Transcript References - The Strategy Works

The Convergence of Transactional & Direct Mail
- making Mail more relevant
Prepared for:
by:
The Strategy Works
31st October 2007
Mail Convergence
- TSW’s Primary Research Sources
Upstream Mail Research with a mix of 32 BPO’s / Digital
Printers / Manufacturers – March 2007 – article published in PFM
magazine April 2007
Mailing House Research with 40 mailing houses – July 2007 –
article to be published in Print Week magazine
Hybrid Mail Research – September 2007 with 8 new entrants /
suppliers specialising in Hybrid Mail - article to be published in
PFM magazine - January 2008
Factors driving Mail Convergence
- blurring of boundaries
BPO ‘mail club’ growing in number – 20 companies - almost two
thirds of the upstream sample - self classified themselves as
(mail) BPO’s
Emergence of DPO’s – document process outsourcers
4 self classified themselves as DPO’s – correct term for a (mail)
BPO
45 (mail) BPO plants in UK (answered by 18 respondents)
Trade with each other – mix of own customers / sub contract work
4 large BPO’s + a ‘long tail’
– aggregating to £1.1bn
(excluding divisions of corporates)
Sample size - 16
350
300
300
270
250
200
150
150
100
100
50
50
40
36
25
25
25
25
25
4
4
Inc Direct
16
FCS Lasermail
17
0
K2
4DM
CFH
MBA
Inkfish
Stralfors
DSTI
Lettershop
Howitt
TPF
CDMS
Williams Lea
Communisis
R R Donnelley Global
Document Solutions
Figures do not include TNT, XGS,Capita or OCE BS"
(Mail) BPO’s Relationships With
Downstream Postal Suppliers
Relationships with Downstream Postal Suppliers
Sample size - 19
Formal relationship with postal
operator
5%
No influence
16%
Influencer - preferred supplier
53%
Influencer - no preference
26%
Factors driving Mail Convergence
Transactional Mail (62%) preferred to Direct Mail
Predictability of forecasting transactional mail vs.
unpredictability of Direct Mail:
“Transactional mail is all about continuity, high quality, high reliability, and very
tightly managed processes. If you look at direct mail, however, this has a different
profile - it is more campaign and event-driven with no pre-set production schedule”.
Craig Scott – Divisional G.M. - TNT Document Services
“When I used to forecast transactional mail I could roughly forecast my business
plus or minus, 10% … when I had to forecast DM I couldn’t forecast two weeks
hence because everything was dependent on when the campaigns were going to
be placed. You would get campaigns cancelled at the last minute or dropped on
you at the last minute so, in terms of production planning, it was an absolute
nightmare.” - spokesperson from Stralfors
Factors driving Mail Convergence
Transactional Mail (62%) preferred to Direct Mail
Better margins achievable:
“There’s still a lot more margin in transactional than direct mail. Also
there’s more opportunities to do something with it if you have an
intelligent business…” Martyn Viquerat – Director - CDMS
“A lot of DM companies are entering into the transactional space so
they’re offering both. I think one of the reasons being the margins
within DM are far less than they used to be.” Robin Skinner – Sales
& Marketing Director - 4DM
Empowers even small companies
to win large contracts – e.g. Inc Direct
Technology drives convergence
Previously siloed databases - Financial and Marketing - now
converging
“ I found it hard to understand why the transactional biller and the
marketers didn’t get their heads together sooner than they have
done, to actually leverage the benefits of each other’s activities.”
