Expert advice

Jul 1, 2005 12:00 AM, By Katherine O’Brien

Variable data printers share their success stories

Variable Data

What does it take to succeed with variable-data printing? Mike Panaggio, CEO of DME (Daytona Beach, FL), a direct marketing firm, cites a sports analogy. Speaking at a Xerox panel discussion at last year’s DMA conference, Panaggio recalled Dick Fosbury’s pioneering high jump technique in the 1968 Olympics. "In 1968, Fosbury was a laughingstock," said Panaggio. "He was jumping backwards." But Fosbury’s technique enabled him to jump 7 ft. 41?4 inches, good enough to set an Olympic record and win a gold medal. By the 1972 Olympics, all high jumpers had adopted the Fosbury Flop. "That’s what ROI is all about," said Panaggio. "You have to be able to show that [the campaign] works. It’s as simple as that."

You’ll find some familiar names as well as some digital printing newcomers on the following pages. All are setting the digital printing bar a little higher.

DME: Marketing is fundamental
Prior to founding DME (Daytona Beach, FL) in 1982, Mike Panaggio was a securities and commodity broker working for Prudential Bache in Rochester, NY. Two clients, both doctors, had gotten in over their heads with some real estate investments. "But their problem wasn’t money, it was marketing," recalls Panaggio. "Lo and behold, I realized marketing came very easy for me. Before I knew it, I was down in Daytona Beach [permanently]."

Today, DME is a 650-employee direct marketing firm integrating telephony, e-mail, Web-based communications and CD-ROM technology into campaigns for Auto Nation, Toyota, American Express Financial, Microsoft and other customers. DME helps its clients retain existing customers, reactivate former or dormant customers, and acquire new customers.

Panaggio says that while some companies can cite their acquisition budget down to the last penny, many underestimate the importance of keeping those customers. "We concentrate on retention-based marketing," he explains. "We push really hard on that side of the business because it’s the easiest way [for clients] to build a business and keep it strong."

DME’s 11-acre complex features 20 departments occupying 120,000 sq. ft. of office, production and warehouse space. "We’re approaching $80 million in sales," reports Panaggio. "Our margins have been increasing over the last four years to where over 10 percent of our sales is profit. We’ve got an EBITA that’s close to 15 percent."

What’s the secret to DME’s succeess? "We are not just a vendor," says Panaggio. "We want to be a part of our customers’ strategy and then we want to help execute every detail of that strategy."

Panaggio, the son of a college basketball coach and brother of an NBA assistant coach, adds that a sports background has influenced his management style. "A coach has to recruit the right players and play in the right league."

In addition to hiring good employees, DME chooses its customers carefully and emphasizes the fundamentals. "It doesn’t matter who has your playbook—you have to execute it," says Panaggio.

Constant tracking and testing
Proving ROI is another fundamental activity for DME and its customers—Panaggio says tracking results is the best way to determine a project’s success. "In some cases [with new customers], there’s no data, so we have to start from scratch," he explains. "It’s going to take longer to find the right program. Once we get it to work with an acceptable ROI, there’s constant testing. What works today might not work tomorrow, so you’ve got to be ready."

A Jacksonville, FL-based DME division, Red Rocket, tracks ongoing monthly campaigns for a group of auto dealerships. Mailings are sent twice a month—individual dealers can select a four-color personalized postcard, mailer or letter. Dealers then can access comprehensive online reports that show total campaign investment and revenue generated by their sales and service departments. Dealers also can click on customer survey results to see individual respondents’ buying intentions.

"Anybody can give you feedback on response rate," declares Panaggio. "We had to go much deeper than that. We developed reports and programs that let us go into the dealerships’ point-of-sale system, and, on a daily basis, pull all of the transactional information. That gives us some good information, because transactional information (what you bought) is 10 times more predictive than demographic information (where you live)."

DME’s print production highlights include two Halm envelope presses, two Heidelberg presses, 12 high-speed one- and two-color laser printers and four Xerox iGen3 digital production presses. "We begged Xerox to let us open up Daytona Beach [in 2003]," recalls Panaggio. "At the time, the iGen hadn’t been released yet, so there was no way they’d [put one] in Daytona Beach over a bigger city. But we managed to get enough support to do it."

DME started with three iGen3 presses installed over the course of 2003. A fourth machine was installed in 2004.

