by Barbara Pellow July 28, 2003 -- Last month in On Demand Journal, I identified what I consider to be the ultimate digital color opportunity. Profitable digital color business communications providers are focused on the "killer application" that incents their customer base to use digital color variable data programs again and again and again. It is simple to use Internet-based templates that put marketing power in the hands of dealerships, agents, franchisees, or remote sales reps to help them grow and expand their business with a more personalized message. Dealers, resellers, and franchisees want to customize materials and campaigns to meet their own needs that could mean dozens of variations that compromise brand identity. Major corporations are investigating digital collateral management solutions that allow a firm's corporate headquarters to create marketing or collateral document templates with certain locked-in features while still allowing local and regional offices to customize some content. I had the opportunity to interview Brett Knobloch, Executive Vice President of JGSullivan Interactive to understand how his company works with digital service providers to develop and implement Internet-driven template-based solutions. Located in South Bend, Indiana and Chicago, Illinois, JGSullivan Interactive was founded nearly half a century ago as J.G. Sullivan Advertising. The company was an early adopter of one-to-one communications techniques and recognized by PODi (Print on Demand Initiative) for work with Vertis on behalf of Whirlpool and others. Knobloch manages a structured business unit, Build-A-Brochure, which provides the ability to deploy personalized materials through a variety of distribution channels. It Starts With Identification of the Right Buyer and Building the Value Proposition While print service providers are consistently told that they need to migrate sales activity away from the purchasing department, this is especially the case with digital collateral management solutions. When Knobloch was asked who the focus of a sales effort should be, he said, "The emphasis needs to be on the marketing executive team. They understand the messaging and the channel structure, and how to best leverage communications." The sales team must develop a strong business case for the marketing organization. In looking at the benefits of a digital collateral management system, the value proposition for the marketing department is four-fold. 1. Reduced cost-With slow economic times and the anticipated impact of the National Do Not Call List, direct marketers are looking for more effective ways to target their best customers. Especially as they migrate "personalized" telecommunications activities back to print, they are opting for smaller name counts, resulting in modest quantities with more versioning. Print applications like personalized postcards are gaining popularity based on their cost-effectiveness, quick turnarounds and higher response rates. Knobloch discussed how Build-a-Brochure helped HON, a large office equipment furniture manufacturer, achieve a significant reduction in its need for large quantities of mass produced print catalogs and pre-printed sell sheets and flyers. Dealers include product information in customized brochures they tailor uniquely for each end customer, right in their showroom office or tradeshow booth. HON actually analyzed the costs of storing, picking, obsoleting and shipping catalogs and found that with a digital collateral management system, they saved 75% of the total cost. 2. Channel loyalty/dealer recruitment and retention - Some corporations are leveraging digital collateral management solutions as a dealer recruitment tool. Firms like York International, a supplier of heating, ventilating, and air conditioning products provide custom capabilities to more than 1000 distributors and dealers. York attributes a portion of its 66% increase in new dealer recruitment to the digital collateral management system. York has a multi-step distribution structure. The corporate headquarters sells to distributors; distributors sell to dealers and the dealers sell to consumers, who are homeowners. If they secure a new dealer for a distributor, that helps sales and ultimately business for York. 3. Improved response rates - The primary objective on any personalized campaign using data base information is raising response rates. Companies want to improve ROI through better targeting and changing what would have been a 2 percent response to 10 percent. Whirlpool was an early adopter of customized brochures. According to Knobloch, "Whirlpool's consumers responded positively to this personal, individual attention. A survey of Build-A-Brochure recipients showed that their purchase rate was 25 percent higher than those receiving traditional product literature." 4. Protection of brand image - One of a company's most important assets is its brand. Customers often evaluate a business on how marketing executives dress their firms. The company's dress is the brand message. If your message is clothed in rebellious red one day and conventional blue the next, the brand is confusing. Presenting one consistent brand to the customer is a challenging task for companies with a large distributed sales force. Corporate marketing executives realize that their brand is their promise to the customer base and are looking for brand templates that make it easy for distribution channels to promote their products, yet at the same time, protect their image in the market. 