Print Solutions Magazine, February 2005 -- Management: Transformation

TRANSFORMATION

Three print providers redefine themselves with data management services.

BY ANDREW BROWN

Saying farewell is never easy, especially when you’re talking to a profitable account. Faced with declining forms orders, many industry members have supplemented their traditional business with diversified product lines. Others have transformed their companies, adding products and services not widely associated with traditional forms manufacturing and distribution. The firms on the following pages helped to redefine the scope of the printing industry by understanding and offering data management.

Company: Jerome Group, Maryland Heights, Mo.

Transformation: Founded as a traditional print distributorship, Jerome Group has transformed to a digital print-on-demand provider with in-house manufacturing capabilities.

Web Site: www.jeromegroup.com

Ken Brown recalls the moment 12 years ago when executives at Jerome Group looked at each other and said, “There has to be a smarter way to do this.” Founded as a traditional print distributorship, the company sold solutions to clients’ paper processing needs. “We had a health care client that we managed the print and fulfillment for,” Brown says, “They ended up with $300,000 of inventory that got pushed into a dumpster one year.”

The client, an insurance provider, ordered the quantities after researching its needs, but laws and regulations changed, rendering the products obsolete. After dumping the product, the executives recognized that many of their customers would benefit from smaller, personalized quantities. Jerome Group began its transformation to a digital print-on-demand provider.

The company took a big step when it decided to purchase its own equipment rather than partner with a manufacturer. “At the time we couldn’t find anybody that could do what we wanted to do,” Brown says. The company also wanted to ensure compliance with privacy laws by maintaining control of its clients’ data. Owning equipment meant that Jerome Group staff faced a steep learning curve. “[Equipment suppliers] said all you have to do is buy this laser printer and put in on your floor and you’re in the print-on-demand business. Nothing could be further from the truth,” Brown says. After spending more than $1 million on equipment, the company concluded that no available software allowed them to print the highly personalized products they imagined. The executives hired a staff of programmers to write the programs they wanted. They also incorporated the company’s existing direct mail and fulfillment capabilities into their strategy.

Printing form letters with variable names and addresses didn’t go far enough toward accomplishing the company’s goals. “We don’t call that personalization,” Brown says. A letter they consider customized would include not only a personal salutation and address, but also content specific to the recipient. For example, a recipient whose profile indicates he likes to ski receives a vacation package offer to a ski resort, while a beach lover receives a different offer. Targeting recipients’ specific interests increases mailings’ efficiency and response rates. “I’m not a skier,” Brown says, “If somebody tries to sell me a ski vacation, they wasted 37 cents and whatever it cost to print that letter.”

Educating end users about print-on-demand’s benefits posed another challenge. End users resisted the higher unit cost because they believed that buying large quantities resulted in higher savings. Jerome Group demonstrated that clients’ overall savings could increase with print-on-demand. The company’s history of promoting solutions and added value aided in the effort. “Though they pay more per page, they buy fewer pages,” Brown says, “When you’re buying something that’s highly personalized, you may be buying fewer of them, but the value is higher because it’s going to elicit a higher response from the individuals that view it.”

Jerome Group’s business has changed since its inception, but the company’s core philosophy has not. “What we really sell, and have always sold, is solutions for our customers,” Brown says. Going forward, he sees the company positioning itself less as a print provider than a data management service. “Where I see our company going is to continue to manage information for our clients, but then be able to send it through any communication channel,” he says.

Company: Matrix Imaging Solutions, Niagara Falls, N.Y.

Transformation: Founded as a traditional print broker, Matrix Imaging Solutions now works with distributors to offer data and information management services, including printing, presentment, processing, fulfillment and archiving.

