Article prepared by C. Clint Bolte, C. Clint Bolte & Associates, Chambersburg, Pennsylvania. For additional information please call 717-263-5768, fax 717-263-8945, or e-mail to clint@clintbolte.com.

TransPromo Summit 2007

Transforming Transactional Documents into Marketing Opportunities

This inaugural conference on high volume transaction output drew three hundred attendees to New York City August 22-23, 2007. Transaction documents, such as bills, statements and confirmations, averaged more than one per household for every working day in 2005 and totaled over 30 billion. The impetus to move these vital corporate communications from a cost center to a profit center is being driven by faster variable print technologies, better softwares, improved means of measuring marketing effectiveness of this tool and the fact that every one of these statements received in the mail is opened by the customer. To add promotions and additional sales incentives to this document "is a no brainer," remarked Jeffery Hayzlett, Kodak's Chief Marketing Officer, "but doing it effectively is difficult."

During the conference, corporate entities described their early adoption experiences to transpromo products while specialty software vendors, full service outsourcing providers and consultants offered their "how to" and "caveat" advice to corporations considering this new marketing vehicle.

Transpromo Features & Benefits

Conference Moderator and InfoTrends Director Barb Pellow commented that traditional transaction statements have included inserts for years. Most all of which are thrown in the trash immediately upon opening the envelope. The same offers appearing as "on-serts" are showing remarkably improved responses. Banks and credit card companies have sent separate mailings containing convenience or balance transfer checks. By combining the monthly statement with the check offer in a single mailing, the financial institution can take advantage of the recent May 2007 USPS postal rate reduction of 8% offered to first class mailings requiring the additional second ounce of weight. The custom up-sell or cross-sell to specific client needs adds competitive differentiation while literally reducing call center volume and costs were further benefits cited by Pellow.

The fact that all mailed statements are opened and read provides the opportunity for multiple messages and selling opportunities. Tom Fenske, Controller of Rapid City, South Dakota's Fenske Media added his firm's awareness of banking service clients. "If a client buys three services from a bank, they will stay five years (before shopping for a new bank). If they subscribe to five services, they tend to stay a lifetime." Transpromo offers the marketer the opportunity to make "the right offer to the right client at the right time," according to Dr. Rene Muller, CEO of GMC Software Technologies. And therefore sell more to existing clients.

Glen Wordekemper, Vice President of First Data, added a few other market dynamics that seem to suggest that the benefits of and timing is nigh to move into transpromo; (1) the Do Not Call list makes direct mail more attractive, (2) ever advancing hardware and software technologies and available multi-media marketing channels, (3) the sophistication of data analytics to aid in segmentation and targeted marketing, and (4) the customer relationship management concept and application. This CRM concept couple with the personalized up sell and cross sell opportunities is illustrated in this use of transpromo of products and services across what First Data calls "the Customer Life Cycle."

Getting Started with Transpromo

Almost without exception each presenter suggested that among the critical success factors are that the (1) transpromo decision comes from the C-suite of officers as a signal of strategic importance to the company and (2) the operations (IT and finance) and marketing folks must all sit around the table to work out the objectives of the project and satisfactorily answer concerns.

Because of the complexity of transpromo campaigns relative to conventional transaction documents, the start up should be an abbreviated portion of the total data base according to Lynne Andrews, Moore Wallace's Variable Color Market Manager. She advised starting with a demographic or geographic split sample to prove the design, return on investment, results measuring methodology, etc. When workflow and automation procedures are proven, the full roll out can commence. Subsequent testing of campaign elements can then be accomplished in simulation mode.

Nick Romano, President and co-founder of the consultancy Prinova out of Toronto, Ontario, suggested that the strategic decision to move to transpromo should include the opportunity to "re-engineer the process and re-design of the statement altogether with an emphasis on the client touch points, and the overall goals to be achieved." When asked his advice for a target timeline for complete transition, Romano said (1) the degree of upgraded infrastructure, (2) how aggressive top management wanted to be, (3) the number of touch points anticipated and (4) number of gates for approval all play a key role in how long the process will take. A year would be typical. Some less complex requirements that were outsourced to full service vendor might be accomplished in six months. Occasionally a transition could take two years.

