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Mar 1, 2003 12:00 AM
Printers know that variable-data printing (VDP) can be a lucrative business, and a useful technology for customers who know how to take advantage of it. But what was once heralded as The Next Big Thing hasn't yet lived up to expectations. In the January “Digital Printing Report,” RIT (Rochester, NY) professor Frank Romano laments that despite a steady increase in digital-press installations since the early 1990s, VDP “is still a small part of what we print digitally.”
Romano observes that marketers and creatives need more education on the value of targeted direct mail. For printers, the limited customer knowledge in many cases means longer sales cycles and client handholding. And the very nature of VDP — dealing with a range of databases and merging data with the appropriate application for printing — can make it too work-intensive for some printers' tastes.
It's possible, nevertheless, to find printers attempting and succeeding at VDP. american printer spoke with five printers for an in-depth look at how they do it.
Microdynamics Group (Naperville, IL) has been doing VDP for 20 years. The company started in the microfiche business, recording data electronically or in hard copy for customers. Eventually, it migrated from archiving to distributing data to its clients' customers via multiple media, including print and the Internet.
Although the 30-year-old company still does some archiving work, invoice and statement production is now its core business. “A lot of companies welcome us with open arms,” observes Thomas Harter Jr., vice president of sales and marketing. “Most of this back-end printing is a function of IS, and typically, computer guys don't like to do the printing. It's a nice win-win, because they want to get rid of [that responsibility].”
Customers are typically midsize to smaller Fortune 500 corporations. Microdynamics maintains a sales staff that calls directly on companies; partnerships with larger computer companies, such as EDS, bring in additional customers. Harter notes transactional printing is an annuity business, with repeat customers requiring daily, weekly, monthly or quarterly printing.
Ten of Microdynamics' 100 full-time employees are developers, saving clients the hassle of manipulating their data. Document composition is handled through Exstream Software's (Lexington, KY) Dialogue and Scitex Digital Printing's (Dayton, OH) Composer Data Preparation applications, as well as Microdynamics' own proprietary systems. Printing is done on 10 Xerox cutsheet and three Océ PageStream high-volume digital presses; barcode technologies and homegrown controls ensure 100 percent integrity of the printed pieces. According to Harter, on a 400,000 run, typically only two or three pieces need to be regenerated.
Microdynamics recently took a New York financial institution's print output file — containing the equivalent of one million pages of data — and cleaned the data, redesigned the printed piece and identified transactions within the datastream to make the statements more customer-friendly. The printer further added a marketing component: One of 1,000 different messages — such as “Earn a quarter point on your next CD” — could be printed on each statement, based on certain conditions. The job is produced monthly; typically, about 60 different messages are used per statement cycle.
Next up for the transactional printer: a conversion to more roll-fed digital presses, and color. Microdynamics recently installed the Scitex VersaMark Vantage four-color, inkjet variable press. “We felt the most comfortable with this press for its ability to put out quality color print in a very high-speed environment. That was the key,” says Harter. “Everything fell together from the production and cost standpoint, and from the marketing standpoint of being able to do variable data.
“We believe four-color variable printing will be a huge market for us,” says Harter. “[We'll be able to] integrate inserts and newsletter information, graphics and pie charts in full four-color variable mode.”
Printing giant Mail-Well entered the variable-data market in October 2000 with the launch of a separate digital business, Mail-Well 1-2-1 (Englewood, CO). Nine employees — some of whom had volunteered to transfer to the new division — made up the payroll. Two staffers sold VDP capabilities directly to potential customers; the 1-2-1 team also educated Mail-Well's 400 print-group salespeople on the variable offerings. The digital printer generally pitched its services to large, business-to-consumer companies selling big-ticket items. Jobs were printed on an IBM Infoprint Color 130 continuous-forms production printer.
In one campaign, 1-2-1 collected information requests from Ford Motor Co.'s website to create a customized brochure for each consumer. Website visitors chose the color, model, interior package, and towing and engine options they preferred on their ideal automobile; 1-2-1 collected the data on the back end, then printed and mailed a 16-page brochure or e-mailed a PDF document directly to the consumer. According to campaign results, 61 percent of respondents indicated they wanted to visit a dealer after receiving the brochure.
“The most important part of VDP is having good data to work from,” says Mike Emerson, director of marketing for Mail-Well's print group. Despite the success of the Ford project, the exec notes many other customers didn't have their databases at the level required to produce an effective one-to-one campaign.
