Feb. 23 2007 04:37 PM

The importance of gathering customer data continues to increase for corporations, financial institutions, colleges and universities and other entities with mailing operations. Extensive customer data, usually readily available through the organization's customer relationship management system, can be used in many forms, one of the most important of which is direct mail.


Using customer information to make mailings more targeted, personalized and appealing through enhanced inkjet addressing for example, incorporating maps, graphics and coupons, in addition to the customer's name and address and a 2D barcode on a direct mailpiece can increase the impact of this crucial customer touch point. If you've recently brought your mailing in-house instead of using a third party, it could be because you want to engage specific, tailored programs to better utilize the customer data you've accrued.


But expanding your mailing operations to include enhanced addressing takes careful consideration. The upfront cost of a mid-range-priced system, including an inkjet printer, mailbase, conveyor, dryer, stands and interlock cabling, is between $80,000 and $100,000. That figure also doesn't factor in the dedication of up to three employees to prepare the data and operate and maintain the system. Too rich for your blood? It doesn't have to be. Doing plenty of front-end research to develop a solid plan will go a long way in reducing the risk and increasing the reward.


Developing a Plan

Contouring messages and presenting them to customers in a more personalized way has increasing relevance for many organizations. For example:

  • Colleges and universities do direct mailings on upcoming seminars and specialty classes and often target such pieces to students who attended similar courses in the past.

  • Casinos have a feel for how much their regular patrons spend and message accordingly the casual gambler receives a direct mailpiece with a coupon for a $10 chip, for example, while the high roller's coupon is for a substantially higher amount.

  • Insurance companies do mailings to their agents' customer bases and contour messaging and offers to specific customers.

  • Financial institutions are printing more promotions on bank statements, in part because more banking is being done online, thus resulting in fewer customer touch points.


    It's tempting to jump into enhanced addressing in a big way by purchasing an extremely high-end inkjet printer, figuring it will do everything an organization could possibly need, both now and in the future. However, such printers typically need to run all the time to operate properly. Running a printer only one or two days per week could lead to increased maintenance costs. Thus, the return on investment for that piece of equipment is not maximized and might never be realized.


    That scenario is unfortunate, but also avoidable. Research is the key to developing a strong business case for adding enhanced addressing, and it starts by determining what type of messaging you want to offer, which gets into more than just management and manipulation of variable data. Do you want to add marketing messages, coupons, maps or other images? On what type of substrates do you want to print? Will you be printing on both sides of a piece, and if so, will you fold and seal those pieces? Answering these questions will determine the type of equipment you need, and thus your initial capital expenditure. For example, if you'd like the capability to print an address on one side and a promotional offer on the other, that will require a camera system and possibly turnover equipment and multiple mail tables.


    If you'll be printing on claycoat surfaces, an appropriate printer that utilizes water-based ink is best. However, because you're using water-based ink, you'll also need a dryer. When printing on varnished, UV or aqueous coatings, you'll need a printer that handles solvent-based inks. Plus, solvent-based inks don't usually need a dryer, which is one less piece of equipment to buy.


    It's also important to remember the manpower needed to implement whatever strategy you choose. You'll need a person to prepare the variable data addresses, barcodes and customized messaging like promotions, coupons, maps or other graphics along with understanding the nuances of mailing software. You may need a second person to run the line and possibly a third person for maintenance.


    Risk, Reward and ROI

    The temptation may be to purchase the most advanced inkjet printer available, along with the related accessory equipment. However, equally tempting is purchasing a bare-bones basic printer (at a much reduced cost) to dip your toe in the enhanced addressing waters. However, consider that moderately priced inkjet printers with capabilities on par with their high-end counterparts are now available and might be the best choice. Why? First, although your front-end cost for the printer is a little higher than a basic model, you now have the capability to print more extensive and appealing messaging.


    With all the variables to consider, what is a reasonable ROI for adding enhanced addressing? Assume the capital expenditure for a moderately priced inkjet printer with the ability to print sophisticated messaging, mailbase, conveyor, dryer, stands and interlock cabling to be approximately $100,000. For a volume of 500,000 pieces per month, you would typically save $10,000 versus outsourcing to a letter shop. Typical operating costs, such as consumables (i.e. ink) maintenance and someone to operate the equipment would run about $4,000 per month, equating to a savings of $6,000 per month. The payback period would be just under a year and a half; however, that doesn't take into account the added benefit of the flexibility you gain by controlling your own mailing process.


    When it comes to researching and planning to add enhanced addressing, you don't have to go it alone. Getting counsel from manufacturers that offer a full range of equipment in this area will make the process easier. They can help assess what you want to print and guide you into the system that is most appropriate for your needs and projected growth.


    Bob Neagle is Senior Manager, Graphics Systems, Videojet Technologies Inc. For more information, visit www.videojet.com.



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