He then zeroed in on the professional-services market: medical offices, accounting firms, brokerages, and the like. His thinking went as follows:
Just because there are 40,000 quick-printing shops in the country, it doesn't necessarily mean this is a commodity business. In fact, that is a misapprehension Carns believed would work in his favor. He argues that his business is, in fact, "a custom-manufacturing business." Customers' needs vary widely. Many customers, seeing printing as a small part of their operations -- yet reliant on good printing to keep things running -- put great stock in a printer's expertise and professionalism. For that they will pay a premium. Small and midsize white-collar service companies best fit this profile.
But why not larger companies?
Larger companies, Carns figured, work in larger volumes -- and think accordingly. "They don't want the printer to make much money," says Carns. They also might often have an employee whose principal duty is to buy printing services. Smaller companies could not afford such a specialist and thus would be reliant on the printer. Moreover, in white-collar service companies, printing, done right and on time, is more critical to the overall health of the operation than it is in other types of businesses.
Today white-collar professional operations such as doctors' and CPAs' offices, real estate and stock brokerages, and law offices constitute the core of PDQ's customer base. They account for about 75% of annual revenues, with the typical account doing about $4,000 worth of business per month.
The medical market is a case in point of how Carns's strategy to provide a custom-manufactured product rather than a commodity has paid off. Health-care providers routinely drown in paperwork, which they must complete expeditiously to stay in business and survive. As Carns studied that market, he noticed something interesting. Vendors sold complete "packages" to medical practitioners. Those included not only printed matter but software and related services to keep an office running. But then the vendors would disappear, and soon after, the printed forms would run out. Carns realized that certain oft-used forms relating to billing and insurance were critical. PDQ came in and offered to print specialized replacement forms on a timely basis. That filled a pressing need and gave PDQ an immediate toehold in the market. It also provided PDQ with a window on the medical market, so the printer could then appraise what other needs it could fill. Moreover, since workers in the health-care field tend to stay within the industry when they change jobs, PDQ started getting a lot of referral business. Today 20% of PDQ's sales are to medical practitioners. Carns estimates PDQ has as much as 50% of the Las Vegas medical market.
Gathering Grass-Roots Intelligence
Who are the decision makers and what do they want? More recently, PDQ has also made serious inroads into the legal market by filling a simple and very specific need -- the timely photocopying of documents for litigation work. And like PDQ's entry into the medical market, that was the product of grass-roots research.
One day Carns spotted an empty 825-square-foot space in what appeared to be a strategic location -- the ground floor of a prestigious building in downtown Las Vegas. Maybe PDQ could set up shop there? From talking with contacts in the legal field, Carns knew the building was home to four of the five top litigation law firms in the city. He knew litigation required a great deal of photocopying work to be done on short notice and to precise standards, or else the court wouldn't allow it to be filed. Thus, quality, timeliness, and confidentiality were paramount. Price was not.
Now Carns, who had been looking for an opening in the legal market, got interested. He wondered who exactly controlled the flow of copy in a law office. The answer, he discovered, was paralegals. He also discovered that paralegals in Las Vegas had their own professional organization. He contacted the head of the organization and invited her out to lunch. He told her he wanted to meet with her for perhaps two hours twice a month, for two to three months, to learn as much as he could about the market. He was willing to pay $500 for each consultation.
By the time those meetings were done, Carns knew plenty about the legal profession and its printing needs. He devised a brochure whose cover was stamped with the word confidential in bright red letters, since that issue, he learned, was of paramount importance to lawyers. He attached a copy of a document that all PDQ employees were obligated to sign when they began working for the company, agreeing, under threat of dismissal, that they would keep confidential all documents they handled. He then had his lawyer draft a one-page document, holding PDQ itself liable for any breach of confidentiality. Last, he made it known that PDQ's facility would have a shredder, ready to devour any flawed or mangled copies.
Carns then saw to it that one of those packets landed on the desk of every paralegal and every partner in every law firm in downtown Las Vegas, days before PDQ opened its legal-services division. Meanwhile, Carns discovered that paralegals in Las Vegas had a monthly newsletter. He offered to redesign it and print one issue for free, in exchange for an exclusive ad in its pages. In early January 1991, the PDQ blitz hit in the form of the redesigned newsletter and the PDQ brochure, reinforced with the offerings of a local baker Carns had lined up. Every day for four weeks, boxes of doughnuts -- compliments of PDQ -- were delivered to the city's largest litigation firms, which Carns had dubbed PDQ's "10 most wanted." (Those firms account for about 80% of the litigation work done in Las Vegas.) By month's end PDQ had landed all 10 accounts.
In its first full month of operation, February 1991, PDQ's legal-services "division," operating three photocopying machines out of an 825-square-foot space, grossed more than $64,000. For all of 1991, it generated $600,000 in revenues, or more than twice the volume of the average quick-printing business in the United States.
Getting The Message Out
Bucking industry norms with advertising and sales efforts Back in the 1960s, after graduating from college, Tom Carns got a job selling advertising for the Los Angeles Times. That experience convinced him of the value of advertising and, even more important, the worth of advertising consistently.