Even if a customer invested the necessary dollars for a better database infrastructure, there were other roadblocks, according to the marketing director. He explains variable-data projects require involvement from multiple departments, including IT and marketing, introducing “a couple of different levels of complexity to what used to be a pretty cut-and-dried print process — and it would be interesting to all, but at times difficult to execute.”
Because of these factors, Mail-Well decided this past September to stop supporting 1-2-1 as a separate business and instead fold it into Mail-Well's Denver-based litho printer, Communigraphics. Emerson says offering VDP was no longer cost-effective without greater database competencies on 1-2-1's part, something that could not be gained without partnering with agencies or buying a database company.
“From where we stood today, it felt like quite a large step from commercial printing. Our hit ratios weren't there with most of the customers we talked to,” Emerson acknowledges. In addition, “the whole profit question is a difficult one. You make money when you get a higher response. It's not how many you are going to print, but who is going to invest upfront and how long the customer is going to stay with you. It begins to look like an agency or service where printing is the last component.
“As a marketer, I absolutely see the application of VDP to customize messages to your customer,” observes Emerson. “But I think there is still a gulf between one-to-one marketing and organizations really understanding how to use it and justifying the dollars spent to do it.”
According to Dave Rohe, owner of The Document Centre (Carol Stream, IL), there are three categories of VDP. The high end involves bill processing and the transactional printing of financial statements. At the other end of the spectrum are the simple data-merge projects, where the addressee's name and company might appear on a piece — “which we know in today's market isn't sophisticated enough,” he says.
“The big middle ground, which everyone is having trouble getting their heads around, is variable marketing materials involving Quark files,” Rohe observes.
The Document Centre offers both VDP and short-run digital printing. The $3-million-plus company employs 20 people, and currently operates two DocuTech 6155s and two DocuColor 6060s, all with inline finishing. It primarily serves the medical industry, with pharmaceutical companies and hospitals among its clientele.
Rohe founded The Document Centre 25 years ago as a typesetting company. The firm's strong prepress expertise allowed it to move into black-and-white printing on a Xerox DocuTech for a few corporate accounts. “As soon as we tried variable data and saw the response numbers, it didn't take too many of those [projects] to figure out that that's what people were looking for.” The exec says 20-percent response rates — nearly unheard of with standard direct mail, where response usually hovers in the low single digits — are not unusual on well-conceived jobs with a decent database.
For one client — a hospital-owned doctors' practice with about 30 physicians — The Document Centre printed and mailed 10,000 postcard reminders as part of an outreach program to inactive patients. The cards were both gender- and age-specific. For a female recipient, for example, it included a photo of a woman in the recipient's age group; cited the health issues for women in that age category; and included a photo of the recipient's physician, the physician's signature and the phone number of the office the patient had visited (particularly useful if the doctor operated out of multiple office locations).
Response rate on the mailing was 26.3 percent on inactive accounts, higher than for the radio and newspaper ads the hospital had also run.
Rohe notes the sales cycle on variable-data projects are long, “with a capital L”; it can take more than a year to secure a job. The hospital with the doctor's practice began as a regular digital-printing customer to whom Rohe had previously proposed variable-data applications.
“There isn't a cry out there for variable data. You have to get out there, show it to them, and they think about it,” the exec explains. “It's very much a consultative sale.” Rohe does the majority of the selling for the company.
Rohe starts the database discussion early in the sales cycle. The Document Centre requests customer data in Microsoft (MS) Excel, although it also accepts Access. “But if you put it in Access, the person coordinating the project will never know if it's a good database or not,” explains Rohe. “In Excel, the fields line up, and you can figure out what's missing.”
While the job may not progress further if the client is too busy to fill in the missing data, Rohe notes customers mistakenly assume variable-data projects require several fields of information. In truth, “we don't need many data points to pull off a powerful variable-data job,” the owner explains. “With just two or three — such as first name, company name, gender and age — you can put together a wealth of materials.”
Rather than having database experts on staff, The Document Centre mostly employs veteran Quark aficionados that it later trained on the basics of Xerox's (Rochester, NY) VIPP personalization software. The printer also uses Scitex Darwin for simpler variable-data jobs. Some clients prefer to do the majority of database manipulation on their own, but The Document Centre does establish some project setup fees. While Rohe acknowledges many customers don't like the fees, he explains that they reflect the amount of programming involved on the project. Pricing from that point is comparable to that of on-demand digital printing, allowing customers to identify the costs associated with VDP. Most repeat jobs require very little by way of setup (and attendant fees).
Work at The Document Centre is currently split between VDP and simple digital printing, with volume slightly skewed toward digital printing. Rohe predicts, however, that variable-data jobs will increase in the next two years to about 75 percent of the shop's overall work.