DME’s keen interest in the iGen3 press was born of a huge production headache. The company had just started doing work for Auto Nation, a coveted direct mail account with locations in 18 states. DME was using Xerox laser printers to overprint on offset preprinted forms customized for dealerships. "The proofing we had to do was maddening," says Panaggio. "We were making mistakes because so many of the forms looked the same. We were losing money on the account and were faced with dropping it or finding a [different way]. That’s when the iGen was just coming out—we begged all the way up the ladder to Anne M. Mulcahey. And they finally gave in."

Panaggio credits a great deal of DME’s subsequent success with the Auto Nation account to the iGen3 press. "Things turned around to the point where we became its main service marketing partner on the retention side of the business. Our business with Auto Nation has grown five-fold in the past three years. That was business we didn’t have before."

The XMPIE workflow software Xerox recommended to DME integrates design logic and data across multiple media, enabling designers to use their favorite software. The system can simultaneously create personalized-response Web sites and associated print pieces with personalized URL links on the fly, during printing.

What’s next on the Web
Panaggio says DME sees more Internet-related opportunities. Earlier this year, DME did a 30,000 piece postcard mailing for two NBA teams to generate ticket sales. The two team’s postcards featured identical elements, but one team opted for a prominent personalized URL for all recipients on one side of the card, while the other team featured a picture of three players. "The response blew our mind," says Panaggio. "We couldn’t believe the response to using a personal URL. It’s such a lesson in direct marketing: People are busy. Don’t distract them from raising their hand and saying ‘Yes, I’m interested in buying tickets from you.’"

Padgett Printing: embracing technology
In 1989, family-run Padgett Printing (Dallas) was at a crossroads. The third generation, cousins Don and Win, realized they needed help to grow what was then an $8 million company. David Torok, formerly with Western Publishing (Racine, WI), was hired as president and CEO. Today, the 102-year-old company has 109 employees and annual revenues of $26 million. Its customers include retailers, utilities, financial service companies and agencies.

"If we continued to print like we did in 1903, we wouldn’t be around," says Torok. "Padgett has a history of embracing technology."

Fifteen years ago, the Dallas printer was among the first to go digital, first with scanning and then prepress and Logic MIS. In 1998, Padgett installed an Agfa Chromapress. "We liked the Xeikon engine as well as the Intellistream and Personalizer X software," says Torok.

In 2001, Padgett added two Kodak Digimaster 9110s, later adding a Kodak Digimaster 9150i and a Xerox 92C spot-color device. Padgett did a brisk business imprinting shells produced on its offset equipment, which includes a Harris M-110 web press and three 40-inch presses. To meet growing demand for short-run and variable work, the company replaced the Chromapress with two Kodak NexPresses, the first in 2004 and the second this year.

Padgett’s sales per employee are about twice the industry average. Torok says the company tries to grow without adding fixed costs. "We’re also very cognizant of where our customers are going so that we can offer [the best] solutions." Examples include mailing services. Padgett now has the capacity to mail more than 500,000 pieces per day.

In 2004, Padgett’s overall sales were up 18 percent while digital sales increased by 33 percent. "We’re happy campers," says Torok. He notes that digital work has boosted offset growth. "In 2001, we were doing $2 million worth of work for our top digital customer. Last year he did just over $4 million with us, of which $3 million was offset."

The Fantastic Four
Torok attributes Padgett’s digital success to four things:

Padgett knows print production. "Since we know color and are used to working with agencies, we have no problem working with our customers’ print production [people]," explains Torok. "They talk dots and so do we."
Database expertise. "We have two people that do database applications," says Torok. "Our techie talks to the customer’s techie—they can talk about tab-delimited files, which print production guys and gals typically don’t want to deal with."
Top management involvement. "Management understands the ultimate goal of customers’ programs—they ensure the customers have all the resources they need."
Vendor assistance. "We have no problem bringing our vendors in to help close a sale," explains Torok. Kodak’s business development manager reportedly was involved in 90 percent of the on-demand business Padgett gained last year. Another source of help, the NexPress business development toolkit, offers sales and marketing strategies, sales eduction, vertical market information and variable-data application development.

Steve Woods Printing Co.: Follow that sample!

Variable printing represents about 25 percent of Steve Woods Printing Co.’s work. "It’s a good door opener," says Woods. "We might not be doing the customer’s 40-inch work, but if they have a unique variable need, we can start there."

One of the company’s more unusual projects involves helping a pharmaceutical company track drug sample distribution. "Previously, there was no effective way to know whether the samples were going to a patient, doctor’s family member or the circular file," says Woods. "With the drug sampling program we’ve co-engineered, there are identification numbers on script cards that are presented to pharmacies. Now information is captured as to which doctor is giving out the sample. It’s a better way of knowing where the drugs are going, who is using them and how effective they are."

