Commentary & Analysis
Customers Don't Buy Return on Clicks
By John Giles September 28,
By WhatTheyThink Staff
Published: September 28, 2006
By John Giles September 28, 2006 -- There is a fear among marketing types that printers will turn VDP into commodity work based only on printing costs and not on value. If printers are going to succeed in variable data printing, they need to quit thinking like manufacturers and start thinking like marketers. Marketing companies and advertising agencies that take a VDP concept to their customers to help them increase their revenue are making the real money in VDP. The printing is only one small--and let me emphasis small-- part of the total value of the job. The marketers are selling the job based on the customer’s return on investment and value, not on click costs. Printers have to understand that customers will pay for additional services because they make a VDP project successful. Printers have to understand there are other important processes that make a VDP job successful and that customers will pay for the additional services because it makes the VDP project successful. Other chargeable functions include licensing fees for VDP campaign ideas, services such as creative and copywriting, template creation, data processing, post-mortem analysis, and project management. If the printer is can't do these functions or add value to them, the probability that the VDP project will fail increases. Printers must understand that VDP is more than just mail merge. Ahh, the Free Mailing Strategy! The business plan of too many printers considering VDP is to be the low-cost provider or to give away some services free to get the business. One printer recently told me he was going to give away the mailing list for free to get the job. Another told me he was going to provide free mailing so he can close the sale. Rather than concentrating on explaining to the customer how VDP can increase the customer’s revenue, the printers are concentrating on how it will cut printing costs. This business plan can work if VDP is the single focus, but too many printers are custom job shops attempting to manufacture any printing request for a customer. Having too many products to sell makes it difficult to become the low-cost provider. Printers also have to understand the costs involved in VDP, but many are surprised at the cost of the VDP software programs and web-to-print services that may be required to be successful. They don’t understand the kind of personnel needed to make the software work. If a printer wants to move past mail merge--which is quickly becoming a commodity priced service--they will have to make an investment in software, personnel and web-to-print services. And those investments will only handle the manufacturing side of the equation. Beyond Marketing 101 Printers will also have to learn about marketing. They will have to be market experts that clients can rely on for marketing expertise. They’ll have to help clients plan market strategies. They’ll have to understand offers, timing and building a relevant list. If a printer wants to make money, they have to move beyond the manufacturing philosophy of cost plus and into a system that will actually measure the success of a VDP project. We see a lot of people out selling VDP now. Will they be selling it in a year? Will their customers keep buying if the project isn't successful? Will they drive down prices? Will they give away services that others charge for just to get the printing job? There are a lot of questions about VDP right now. Printers who want to make money have to move beyond a cost-plus manufacturing philosophy into a system that will actually measure the success of a VDP project. VDP services are not a “one size fits all” solution. Successful printers understand there are different levels of VDP. There are different customer needs and different needs require different production capabilities. Partnering with different trade services will help a printer be able to handle a VDP project of any size. Success isn’t going to come to the first ones to buy the VDP solutions, software and hardware. It is going to come to those printers who can help a client be successful with a VDP solution. It will be the printer who develops a special niche where they become an expert in helping a client increase revenue. Maybe the job will be produced in house. Maybe it will be jobbed out to a for-the-trade printer partner. It will be difficult for a small printer to offer all VDP services. Partnering is a good solution. As with color printing, there is going to be an explosion in VDP capacity within the printing industry. Just because you know where you can get low prices doesn’t mean you have to pass those low prices on to your customer. VDP is so new that most customers won’t even know they need it until you explain it to them. Don’t give your intellectual property away. VDP provides excellent ROI for the customer. It can provide tangible results to your customer’s bottom line. The people that are going to make money aren’t the ones who sell it at the lowest price, but the ones who bring a new service to their customers and sell it for its value.