Jul 24, 2007
TransPromo Messaging Yields Rapid Payback for Chapman Data
Colorful, customized messages trigger double digit response rates for clients
By George Linkletter
TransPromo customer messaging -- a blend of transaction and direct marketing mail that emphasizes color and customization -- is an application whose time has come. At least that's the view of Rick Glashan, president of Chapman Data Services, a Dallas-based outsourcing firm specializing in the direct marketing channel.
Glashan reports he has monitored the advances of digital color printing technology for several years while waiting for the cost to drop. When that point occurred he took the plunge and has since achieved a payback on his combined investment in color digital printing hardware and variable data software in about six months. Just as important, one of his clients is achieving significantly higher response rates and profits thanks to an innovative TransPromo messaging application Glashan developed.
First, a little background. Chapman Data is a major player in the direct marketing world in Texas. The firm prints and mails more than 150 million mailpieces a year for a variety of organizations, including major U.S. petroleum companies and non-profits such as the Catholic Charities. Typical applications range in size from about 100,000 to five million mailpieces and center on sales and marketing efforts, such as new customer acquisition and solicitations. Like Henry Ford's Model T automobile, Chapman Data's clients could get any color they wanted -- as long as it was black.
However, once the cost of digital color became viable he made the switch. And with the aid of sales consultant Doug Lovelace from IKON Office Services, he implemented a coordinated hardware and software solution. It consisted of a single, IKON-branded Konica Minolta Model 8050 digital color printer, buttressed by the PlanetPress software suite from Objectif Lune to facilitate the printing of the variable data and images. The results of that modest investment are remarkable.
Ordinary to Extraordinary
Glashan's goal was to transform an existing and uninspired transaction-based billing statement into a colorful, customized and compelling TransPromo message. The existing billing statement, which Chapman Data processed on behalf a mid-sized catalog retailer, was designed solely to collect the money owned for products previously ordered. It amounted to a single 3"x7" remittance-style coupon with a return envelope. The firm processed about 200,000 of the small billing notices a month, or about 5,000 every workday.
The new billing statement was enlarged to an 8.5"x11" size, viewed vertically, and divided into three equal parts. The top third was the original billing notice, largely unaltered but with some highlight color added to emphasize the amount owned and the date payment was due. (After all, the point of the message was still to collect the money owed.) The middle third consisted of an image and description of an additional product being offered to the customer. The bottom third was an order form for the customer to use in purchasing the product. The new full-page format is easily accommodated by the digital color printer, which outputs the 11"x17" pages in 2-up simplex fashion at 50-pages per minute. The printer is capable of duplex printing, but the text on the reverse is static, so the reverse side is pre-printed.
To gauge the effectiveness of the new format, Glashan tested it with a small, high-dollar-value segment of buyers. The test offer consisted of an image and description of a desktop printer, which was included in the bill of customers who had purchased a computer. The response to the offer was overwhelming, "well north of double digits," according to Glashan. It clearly showed the viability of the new format.
The next phase involved identifying and selecting groups of compatible products to offer customers. Glashan emphasizes that the product match is not intended to be a precise 1:1 match but rather a category-to-category match. And with about 200 different SKUs in the catalog, the process is hardly scientific. Often it comes down to a gut feel or what seems logical. If no match is readily apparent, the cataloger inserts an offer for a product that is 'on sale' or discontinued. Both approaches work as Glashan reports success in cross-selling products ranging in price from $10 to $300 during the two-plus years the application has been in place.
Warm, not cold customers
"Selling to an existing customer base is clearly advantageous," Glashan explains. "The customers have already bought a product, so they are favorably predisposed. They have already cleared the credit hurdle, so there is little risk of non- or delayed payment. And they are already expecting the bill, so they are ready to pay for the product. A modest additional charge for a related product seems very reasonable to them."
"With a volume of 200,000 monthly billing notices, and an incremental cost to the client of only $50 per thousand for the color TransPromo message, the economics are exceedingly favorable. The cataloger only needs two percent response rate and $2.00 in added profit per order to make it all worthwhile. And we've consistently achieved a much better response rate than just the bare minimum."
Glashan acknowledges the response rates will tend to decrease over time, since customers can't be expected to respond to an additional offer every time they receive a bill. Still, he points out that the decline is partially offset by the addition of new customers, who are constantly being added to the base and for whom the cross-sell message is a new opportunity. Plus, he has developed subsequent TransPromo messages for the top tier customers of other clients, so his experience with the new technique is still growing.
He also credits IKON with facilitating the shift to the new capability via its competitive pricing and strong support services. "Our traditional strengths are monochrome and high volume," Glashan explains. "We needed expert guidance with the use of color, the variable data and imaging, and the lower volumes, which required us to make more frequent checks to assure consistent quality."
"IKON committed a team of top notch technical people to us," he continues. "Not just the senior consultants, who helped us develop the concept, but the specialists who were actually responsible for getting the new equipment, software and application up and running," he adds. "That on-site expertise was critical to assuring the success of our new TransPromo capability from the get-go."
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Comments? Contact georgelinkletter@charter.net or rickglashan@yahoo.com.