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 2008

The Ultimate in Simplexity

Adding color and selling advertisements to fill remnant white space in periodic statements that consumers expect to receive seems like a drop-dead winner for all concerned. The idea is simple, but the execution a little more complex. Hence, the theme of this year’s TransPromo Summit as articulated by Conference Chair Barb Pellow, InfoTrends Group Director, in the featured keynote presentation was “The Ultimate in Simplexity.” Borrowed from a book by the same name penned by Jeffrey Kluger, Pellow explained the analogy of “simple things complex and complex things simple” is so apropos for converting transactional documents to transpromotional communications. The customer sees a simple, elegant watch, but is unaware of the complex inner workings. The Google home page and the iPhone were other products accentuating this same “simplexity” principle.

Attendance at this second annual Trans Promo Summit in New York City August 13 & 14 spiked up to 370 with a growing contingency of International participants. Drupa, only a few months earlier, was inundated with the digital print engine and software manufacturers’ hype for TransPromo. The new high speed, high quality, low cost inkjet technologies seem ideally suited to drive this innovative product offering. But appropriately so, this New York summit pealed away the onion layers of the hype to offer a plethora of successful “how to” case studies. This article will describe the key and often common elements of many of these neat applications.

Emerging Mid Market Leaders

Ironically some of the more successful case studies do not come from the big, sophisticated corporate behemoths. The multi-layered organizational impact, extensive change elements, uncertainty, and perceived risk (personally rather than corporately) seem to bog down the big boys from making even an initial commitment to consider and try the transpromo concept. On the other hand the flexibility, “can do” attitude of the more entrepreneurial smaller firms, and the plethora of suppliers willing to help and show how its done are beginning to suggest that the middle market firms might be the early leaders in proving the validity of this interesting new marketing tool.

But first lets review the basics. Statistics showing market potential and current surveys revealing customer behaviors help to quantify and qualify this opportunity along with suggesting select service elements that should be in a successful business model.

Despite the preponderance of financial and transactional mail accounting for 53% of First Class mail in 2005, this volume has eroded by 30% since 1988 and forecast by the USPS to continue to cascade by another 8.6% over the next three years. This decline is attributed to the electronic diversion of online banking and electronic bills, colloquially referred to as electronic bill presentment and payment (EBPP). The volume and market are still huge with each U.S. household receiving more than 21 individual statements a month at an aggregate cost to the corporate sender of $2 each. Annually there are over 64 billion statements representing a total United States market value of $120 billion according to InfoTrends.

The transition to electronic does not adversely impact the business model of most data management service bureaus as they handle both the print and electronic-to-website production workflows. The fully integrated offerings, whether in house or from outsourced partners, provide their corporate clients both economy of scale leverage for the common design and multi-channel marketing as well as the full postage savings realized from the electronic versions. Likewise most all software vendor packages offer compatible workflows assuring that the printed statement and electronic PDF all look alike carrying the same custom message(s) and are delivered in a secure, timely fashion.

The conference offered two attendee tracks: technology and the anatomy of the successful transpromo process. At this early stage of the product evolution, the later track had two-thirds of the attendees. This article will cover the highlights of both tracks.

Consumer surveys indicate that over 95% of all transactional documents, such as bills, statements, policies, checks, contracts, proposals, & purchasing/trade agreements/confirmations, are opened by the intended recipient. (It can only be assumed the balance was inadvertently put aside and lost!) On average recipients spend 2-3 minutes reviewing their statement while 20% spend over five minutes perusing the information.

Any media generating this kind of dedicated attention is nirvana to a direct marketer. Or so it would seem. Lets consider how some early practitioners have learned to add additional value to these periodic communiqués benefiting the client, the corporate sender, and increasingly third party entities with potentially complementary services or products.

Successful Case Studies Start Small

The UMass Five (umassfive.org) Federal Credit Union in Hadley, Massachusetts sends monthly statements to their thousand accounts. Their former IT intensive statement was “labor intensive, inflexible, and prone to quality errors,” bemoaned their Vice President of Marketing John Reske. Call center activity was always high due to the errors as well as the confusing statement. Five years ago the Cathedral Corporation (cathedralcorporation.com) was brought in as the new full service vendor to turn the situation around.

