Online Exclusive

Press 'Print' for Transpromo

Electronic bill presentment and payment is nothing new. After a decade of begging, online banking’s “go paperless” pleas finally are being heard, as tens of millions of bill-payers no longer write checks or affix stamps on return envelopes, to the USPS’s chagrin. That many customers still are charged for this convenience misses the point that nearly 90 million American households participate in online money management, as Reuters reported last September.

Internet and 4G network security concerns aside, this is our reality; it’s how the market has trended. On a cold winter day early this year, I saw a cashless 20-something pay for a steaming Starbucks latte from an iPhone app, as if to dare mobile phone hackers. Is such e-preference generational? Not necessarily, says Xerox, whose 1:1 Lab partnered with Miami University to market to high school junior honors students. Surprisingly, perhaps, some 60 percent of the 16- and 17-year-olds targeted said they prefer hard-copy communications to electronic alternatives.

Transactional documentation is the most “required reading” of all the hard copies reproduced in print. Text and corresponding images for such promotions as tailored service reminders, bonus cash offers, lower financing rates, and new product deals are printed prominently — and often in full color — onto bills that arrive monthly in the mail. With volumes expected to drop by about one billion by year’s end, paper statements and bills still are being printed and mailed en mass — almost 24 billion such documents in 2011 alone. We’re not talking, dare we utter, “junk” mail here. Consider that 19 of every 20 statements or notifications that get mailed actually are opened and read. A multi-client study by InfoTrends showed that, on average, consumers spend between two and three minutes reviewing monthly statements received in the mail; 20 percent spend five minutes or more. Even video-centric websites are jealous of “eyeball” viewing stats like those!

Of course, consumers are more mindful of their debt and debit cards during lean economic times like these. In corporate America, marketing typically is one of the first areas to suffer when budget cuts commence. And those two factors combined are precisely what makes transpromotional printing so enticing. It combines transaction documents with promotional direct mail by printing non-solicited, highly targeted personal messages directly on the face of bills, statements, and invoices. (Respondents prefer “onserts” to easily discarded inserts, research shows.)

Transactional output has not been immune to cost cutting: Statements are smaller and page counts are down, particularly since 2010, as marketers strive to save money on printing and mailing. Postage can account for up to 40 or 50 percent of the cost for some transactional marketing pieces, pointed out Shelley Sweeney, VP and GM of Xerox’s Service Bureau and Direct Mail Sector. “The [transpromo] segment is in transition, [yet] direct mail is growing,” Sweeney said. The challenge lies in changing customer mindsets, she added, from focusing on “the cost to produce a bill versus revenue generation.” By leveraging campaign content, transpromo print can be combined with marketing pieces or even replace other direct mailings.

With the prevalence of online billing, MPR asked Jim Hamilton, InfoTrends production group director, how much longer the transpromo segment of the print market will be viable. “I think transaction print holds out for quite a bit longer than 10 years,” Hamilton said. “We don’t have a forecast out that far, but our five-year forecast, though showing a significant drop in transaction documents, doesn’t have them dropping out entirely. [See chart in sidebar.] And keep in mind that though volumes drop, the remaining pages become more fully digital (fewer workflows with pre-printed offset shells) and more colorful,” he added.

$4 Billion Market

Despite being flat in 2008 to 2009 and some decline in volume over the past two years, the worldwide transaction and financial document market still is estimated at approximately $4 billion, according to market researcher PRIMIR, a unit of NPES. When done right, transactional marketing is among the so-called “unavoidable media.” It captures more mindshare than mass-media alternatives (billboards, TV, radio, and magazines), its advocates contend. Television commercials, already far less potent thanks to ad-skipping TiVo and DVR systems, have been rendered nearly moot (and mute) by on-demand/online streaming viewing services like Netflix, whose global membership now exceeds 25 million. However, more in-your-face media venues — such as signage and displays in elevators, at gas pumps and checkout lines, and also printed on billing statements sent to mailboxes — force themselves into audience attention.

“Transpromo marketing messages, by their very nature, command more attention than traditional communications,” InfoTrends analyst Barb Pellow told Graphic Arts Monthly in 2009. The same is true three years later. “While the average consumer may get as many as 3,000 advertising messages per day, they receive less than 12 transaction documents monthly,” Pellow continued. These come “from known and trusted sources, so they are more likely to draw the customer’s attention.” Myriad statistics showing transpromo’s much higher response rates confirm this.

Art Plus Technology, Salem, NH, a subsidiary of printing firm NEPS, spearheaded a project for a financial services firm to increase 401K participation by including promotional messages on participant statements. The 10.5 percent response rate was shockingly high for such a campaign. In another project, consulting firm Prinova created a health benefits promotion for Humana that resulted in a 42 percent switch from more expensive, brand-name prescription drugs to cheaper generics. Ordinary mailers had netted just 10 percent.

Relevant offers can increase response rates by up to 300 percent compared to those that are simply personalized, according to research conducted by the PODi Digital Printing Initiative. Similar studies from RIT indicated that personalization alone can boost responses by 44 percent over static communications, while personalization plus color can spike responses up another 135 percent. When campaigns are personal and relevant (defined as one-to-one content) and produced in color, rates increased by 500 percent over static. The takeaway is that relevance provides a bump of 365 percent over personalization and color alone.

There’s ample room for growth, especially in the color space: Only about one-third (21.7 billion impressions) of North America’s transaction document volume is printed in full color, reported InfoTrends.

Big Volume

While there is little doubt that transpromo print works for customers, can it fit in your operation? The answer probably is “no.” Even more so than adding value-added mailing services expertise, high-volume transactional output (HVTO) is a highly specialized offering.