On the same panel was the outsourced service bureau Datamatx. President & CEO Harry Stephens remarked that "two years would be an eternity (for a full transition) even when you have HIPAA compliant regulations for a Healthcare application." The implication being that the software vendor as well as any chosen outsourced print vendor wants the transition to be as smooth and complete within a reasonable time period so that two processes are not required.

Each of the steps and tasks of a transpromo campaign are depicted in this chart presented by Glen Wordekemper of First Data.

Successful Transpromo Case Studies

The Ford Motor Credit Company and its output service provider, DST Output, shared one anatomy of a transpromo buildup. Cheryl Kananowicz, Sales and Corporate Communications Vice President for DST Output, remarked that each separate campaign should have a 45-90 day planning horizon to give ample time for test simulations. She added that it is "easier to scale up rather than down" in terms of the complexity of any particular campaign.

Ford's representative responsible for the transpromo initiative is their Invoice Marketing Manager, Dennis McClure. Their traditional monthly leasing invoice was a 6.25" by 14" preprinted shell with three concluding messages and lots of inserts. While operations and marketing jointly own the transpromo product begun in 2000, the real group that became the beneficiaries was the Dealer Ad Groups. These are regional car dealers that come together for advertising purposes.

The initial focus groups conducted with Ford-leased auto clients concluded that the clients (1) want and expect to hear from Ford, (2) love imagery and pictures, (3) love color, (4) but they don't want too many pages.

One of the measurement methodology followed by Ford is to use control groups. Select channel control groups may not receive particular promotion for an extended time period, even up to two years. Hence, when they do begin receiving that timely promotion, perhaps toward the conclusion of their lease for a roll over lease or another new car lease, there is a base of "inactivity"available from which to compare. While Mr. McClure would not give any specific incremental return on investment (no other practitioners did either), he was confident in saying that the transpromo initiative was working for Ford through its fifty million invoices processed each year.

The Vice President of Marketing for the Direct Marketing Association, Alan Kuritsky offered that transpromo campaigns are moving cost-based client communications to a revenue generator and are definitely an integral part of the marketing mix. He highlighted the trends that are increasingly evident; (1) mass media channels are fragmenting and marketing silos are breaking down, (2) interactive technologies are enabling the customer relationship and (3) the empowered customer wants to control this interactivity as well as the buyer/seller relationship. Direct Marketing and specifically this TransPromo initiative complements nicely these trends as well as being 'channel agnostic.' This term refers to the use of a variety of marketing channels with no discrimination favoring any particular one. He concluded that 20+% of the populace moves every year while 30+% change jobs each year. Consequently, the mailed "invoice is the most stable client list available!"

Jim Hackett, President and Founder of Indivia, Inc., opined that process color digital print engines until recently were simply not fast enough to output the high volume requirements for variable data. Additionally he gave the example of the personal property tax notices sent out by every state each year. State Procurement typically outsources these to the lowest qualified bidder. His firm has won the contract in five different states for a bid of "zero costs." His revenue stream comes from converting the document to transpromo by selling advertising promotional on-serts to local dealer ad groups.

White Space Marketing

The use of white space on a printed statement is critical marketing real estate. White space management was illustrated by Walter Riddock, Vice President of Fidelity Output Solutions of St. Petersburg, Florida.Claiming to be the #1 bank service provider in the country, FOS utilizes Dialogue™ software by ExStream. This allows Fidelity to design up to three different size on-sert advertisements for the same promotion. Dialogue™ will pull down the size that optimizes the white space available at the beginning, end, or middle of a page of personalized transaction data. FOS has been doing this for years with only single color printing. They expect to offer four color within the next nine months and plan on needing at least eight times the electronic data storage capacity used by their single color campaigns. (This storage capacity would be even greater without the use of sophisticated compression techniques according to Glen Wordekemper of First Data.)

Another niche application, which FOS developed in conjunction with Oce, is what they call a triplex (not simplex or duplex) form. This prints the convenience or transfer check with the requisite MICR inks applied via a dedicated Oce digital print engine. This is done in line and as an integral part of the remaining conventional digitally printed document.

