PRINTING: Surfacing work
With the print industry consolidating rapidly, the smart money is in high-value, non-standardised direct mail. While service is key, investment in new equipment can also unlock doors. By David Reed
If you see a juggernaut heading towards you, have two options: jump out of the way or start moving in the same direction. Direct mail print specialists may feel they are facing such a decision. Blue-chip clients are increasingly looking to outsource printing, including direct mail.
As well as the cost savings, the ability to operate automated document factories often plays a part in these contracts. Enabling print on demand and combining transactional and marketing messages, this new infrastructure is closely linked to core operational and customer management systems.
Direct mail printers need to either increase the value of their proposition, or move in the same direction by introducing workflow and management information systems in their own factories. The only other alternative is to persuade clients that direct mail print needs to be kept out of the hands of print and facilities management companies.
That looks like the hardest of all the options. Last October, Norwich Union signed a #225m contract with business process-outsourcing provider Williams Lea for it to handle all of its document services. This includes statements, direct mail, marketing campaigns, policy and renewal documentation.
What used to be an in-house print operation is being transferred, including 500 staff at 12 sites. The deal is the largest of its kind in the financial services sector, which is already the largest buyer of direct mail print.
The deal includes the transfer of a specialist operation called Printopost, which supplies laser printing and fulfilment services to Virgin Money and The One Account. At a stroke, Williams Lea has effectively become the single biggest supplier of direct mail print to the industry.
It is not alone in chasing massive document management contracts. EDS, IBM and Xerox are entering the sector by combining services with equipment leasing, while Astron and Communisis are also consolidating transactional, customer communication and marketing print jobs into one centralised deal.
"It is logical for companies like these to look at the entire print system," says Nauzar Manekshaw, marketing director for print and document management solutions provider Danka Europe. "Direct mail printers are going to feel pressure."
He believes specialist suppliers will not be squeezed out of the picture entirely. They are likely to become sub-contractors within a supply chain assembled by business-process outsourcers.
This is already happening via print management firms, and is likely to accelerate. Manekshaw suggests direct mail printers could use their contacts with clients to ensure they are entrusted with print contracts outside of these set-ups.
"On the other side, a big opportunity is to ensure that printers' software is linked to the client's customer management system. Closing the loop between customer and lead management is critical. Sending out direct mail for prospects as a one-off is not the way forward," he says.
This new technical infrastructure is likely to be highly complex, and built across multiple locations. It will link client-side call centres and marketing departments with printers' workflow systems.
An outsourced, automated document factory will be accessed by multiple business users to create communications and adjust business rules and ensure events trigger the right messages. "The ADF could be offshore. This is a global market and opportunity," says Manekshaw.
Technological advances are driving this change. Even five years ago, document management – like inventory and collateral management – often required expensive infrastructure investment by the client, as well as the supplier. More recent technology is moving these service models onto an e-business footing.
"We have recently invested #600,000 in equipment and our software is leading-edge XML technology which can change and integrate seamlessly with our clients' systems," says Dean Smith, group facilities management director at The Print Factory.
This allows all of the different stages in print and production to be brought together into a single, seamless environment. The result is not just cost savings, but more rapid cycle times. Electronic ordering reduces administration and management time – and allows tight business rules to be applied.
TPF client BSkyB uses this solution. Project director Ken Belcher says: "For the first time in Sky's history, we will be able to access realtime print management spend. This will offer an invaluable insight into spending patterns, compliance, budgeting, financial forecasting and return on investment that will be felt throughout our business."
Clients also make savings by gaining better control over their print inventory. By giving client-side managers online access to stock information, they can track, call-off or re-order fulfilment literature to suit demand, reducing waste by 20 to 30 per cent.
Pitney Bowes Managed Services (PBMS) is increasingly combining transactional printing with marketing communications, leveraging the data-processing systems that now sit at the heart of its print factory. "We understand the difference between transactional print with a marketing message and traditional direct mail. We will see a transition towards the former because of evidence that statements and invoices are held in the hand longer than direct mail," says Ashley Bailey, managing director.
PBMS' managed services involve creating data feeds from a client's core operating system to extract billing information and customer name and addresses. These communications are usually pre-formatted, allowing the data to be merged seamlessly with a template. Marketing departments can then exploit white space areas to drop in targeted messages, or use selective inserting to place a flyer into the envelope.
Critically, these systems need to be connected to the front office as well as the back. "It's about the ability of different legacy systems to talk to each other so that you can manipulate the data in a way you couldn't before," says Bailey.
Looping print management systems into the call centre is another major feature. In many campaigns, outbound calls are scheduled to be made to mailing recipients. Call centre agents need to know that the mailshot has actually been sent and what messages or items were included. "Timing is critical – you may be giving information about an event. That is when service levels become important," adds Bailey.
Vertis Marketing Technology entered this new customer communications management space at last week's International Direct Marketing Fair. Infrastream is designed to help clients to "streamline their infrastructure" by giving them better control over their communications. Ruaraidh Thomas, general manager, explains: "It is a trigger-marketing tool. We take templates and variable fields, and the database, so in realtime you can spit out communications. You get lower process and cycle times."
The system is Web-enabled to allow easy access and links with client- side IT. It reflects important changes in the direct mail print market, driven by big document management deals and print management.
Thomas says: "A different direct mail production business is emerging. We need to be process-driven to deliver benefits to clients."
He believes the whole industry needs to undertake a major business process re-engineering programme to refocus on providing service, management information and efficiencies. "It is about being more effective. Clients don't really see your internal processes. They're more interested in getting their communications out to customers as efficiently as possible."
That makes Web-based tools and print management systems very attractive. Just as analytical software has hidden the algorithms and just presents the charts, direct mail printers need to keep the heavy machinery in the background and enable the marketing process instead.
That does not mean that investing in a more impressive plant list is completely redundant. In fact, it may be key. "We are investing in technology that makes us different," says Jo Lloyd, sales director at Lloyd James Group. "It is about establishing that direct mail does not fit into an automated document factory. There is a lot of creative work involved, so they need to work with us to get it produced."
Most direct mail produced by clients is not in a standardised format. Although control packs are established and mailed time and again, new variants and creative solutions are being tried constantly. These cannot be automated, and often require a printer to be involved early on to ensure the idea can be executed.
New production equipment, especially digital printing solutions, can offer a competitive advantage. "More segmentation, refining the creative work and thinking about what you want to send out – that is where the clever money is," says Lloyd.
Consolidating all print activity into one deal is inevitable among large clients, as is consolidating the supply chain. But while the market for commodity mailpacks may be getting crowded, new opportunities for high-value print work continue to appear. Customer management strategies imply greater investment in high-worth individuals, not automated and standardised communications.
To avoid getting crushed by the juggernaut, direct mail printers need to find roads down which the big players cannot travel.
