Worth Knowing

Direct mail leading channel for customer acquisition

Direct mail is still the channel of choice for customer acquisition and runs a close second for customer retention according to the recently released Media Usage Forecast by Target Marketing.

Customer Acquisition
In 2008, 52% of direct marketers’ media budget will be spent on customer acquisition. According to Target Marketing’s survey, 34% of direct marketers found that direct mail delivered the strongest ROI for customer acquisition. Email came in second place with 24%. In terms of usage direct mail still comes out on top with 81% of direct marketers reporting that they use direct mail for customer acquisition. This is followed closely by email (78%), search engine marketing (60%) and search engine optimization (59%).

Customer Retention
When it comes to the ROI of customer retention efforts, email and direct mail are very close. Thirty-seven percent of direct marketers reported that email delivered the strongest ROI and direct mail came in a close second at 33%. Although the ROI is close between these two channels there is a preference among marketers to use the less expensive email channel when communicating with existing customers. Eighty-five percent of marketers plan on using email in their customer retention efforts, compared with 76% who plan to use direct mail.

Direct Marketing Spend
The majority of direct marketers anticipate that their total media budget for 2008 will either stay the same or increase compared to 2007 expenditures. Not surprisingly the growth of electronic channels is outpacing that of direct mail. Eighty-nine percent of marketers plan to increase or maintain their budget for email marketing. This compares to 76% of marketers who plan to increase or maintain their budget for direct mail.

Among those that are planning on decreasing their direct mail budget, rising postal and paper costs were noted as factors in the decision.

What This Means for Print and Marketing Service Providers
Some of the respondents who planned on increasing their use of direct mail cited advancements such as variable data personalization, Personalized URLs and targeting abilities. Service providers should work with their customers to incorporate these relevant marketing techniques to increase their overall campaign effectiveness.

PODi members should take advantage of these resources:

• Educate your sales staff and your customers with PODi’s digital print case studies. Use the advanced search function to look particularly for Direct Marketing Lead Generation cases and for cases that incorporate Personalized URLs. Also, look for 46 new case studies to be added to the online database next month.
• Learn how you can help develop an effective customer retention program by reading the New Customer Experience report. This report is free to PODi members and may be purchased by non-members at our online store.
• PODi members should also utilize the sales tools on the S3 Council site including the Lead Generation Solution Presentation and Value Calculator. All the resources on the S3 Council site are free to PODi members.

Xeikon Revs it up for Drupa

Xeikon announced a new product for Drupa, the Xeikon 8000 (www.xeikon.com).  It’s essentially a much faster version of the Xeikon 6000. The new product produces 230 A4 pages per minute (up from the 160 ppm rate of the Xeikon 6000.)

While this toner-based product doesn’t have near the speed of the new color inkjet devices it has something they don’t have and that is 1200 dpi quality. The Xeikon delivers the level of graphic arts image quality required for many promotional commercial printing applications.

The market now has a number of high speed (1000 to 2000 ppm) ink jet device that don’t have quite have graphic arts quality. And now the market has its first 200+ ppm color printer with high quality. It will be interesting to see which vendor can get both: very high speeds and high quality.

The Xeikon 8000 offers:

*  speed of 230 A4 pages per minute

*  duty cycle of 8.5 million A4 pages per month

*  1200 dpi image quality at 4 bits per spot

*  Real-time variable data handling capabilities

*  An extended range of paper input and output options

*  Eco-friendly design and consumables

The Perfect Invention

As I make my way through airports I often come across a person who is walking along talking out loud and for an instant I think he is talking to me; then he turns and I see his blue tooth ear phone. Although a good invention, it’s not the one I had in mind. My dream invention is similar in size to the blue tooth device, perhaps a little smaller, but what it does is allow me to instantly know the highest price my prospect will pay for what I’m selling. It gives me the value of my offering at that moment in time. Then I can decide if this prospect is worth pursuing or not and I’d never leave another nickel on the table.

Since I don’t have that device perfected yet I have resorted to another approach for pricing personalized marketing programs. I calculate the value of my solution based on input from the prospect. Then I know how to price it.

Here’s how Paxar did it. With a surplus of retail shopping bags, Ohio-based retail supply house Paxar Americas decided to use direct mail to reach customers who only order supplies every several years.

•         Program objectives:

•         Reduce inventory of retail shopping bags

•         Improve typical 1% response rate for mailings

Paxar worked with Early Express of Dayton OH to develop a program to meet these objectives. Early Express did their homework and found the following information about previous campaigns.

Campaign Metric	Historical
Audience Size	3000
Response Rate	1%
Number of Orders	30
Average Order Size	$900
Total Opportunity	$27,000

Now Early Express knew that they could help Paxar improve on this performance by using a personalized direct mail campaign. They design a simple postcard mailing that included the recipients name and a list of the items they had purchased in the past.

Paxar knew that their program would improve upon the 1% response rate. They chose a conservative estimate of improving the response rate to 4%.  Plugging the new response rate into the table yields a program that provides $108,000 in revenue and a whopping $81,000 increase in value over the static approach.

Campaign Metric	Planned	Net gain
Audience Size	3000	--
Response Rate	4%	3%
Number of Orders	120	90
Average Order Size	$900	--
Total Opportunity	$108,000	$81,000

How much would you charge for an extra $81,000 in sales beyond what you paid previously?  What would the customer be willing to pay?

