Put It in the Mail

This month's Graph Expo event in Chicago is showcasing a range of mailing solutions in its Mailing & Fulfillment Center. In fact, the special section was so popular in 2003 that the floor space allotted to it was doubled this year to accommodate increased demand, according to the Graphic Arts Show Company, which manages the exhibit.

In an age of automation and streamlined workflows, vendors are offering efficient ways for printers to adopt mailing systems and services to broaden their suite of services. Taking on these value-added services can make a competitive difference in a tough market, suggests TrendWatch Graphic Arts (TWGA).

In a report released in February 2003, TWGA found that 25% of commercial printers see "broadening fulfillment, shipping, mailing capabilities" as a sales opportunity. In its Spring 2004 survey, TWGA reported, 35% of quick printers identified these services as a sales opportunity, a marked increase from Fall 2001, when only 12% saw them as opportunities.

Similarly, the National Association for Printing Leadership (NAPL) has reported that 70% of printers asked if they were investigating adding mailing and fulfillment services to their businesses responded in the affirmative.

"There's a big push among commercial printers to add more value, to go farther than the printing process and drive additional revenue from finishing," says Mark Van Gorp, vice president of marketing for Böwe Bell & Howell, which offers an array of mailing products including software tools and finishing, inserting, and sorting systems. In the past few years, he notes, printers have extended these value-added services from case and perfect binding all the way to mailing.

Mailing is a complicated topic that often doesn't get as much attention as other up-and-coming technologies, observers say. In its 2003 report, "Mailing and Fulfillment: Where the Money Is (Or Should Be)," TWGA puts it this way, "While the industry's attention has been focused on 'sexy' technologies like digital printing and variable data, mailing and fulfillment have been slowly and steadily gathering steam as practical, implementable strategies for increasing revenues and making shops more valuable to their customers."

But now the timing is right, and the profits are out there, particularly in direct mail. The Graphic Arts Marketing Information Service (GAMIS), a special interest group of the Printing Industries of America/Graphic Arts Technical Foundation, recently published a study, which was conducted by Kubas Consultants. The report indicates that direct mail will represent about $36 billion, or 10% of all U.S. media and marketing expenditures in 2004. Further, it predicts that expenditures will continue to grow at an above-average pace of 5.6% per year in real terms from 2004 to 2007.

Indeed, says Van Gorp, "Because of federal Do-Not-Call legislation and the fact that viral marketing through e-mail and Internet ads is proving not to be all that people thought it would, the investments in direct mail continue to grow."

Among the bigger players in the market, consolidation is taking place, and "everyone is fighting for the direct mail business," he adds.

"Commercial printers considering offering mailing services need a few basics. You can't go into it casually; it's a serious business. After all, you are providing a service to your customers," says David Currie, national manager for Hasler Inc., which manufactures address printers, mailing machines, folder inserters, and mail accounting and tracking systems.

As TWGA puts it, setting up a mail shop requires four components: postal software, addressing equipment, inserting equipment, and folders, tabbers, and strappers. Its report estimates that such a set-up may require an investment of between $100,000 and $140,000.

But Currie points out two other essentials printers shouldn't overlook: "A business plan, and customers." He adds, "They have to make sure their current customer base is aware they're offering these services and are prepared to make them a one-stop shop."

So how can printers distinguish themselves in an increasingly competitive direct mail marketplace?

According to Van Gorp, direct mail today is "typically not personalized," and therefore not dependent on digital printing. But among direct marketers, he notes, the popularity of customer relationship management means that "there is a huge push to drive more personalization into direct mail. That implies that you need variable print capability."

In contrast, he notes, mid-size shops that limit themselves to non-personalized mail will be facing fierce competition over relatively less profitable "lettershop work."

So, Van Gorp concludes, commercial printers that want to get into direct mail "in any substantive way" should take a good look at digital capabilities such as variable data. This, in turn, requires adopting the capacity to accept digital files, an infrastructure to manage those files, and a system to ensure the integrity of each piece of mail.

