C. Clint Bolte & Associates

This second year of the joint conference venture by the Mailing and Fulfillment Service Association and the National Association for Printing Leadership enjoyed a little of its own March Madness with strong attendance - nearly 150 attendees and almost half those being first timers. Many of these fulfillment newcomers arrived early for a pre-conference full day workshop on How to Sell & Market Fulfillment Services conducted by MFSA's Director of Fulfillment and the total conference program organizer, Tom Quinn. The Conference was held in Dallas March 22-25.

Keynoter Andrew Paparozzi, NAPL Vice President & Chief Economist, delivered his third annual profile of the Fulfillment Industry based upon an extensive survey. This "2006 Survey of Fulfillment Practices" is the second involving both MFSA and NAPL members. The full report can be purchased from NAPL by late spring (napl.org). This survey followed a similar format to past surveys with the addition of queries on sales and marketing practices. This report shows the dynamic nature of the variety of fulfillment services as well as the interesting relative differences between the mailing and fulfillment specialists and general commercial printers. The following table highlights some of the marked differences between these two groups of firms. There were 52 respondents nearly equally divided between the two groups.

A few preliminary conclusions can be derived from these relative survey responses:

• While total revenues would suggest that printers are over four times the size of the M&F Specialists (item 1), they actually have comparably sized fulfillment businesses (item 2: $1.3 versus $1.1 million).
• Though both groups have about the same number of clients and revenue concentration among the largest clients (items 5 & 6), the M&F specialists offer a broader assortment of fulfillment services (item 4).
• Printers are a little more optimistic about future growth, but clearly fulfillment is expected to continue to grow universally (item 8).
• Sales organization and compensation are markedly different with M&A folks relying upon a higher salary component to total compensation (item 10). This might suggest that M&F firms grasp the longer term relationship being created with these clients and the less transaction driven nature of the business. Absolute numbers and ranges for sales compensation would be helpful and unfortunately are not available. Also the bonus or profit sharing component of compensation for the Fulfillment General Manager would be useful in future surveys.
• It is also interesting to note that print salesmen are notorious for not being well equipped to sell fulfillment effectively, i.e., profitably, and yet 30% of printers rely upon the print salesman to sell the fulfillment service offering (item 9).
• Item 13 shows that the M&F firms in toto utilize a broader spectrum of the marketing mix to promote and sell their fulfillment services.
• Without knowing the absolute profitability (as a percent of revenues) of the fulfillment division of the two groups being compared, it is difficult to draw any meaningful conclusions from item 15. However, not to know profitability relative to other divisions would suggest an immature MIS capability, which could be disastrous! Both groups show at least a fifth of their firms without this vital data.
• The favorable impact of increased overall revenues from fulfillment clients and markedly improved loyalty of these same clients is highlighted in items 16-18 as has been reconfirmed in every single NAPL survey!

As with most NAPL surveys conducted by Mr. Paparozzi and his professional staff, extensive phone conversations were held with the respondents to ascertain "the rest of the story." Some of the key values shared by the more successful practitioners regardless of which group they came from include;

• "In terms of management and structure (1) hire the right person to run the division, (2) invest in a General Manager or COO type, i.e. don't expect your bindery manager to lead the team and (3) set up fulfillment as a division with its own profit and loss statement."
• "Communicate the fulfillment vision to every company employee not just those in fulfillment."
• "Don't compromise fulfillment to the print division." For example, clients want their fulfillment vendors to control and ultimately reduce their investment in inventories, which mean shorter print run lengths. This paradox opposes the Print Division.
• Corporate IT commitment for professional staff and fully integrated fulfillment MIS resources are a strategic reality.
• "Seasonality forces strong labor cost control and typically reliance upon a part time labor force." One firm reported developing a relationship with a church or cultural group for conscientious and reliable part timers in exchange for funding courses in English as a second language for the host organization.
• "Develop strategic alliances and encourage peer firm visits." This may be strange to printers but is commonplace practice among most M&F Specialists.