remember that communicating a little ‘too well’ runs the risk of sending people into a blind panic, if things are tough. It’s about striking a balance, I guess.
Back to the growth plan: you mentioned that the next target was the £6m mark, which would be relatively easy. But a lot of people seem to think that the transition from a £5m to say £10m is one of the hardest changes?
It probably is. We did an exercise a few years ago in which we looked at growth and where it was coming from and we also did the ‘Elephant hunting’ programme with Nick Devine and that really set us on a strategic growth path. Much like high-margin selling, where you need to get under the skin of your clients to really understand their business.
Does taking that sort of strategic approach to sales come naturally to the industry?
No, absolutely not. It didn’t always for us either, but it can be taught if you really want to grow and are prepared to leave your baggage behind and learn.
You mentioned seeing Tyrone Spence speak at a BPIF event earlier, have you always been into that side of industry – networking and sharing knowledge?
No, not until Dscoop really.
When did you first get involved with Dscoop then?
2010. I think it was Dscoop5 in Dallas, and it was incredible. We were just starting to get into cross-media properly and I was blown away by the sharing at Dscoop. In one session I learned how to sell cross-media, how to talk to clients about it, how to price it and all the pros and cons of various software packages. Those two and half hours probably accelerated our cross-media programme by 12 months – the level of openness really was incredible.
It almost sounds like a religious experience.
It was very American with lots of whooping and hollering, but it really was a revelation. So we came back and started talking about launching Dscoop EMEA.
What’s been the real benefit to your business though?
Peer-to-peer sharing. If you’re going through something, or want to try something new or get some idea of best practice, it’s the best way. It’s not about sharing secrets; it’s about sharing experiences and building your own knowledge network. We’ve also won various projects through it; where we’ve received work through a fellow member in the US or wherever that needed to produce work in the UK for a global customer. We’ve also placed work ourselves with other members when the client has needed an international footprint. It’s definitely a two-way street.
Doesn’t your role as EMEA chairman take up a lot of your time?
It can do, but that’s part and parcel of it – I’ve benefited from Dscoop, so I’m happy to give something back.
Have you learned things outside of Dscoop?
Yes, but then Dscoop reinforced them, to be fair: sharing knowledge and the importance of training, in terms of mine and the whole team. That’s probably something I only learned in the past few years, and I wish I had appreciated its importance a few years ago.
Do you spend a lot on training then?
We do now and we never did before. It took me a while to realise this, but the prospect of spending a lot on training is far less terrifying than the impact on the business and the team if we didn’t invest in training. I wish I had worked on my own development a lot sooner too.
Clearly you have changed, do you think the industry has too?
Regarding its approach to training, probably not enough...
…I meant more generally?
Well, it’s certainly leaner. Personally I think the industry has changed dramatically in the past few years and it’s finally catching up with other sectors. We’re in a market that is at the forefront of technology, but is production driven and those two things don’t always sit together well. But we’ve learned a lot from a lot of
Do you mean the challenges of historically being a manufacturing industry but increasingly becoming a creative industry?
I guess so. Doing the two, when you’ve got innovation and creativity on one side and production constraints on the other – is a big challenge. There’s still a lot that needs to change in the industry and a lot of that needs to be driven by the people, not the technology. The industry has sold itself in the past on service, quality and price – so the last thing to differentiate your business is price. If you do that then your business and the industry suffers as a result.
I guess the alternative is a ‘last man standing’ model when the market is just dominated by one ‘super printer’?
That’s already happened hasn’t it? Didn’t the ‘last man’ just buy Pixart Printing?