A rule of thumb is that you can easily get 10% of the revenue increase or if it’s a cost savings you can get 25%. Knowing exactly how much of the revenue increase you can get requires you to know what their costs are for the extra product sold.

The critical point here is that you have arrived at a possible price for your services without ever thinking about costs.  Once you have the price you need to circle back and make sure it is profitable for you. 

What if your response rate turns out to be higher?  Some service providers link their price to performance and take the risk, whereas most of the time the customer will take the risk. Your track record will help you select the appropriate values to use. If you don’t have a track record you can grab a copy of Caslon’s Response Rate report from the resources section of the PODi site (www.podi.org) or you can download similar case studies from the case study database.

While we can’t offer the value calculator ear phone, we can offer Excel-based value calculators and you’ll find them in the Strategic Solution Sales S3 Council section of the Caslon site (www.caslon.net ) and they are free for PODi members.

HP Targets Offset Market and High Volume Digital Markets with New Products

HP’s pre-Drupa product announcements show that HP is clearly going after the high volume offset and high volume digital markets. Products announced included 3 new Indigo models, a high speed web inkjet press, large format inks, and workflow software.

HP unveiled three new HP Indigo models that offer faster speeds, greater productivity and deliver significant improvements in break-even costs compared to analog print methods. The HP Indigo 7000, available in June, offers 120 four-color ppm and is currently installed at 10 beta sites.

Designed for customers printing more than a million pages per month the HP Indigo 7000 press offers a host of features.

·         Faster speeds of 120 A4 pages per minute (ppm) in four-color and 240 ppm monochrome

·         Capable of producing 800,000 4-color A4 (letter) per month in one shift and 3.5 million 4-color A4 (letter) running 24/7.

·         Lower-cost production enabling a higher break-even point with offset printing with run lengths in the thousands.

·         317mm x 464mm (12.48-inch x 18.26-inch) image size for increased throughput, enabling production of four-up 6-inch x 9-inch book and postcard as well as covers for letter size books with over 500 80lb text (120gsm) pages.

·         Robust, scalable Digital Front-End (DFE) provides easy remote user interface capabilities, unique VDP attributes and expandable storage capacity.

·         New, user-friendly graphical user interface for simplified operation

·         Enhanced serviceability and increased uptime with on-press diagnostics and guided troubleshooting tools

·         Support for a wide range of media, with no decrease in production speed

·         On-press fast ink replacement feature for color changes on optional 5th, 6, and 7th colors with virtually no downtime

The HP Indigo W7200, available in the second half of 2009, is a high-volume commercial press. The WS6000 is a label and packaging press expected to be available in early 2009, that offers twice the productivity of the HP Indigo ws4500 press and is targeted at labels and packaging converters with significant volumes of medium- and short-run jobs

HP enters high speed inkjet market

The HP Inkjet Web Press is designed to perform in high volume, 24/7 environments, runs at 400 feet per minute or 2600 letter pages per minute, and has a target duty cycle of 70 million impressions per month (letter sized, 4/0 impressions). With its combination of 30 inch print width, color quality, low print costs, and speed it is targeting direct mail, transactional and transpromotional printing, book publishing and newspaper publishing applications. 

The press will sell for $2.5 million, which is lower than the high speed offerings from Océ, InfoPrint Solutions, Kodak, Xerox, and Screen. However, it’s the running costs that are worth noting. The Print costs for the Inkjet Web Press for an A4 color page with 30% coverage will cost $0.01 and a basic monochrome page $0.0015. At these prices this printer appears to set a new competitive price target for other suppliers and is poised to move pages from offset to digital.

The HP InkJet Web Press is expected to be commercially available in the second half of 2009

Digital Print Engine News from On Demand

With this being a Drupa year, most companies are saving their new product announcements for the world’s largest printing conference and will be releasing details over the next few months, just prior to the show in May/June. Given this situation there were just a few new product announcements for new print engines at On Demand this year.

On the color digital printing front Canon announced two new companion products to its hot new imagePRESS C7000VP.  Keeping with Canon tradition the new models are slower speed versions called the imagePRESS C6000VP and the imagePRESS C6000.  Both are 60 ppm digital color cutsheet devices and both have the same image quality as the original C7000VP.  Initial list prices are $155,000 and $99,800 respectively.

On display, but not available until this fall is the C900 from Ricoh. This new color digital printer will run at 90 ppm, even on heavy substrates (up to 300 gsm). While pricing is not official early indications are the price will be around $100,000 - making it very affordable.

New color digital product announcements will be forthcoming from HP, Xerox, and Xeikon over the next few weeks.

There is a buzz around the very high speed web-fed color devices. A market that Kodak Versamark used to have to themselves that has suddenly gotten crowded with entries from Xerox (the only toner based machine), InfoPrint Solutions, Océ and Screen.  Vendors are poised to capture new TransPromo and Direct Mail pages.

On the monochrome front, Canon introduced a new 135 ppm machine that is positioned to fit in between the 105 ppm light production device and the heavy duty cycle devices (Canon IR110, IR138, IR150).

Konica Minolta announced the Bizhub PRO™ 2500P, a 160 ppm single pass duplex printer, which is the Océ VP 6160 machine. It’s interesting to note that Océ sells the Konica Minolta C6500 digital color printer under its own label and now KM sells an Océ product under its label.