Beginning with a redesign of the statement, Cathedral initially added highlight color only via their Visual Fox Pro 8.0 software. In the upper right hand corner of each statement they placed an “on-sert announcement.” The actual full details were included in a separate insert. Each statement concentrates on only a single message beyond the statement data itself.

Though little effort has been exerted on tracking response rates for any of these message programs, one sure metric that has proven the package’s value according to Reske has been the fact that 30% of their members have converted to electronic statements. This has saved the Credit Union $30 a year per member on printing and postage. The recent thirteen months of e-statements are available to the members in PDF format. A click through feature allows the member to view their actual canceled check. Reske concluded by describing Cathedral as a “data management company that happens to print.”

Larry Beasley, Cathedral’s Vice President of Sales & Marketing, said there was no studies to compare the response rates of the onsert versus insert approach. However, the complementary use of the two in the fashion described by Reske coupled with the single message approach has been proven to reinforce one another with very favorable results. In response to an audience query Beasley confirmed that any degree of current and future conversion of statements away from print and to electronic would not adversely impact Cathedral’s total business model.

All successful practitioners universally advocated this “redesign” step as the first tangible product of the move to transpromo. Because of the condition of the current statement, the approval process, and the output device, this redesign process including testing was confirmed by several speakers to take from six weeks to six months.

A group medical subscriber of Humana was carrying a copy of her Smart Summary Statement showing her listing of prescribed medications with a thumbnail picture of each. Because of this documentation, the TSA inspectors at the airport allowed her to keep the medications with her in her carry on luggage as she successfully passed through airport security. While this clearly was not the key purpose of Humana’s generating their new Smart Summary Statements for their 11.5 million members, it is an interesting illustration of the effectiveness of a well designed medical statement.

Chris Nicholson of Humana described their TransPromo journey of hiring Prinova in 2005 to assist the firm through this vital client communications transition. Nick Romano, President of Prinova, described the thorough redesign of this initial and valuable Humana statement. Humana now uses Prinova’s messaging software in conjunction with the onserting feature designed for the open white space via their ExStream software. Many of their targeted up sell campaigns have generated greater than a 10% response rate. There are now 18 different statement applications that Humana has converted as transpromo communiqués.

Humana’s return on investment for their transpromo initiatives include $11 million saved on consolidated or redundant printings and mailings, a 17% increase in loyalty and retention of their members, and a 52% increase in the subscription to their Private Membership Program. All of this plus substantially reduced burden on their customer service call centers have more than justified their investment in transpromo.

Another panelist Liz Tindley, Executive Vice President of Art & Technology a Division of NEPS LLC, reconfirmed a truism that Humana learned early on with their Smart Summary Statement, “Clients like educational messages.”

Concerns for Complexity

Large corporations have been slow to move into transpromo for a number of reasons: 1) their legacy systems, 2) IT legacy infrastructures, 3) perceived and real costs, 4) organizational complexities, 5) lack of customer insights, and 6) lack of data. Each of these issues must be addressed head on and resolved before any company can reach the light at the end of the transpromo tunnel. Virtually never can this be achieved alone. It requires a vision by a key corporate officer and specialty vendors facilitating the planning and implementation.

Kelli Nesseth, a Statement Manager for GE Money, described how her firm works with their clients’ marketing, IT, analytics, design, production, finance, and call center personnel in planning and executing successful transpromo campaigns. GE Money provides private label credit card services for 30 different clients as a service bureau. They issue nearly 50 million statements each month in the United States.

Each of these internal departments has unspoken concerns, which must be met. Ms. Nesseth calls these “what’s in it for me?” For example, for marketing – the document is guaranteed to be read, for IT – successful testing, ebills in sync, and leveraging existing capabilities and resources, for production – start small and Pilot, Pilot, Pilot, for the call center – listen to their design ideas to assure reduced customer calls, for analytics – CPM (cost per thousand), ROI, and RR (response rate) quantifies profitability, and for finance – low cost with high benefit.

Ms. Nesseth emphasized the key to a smooth start up was having a senior level champion, planning three months in advance, and utilizing pilot projects before the full roll out.

