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Statements TransForm the Future of VDP

Trusty transaction printing brings new opportunities with personalization

By Rebecca Trela

Print industry pop quiz: What’s black and white and you’ve read about it all over? If you follow trends closely, the right answer is variable data printing, the oft-heralded but seldom-seen renaissance in ink-on-paper.

The number of variable print jobs has risen over the past few years, and research organization The Industry Measure reports that about 71 percent of digital print shops now offer VDP applications. But dig deeper to find the variable data—it’s a lot of addresses; segmented batches of text; a name on a postcard here and there. A handful of the savviest print sellers offer personalized URLs, which lead recipients from a printed piece to a unique webpage. But the lion’s share of your mail is as generic as could be.

The print industry, it seems, is struggling to play catch-up with several pieces of technology. The data aren’t available to support complex applications, gathering the information is expensive, and manufacturers and distributors quibble over who’s going to show the end user the ROI on VDP. When will we catch up to the hype?
The solution to VDP’s popularity problem may lie in the slumbering niche of transactional printing. Although this segment has long been regarded as commoditized black and white work and endangered by e-billing, transactional printers may give their promotional cousins a much-needed raising of the stakes. Transactional printers add value and business with customized promotional messages using 4-color printing on the targeted 1-to-1 transpromo statement.

Info: For-One-(to)-One
Good information has always been a vital part of the print world, but web-to-print, email marketing, 1-to-1 promotion and a glut of advertising have made it crucial for success. Rent the wrong list and your mail will bounce back or disappear into the ether. Hit a consumer with the wrong message and your client won’t ever get new business.

He who has the data wins the job. He who can manipulate that data wins the day.

“It seems that the promotional VDP market is struggling with concepts and technologies that have been around for decades,” says Thomas Greer, who works as a developer and trainer for Objectif Lune, a Montreal-based software company that makes programs for both transactional and promotional VDP applications. The lessons learned about managing and merging data, he says, come up all the time in a promotional VDP context, even though they’re demons transactional printers mastered decades ago.

“The tools for transactional VDP are extremely robust and so it’s trivial, in the context of a typical transactional document, to insert promotional messages and graphics,” Greer continues, illustrating the advantage transactional printers have in printing VDP work with sophisticated tools. “On the other hand, using a promotional VDP tool to attempt to support transactional documents would be next to impossible,” Greer continues. “By focusing so narrowly on promotional VDP, the printing industry is ignoring the well-honed tools developed in the transactional VDP world.”

Statement printing allows no room for error. There must be no duplicates, mismatches or missing data. “You have to be 100 percent secure in your data transmissions, and a lot of effort is put into the checks and balances throughout the cycle until the inserting is done and it mails. It’s all about accuracy,” says Dave Basta, co-owner of Matrix Imaging Solutions, Sanborn, N.Y., which specializes in collections letters. Transactional printers have a solid reputation for reliable data handling, generally with an in-house IT staff to back it up.

Do all printers need an IT staff person? That’s debatable, but accuracy and flexibility is key, no matter who performs the tasks. To get started with a VDP program, print professionals need to plan every aspect thoroughly, says Todd Kueny, president of Lexigraph Inc., Harwick, Pa., who has written VDP software and built and sold a printing/mailing/fulfillment company. “You can develop a team in-house, hire a mail industry person to work with existing programmers and graphic designers, or hire a professional VDP service.” All three roads are costly and take time, but are what’s required to get into the market, he says.

“Think about it like this,” Greer says. “What mail do people routinely open? What mail do they routinely throw away?” The transactional printing market is absorbing the promotional market, he supposes, as VDP-savvy transactional printers look to add value with promotional messages on statements. According to an InfoTrends study, customers review statements for an average 42.5 seconds. The lucky direct mailer gets five.

With the rich data available in a transactional VDP scenario, the promotion acquires depth based on past purchase information, Greer says. “Transactional VDP tools are very, very good at data analysis and conditional logic,” he says, which is their greatest strength. Last year, 63 percent of end user survey respondents told InfoTrends they preferred a full-color transpromo document as the way to receive advertisements in the mail. Digital transpromo documents are expected to balloon at a compound annual growth rate of 91 percent through 2010—to an extraordinary 21.76 billion pieces.

On the other hand, transactional printers must learn to deal with color and image management and manipulation, as well as marketing messages and campaign cycles.

“Caught between these two groups are the majority of commercial printers,” says Hugh Griffin, vice president of marketing at Stuart F. Cooper, Los Angeles. “They lack heavy expertise in data management or transactional printing, as do most of their customers or the potential buyers of VDP. Sales organizations can easily adjust to selling whatever a market will bear,” he says, but without gaining credibility and expertise, it’s hard for inexperienced commercial printers to bid for complex VDP jobs.