“Mailing is only one component,” pointed out Sweeney of Xerox. Whether outputting on production-class, continuous-feed digital presses from Kodak, HP, Oce, Ricoh, or Xerox, all the other “systems needed [for transpromo] are significantly different,” Sweeney noted, citing security requirements first and foremost. In addition, variable-data application development can involve thousands or even millions of unique pages, requiring proper planning and access to clean, up-to-date data. Software must be robust, as transpromo statements feed on information from CRM, ERP, and other external databases. GMC’s Inspire software, for example, centralizes data from different enterprise “silos” to build personalized communications with relevant content. Inspire “muscles” through jobs involving large input files, multiple data sources, and print volumes in the millions, said its developer.

In general, transpromo print services are reserved for in-house data centers within the financial/insurance and medical vertical markets and large print-for-pay service bureaus, such as Crawford Technologies, DST Output, and O’Neil Data Systems, the latter of which boasts a trio of HP inkjet web presses: a 20-inch-wide T200 model, a 30-inch T350, and a 42-inch T400 installed last year. For transaction/direct mail printers, the ability to place four 8.5x11 inch images across the T400’s 42-inch web significantly increases throughput. For shops with 20-inch finishing equipment, the digital press can be equipped with a slitter that allows two 20-inch jobs to be imposed in parallel, and then slit at rewind for feeding into the respective postpress operations.

In fact, about 20 percent of such bureau sites globally produce some 80 percent of transaction print volume, or approximately 18 billion documents annually, PRIMIR reported. For example, Regulus Group (3i Infotech and now part of TransCentra) is America’s largest independent remittance provider and a leading bill processor, receiving and storing some 1 billion images and processing more than 2 billion transactions annually through 10 centers across the U.S. Its blue-chip clients include one-third of the Fortune 50, including several banks. Printing industry heavy-hitters IWCO Direct, QuadDirect, and RR Donnelley Business Communication Services (BCS) play in the transpromo arena as well. From three production sites, Donnelley BCS reportedly outputs some 30 million pages annually for one of its financial customers.

Commercial print case studies of transpromo applications are difficult to find, as most printers cannot afford to experiment with transpromo. The capital equipment investment is substantial; plus, it is difficult to compete with the aforementioned “big boys” on price, Xerox’s Sweeney acknowledged. The exceptions are general commercial printers that have added transactional marketing services by acquiring firms with that expertise and existing accounts, she said, but such examples are few and far between.

InfoTrends’ Hamilton concurs. “I think transaction is a pretty difficult market to ‘dabble’ in,” he noted, “though with the purchase of high-speed, continuous-feed color inkjet by commercial printers, we will see them try to leverage those in transactional applications. I think that will be more likely to happen through market consolidation as commercial printers buy transaction service bureaus, or vice versa.”

PRIMIR measures average monthly page volume rather than page- or feet-per-minute speeds because financial and transaction printing often occurs in bursts: 2 million pages may need to be printed during a five-day period, for example, followed by 25 days of downtime.

In Texas, Broadridge Financial Services prints and mails more than 2 billion images within the first days of each month. Spun off by ADP (Audomated Data Processing) five years ago, the NY-based firm is the de facto provider of proxy voting services to U.S. corporations. Its facility in Coppell, TX, is one of three processing centers that prints brokerage statements. To keep up with such a large volume in such a short time frame, Broadridge deploys some 100 printers between its four locations. Data is digitally printed, then rewound, cut and stacked, or folded inline. Finished output is transported to one of more than 100 inserters of various types. To handle such a wide range of applications, the firm uses a variety of Lasermax Roll Systems feeding and finishing solutions.

Xerox customer Advanced Business Graphics, Mira Loma, CA, produces some 400,000 records per run (3.8 million impressions). The firm outputs trans-informational and trans-educational documents such as benefits explanations and personalized health passports.

Digital Mailbox Impact

InfoTrends expects digital mailbox services to deliver 2 billion paperless transaction documents to consumers in 2015. That figure represents 7 percent of all transaction documents, 19 percent of all paperless delivery, and $323 million in transaction document delivery fees alone. Its forecast shows that from a base of 13 percent paperless delivery in 2010, paperless transactional business-to-consumer communications is expected to grow to 36 percent in the next 30 months (see chart). “While businesses want to see that needle move more rapidly, consumer inertia and resistance to change, among other things, are likely to slow overall adoption,” said Matt Swain, an InfoTrends associate director specializing in document outsourcing. Swain recently presented in June at PostalVision 2020, where he discussed the role of the U.S. Postal Service and what it would look like eight years from now.

“All players in the customer communications delivery value chain will be impacted by digital mailbox services as volumes shift, the economy changes, and new competitors, partners, and suppliers emerge,” continued Swain. “It is critical that companies understand the opportunities that digital mailbox services present and the future impact this emerging channel will have on their businesses.” Existing and announced providers in the U.S. to date include doxo, Manilla, Volly (Pitney Bowes), and Zumbox, which all enable paperless delivery options of multiple types of critical customer communications, among other services.

Released in late 2011, “The Emergence of Digital Mailbox Services: Moving Beyond Online Bill Consolidation in the US” report is based on an extensive analysis of surveys with more than 1,500 consumers; 300 businesses across eight vertical markets; and in-depth interviews with 25 leading service bureaus, billers, financial institutions, and digital mailbox service providers.

“In 10 years, there will still be a segment of the market that values the hard-copy mail piece,” Swain concluded. “Our message to the market is to focus on driving paperless communications for customers that are the next most likely to make the transition. For customers that are unlikely to move from paper-based to paperless, optimizing the printed communication — that is, transpromo — should be their primary focus.”