Janus Capital added another dimension to the success formula outlined by Ms. Nesseth. For the past two years Janus Capital has outsourced their quarterly flagship account statement to RR Donnelley. While they followed the elements suggested by Ms. Nesseth, they learned that an internal project IT leader was needed in addition to Senior Officer Champion. They actually hired a professional that had several years experience producing transpromo documents in house.

Partnering to Sell White Space

The largest outsourcing service bureau in all of Australia is Salmat. Vicki Young, their National Business Colour Direct Marketing Manager, described their initial step in helping a corporate prospect along the road to transpromo was to use a proprietary questionnaire as an element of a thorough operational audit. Each of the “stackholders”, as described by Ms. Nesseth, are interviewed to ascertain their wish list and current benchmarks being experienced. Their recommended program always begins small (pilot concept again), focuses on segmentation, and includes software automation features, which immediately yield value. Their initial redesign often includes preprinted shells and they move smoothly to selective onserting within a template structure. They always conclude with a post campaign review and audit.

Per Larsson, Sales Manager for Sweden’s largest service bureau Parajett AB, described their case study with the ICA Group, the leading Nordic retailer with 1382 stores and $12.7 billion annual revenues. Their loyalty program began in 1994 and has grown to include 4 million cardholders out of a total country population of 9.2 million citizens. The active users number 2.2 million. Their monthly statements totaled 6 million pages, were comprised of preprinted shells with single color variable data, and realized 2-3% response rate on inserts. The transpromo document needed to be offset quality, recyclable, continuous run, a dynamic perforation capability and a predictable 5-day turn around.

Their pilot process color program involved 80,000 loyalty program members and nailed a 35% response rate. The transpromo statement now typically includes ten coupons.

Parajett AB utilizes GMC software in preparing the monthly statement to be printed on four Xeikon 8000s and a Xeikon 1000 and then dynamically perforated on a Lasermax.

Utilizing third party firms to sell the remnant white space on a company’s transactional documents has interesting revenue stream potential. Three separate case studies addressed this.

Mike Badour, Canada Post Corporation’s General Manager of Product Development and Management. Our northern neighbor’s counter part to the United States Postal Service, Canada Post has defined their business as the delivery of information not just the delivery of mail. They have been offering e-Post for over nine years. They commissioned a consulting study, whose results are now published free, which detail the 77 attributes of a great transactional document.

A fascinating example of the transpromo service bureau was Canada’s 407 ETR, which is their equivalent to the EZPass run by the various Departments of Motor Vehicles in the United States. The redesign of the monthly statement has reduced the admin costs for 407 ETR by 38% while cascading the call center volume by 17%.

Imagitas, purchased by Pitney Bowes in 2005, is a service bureau that specializes in partnering with firms to sell their remnant white space on transactional documents. Mike May, Imagitas’ Director of New Platforms, described their partnership with the USPS in redesigning their change of address and movers’ guide. Imagitas actually “created” white space by increasing this form from one to a four page folded document. It now serves, as a Welcome kit including a Lowes’ advertisement, mover’s ads, and preprinted helpful phone numbers for the new locale the family is moving into.

Typical untargeted direct mail will cost $10-20 per thousand from list brokers. By including relevant ads price climbs to 5-10 cents per statement. The typical cost break down before split of profits between Imagitas and the corporate statement owner is 70% for statement production, 20% for agency, and 10% for list broker according to Mike May.

The largest service bureau in Latin America, Empresas Jordan S.A. has four plants in Peru and Chile generating $70 annual sales with 670 employees. They control over 70% share of the transpromo market with their GMC PrintNet driving two HP Indigo 550s. Juan Pisano, Managing Director, described their business model as selling advertising in the remnant white space for their corporate clients. He added that their commercial printing salesmen were not suited to sell this product and service. Rather they hired college graduates with IT educational backgrounds.

Konrad Rochalski, CEO of Poland’s Inforsys, described their company’s decision to move toward TransPromo services in 2006 with an expected start up in early 2009. Paper problems were resolved by importing inkjet compatible stock from the United States. Pitney Bowes software solved the concerns with the data transfer from legacy software programs. Much excitement has been generated from a marketing perspective as Kodak has co-hosted with Inforsys Poland’s first TransPromo Conference. Their first client, Deutche Bank, began with a footnote on sert and Rochalski expects it to evolve into reverse side ad selling.