Because the program is subject to FDA scrutiny and each piece is essentially currency, security is a priority. "We have to manage every piece," says Woods. "Everything has to be closely monitored."

Customers in the hospitality industry often use reservation codes to assess direct mail campaign results. "It allows the buyer to specifically track the printing and mailing costs vs. revenue generated as a result of that offer," explains Woods. A hotel customer, for example, might track a room-rate promotion against a golf package deal. Subsequent mailings’ text and images can then be tailored to the recipient’s responses.

Prior to starting his company in 2003, Woods spent more than 20 years at Woods Lithographics, the company his parents founded in 1978. In 1999, the family business was sold—Steve Woods remained there until 2002. "I didn’t set out to recreate what Woods Litho was or what it became," he says. "This is a clean slate."

Broader customer base
The company uses Heidelberg’s Prinect Prinance print management system to track jobs—information flows seamlessly from estimating to purchasing to materials management. "We’re driving information from the original estimate through to the equipment and handling it fewer times," notes Woods. "We’re running our business on this platform."

Steve Woods Printing Co. averages 80 to 100 projects a month with a typical invoice of $8,000. By contrast, says Woods, his parents’ company used to do about 30 $25,000 projects every month. "When times were good, the old way was great," says Woods. "But with the economy’s ebb and flow, we wanted a broader base with a greater number of transactions with a larger group of clients and a wider variety of products."

It’s all about the ROI
This past fall, Xerox hosted a Thought-Leaders seminar for its Graphic Arts Premier Partners in conjunction with the DMA’s annual meeting. Xerox’s Tom Wetjen, Robert Wagner and Shelley Sweeney hosted panel discussions on:

How direct marketers must evolve to prosper.
The visual communication provider.
Digital printing through the eyes of a creative director.
Direct marketing best practices.

Integrating print with Web and telephony
In his presentation on Direct Marketing Best Practices, Panaggio said that direct mail by itself doesn’t work. "You have to integrate it with other media," Panaggio declared. "DME is all about the integration of direct mail with the Web and telephony."

The Daytona Beach, FL-based direct marketing company combines the power of four Xerox iGen3 presses, XMPIE personalized Web site/workflow software with database experts, programmers and production capabilities (a multimedia department, soundstage, audiovisual studio) to integrate digital print with Web, e-mail and call center efforts.

DME works with ad agencies, brokers and manufacturers on retention, reactivation and acquisition marketing programs. Panaggio explained that retention marketing generally involves transactional customer infomation. Reactivation describes the challenge of getting customers that previously spent money with you to start spending it again. Acquisition, said Panaggio, is the toughest, because the company doesn’t know enough about the targeted recipients to make a campaign as personal and relevant as DME would like.

Panaggio attributed the success of the 650-employee, $80 million company to its selection of clients as well as its ability to prove the ROI for its campaigns. Clients are evenly split between automotive and financial service segments.

Understanding true response
Panaggio stressed the importance of obtaining first-hand response information. "You will wait forever for customer ROI information," he warned. "We don’t wait; we pull it directly. Our automotive customers have dealer management systems. We know repair orders generated, used and new cars sold and their prices [resulting from a DME campaigns]."

ROI results also ease the selling burden. "I can’t sell," confessed Panaggio. "I hate it. I like to point out ROI. With [our reports], I don’t have to sell. I point out what we produced and the revenue it generated."

All DME customers must be what Panaggio calls "testaholics" and "trackaholics." He advocates frequent testing because, "No matter how great you think your piece is, it won’t work forever." Early on, DME asks its clients how they will handle responses. If the client is only prepared to respond during working hours, DME will explain the advantages of using its call center for 24/7 coverage. Panaggio noted DME has a selfish ulterior motive for suggesting this service: "We’re greedy. We want all the responses credited to our account."

Panaggio concluded with two key pieces of advice: Get closer to your customers and find out who controls the budget!

Variable data pitfalls Kate Dunn, president of Digital Innovations Group (DIG) (Richmond, VA) has an interesting print background. In her 15 years with Xerox, she developed programs on selling digital printing, the power of variable data and market strategy development. She’s also spent many years selling traditional offset and digital printing. Prior to founding DIG in 2003, she was vice president of sales and marketing for Choice Communication, where she helped develop a personalized printing division called Choice 1:1.