Craig Scott – Divisional G.M. - TNT Document Services
Stimulated by advances in database software technology
“Basically this is data driven transactional direct mail; so it’s based on
valuable rich data that the clients have and then turning it into
something meaningful.” Noel Warner – M.D. Inc. Direct
Technology drives convergence
Building ‘middleware’ solutions - ‘intelligent production’
“Convergence is all about creating a middleware solution where you
can ingest marketing and billing data to produce a transactional
document that incorporates compliance information as well as
marketing information, but employs intelligence in the data formatting
process.” Jarrod Green -Business Manager Corporate - MBA
Factors Driving Convergence Improved
Quality
/ Speed
“The quality
of digitalDigital
printers Print
is at such
an incredibly
high standard
these days...it is absolutely sufficient, serves the purpose and there is
a decreasing need to actually use litho, particularly in the SME
marketplace”. Bob van Ierland – Director of E2E Development TNT Post
Range of Examples - depending on application – trade off –
colour quality vs. speed:
“Océ achieve 50ft/min full colour with their new 9000 laser equivalent to 100 pages x A4 sheets per minute” Dave Broadway –
MD - CFH
“We have just installed a Xerox iGen3 sheet fed colour laser. This
also runs at 100 x A4 sheets per minute” Dave Broadway – MD –
CFH
“Each Kodak produces 1000 (duplex) pages x A4 colour per minute every page different” – Chris Walton - Chief Operations Officer DSTI
DSTi - UK Credit Card Application
with Kodak IPS
Brand Identity
Variable Graphics
Transaction Detail
Loyalty Information
1-to-1 Messaging
Factors Driving Convergence White Space Management
- Personalised transactional mail
“Completely personalised to the individual, everyone is different,
there’s 25 million combinations of the book … It is all done on two
IGEN digital presses.” - Noel Warner M.D. - Inc Direct
“We have a product called ‘Easy Message’ and what that does is it
allows our customers to go in via the web and actually insert
marketing messages within their data … we would actually class it as
a data segmentation tool.” Mark Lee - Business Development
Director - R. R. Donnelly Document Solutions
Factors Driving Convergence White Space Management
- Personalised transactional mail
“The traditional bill document, instead of being a necessary bit of
compliance, it is actually a business tool … an intelligent message
within the bill.” Steve Berney – Business Development Director Océ Business Services
“So we have a product called VDE (Virtual Document Engineering)
and this allows people to insert messages, images, text etc, based on
content in the document”. Dave Thomas – Sales & Service
Manager EMEA – Emtex
Unused advertising space on bills / statements equates to 22% of
UK annual direct mail spend – dsicmm Group research August 2007
Factors Driving Convergence the ‘uncontrollables’
July 2006 Energy White Paper
Increased transparency of utility bills will be a market driver and
increase focus on colour transactional printing.
“It could have been written with Océ in mind. It is designed to
encourage customers to be energy conscious …the bills must include
graphic information in colour, that drives and informs the users how to
conserve energy and also to be more conscious of how much their
bill is really costing them – in effect predictive billing information”.
Steve Berney - Business Development Director - Océ Business
Services.
Factors Driving Convergence the ‘uncontrollables’
Environmental Drivers – Carbon Footprint
“I think it’s inevitable for a number of reasons - I think because that is
the document that people look at and also I believe there will be
environmental and legislative pressure to move away from ‘carpet
bombing’.” Martyn Viquerat – Director - CDMS
”It’s about offering the range of list cleansing services that will reduce
the amount of ‘gone aways’ which in turn reduces the amount of
physical bags you create and therefore the volume of paper you use
and the machine time you use to fulfil it” Paul Galpin – Sales &
Marketing Director – dsicmm Group
“When we are applying for tenders and projects, we are increasingly
asked to specify our own environmental policy.” Steve Gryf – M.D. Hercules Direct Marketing
In-house IT expertise drives convergence
Investment in IT (technology & people) is regarded as imperative
CDMS - £100m t/o – with 40 people employed in data / IT
CFH - £25m t/o – with 19 people employed in document
composition / IT / system development
Common denominator is IT investment in relation to size
