Is Variable Data Printing Right for You?

An up-and-coming technology called variable data printing (VDP) offers catalogers a relatively easy and effective way to create highly personalized direct marketing pieces.

VDP offers the ability to change text, graphics and even photographs from one printed piece to the next without stopping or slowing down the web press. As a result, these digital presses not only can personalize but also can customize information for each recipient, making one-to-one marketing easy.

While VDP is not quite ready to create full-sized custom catalogs, it can deliver personalized mini-catalogs that offer superior response rates and increase loyalty, say experts. Presently, VDP is used mainly in the b-to-b catalog industry, because businesses tend to have more depth to their customer files and offer higher-end products or sell merchandise that’s frequently reordered.

VDP has several uses in the catalog industry, including the following:

• personalized fulfillment—a mini-catalog of products requested via the Web, phone or a survey;

• relationship marketing pieces—created from simple or complex personal information, usually purchase history; and

• transactional—using billing statements to make offers based on a recent purchase. The offers are typically printed and attached to the bottom of a bill. Credit cards do this often.

VDP requires a cataloger to tap its database for customers’ personal information (similar to that used by Web sites employing personalization) or to build a database. While the latter may seem complicated, it’s not. VDP works hand-in-hand with the Internet, which allows catalogers to capture a lot of personal data.

“The Web has created a vehicle for delivering personalized content that is impacting print,” says Doug Johnston of the Print On Demand Initiative (PODi). “It’s raising the bar of expectation in print.”

For example, a retailer can track what a customer is looking at and combine that knowledge with address information to make a targeted mailing, such as a brochure with the exact model, color and accessorized car a customer was ogling online.

Whirlpool, which mails a 200-plus-page catalog, reduced its main catalog mailing by 15 to 20 percent by using a 16-page personalized mailer. The mailer was sent to prospects and was generated from information obtained by a customer service rep during the catalog request call. The piece was tailored specifically to the appliances that the prospect had called about and reflected the prospect’s interest in a specific model, style and color.

While VDP certainly has benefits, it can be expensive and should be approached cautiously, say experts. VDP printing costs between 20 cents and $1 per page, but that price is offset by the higher-than-average response rates it yields.

According to a CAP Ventures Personalization Study, personalization can increase response rates as much as 35 percent.

“If done correctly and with careful analysis, there’s an even chance of meeting your goals,” says Thomas Brady, account representative for Vestcom, a VDP provider.

The technology seems to work better in the b-to-b atmosphere and particularly with higher-end products. VDP usage also may increase a cataloger’s market share because it eliminates the need for the prospect to hunt through a larger catalog. The key, says PODi’s Johnston, is to calculate the return on investment rather than VDP’s actual costs.

For Example

Rogers Seed Catalog, a division of Novartis, used VDP to increase loyalty among its seed dealers and to increase sales to farmers. For many years, the cataloger had mailed a text-heavy, black-and-white book that offered its entire line. Because only certain seeds successfully can grow in certain climates, the brochure offered several areas of personalization.

First, it branded the piece with a local dealer’s name. Second, the lift letter in the brochure was addressed to the customer and contained facts about seeds they were looking for. It also had the name and contact information of the sales distributor. Inside, the piece made plant and seed recommendations to the customer.

Rogers Seed had phenomenal results. More than 85 percent of the catalog’s seed dealers joined the program. Sales increased 17 percent compared to the previous year, and market share increased 5 percent.

Knapp Shoes used to end every season with a surplus shoe inventory. Having tried the traditional liquidator approach, it turned to VDP to solve the surplus dilemma.

Working with printer Vestcom, Knapp executives reached back three years into their customer database and pulled the names (inactive as well as active buyers) that had style preference, color and size. They matched those preferences against the available shoe surplus. They sent a postcard mailing offering customers shoes in their size, color and style at a 25-percent discount.

Knapp felt it needed a 2.5-percent response rate with an average order size of $50 to break even. It got a 10.3-percent response rate of which 70 percent of the orders came in by phone with an average order of $50. The remaining 30 percent of the orders came from the Web site, and the average order size there was $120.

Knapp now does this promotion on a seasonal basis and generates more revenue than it had with a liquidator.

Questions catalogers need to ask themselves:

• What’s the offering and strategy of the piece?

• Who comprises the audience?

• What data can I take advantage of in using VDP?

Questions catalogers should ask their printers before using VDP?

• What kind of equipment does the printer use?

• What are the equipment’s capabilities?

• What kind of quality can the printer achieve using the catalogers’ photos?

• What front-end capabilities does the printer have to handle the data? Are they capable of helping the cataloger build a database solution to supply the front-end data?

• What back-end capabilities, such as postal pre-sort, inserting or finishing, does the printer have?

Five Challenges of Using Variable Data Printing

By Bruce Ganger

While variable data printing (VDP) certainly has its benefits, it should be considered with caution. The following five challenges demand consideration.

1. The traditional print manufacturing model does not support printing-for-one. It also does not support the creation of customized pieces within a print run. Print-on-demand (POD) applications have provided a strong source of income and profit for many printing companies. However, when a customer wants to use data from prospects to tailor the content of a direct mail piece, the POD model breaks down. A different manufacturing model is required for variable data printing.

2. Managing customer data is a new skill set for the typical commercial printer. Customers who want to use data to tailor content for personalized direct mail pieces need to use demographic data. Most commercial printing companies aren’t staffed with systems or database programmers, so they’re not ready to take on the responsibility of updating, maintaining or working with a customer’s database. These are new skills to acquire and new services to manage.

3. The appropriate market development has not been done to create the “killer apps” in variable printing. Commercial printing companies are buying technology to accommodate a specific customer or in the hope they’ll figure out how to make VDP a successful part of their service offerings. Many times the customer goes elsewhere to save a nickel or the application goes away, and the printing company is left to create a new demand that will help pay for the new technology. The requisite work hasn’t been done to develop the market for variable printing, to show commercial printing companies how to move forward.

4. Commercial print salespeople don’t know how to sell variable applications. There are different customer and value propositions for VDP and personalized direct mail applications. The real customer has a business need and controls the budget dollars for satisfying it. Commercial print salespeople spend most of their time nurturing relationships with print buyers who may not be aware of the larger needs of their company and the relative benefits of new applications. Training and support is necessary to make the transition from selling print to selling value and solving business problems.

5. The up-front cost of acquiring technology is high. Some commercial printers are attacking the opportunity by acquiring expensive hardware and software technologies without taking into account the hidden costs that come with staffing and training. They’re taking a leap of faith by buying the technology before they’ve set up the appropriate infrastructure to produce the work.

Bruce Ganger is president of Digital Works. He also is a regular contributor to Printwriter.com, a Web site dedicated to the printing industry. He can be reached at bganger@digitalworks-usa.com.

Definition;
Variable data printing offers catalogers the ability to change text, graphics and even photos from one printed piece to the next without stopping or slowing down the press.