5. Information currency - With increasingly short product life cycles and frequent product changes, there is always the risk of dealers and franchisees promoting a product or option that is out of date. With a digital collateral management solution, corporate locations can ensure that information is accurate and current. So You've Identified the Right Customer….Built the Value Proposition…But How Do You Implement? One of the key challenges that digital service providers have encountered is building the infrastructure for implementing digital collateral management solutions. Companies like Royal Impressions, Lexinet and Digital Marketing Inc. invested heavily in the development of custom application software to support their unique systems. It requires a pool of technical software talent for the initial development effort and on-going maintenance as well as investment in an array of application software tools. The service provider needs to set up the Internet infrastructure; understand databases, and in some instances, provide mailing databases; offer content management support; handle order entry; provide high quality printing and manage fulfillment operations. These capabilities are typically not core competencies for most printers. JGSullivan Interactive caught my attention because they actually have an ASP model for printers to deliver digital collateral management solutions. Application Service Providers (ASPs) are third-party entities that manage and distribute Web-based services and solutions to customers across a wide area network from a central data center. In essence, ASPs are a way for companies to outsource some or almost all aspects of their information technology needs. While JGSullivan Interactive handles the infrastructure for digital collateral management through its Build-A-Brochure program, customers identify the printers that they want to use for production, kitting and fulfillment of direct mail pieces and other marketing materials. JGSullivan charges an initial fee to the end user to get the system up and running and for the initial programming that has to be done. There is also a monthly hosting fee and maintenance fee. The hosting fee covers the data base services, customer support, management of the digital assets, and the cost of running the program. Maintenance charges can be purchased for copy and design support or customers can pay for updates on a per hour basis. JGSullivan also provides toll free phone, e-mail and live chat customer support for the remote agent or franchisees. As digital color becomes more affordable for both printers and their customers, "time to market" for digital collateral management systems will become critical. For the print service provider, the ability to "rent" ASP infrastructure as opposed to building and maintaining the system may accelerate profitability. I asked Brett Knobloch how a printer could engage JGSullivan to deliver a total system. JGSullivan indicated that if the printer had a prospect for these types of services, the following options were available for the print services provider. 1. JGSullivan will act as a consultant to the printer when a client opportunity presents itself. The print service provider can contact JGSullivan for advice. 2. JGSullivan has a client needs analysis document that will help sales teams scope the project. It helps the sales team ask the right questions and appear knowledgeable in front of the customer. 3. On-line demos and WebEx sessions can be conducted with JGSullivan for qualified prospects. 4. JGSullivan is willing to provide sales support and analysis to help close the sale. 5. The printer has the option of using them as an anonymous partner or can work visibly with them side by side 6. JGSullivan will bill the client directly or pass it through the printer…whatever the printer chooses. There are clearly several options available to printers today to develop and deliver digital collateral management systems. While early adopters of digital color have built their own solutions with an array of software tools, the option of an ASP solution is clearly a time-to-profitability alternative. The benefits for the digital print service provider are clear: * The printing firm gets a "time to market" advantage versus investing its own capital to build a solution over years. They have immediate access to a system that has been proven and tested with the experience of the multiple users. * The printer aligns itself with an advertising partner that has experience in the space - and can "talk the talk" of marketing executives * The printer saves dollars by not investing in all the IT, database and Web infrastructure, as well as template composition skills, and ongoing maintenance of a proprietary solution * The delineation of revenue streams is clear. The ASP provider is paid for software, hosting and application maintenance, while the printer receives revenue from printing, kitting and fulfillment. A digital collateral management solution is clearly the "killer application" for digital color. The key factors for success are identification of the right customer; building the value proposition; and implementing a system. With today's technology, or partnership relationships with ASP providers, the solution is more easily within reach.