Commentary & Analysis
Better Together: VDP and CRM Part 3
by Heidi Tolliver-
By WhatTheyThink Staff
Published: March 25, 2005
by Heidi Tolliver-Nigro The applications were not about getting an immediate return on investment. The companies were simply willing to spend the money on personalized printed pieces to make the recipients feel good about the company. February 25, 2005 -- Over the past couple of months, we discussed how a growing number of companies are using VDP without looking for an immediate return on investment. It is simply used as a CRM tool, to develop and maintain lifelong relationships with customers. Here are a few examples taken from a brochure put out by Custom Data Imaging Corporation: NCR, global leader in relationship technology solutions. The CRM division was launching a new product to international executives. They were holding a two-day CRM seminar to bring the executives up to date on the latest business models. Executives were sent an introductory package with a response card indicating interest in the seminar. The response card had several personal preference questions. The executives who registered were sent a bottle of wine that matched their indicated preference. Other information was utilized to tailor seminar materials for each executive. Ben & Jerry’s Foundation, is an employee-led grant administration organization, funded by Ben & Jerry’s Homemade Inc. The foundation wanted to hold an event to bring together the various groups who are funded by their grants as a way to provide networking opportunities for each organization as well as offer thanks to all of the volunteers. The foundation designed an invitation that was personalized for each individual, thanking him or her for participating in a specific fund-raising vent. To facilitate the organization of the event, the invitation directed the recipients to respond to different planners. The inside of the card thanked the recipient for the event they participated in and mentioned the organization that benefited from the event. Forget ROI What’s fascinating here is that neither of these applications were about getting an immediate return on investment. These companies were willing to spend the money on personalized printed pieces simply to make the recipients feel good about the company. And when you read success stories about CRM, this is often what you hear, as well. CRM (and VDP as a component here) is about fostering customer service, retention, developing loyalty and building relationships. Of course, CRM is a big concept and VDP is a narrow implementation. So it should be no surprise that while many VDP customers are involved, consciously or subconsciously, in CRM, very few companies involved in CRM are doing much VDP. However, smart VDP printers recognize the opportunities. Identifying the "right" customers for VDP is difficult. But because companies enlisting the help of CRM are already thinking along the lines of spending money to personalize communications, foster customer loyalty, and so on, starting with these companies or partnering with marketing firms serving this kind of clientele at least puts VDP printers in the ballpark. Same benefits, same challenges To date, there have been few VDP printers who are systematically targeting this market. Most, even the front-runners, are still busy developing applications, developing infrastructures, and streamlining workflows to keep up with the demands of their customers. But once the implementation phase among these cutting-edge players begins to slow, watch for them to narrow their sales focus and really start to target CRM implementers in their sales strategies. And while many associate CRM only with big companies, a study from AMR Research reports that 48 percent of mid-sized companies (those with less than $1 billion in revenues) are considering CRM. Thirty-five percent planned to implement CRM in 2003. Figure 1: Mid-Market Companies (Less Than $1 Billion in Revenue) Attitudes Toward CRM Source: AMR Research Not that this would be easy, in itself. Implementing CRM is as challenging and uncertain, in many ways, as VDP. Here are a few phrases recently used to describe the challenges of implementing CRM: • "Creating a CRM culture" • "Getting employees to think differently" • "It’s a behavior, not a technology." • "The philosophy ‘If we build [CRM] right, it will sell itself’ is not true.’" • "Managers should expect success if users aren’t sold on the benefits of CRM." The relationship between VDP and CRM is potentially important, but it’s not going to be a slam-drunk. Sounds like what industry leaders have been saying about VDP for the last 10 years, doesn’t it? Thus, there is both opportunity and warning here. Yes, the relationship between VDP and CRM is potentially important, but it’s not going to be a slam-drunk. Both CRM and VDP are born from the same need--to identify more closely with customers, create more relevance and relationships with customers--and therefore they offer similar benefits but also suffer from similar challenges. And according to one report, the promise of CRM is being realized only by a minority of the firms that have invested in it. According to a study done by CSO Insights, only 27 percent of the companies surveyed stated that they were achieving "significant improvements" in their performance as a direct result of technology investments and 44 percent were achieving only "minor" improvements. "On the positive side," notes the report’s author, "this is the highest significant performance improvement rating we have seen in the eight years we have been conducting this survey, and conversely, the 17 percent rating for "no improvement at all" is the lowest we have seen." It is also important to recognize that there are lots of other benefits and goals associated with CRM that have nothing to do with VDP. Among the most common include reducing answering time or abandonment time at call centers; reducing email response times; increasing standardization and reducing redundancy; reducing number of full-time employees; reducing IT costs; increasing productivity of sales people or customer service reps; and so on. Few, if any, of these have much to do with print. And even among those that have do to with direct contact or follow-up with customers, CRM implementers have many options for achieving their goals, including Web sites and the effective use of "cookies," opt-in email, and e-mail newsletters. Cracking this culture, and determining just how to capitalize on the corporate world’s fascination with this concept, will be one of the challenges going forward for VDP specialists. Perhaps this is why many highly successful variable data printing companies don’t mind heading up seminars on variable data printing. It makes them look good to their customer bases ("See? I’m an expert in my field"), while not jeopardizing their position by giving away secrets. It’s not something that is easily duplicated. It’s a business philosophy that has to be carefully cultivated, starting at the top, and carefully populated with managers, executives, and sales personnel who carry on that understanding and philosophy throughout every layer of the printing organization. These personnel can then communicate this vision to clients with a similar vision, and marrying the two is about like hitting it off on a blind date. But it happens.