Complexity Requires Trusted Partners

The specialty software vendors may be new names to many publishers, corporate entities, advertising agencies and digital print vendors. But their credentials are substantial in this niche application. They include Metavante, Sefas, GMC Software Technologies, PrintSoft, document sciences, ExStream, Solimar Systems, StreamServe Persuasion™ and ISIS Papyrus. Many of these were sponsors or exhibitors of TransPromo Summit. Future article(s) in The Seybold Report will highlight their range of features and capabilities.

Dr. Rene Muller, CEO of Switzerland's GMC Software Technology shared his firm's best practices observations: (1) single to process color use, (2) individualized (personal) offers, (3) data driven images, (4) data driven discounts (offers) and (5) PURLs (personalized URLS) as a means of measuring the results of the campaign.

Sharing the same podium, Moe Farsheed, CEO of MindFire, Inc, described his firm's PURL services. This is their only product and it is offered exclusively via an application service provider (ASP) venue, i.e., the software is not resident on the client's computers. In his presentation Farsheed offered a statistic that can be interpreted as an unusual opportunity or the underlying reason why the transpromo offering may not be a totally ubiquitous success. He said, "Sixty-four percent of companies lack a strategy to use their own customer data." He feels this is a huge data mining opportunity for which transpromo helps provide a profitable solution. At the very least it presents an educational challenge for corporate entities to learn how to use their own client buying behavior statistics.

In the same train of thought Mark Clemente of the CMO Council (cmocouncil.org) offered that there is a clear "shift in the skill sets required of current Chief Marketing Officers,"i.e., a much broader experiential background to include IT and database sensitivities. The 23 month average job duration of CMOs may be attributed to the difficulty posed by the top marketing challenges: (1) quantify and measure the value of marketing programs and investment, (2) improve the efficiency and effectiveness of the marketing organization, (3) grow customer knowledge, (4) improve the ROI on marketing spend, (5) increase the value and profitability of the customer relationships, (6) establish a clearer value proposition, (7) increase the perceived value (of the marketing function) with senior management, and (8) establish a global marketing organizational structure.

Underlying Currents of Resistance

Clemente concluded that the money for the transpromo initiative must come from the corporation's budget for traditional areas of advertising. Conference attendee Chris Lewis, CEO of Richmond, Virginia's Research Data, a subsidiary of Lewis Creative Technologies, reaffirmed the difficulty of enacting Clemente's conclusion. His own discussions of transpromo program benefits with prospective regional bank CMOs have been well received until the CMO has to decide what traditional advertising budget to cut to float the early transpromo trials.

Or stated another way, many CMOs appear to view transpromo as an operational marketing alternative rather than a corporate strategic opportunity. Regardless of how obvious the benefits appear to be, the inertia to stay the traditional course is substantial. Whether the road block(s) be personal career risk perception or corporate politics, some fulcrum point of change appears to be needed. As with many corporate change initiatives, transpromo's birth at any corporate entity may not be due to a perceived opportunity but rather a solution to a crisis!?! And more corporate crises seem to occur during economic downturns rather than during stabile economic times like now.

Because Fenske Media is sensitive to prospects' concerns about the risk of outsourcing their transpromo production, Fenske has become SAS 70 certified with a thorough and dynamic corporate disaster recovery plan. SAS 70 is an audit process required by public companies of their critical vendors, whose potential failure to deliver contracted services could negatively impact the public company's earnings per share. The SAS 70 audits are conducted by specialty divisions of public accounting firms.

Barb Pellow concluded the Summit with her summary of lessons learned to assure critical success for TransPromo programs: (1) start with a champion, (2) build a team, (3) make the message relevant, (4) make the offer meaningful, (5) call to action, (6) design a quality document, (7) be media channel - agnostic, and (8) educate, educate, educate.

Article prepared by C. Clint Bolte, C. Clint Bolte & Associates, Chambersburg, Pennsylvania. For additional information please call 717-263-5768, fax 717-263-8945, or e-mail to clint@clintbolte.com.