Technology Highlights

COPI's CodeZ Quick Response (QR) generates two-dimensional QR codes to be printed on statements. These are easily readable by cell phones or PC cams. Pointing a cellular phone or PC cam at the QR symbol instantly connects the recipient to a Web page without ever having to remember or type in URLs, numbers or promotional codes. The Web page, encoded in the QR code, can launch a sales video or a coupon or a personalized product promotion based on the recipient’s demographic profile.

Joe Barber, chief QR officer of COPI's CodeZ QR division, said that early successful experimentation has been done in the far east- Korea and Japan – where the use of cell phones is more readily being accepted for mobile data acquisition.

GMC’s (gmc.net) two new products that underwent an early preview at this May’s Drupa was PortalBuilder™ and Open Document Publisher™ (ODP). The former helps businesses create complete web-based marketing centers for workflow automation while GMC ODP helps users collect, sort, merge and dispatch variable data documents according to business rules. GMC’s PrintNet has received wide acceptance as a software platform for transpromo applications in finance, insurance, retail and telecommunications sectors, as well as to outsource providers who serve clients in these sectors.

A panel presentation by representatives of the leading digital print engine manufacturers highlighted some interesting strategic differences that all potential buyers should take into account. For example, HP has their RIP outside the print engine to assure there is no sacrifice in print speed. Oce countered by saying their RIP is at the engine and their software assures that there is no adverse affect on print speed. He added that this prevents the users from needing to buy superfluous multiple servers simply to handle offline RIPping.

Select vendors highlighted the strength of their offering as a fully integrated software – hardware package. Guy Broadhurst of Oce again countered by saying they provide the greatest flexibility by offering open architecture. This allows potential buyers the option of choosing among the array of world class proven softwares, many of which were sponsors of this Trans Promo Summit. Plus as volumes grow and the need for faster print engines emerge the buyers again are not locked into the limited offerings of the proprietary full service manufacturer.

Opportunity for Smaller Buyer/Service Bureau

If the smaller enterprise users are the near term potential market for the move up to transpromo, less expensive software is a necessity since the typical full-bore package exceeds a quarter of million dollars. Two potential answers were offered at this gathering. Printables introduced their TransPromo add-on to their popular FusionPro™ web-to-print offering. This transpromo application will be a vendor-hosted software-as-a-service program. Solimar Systems, Inc. (solimarsystems.com) has a series of transpromo modules all of which can be a six-figured investment at maturity. They offer an entry-level investment of $20,000-40,000 for the smaller volume users.

The concern for transpromo software complexity is very real as evidenced by the following series of distinct and integrated needs;

• Compatibility with existing legacy systems, infrastructures, and historic data streams,
• Each new message or “monthly campaign” requires a new document design which typically requires extensive man-hours to test to assure the data extremes will fit and work,
• Campaign management software since several monthly statements are constantly at various stages of their planning before final implementation,
• Powerful job tracking and routing capabilities,
• Automating manual processes,
• Postal sorting routines to enable postal savings and to add intelligent mail barcodes (IMB),
• The e-presentment is much more than a PDF of the final statement. It requires security, indexing for storing, searching, and retrieving large quantities of relevant information.
• And finally the ability to provide analytics to measure the effectiveness of each element.

Huge volumes of potential business have the natural tendency to attract large manufacturers with the ability to focus extraordinary research and development resources to solve the myriad of processing problems. Of all the variable data and digital print product opportunities identified, the pot at the end of the transactional document rainbow is undeniably deep and broad. Any corporate buyer has got to feel a sense of awe and comfort with having an array of the largest and most talented global vendors ever assembled from hardware to software to service bureaus to consultants to educational venues. TransPromo is certainly poised to make a significant and positive impact upon many corporate entities and their dynamic client relationships.

InfoTrends, the originators and organizers of the TransPromo Summit, have done an admirable job of presenting the “simplexity” issues of this product evolution. While attendance more than doubled from the inaugural session, well over three-quarters of the attendees were manufacturers, consultants, and the media. When corporate buyers start to come, the selling cycle should contract substantially.

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.