By Barbara Pellow The statement offers a tremendous consistent communication opportunity to reduce call center activity and associated support costs. May 24, 2004 -- Transaction documents have typically been viewed as a core business application and an important customer communications tool. Contracts and order documents, receipts and delivery notices and statements all play an important role in the information value chain. With the emergence of affordable high-speed digital color technologies, print service providers are now working with clients to expand their transaction printing business into a direct marketing opportunity. Corporations are beginning to generate color-enhanced transaction documents InfoTrends CAP Ventures studies done over the past several years indicate that the impact of color is real and measurable. On time payment of invoices increases 30 percent when color is applied and the attention span of the recipient is as much as 82 percent longer. Digital print service providers are reaching the realization that transaction document re-engineering can open new digital color business growth opportunities. Additionally, transaction printers see the ability to leverage their current business model as a platform to help them migrate into profitable direct marketing applications. The Value of a Statement DST Output, a subsidiary of DST Systems Inc., is working with its customer base to help them leverage their billing statements as marketing tools. DST used to be viewed as a billing statement print and mail supplier, but the company is now focused on the ability to create personalized communications that connect corporations with their customers. DST Output is the largest First Class mailer in the U.S., with three mega-production centers in Eldorado Hills, California; Hartford, Connecticut; and Kansas City, Kansas. The company controls more than 1.5 million square feet of production space. Its three thousand-plus associates produce more than 9 billion images annually and 1.8 billion mail pieces representing nearly 2 percent of U.S. Postal Service First Class mail volumes. In 2003, DST produced more than 12 million full color digital images. In addition, DST uploaded more than 183 million e-statements and processed more than $800 million in electronic payments. The Document Transformation DST Output is a market leader in statement production in five key industry segments including cable, telecommunications, insurance, healthcare and financial services. According to Wes Ervin, media and public relations manager, DST's view on these market segments is one of convergence. Historically, major corporations sent their customers transaction documents (statements), direct mail (promotional material) and general customer communications (newsletters and information). These were viewed as very distinct document types with very different functions. But today, there is convergence in these three functions. The lines are blurring and the barriers are breaking down. The Drivers of Change The rationale for change is four-fold. First, in the face of 2003's challenging economy, corporate marketing budgets were slashed. Additionally, when it comes to customer communications, postal expenses are a major component. To the extent that a single document can be used for marketing, education and communication without changes in service level, there is a significant opportunity for corporate cost reduction. Effective white space utilization on a statement can trigger an improved response rate that increases sales, improves retention or enhances service. Secondly, statements can be used as a front-line customer service tool. The statement offers a tremendous consistent communication opportunity to reduce call center activity and associated support costs. Because the information is communicated in a document that is actually opened by the customer, the call center can focus on providing real service as opposed to dealing with customer irritation due to service changes that the customer neglected to read about in a separate direct mail piece or newsletter. The statement can also be used as an educational vehicle incorporating charts and graphs that explain usage patterns. This further reduces reliance on support centers. Third, corporations know that the statement is a document that the recipient opens. Statements require action and recipient attention. Effective white space utilization on a statement for a new offer can trigger an improved response rate that increases sales, improves retention or enhances service. Firms like DST Output, are currently producing cost-effective, high volume full color applications using a blend of technology. Fourth, color is a big driver of change in the statement market. Historically, there were two barriers to the rapid spread of color in the billing and statement market. The cost was too high relative to lithographic printing and monochrome digital printing. And the quality was marginal. With a blend of electro photographic and inkjet technologies, these issues have been addressed. Firms like DST Output, are currently producing cost-effective, high volume full color applications using a blend of technology. These devices offer color quality and affordability that would not have been feasible even two or three years ago. An Application Example DST Output shared a specific example from a leader in the defined-contribution retirement planning industry. This firm worked with DST Output to converge a traditional litho newsletter with the quarterly transactional document. In the past, the company produced a quarterly statement, printed in monochrome on plain white paper that averaged 9-12 pages. In addition, the company produced two quarterly newsletters – one for plan sponsors, and another for plan participants. They were litho printed and mailed in bulk to plan sponsors, who in turn, at their discretion, distributed the newsletters to individual plan participants. Most newsletters were four pages; sometimes they were as many as eight pages. There was no customization--all plan participants received the exact same document. In light of the availability of new technologies, DST Output worked with the company to re-evaluate this approach. The statement was redesigned as a full-color application and streamlined to a 2-page summary. This shorter version summarizes key information, emphasizes results using full-color charts and coding schemes, and adds messages to help plan participants make informed decisions about their investments. The 4-8 page litho-printed newsletter was transformed into a 2-page digital version. Those two pages became pages three and four of the new communication. The key difference is that content is no longer static--the digital content can be versioned according to plan type. And the content can be personalized. The real benefit for the client was more for less. The cost of litho printing, shipping, processing and distributing of the newsletter was eliminated. Postage was almost cut in half since the new combo mails at less than an ounce. The call center volume was reduced resulting in shorter wait times and elimination of the need to add staff. The newsletter information had a guaranteed and timely distribution since it was now mailed directly to plan participants. And finally, while the cost of full color digital printing is more on a per image or per page basis, the page count has been cut in half, leading to the sharp reduction in mailing costs. Leveraging Statement Success to Build New Market Opportunities When Giovanni Antonnuzzo, Paolo Bandecchi and Giorgio Albertini founded Rotomail five years ago, they faced a tough market with well- established competitors. They looked for a business opportunity with untapped customer demand and identified a niche for providing invoices and statements in full color. With this target market in mind, Rotomail launched an ambitious action plan and growth strategy. Today, annual volumes exceed 250 million pages and at drupa 2004, Milan based Rotomail ordered its 6th Versamark system. Once Rotomail secured a strong presence in the financial services market, the company searched for new business to fill in the gaps between peak statement production periods. Rotomail realized that there were pitfalls in servicing the financial services sector. Clients in this sector typically communicate with customers during the same time period each month and each quarter. This created peaks that required careful production management. There was also a need to identify applications that would more effectively balance the workload over the month. support clients by mining data and building better business communications in documents the end customer is going to open and read. A golden opportunity emerged in the tourism sector with Costa Cruise, the largest cruise ship line in the Mediterranean and Latin America. Costa Cruise is part of the Carnival Cruise line and operates 11 cruise ships holding up to 3,000 passengers each. Based on Rotomail's skills with digital color transaction printing and data base management, the company secured the opportunity to print all tickets, booklets, and vouchers for Costa Cruise. Prior to a holiday cruise, passengers receive a booklet containing their personalized information. As each cruise is being booked, the reservation department at Costa Cruise sends Rotomail a daily, structured file with the relevant information for the particular trip. A unique booklet is created with vouchers, itineraries, sightseeing tips, maps and flight tickets. Rotomail prints 1000 to 3000 customized booklets in seven different languages every day. In addition, they use the color capability of the Kodak Versamark to generate personalized luggage tags that match each ship's color scheme. The Future leverage electro photographic and inkjet technologies in combination with application re-engineering to build new and profitable businesses Marketers are looking for retention, loyalty and more revenue per customer. DST Output is focused on producing a new breed of bills--to help clients leverage digital technology and gain marketing advantage without incurring incremental costs. They plan to support clients by mining data and building better business communications in documents the end customer is going to open and read. Rotomail has developed successful a digital color transaction business and sees the opportunity to leverage technology to expand its business into a broader set of direct mail applications. As transaction printing providers evaluate the future, the key for them is to leverage electro photographic and inkjet technologies in combination with application re-engineering to build new and profitable businesses that take advantage of both the available technologies and emerging customer demands.