“We're not printers. We view printing as a communications medium, not just a production medium.”
With a background in direct marketing, Mike Nelson's description of his business, Digital Marketing (Minneapolis), isn't surprising. The company emphasizes its digital-printing-fueled marketing services.
Nelson founded Digital Marketing in 1994 with a partner, Joel Hoefle, who had a background in communications. They started out working with established printers on the printing end, but project control and workflow issues soon arose, and by 1996, Digital Marketing was operating its own Xerox DocuTechs and an HP Indigo digital press. It also has finishing and intelligent inserting equipment.
Digital Marketing has 65 employees in a variety of departments. About eight people are full-time programmers — the company offers Web hosting in addition to digital printing and database management — six are in document engineering, five work in the creative department, and about 10 handle client services and marketing. In addition to an outside salesperson, a new-business team within the client-services department makes sales presentations.
Rather than doing strict one-to-one work, the Minneapolis company focuses on doing versioning for clients. It may, for example, take on a brochure-printing job that requires 16 different versions at 300 impressions each. “The key is to develop a creative template to take advantage of the economies of scale, and do it all in one print run,” explains Nelson.
Digital Marketing's first client was American Express Financial Advisers. American Express had already segmented its audience for different services, based on gender, race, occupation and lifestyle, but had previously relied on standard brochures whose information would quickly become obsolete. Digital Marketing customized brochures for each of American Express' 8,000 financial advisers, tailoring photography and copy tone to each identified customer demographic, and adding in the financial adviser's photo and product preferences.
Digital Marketing caters to larger corporations; many of its clients have field-distribution systems, where data specific to a local agent or distributor needs to be combined with the corporate brand and messaging.
“As printing has become such a commodity, being able to manage the process and content has more value to customers,” Nelson says. “Data is a huge fact of life for corporations. I think that's where digital printing provides tremendous value.”
Sean Cummins is a self-described VDP evangelist. He began in sales for his father's printing-supply company, and eventually went on to do prepress and systems-engineering work for various businesses, including two electronic-imaging-equipment vendors. Cummins founded Creative Digital Color (Elk Grove Village, IL) with his brother Daniel in May 2001.
Creative Digital Color has a Xeikon 50D digital press, but it does most of its printing on a NexPress 2100 installed in November 2001. The company consists of four employees in addition to Cummins; two were recently hired to assist him in selling, and the other two manipulate the customer data and operate the presses. Cummins himself has operated the NexPress during busy periods. Seventy percent of the jobs coming through the shop are variable.
According to the exec, selling VDP requires a show-and-tell approach. “You definitely must have examples when you're going into the market,” he explains. “You have to bring the horse to the water. If you demonstrate [the prospect's] exact product, how it looks and feels, you get a quicker response and buy-in to the program.” Creative Digital Color created its own case studies as well as a portfolio of sample pieces containing everything from prospectuses to CD covers.
Cummins once made a cold call to a large Chicago company, bringing along his portfolio of samples. After explaining how the company could enhance a direct-mail piece, Cummins won a job printing marketing collateral that included the recipient's company name inserted throughout, customized text and a prefilled business-reply card (BRC) to increase the response rate.
The customer had mailed 20,000 of the same direct-mail piece — without personalization — six months prior, and had received fewer than 20 responses. When the campaign was re-executed with personalization, 180 people responded — even though the mailing list purchased for the new campaign had a 13 percent failure rate just for containing incorrect data.
Educating customers on what they can do with their data is a key component of selling variable printing, according to Cummins. Though Creative Digital Color has received databases in all conditions, Cummins says once customers grasp the potential response rates, they're more likely to clean up their own data. Creative Digital Color's two technical people are familiar with AFP, Metacode and other file formats, but the client initially does most of the file work. The printer requests the data in tab-delineated MS Excel format.
In some cases, Creative Digital Color has even managed to spur clients to establish new databases. In a program for a wine shop, Creative Digital Color printed and mailed a newsletter with an attached BRC. The BRC included a questionnaire on about 100 bottles of wine carried by the shop and asked for customers' wine preferences. After the data were collected, the next newsletter iteration profiled four bottles related to each customer's BRC responses. The wine shop later created an entirely new database to track customer preferences.
“You start educating the customer on what they can do with the technology, and the creative juices start flowing,” Cummins says. “You're developing the educational relationship” that could lead to future jobs from the customer.
Creative Digital Color is enjoying such success with VDP that its volume has grown steadily each month. Run lengths average in the 4,000 to 5,000 range for a typical job. In January, the volume topped 410,000 images, and the digital printer has another NexPress on order.
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