By Barbara Pellow February 22, 2006 -- Every business owner should develop a written guideline that sets forth the business' marketing strategy. The strategy should be used to judge the appropriateness of each action the business takes. If a company has to take an action that is off-strategy, it may indicate a temporary emergency action prompted by competition or other factors beyond normal management control. Or it may indicate the need to change or revise the company's marketing strategy. This past week, I had the opportunity to talk with Frank McPherson, president and founder of Toronto-based Custom Data Imaging Corp. (CDIC). Frank is one of the most influential people in digital printing. Not only is he on the GATF advisory council and the Digital Printing Council, but he also recognized the business opportunity variable data printing provided and seized it. CDIC opened its doors in April of 1999 and reached profitability in its first year. Frank talked with me about the strategies he pursued as he built CDIC and the modifications he has made along the way. McPherson quickly learned that the agencies were not ready to grasp the concept of personalized and customized marketing pieces. According to McPherson, his wife was the motivating force for starting CDIC. "Before going into business with me, my wife, Sylvia, worked for a financial organization and was looking for a variable data solution. The printers who served the institution’s account at the time told her that none was available. I gave her a book on digital printing one weekend, and we decided to start a business focusing exclusively on variable data printing," said McPherson. McPherson worked to develop a solid business plan and strategy. It included: 1. Identification of the right target market 2. Development and delivery of product and service offerings that meet customer needs 3. The message--a clear articulation of the value proposition 4. Effective selection of media to reach the target audience Target Markets CDIC’s initial market focus was the agency market. In 1999, variable data was truly a new concept, and McPherson quickly learned that the agencies were not ready to grasp the concept of personalized and customized marketing pieces. According to McPherson, "The agencies did not have a clue, and when I started talking about database marketing, they hid." Quickly, Frank and his wife realized they needed to adjust their marketing efforts. They initiated a marketing campaign that promoted what they were trying to sell, custom communications, to a limited number of vertical market segments; finance, insurance and pharmaceuticals. CDIC created a vertically oriented marketing campaign for selected market segments that incorporated variable graphics and text. According to McPherson, "We aren’t sales people, but we knew we could deliver value to customers. Sylvia could talk to corporate marketing executives in their language and I focused my efforts on explaining to the CFO or CEO how variable data solutions could improve return on investment. CDIC also had a strong project manager, Kelly Hicks, that helped get the business off the ground. We built a compelling message that forward -thinking direct marketers could readily see would benefit their bottom line objectives and grow their customer base. During that first year, CDIC closed a major customized application with a large financial institution and the result was immediate profitability. According to McPherson, "Our first three variable data customers are still CDIC clients today." The Right Value Proposition/The Right Products and Services CDIC wanted to ensure it had the right value proposition with clients and that it was perceived as a marketing company and a solutions provider versus a printer. Working within established Privacy Guidelines, CDIC specializes in helping marketers, agencies and advertisers produce highly customized direct marketing campaigns to impact audiences with far greater results than traditional mass marketing can achieve. To deliver this value proposition, CDIC provided an array of services that allow clients to effectively utilize the power of their customer/prospect database, combining it with hybrid printing to provide better more targeted communications. CDIC tells customers that with the right database and messaging, they can demonstrate that they understand customer needs, and then appropriately respond to them. McPherson believes marketing is no longer about selling; it’s about helping people make informed buying decisions. Philosophically, McPherson believes marketing is no longer about selling; it’s about helping people make informed buying decisions. So CDIC’s mission is to help customers break through the media clutter with messages that are personally relevant to the recipient. The product and services portfolio links directly with this mission. CDIC is a full-service house and works with clients from concept through to completion. The first step is to obtain background information on the client’s business and the competitive environment. Within this context, CDIC works with clients to understand their communication needs and objectives--customer retention; sales; acquisition; reactivation--and to ensure that the audience and offering are well matched. McPherson said, "We really talk to