Please, Mr. Postman
In a study done last year, the U.S. Postal Service estimated it spends nearly $2 billion handling mail that cannot be delivered as addressed. On August 1, the postal service’s “Cycle L” requirements went into effect, limiting postal automation discounts to mail with a confirmed primary address. The agency hopes to cut its non-deliverable cost in half by 2010, encouraging stringently accurate address lists.

“That’s one of the biggest mistakes print shops make with variable data,” Kueny says. “I can’t tell you the number of shops I have been in where the prepress guy is struggling to get the mail sorting to work. A prepress guy is not a database or programming whiz—period. If you want it right, you need professionals.”

Kueny continues to explain key issues that printers don’t understand, in his opinion: “VDP is primarily a programming and mailing function. How the piece looks is only one-third of the program. IT and mailing require full-fledged professionals, and you must have incredible attention to all of these details—otherwise you will get amateur results,” he says. “The classic failure model is a mom-and-pop printer buying a digital press with their dwindling traditional print profits and expecting huge returns with no overhead, startup time or learning curve.”

Threat or No Threat?
While a few industry veterans maintain that promotional and transactional VDP are worlds apart, it’s clear that some anxiety registers across the industry. The line dividing the two also plays into a decades-old industry fear about desktop publishing. Increasingly, it’s become feasible for very elaborate VDP postcards to be produced on high-end color copiers. According to a TrendWatch Graphic Arts Survey released last year, 22 percent of printers who primarily use a copier for VDP print one to 12 fields of image and text, and 9 percent print more than 13 variable fields. Only 6 percent of those who primarily use a copier also use a digital press.

“Promotional VDP is job-based,” says Mike Beard, director of sales at Objectif Lune, echoing the program-sales mantra of many in the printing industry. “With transactional VDP, the job is repetitive.”

The “holy grail” of the VDP market, Beard says, is a statement upsell or a cross-sell offer from the same company or, better, a rival or companion company. Although these campaigns have gained traction in Europe and Japan, many fear the consumer “creep out” factor, when recipients think the company knows too many personal details and they feel exposed.

“But VDP is all about invading people’s privacy, isn’t it?” Beard asks rhetorically. He references some successful VDP case studies, all of them conducted in the United Kingdom. “Where is that privacy line?” Very few companies know, Beard says, because they don’t have the intimate detail to test it out—yet.

Big companies, especially retail, financial and insurance companies, may already hold the necessary data on their customers—for example, supermarkets with frequent shopper cards. What they need is the expertise of a print provider to convert that data to a format a VDP press can read, and plan direct mail and offers that resonate with consumers. The “creep-out” factor is minimized, many say, by carefully selected offers and a good marketing manager.

Smaller companies need the print provider to help gather the data. In this instance, you have the opportunity to begin with a pristine customer list.

“Small commercial printers and software companies and distributors don’t go to the customer and say, ‘Gosh, you have all this data and I can help you!’” Beard says. If the customer is patient, it’s possible to build a database from scratch. He recalls a presentation in Washington, D.C. last winter: “The provider found a pet hospital/veterinarian who was just doing the postcard-for-the-cheapest-price deal.” The vet was receptive to a sales pitch that promised to grow his business.

“The premise was this: Suppose you bought a $59 digital camera and took pictures of every animal in here,” Beard explains. The postcards were addressed to the pet, not the pet owner, inviting the animal back for a checkup. Subsequent mailings were further targeted based on the pet’s age, inoculation status and other details. The database was then used for a variety of mailing and billing functions by the business.

“You can start simple and add concepts,” Beard says. “You didn’t have the information on day one, but when you look back two years into the future you’ve got a good database of your customers.” It’s easy for a print provider to walk into an account and promise data magic, “but very different to buy and sell!” he laughs.

Caution: Ads in Statements Are Closer Than They Appear
Targeted transpromotional documents may already be in your mailbox, says Pat McGrew, director of transaction segment marketing at Kodak’s Graphic Communications Group. She has been working on these campaigns since 1984. Did they slip under the radar? Look again—you might find a carefully worded information paragraph, a monochrome ad or a line on the back of the envelope. “It’s really pervasive, and it runs the gamut from monochrome to the all-singing, all-dancing full-color personalized message.”

In the ’80s, McGrew says, digital color was very expensive to use, so marketers focused on monochrome and the ads didn’t look like ads. Static color was attractive but not personalized enough for a high response rate. As the price of color has fallen, however, traditional transpromo experts are ready to use their data mining and managing expertise in a new way.