Web Site: www.matriximaging.com

Alan Olivero wasn’t happy simply satisfying customers’ needs. A former salesman for Moore Business Forms, Olivero could make customers happy merely by filling orders at competitive prices. “As a forms distributor, it got very frustrating just providing a price for a commodity,” he says. Olivero left Moore and founded distributorship Matrix Imaging Solutions with the goal of adding value to the products and services he sold. His attitude led to the company’s eventual transformation from a print distributorship to a data and information management business.

As a forms distributor, Olivero sold statements and invoices to his customers but didn’t process them. One day, a client told him “Get me out of the mailing business,” Olivero says. He agreed to process the customer’s collection letters—the first step toward redefining his business. Matrix hired programmers and purchased digital printing and archiving equipment, and soon expanded its presence in other markets.

“Companies are striving to outsource non-critical business functions,” Olivero says. He estimates that only 2 percent of the country’s collections agencies outsourced their letter processing when Matrix entered the market in 1989. Since then, the percentage has grown to 89 percent.

Matrix Imaging grew with that number. As part of its evolution, the company turned to direct mail. Starting with only the ability to take data and add it to a mailing piece, Matrix Imaging since has expanded to include design, 4-color offset and digital printing, and fulfillment capabilities. “We do things our clients can’t,” Olivero says. For example, when Matrix takes over a client’s statement processing, it mails invoices and provides the client’s customers with an electronic payment option. The company also archives files and investigates the cause of unprocessed mail.

Making the transition to information management providers, Olivero and staff rode a learning curve. One challenge was reaching the right person in a prospective client’s organization. As a print distributor, Olivero was accustomed to selling products to the purchasing department, but selling information management requires speaking with higher level staff, often in companies’ operations departments.

Matrix Imaging also had to communicate the value of its services to distributors. The company doesn’t maintain a sales force. Instead, it relies on distributors to penetrate accounts. At first, distributors hesitated because Matrix must work with the client to manage its data processing. Distributors since have realized the benefits of offering data management services to their clients. “If you don’t want to lose that business to someone who does full service, then offer full service,” Olivero says.

Company: Wright Business Graphics, Portland, Ore.

Transformation: Founded as a manufacturer of printed products, Wright Business Graphics has since added statement processing capabilities through its Wright Imaging Solutions division.

Web Site: www.wrightbg.com

A distributor phoned Jim Wright, owner of Wright Business Graphics, worried that he was about to lose a major account. The distributor supplied the client with envelopes and statements, but the client had announced it would outsource its statement processing. To save the account, the distributor realized he would have to offer statement processing. He had heard Wright Business Graphics offered the service and was eager to work with the manufacturer. “Fortunately, it was an easy job for us,” Wright says.

With business forms orders declining in the mid-1990s, Wright decided his company needed a transformation. “We started looking. What could we do to find products that had growth in them?” he recalls thinking. Wright Business Graphics manufactured statements and envelopes already, so Wright invested in Pacific Print and Mail, a statement processing company. Eventually, he bought out his partner, renamed the business Wright Imaging Solutions and set it up as a division of Wright Business Graphics. “We did it to replace business we were losing elsewhere,” Wright says.

Establishing the new division required patience. “Starting anything from scratch, you go through a lot of personnel until you get the right people,” Wright says. To beat the learning curve, he sought staff with experience in the statement processing industry. Once the business was established, Wright still faced the challenge of getting distributors to sell the service. “The majority of our distributors didn’t want to mess with it. That market has changed now. Distributors have realized that they can sell this product,” he says. As more companies outsource their statement processing, distributors have learned to secure the business from clients.

Wright credits the company’s successful transformation to consistent long-range planning. “If you go out there right now and sit still, you’ll start slipping,” he says. Wright and his staff regularly share ideas about the company’s strategic direction. “We explore a lot of things, and then we ask, ‘Does this market fit us? Is this a market we can learn? Is this a market our distributors are going to be selling a lot?’ We just have to be ready to move in one of those directions or change again so we don’t get left behind.”

Andrew Brown is assistant editor of Print Solutions. Email him your comments at abrown@PSDA.org.