In-house IT / Design
expertise drives convergence
“One of the reasons we can make White Space Management work so
well is because of the quality of our creative design team – they are
experts in putting the right messages in the right places.” Elizabeth
McMahon - Marketing Manager - DST International Output
“We’ve all got Xerox’s, we’ve all got Océs, but then the guys who are
making the most money out of it will be these niche guys who have
spotted an opportunity; they don’t have a lot of competition, it’s the IT
skill, it’s that front end developer that’s making it happen, it’s how
they’re getting the messages onto the paper.” Spokesperson from
Stralfors
Competition threat
to mailing houses drives convergence
55% of research sample of mailing houses are developing
‘upstream’ services to combat the threat from BPO’s
“The scale of our business means we can go forward with it. You’ve
got two options – either watch the dark clouds gather by not
embracing it and watch your business downsize or embrace it and
take it to the market by building the solutions yourselves. The scale of
our business means we can go forward with it.” Paul Galpin – Sales
& Marketing Director - dsicmm Group
New Mailing House Services include:
Data Management
Personalisation
Creative
Digital
Colour Printing
“We are trying to develop digital printing, personalisation, colour
personalisation not just black and white. We do all of them: creative
services; managing clients’ data; advising on personalised ‘intelligent’
mail.” Terry Turner – M.D. - Priority Newstrade, Mailing & Digital
Print
The Customer perspective - Banking
“The direct mail industry is contracting – pushing these big
companies into the transactional space….there is the push the
other way, from the marketing people, to maximise the impact of
all our communications. The two are pushing hard together coming up with this concept known as ‘transpromo’. It’s our
strategy to suppress what mail we can (by encouraging use of online banking) but what we will be left with is communications that
the customer wants…..so the whole statement proposition is
going to evolve” Leading UK Bank
Who is growing the UK ‘mail cake’?
Convergence (in theory) contracts the market – form of
substitution
Royal Mail countering by developing ‘relationship mail’
“We see purchases on the internet as an opportunity to drive
integrated digital and physical communications to stimulate cross
selling” Thierry Saada – Director Sector Marketing – Royal Mail
Personalised integrated media in partnership with Sony DADC
technology
Example of Personalised Integrated Media
Global Postal Operators
growing mail volumes
“What I know, from a commercial perspective, is that, if you combine
email with physical mailing, your penetration rate and your response
rate is much higher than either one separately.” Marc Pouw –
Commercial Director - Belgium Post
“Australia Post sees expansion in Hybrid mail as one of the future
developments of mail and where mail will continue to add value in a
changing world. Hybrid mail is really the electronic convergence of
data streams and physical mail and its use is consistent with our
strategy to actually grow mail volumes.” Mark Worsley - CEO PrintSoft (Australia Post)
New UK Hybrid Mail Entrants
- impact on convergence
New entrant Viapost partnering with large direct mail printers
Polestar, St. Ives etc – thus protecting attrition of revenue streams
from transactional printers
“The SME print at the moment is done on a desktop printer, within an
office. All of that is now going to come through us into the industrial
print side.” Simon Campbell - CEO - Viapost
New UK Hybrid Mail Entrants
- impact on convergence
Extensive network of printer alliances being set up across the UK
by Viapost and other new UK market entrants e.g. PrintSoft
(Inkfish / FCS Lasermail); PDQit; TNTit ; I-Mail
Esker (‘FlyDoc’) business model already exists in France &
Australia Post model (‘DeskDirect Global’)
All based on a ‘Pay as You Go’ model with free downloadable
software
Conclusions
Convergence or ‘transpromo’ (transactional print & proactive
marketing) is now a ‘given’
The (technology) ‘cat is out of the bag’
New market entrants proliferate from 3 different directions:
BPO’s / Mailing Houses / Hybrid Mailers
Mail relationships are fragile and subject to change – more and
more influencers involved
The industry needs to be seen to ‘self police’ its carbon footprint
Mail must become more relevant - to survive and grow
The Convergence of Transactional & Direct Mail
- making Mail more relevant
Prepared for:
by:
The Strategy Works
31st October 2007