“We used to use transpromo to remind people about other products or services from the same company,” McGrew continues, “but we didn’t know to use it from a true marketing standpoint. In the late ’90s we started to understand more about customer data and CRM enterprise applications. That’s when we started talking about using our business relationship with the customer to up- and cross-sell them.”

One of the earliest adopters, American Express, used its gold mine of customer data to launch a monochrome campaign years ago—with less-than-stellar results, she says. “They were also looking at too high of a demographic level, when they needed to zero in on preference level,” McGrew says. The ideal one-to-10,000 level, she says, is personal enough to recognize when a customer is buying makeup and follow up with a Lancôme or Maybelline coupon. But it won’t identify a person who buys a lot of foundation or mascara.

“I think transpromo is still in its infancy,” says Linda Bova, president of manufacturer Primadata Inc., Green Bay, Wis. She’s been selling the pieces since 2003, she says, in concert with distributors, mostly to the financial industry. Primadata employs four developers/programmers and takes care of all the data management and processing details.

Distributor partner Jeff Bassindale, of DFI Total Business Solutions in Green Bay, says that his role is to introduce the customer to the idea and to start the sales cycle, which may take a year—or longer. Targeted messages to end users’ clients based on age, income or other demographic triggers attract clients but also take a long time to put together. “The marketing department of one bank we’re working with right now wanted to write a special offer for customers’ birthdays,” he says, “but then they realized they didn’t even have that information!” The 25 branch locations are capturing the information now, and plan a future promotion.

“I think it’s creating an opportunity for warm leads,” Bova says. “They can upsell a warm product that their customers are familiar with. Because the document is relevant and opened on a monthly basis, it’s an opportunity to subliminally introduce new ideas.” Although Bova doesn’t have precise statistics about her customers’ ROI, she has several longtime clients who report great success, she says. About a third of Primadata’s customers have a transpromo campaign in the works, according to Bova, and almost all of them are small-to-medium sized businesses.

More accurately, says Jeff Carpenter of MediaLink Creative Solutions, another of Bova’s distributor partners, ROI figures vary widely from company to company and are largely predicated on the quality of the offer. Also, he says, the most effective campaigns are multi-channel offerings, encompassing selective inserting, selective “transpromo” messages, an online component and other print details. “We’ve seen 98 percent response and we’ve seen zero response,” he says. “A great offer has the right promotion, written in the right way and is put in front of the customer at just the right moment. Otherwise, it doesn’t work.”

A larger demographic sample, defined by less specific criteria, allows for more options, McGrew says. “You have to get to know your customer on a bigger level, as a holistic person, so they can expand their spending with you, which they’re already spending with someone else,” she says.

At a simple level, a customer who buys lipstick is likely to buy mascara, too. But a big picture view suggests the customer also purchases hosiery, heels and jewelry. The group would be “women who purchase appearance accessories” instead of “women who wear lipstick.”

“Provided the marketing printer has the print capacity,” Griffin says, “they could pick up transactional work by touting the marketing power of their solutions. Even though transactional printers are long-standing data masters, it seems that current VDP jobs are small related to the time they have to spend cleaning and reformatting the data for novice buyers.”

Finding Your Place
In 2005, 64.3 billion transactional documents were sent through the mail and 144 billion pieces of direct mail were sent. It’s hard to imagine that transactional printers or any niche could swallow all that business, but they stand to gain work if they leverage the data they have, rely on past programming expertise and meet the right clients for promotional VDP. Print professionals who plan to stay in business must be prepared for heightened standards in information management and manipulation.

At the highest levels, McGrew says, there is no off-the-shelf solution robust enough for a complex job. “You don’t just go to the store and buy ‘Transpromo: The Solution,’” she laughs. “It can take up to two years from the day you decide you want to do transpromo to the day you’re in full production.”

Once that system is in place and workers are trained, of course, it can be very versatile. “E-bills can be another extension of transpromo,” says Glen Wordekepmer, VP at First Data, a transaction processing and data management company in Greenwood Village, Colo. “It opens up to an even more effective transpromo—especially with pURLS—and it’s even more cost effective.” Many suggest that ink-on-paper has little to fear from e-billing. At least in this generation, all of the same information disciplines apply to both printed and online document production.

“I would not be surprised to see that by 2010 there’ll be much more transpromo,” Bova says. “Maybe a 40-60 split—with only 40 percent of a document being transactional and 60 percent the promotion.”

Rebecca Trela is assistant editor at Print Solutions magazine. Email comments to rtrela@psda.org.