Mailing Services -- Diversification DevoteesAugust 2003
Lack of Competition
"Through our research at that time, we discovered that 67 percent of everything printed was mailed or shipped in some form," Metzger points out. "We also learned that there was one mailer in town for every 25 printing companies. Therefore, we knew the competition was less fierce. We had experience in entering new service offerings or markets, so we were not afraid. We knew it would work."
The printer met with its top 50 customers and found out that most of them would use Metzger's mailing service if they could realize a cost savings and an increase in turn time on their projects. "We set our business plan to fit our customers' needs," he adds. "They always want services faster, better and cheaper. And they want to work with fewer suppliers. So, everything added up to pull the trigger on getting into the mailing business."
The plan fired on all cylinders. Not only was Metzger's able to sell mailing services to existing printing and prepress customers, it also found clients who needed prepress and printing services to go with their mailing needs. But Metzger warns that it is not an out-of-the-box venture—it took pounding the pavement and educating customers and prospects on the new service.
Metzger's looked for every possible angle during its startup process, getting as much free training as possible from suppliers to augment the in-house computer training and tutelage from the U.S. Postal Service. "The ramp-up process was brisk and quick," he says. "Knowing the software and how to work with databases are critical. The postal service will do a lot to help with training and education. You just have to ask for it."
A well-defined business plan enabled Metzger's to justify the addition of a new capability, and its lender was more than happy to come on board with the project. "There is a lot more room for error, and a lot more responsibility on our plate," Metzger says. "However, if we do our job right, we keep our customers very happy. And we continue to grow our business by over-servicing clients and bringing value to our relationships."
Metzger cautions not to follow the "if you build it, they will come" mentality toward adding mailing, or any other product or service, for that matter. Existing customer needs should help dictate which direction your company takes, he says. "New services are great, but great customers and great salespeople are key in tough business conditions."
Allowing customer needs to set the pace was a major motivating factor that prompted Meredith-Webb Printing, of Burlington, NC, to enter the mailing business. An $18 million sheetfed printer that opened its doors in 1952, Meredith-Webb primarily produces high-end promotional work for a variety of customers, including financial and educational institutions.
One of its major customers, R.J. Reynolds, found itself encumbered by new laws that restricted tobacco advertising. RJR decided to concentrate its marketing through direct mail, according to George Webb, president of Meredith-Webb, and the printer was tapped to provide high-end, multi-color work to be mailed.
"We couldn't find mailing equipment at that time," Webb says. "We made some equipment ourselves while trying to learn the business."
Meredith-Webb leveraged its direct mail capabilities to sell existing clients deeper, especially retail customers. Once it partnered with a supplier of mailroom equipment—a $700,000 investment—the printer found that a heavy learning load lies ahead.
"Printers who get into it will be surprised at what it takes to be a top player in the mailing segment," Webb says. "There is a big learning curve if you're going to be a major player. And we constantly study how we can improve our capabilities."
Mailing and Moving On
Some companies find that annexing a new capability is not only good business acumen, but essential to their overall viability. Print Tech, a quick printer based in Mountainside, NJ, found that adding mailing services was indeed essential to its survival, according to Chris Baker, executive vice president.
Print Tech, which celebrates its 25th anniversary this year, has been offering mailing services for the past eight years, with many jobs revolving around the pharmaceutical industry. Previously, Print Tech would take care of the printing, then hand the job over to an outside mail house. It was a method that, at times, proved inflexible for customers.
"We felt stuck between a rock and a hard place—trying to produce something in a time frame along with the mailing house," Baker notes. "Clients were clamoring for greater flexibility. They weren't used to working with mail houses that would schedule jobs way in advance, and it became an issue of whether that mailing deadline could be met. If you were a couple hours late on a given day, you were bumped back a couple of days, depending on how heavy the mail house's schedule was.
"A lot of the bigger mail houses were dealing with very large clients that were mailing on a consistent basis and had specific deadlines to meet," he adds. "The mail houses would fit our clients in on an as-needed basis, as opposed to really listening to their needs. So, we filled it by becoming an on-demand mailer as much as an on-demand printer."
Printing and mailing have proven to be mutual catalysts for Print Tech, with each driving additional business to the other. Mail services alone have bolstered sales by 25 percent, according to Baker.
Mailing represented a major shift for Print Tech, with a considerable learning process. According to Baker, it took roughly 18 months to master the USPS rules and regulations, and to handle high-volume jobs.
Money Well Spent
The financial investment was relatively substantial, as well. "Mailing equipment is not cheap; the investment was a major consideration, but it was necessary for us to capture a large part of the market that we were in danger of losing," Baker states. "Other mailing houses around us are starting to offer printing, taking business away from us. If we didn't move into mailing, we wouldn't be where we are today."
As an alternative to starting a mailing operation from the ground floor, Baker suggests examining prospective mergers with mail houses that are seeking to add printing to their arsenal.