DIG, a five-person marketing services company, often serves as a front-end partner for printers seeking help on digital projects. "Most printers typically aren’t marketing specialists," says Dunn. "They’re more manufacturing oriented. Some need a higher level of expertise-for smaller clients we almost take the place of an agency."

We asked Dunn to identify common variable print pitfalls. Here’s what she said:
Failure to plan. "Variable digital printing is a major business initiative," says Dunn. "You need strategic, operating and marketing plans. What resources will you need to succeed? Can existing reps sell it? Do you need additional salespeople? Do you need marketing expertise? How will you market new capabilities to your clients?"

Poor project management. According to Dunn, project management often is misunderstood. "If someone wants to do a direct mail campaign, you don’t just say, ‘OK, when the art is ready, call me and I’ll come print it.’ If you’re acting as a consultant, you have to [discuss] who they are talking to, what they want to say, a call to action, sales process to support the call to action, how the project results will be tracked and measured, what will be considered a success, what the current response is and so on. To provide value, as Jack Welch would put it, you’ve got to wallow in your customers’ problems."

Premature pitching. "Some printers tend to go for the kill too soon," says Dunn. "A customer [describes] anything that could even remotely be viewed as a problem and [printers] are saying, ‘We have this, this and this.’ The customer will say, ‘What does that cost?’ You might as well get up and walk out."

Unrealistic sales cycle. "To do [digital printing] well, you’ve got to take the time to develop it," explains Dunne. "Often management and owners are undermining their salespeople because they’ve put in a big press with big associated costs. The message is, ‘Sell variable data, but sell it fast.’ But you can’t."

Digital color hits the spot
Doris Brown is determined to spread the word: Digital presses can match spot or brand colors. Brown, vice president of marketing for Pantone (Carlstadt, NJ), won’t just tell you—she’ll show you the digital chip book Pantone and Xerox released at Drupa 2004. The Pantone digital chip books show how 1,089 Pantone Matching System Colors look when printed on Xerox 6060, 8000 or iGen3 presses or offset presses using CYMK process printing.

Confident about digital and monitor color
Brown also can show you postcards printed on an iGen3 featuring pictures of four Pantone spot color chips, part of a mail and Web marketing campaign launching Pantone’s ColorVision Spyder2 monitor calibrator.

"As a marketing manager, I wanted to test variable printing," says Brown. "It’s really a way of creating a conversation with your client."

In Pantone’s case, the conversation with its target audience of designers and photographers was initiated by one of three tatooed artists featured on the front of postcard. Addressing the recipient by his or her first name, each card asked: "Are you this confident in your color?"

The conversational tone continued on the card’s flip side, noting how, as a creative, the specific recipient would understand the importance of accurate onscreen color. Recipients could then proceed to a personalized Web site to learn more about the product, buy it, or enter a contest to win the Pantone Reference Library.

Because a typical mail campaign yields a two-percent return, Brown was delighted by the personalized effort’s 7.9 percent response rate. Beyond Brown’s basic goal of communicating the importance of monitor calibration, the campaign enabled Pantone to achieve 113 percent of forecasted revenue for the targeted month (December 2004). Sales increased 81 percent vs. the previous year’s Spyder2 sales.

Postcards and e-mail reminders
Rick Littrell, CMO, MagiComm (www.magicomm.biz), managed the project. The marketing pieces were created using XMPIE’s PersonalEffect VDP authoring tool and Adobe’s Creative Suite. A total of 32,866 postcards were mailed, followed by two separate e-mail reminders.

Armed with customer information gleaned from the first mailing’s 2,043 completed questionnaires, Pantone’s next campaign will be more targeted. "The data we’ve obtained will help us get more information specific to [recipients’] workflow," says Brown.

More success stories PODi, the Digital Printing Initiative’s fifth edition of "Best Practices in Digital Print" features 45 new digital print case studies and best practices. Each case study describes the goals, solution, and the results of a successful digital print project as well as the hardware and software products used.

For example, the Borgata Hotel case study explains how Vestcom Intl. (West Caldwell, NJ) created a digital print marketing campaign to promote an Atlantic City gaming resort’s loyalty card program. The goal of the ongoing program, said to generate response rates as high as 20 percent, is to capture and use visitor information as well as encourage repeat visits. Hardware used includes an IBM Info Print Color 130 and Xerox iGen3, while software includes Kana, a CRM application and, for composition, Exstream Dialogue.

The full report is free to PODi members; $495 for non-members. See www.podi.org.

Katherine O’Brien is the editor of AMERICAN PRINTER. Contact her at kobrien@primediabusiness.com.