Böwe Bell & Howell says its JETS system, a suite of software and hardware tools, tracks jobs from the time the files arrive through printing, finishing, delivery to the post office, and through delivery to the end recipient using the U.S. Postal Service's CONFIRM service [see sidebar]. It can even track the customer's response to the mailing if the business reply envelope is properly coded. A customer service representative can look up the status of a piece and know exactly its place in the process.

Indeed, printers and their customers can derive postal savings from automating as much of the mailing process as possible, says Currie. "The postal service says that the more work you do in preparing the mail, the lower your postage rate is going to be," he notes. "Automation-compatible mail using a barcode drives address printers, providing the ability to apply names and addresses to mail pieces very efficiently using commonly available PCs and quality software."

At Graph Expo, Hasler is showing its line of HaslerJet address printers, ink-jet devices offered in five models serving the needs of light- to heavy-volume users, along with its other mailing solutions. Hasler's address printers can run more than 26,000 mail pieces an hour, depending on size, Currie adds.

Indeed, says Jim Leone, vice president of information systems and value expansion initiatives for IWCO Direct, located in Chanhassen, Minn., "Mailing services aren't just 'plug and play' additions to a print operation. Mailing has its own unique requirements."

IWCO Direct (formerly the Instant Web Companies) should know; it handles about two million pieces of mail a day. A provider of integrated printing and mailing services for more than 35 years, the company recently announced plans to increase its lettershop capacity by 35%, investing more than $4 million in high-speed mailing equipment, including affixers, embossers, bindery lines, and inserters from a range of manufacturers.

It also plans to increase its commingling capacity with the addition of a fifth Siemens Dematic Delivery-Point Bar Code Sorter (DBCS), making IWCO Direct the nation's largest provider of commingling services.

"After several decades of little technological change in the mailing industry, we have entered an era of rapid technological advancement, particularly in the area of complex personalization for one-to-one marketing messages and high-speed inserting and affixing equipment," Leone says.

IWCO Direct's personalization platform includes 14 laser printers along with ink-jet devices for duplex imaging and MICR check imaging, continuous forms, sheeted documents, and plastic cards. The company's P.O.S.T. (Postal Optimization Strategy and Technologies) platform is a proprietary commingling program designed to reduce postage costs by presorting and processing mail.

The benefits to customers of using a "one-stop" source for direct marketing, from print to mail, are significant, Leone says. "A single direct mail campaign consisting of a mailing envelope, letter, four-color insert, business reply envelope, and related mailing services traditionally involves at least four suppliers," he states.

A vertical approach integrating these services, he says, can reduce the "administrative hours associated with procurement and production," which IWCO's clients find beneficial. At the same time, he advises, smaller printers interested in direct mail may benefit more from partnering with other companies.

Success in mailing can be achieved on a smaller scale, too, as evidenced by Felco Printing & Mailing, a third-generation Kansas City, Mo.-based company offering printing, mailing, graphic support, prepress, binding, and finishing services.

The $3 million, 25-employee company has boosted its levels of automation in recent years, adopting a Web-based submission tool from PrinterPresence. "More of our clients wanted to submit artwork files and mailing lists on line, which are too large to send in e-mails," says Jill Intravartolo, president of Felco. In addition, work the company performs for insurance companies and other clients requires a secure, password-protected data transmission method, she says.

The company operates Didde-Glaser, Hamada, Itek, Komori, Ryobi, and Toko sheetfed and web presses. Mailing systems include an HP Prism ink-jet addressing system, a Pitney Bowes six-station inserter, an Accufast labeler, and Mail Manager 2010 postal presorting software from BCC Software. "We also outsource a lot of personalization" using an HP Prism system for some in-house work, Intravartolo adds.

She concludes, "Direct marketing is taking a bigger role at ad agencies, so the more they embrace it, the more we'll see it becoming the fastest-growing element of the market mix. As the economy continues to improve, the numbers are going back to where they were."