the people about the project. We ask them how they did it before and make sure we know what the client wants to get out of it." Data services maximize opportunity According to McPherson, "Data is the DNA of one-to-one marketing." CDIC’s staff works to help clients get the most from their databases. Data services include database audits, data mining, list acquisition, database enhancement, statistical analysis, segmentation, and profiling to help the client correlate the right customers with the appropriate product and service offerings. In addition, CDIC handles database management for clients: data entry, merge/purge, duplicate elimination, pre-sorts, NCOA validation, processing for Canadian and U.S. postal requirements, tracking/measurement and analysis. "Data is the DNA of one-to-one marketing." Designing for variable data printing is somewhat different than for traditional printing. Messages and visuals must be tailored to each individual in a way that will break through the clutter and motivate desired action. The CDIC digital imaging and graphic designers work with clients to develop the design concepts for direct mail programs and take them to final art. Or, if the customer already has a creative team, CDIC will review the concepts as they are being developed to maximize the impact of the communications program and ensure the design is compatible with digital print specifications Once the target segment data and design elements have been finalized, the production process can begin. The production team constructs the data and design files and using digital presses, selectively imprints the content onto each printed page. CDIC has the flexibility to duplex print any number of variable fields as customized text and images in full color or black & white. Quality Control and Security CDIC takes quality control very seriously not only because clients demand it, but because the very nature of variable data printing demands it. No one wants to receive someone else’s mail. From the time the job is received until it is out the door, CDIC has put in workflow and internal tracking mechanisms to monitor each job--and for variable jobs, the monitoring is right down to each individual printed piece. CDIC has also focused on security. CDIC operates from secure premises to ensure the highest confidentiality of projects on-premise and can lock down selected areas of the plant. In . In addition, key systems including data processing are maintained independently of the Internet and intranet to prevent possible contamination. Response tracking The final element is response processing. CDIC collects the responses, handles the caging for payments and tracks results. "Collecting the responses is critical," says McPherson. "Knowing exactly how well a campaign worked is essential to getting the next campaign." CDIC has a track record of delivering identifiable ROI. Response rates in double digits are the rule and not the exception. While McPherson has confidentiality agreements in place with several of his clients, he can share the success at the University of Toronto. CDIC ran the annual alumni giving campaign using targeted direct marketing. By carefully refining the database selects , the alumni association was able to reduce the size of the mailing by 50% while increasing revenues by 30 percent and the number of donors by 80 percent. Promoting CDIC McPherson said, "You have to demonstrate what you can deliver. We promote ourselves through targeted, innovative direct marketing." He cited an example where he sent out a single shoe telling recipients to come to a seminar to pick up the mate. The typical approach for CDIC is using a customized campaign to get recipients to participate in a seminar. The invitations are sent to between 250 and 500 targeted prospects and the average response rate is 18 percent. According to McPherson, "I talk in these seminars as an educator. People listen better when they are being educated versus sold." This approach has worked, because within 30 days of each session, CDIC acquires at least one new customer. People listen better when they are being educated versus sold. Lessons Learned From opening its doors in 1999 until today, CDIC has become a company generating in excess of $3.5 million annually. Projections are that revenues will be up 30-35 percent this year. Even though the company initially adjusted the target market from agencies to corporate marketers, CDIC stayed the course. McPherson believed that they could make variable data campaign marketing work, and they did. When asked about the most important lessons learned, McPherson cited two. "First," he said, "I found out that the printing equipment would not be my source of profitability. The bulk of the revenues are coming out of value added services such as database management, mailing and fulfillment operations." Secondly, he highlighted the need for the right team. Kelly Hicks is an excellent project manager. His wife, Sylvia, knows marketing and how to talk to the marketing executive. Frank, the company visionary, brings strong business acumen and 46 years' print industry experience. McPherson said, "This combination of skills is what has made us successful." Barb Pellow is Managing Partner of Pellow and Partners, LLC. She can be reached at Pellow [email protected]