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Quebecor World Direct--Building Business, One Client at a Time

June 2000
From six individual companies (and eight original plants) to a unified, centralized and highly successful operation (it's No. 1 in personalized products and high-security, promotional games), Quebecor World Direct has emerged from the acquisition aftermath with a market-driven focus, new state-of-the-art "Mega Facility" and innovations that include a next-generation Internet sweepstakes device.


BY CHERYL A. ADAMS


Like the old Smith Barney line: We build our business one client at a time," says Mike Graham, senior vice president of sales and marketing for Quebecor World Direct (QWD).

One client at a time, QWD has "quietly" become a giant, a global leader, in direct mail marketing products. From six independent companies with eight facilities (all once fierce competitors) to a well-oiled, cohesive operation, QWD strategically positioned itself to become the world's No. 1 printer of personalized products and promotional games.

Quebecor World Direct has grown more than 300 percent since the new management team began three years ago, notes President Ronald Covelli, who says the company's bottom line has increased proportionally more than that. But he emphasizes that this mega-growth did not come easily. And it didn't come from simply acquiring and combining the operations (and revenues) of six different printing companies.

In fact, when Quebecor World Direct was formed through a series of mergers and acquisitions, the newly created company had a huge hurdle to overcome. How would it get these individual printing companies—each with its own products, services, sales teams, operating systems and business cultures—all headed in the same direction, working toward the same goal?

"It was an enormous challenge," Covelli explains. "How do you create a competitive, strategic direction for six unique entities? How do you weave them into a synergistic whole?

"The task was Herculean," he explains. "It meant centralizing the vital functions (all of the components) to drive the organization internally: sales, finance, estimating, scheduling, customer service, programming, plant management and so on. It also meant developing a team of very capable executives who could execute our strategic vision."

As monumental as the mission was, centralizing the company's internal operations was only half the challenge. The second problem Quebecor World Direct faced was what to do with all those customers who belonged to six former competitors and who were now combined into one, huge client base.

The question, Graham notes, was: How could Quebecor World Direct create a customer-based strategy—a single, unified platform—that would satisfy the market demands and needs of the all those clients?

The answer, he says, came in the form of a unique business strategy. "In many ways, the printing industry still operates like it's in the 1950s. It's production-driven," Graham explains. "Fortune 500 companies implemented a market-driven approach years ago. And they are successful because they're market- not production-driven, which is how the printing industry operates."

Typically, printers build their businesses, specialize in certain printed products and force the market to buy those products, adds Bob Barthen, QWD's vice president of Non-Imaged Products. "We do business the other way around: We build our plants and equipment around market needs. We are market- not manufacturer-driven. This is a very important distinction."

Since QWD's creation in 1997, Barthen says all of its activities— mergers and acquisitions, equipment purchases, management decisions and business operations—have proven that the company is dedicated to its mission of market-driven operations and customer-focused business.

"What makes us so unique," Barthen notes, "is that we see what the market needs, and we build equipment, products and services to meet those needs."

To prove this point, Quebecor World Direct recently restructured itself into three product lines:

  • Personalized Products;

  • Non-imaged Products; and

  • Games, Premiums and Specialty Print.


Executives say the restructure will benefit QWD's customers because the company's emphasis is now on sales and marketing (vs. the manufacturing/production process). Changes in the marketplace, as well as in the needs of customers, will dictate the focus and direction of each product line.

In its quest to serve customer needs—and serve them all under one tremendous roof—Quebecor World Direct will be opening a new Mega Facility, in Effingham, IL, in just a few weeks. By summer's end, this enormous, state-of-art plant will be fully operational.

From shifting its focus to restructuring its operations to the opening of its new Mega Facility, Quebecor World Direct is making waves—and making news—in the commercial printing industry, namely the direct mail market.

Interestingly, in the direct mail business, the printing is secondary, according to Chris Locker, vice president of the Personalized Products line. With the multitude of other value-added services that are now required in personalized products, he says printing (the process itself) is of secondary concern to customers. When it comes to personalized mail products, Locker claims putting ink on paper is not nearly as important as the compelling, one-to-one marketing messages, the "bells and whistles" and the "unusual" art/design elements—all of which increase the odds that the product will be noticed.

"You're competing in the mailbox with everyone else," he says. "Our products get noticed. The consumer sees our piece. They open it. That's half the battle." The other half is getting a response.

Inside the envelope, Round Two in the direct mail battle takes place. The same compelling messages and graphic attention-getters, which got the recipient to open the mail, must now—in a grander fashion—hold the recipient's attention and generate that all-important response.

Getting a response is the objective of the personalized mail product; it's what direct mail is all about. The success of the business (for both the marketer/printer and the client who's doing the mailing) depends on the rate of response.

Quebecor World Direct has built a business around this objective and has devoted an entire product line in its Holy Grail quest to create the perfect, personalized mail product.

Personalization Power
Personalized Products is QWD's fastest growing product line.

"I'm not just interested in printing my customers' direct mail packages, I'm interested in improving their results and, therefore, giving them better value than their competitors," Locker says.

When Quebecor World Direct sells a direct mail package, the deal is not based on the price of the job. Although, it does offer a competitive price, and in some cases a substantial cost savings, to its customers, simply due to its enormous size. But Locker says there is no real value in selling a package on price alone.

"So we build the Mercedes, with bells and whistles," Locker explains, "and we will test it against [the client's] control package. We might win in response, but lose on cost. But that's not a bad position to be in because, ultimately, we've found a way to increase our customer's response rate.

"We always test our very best package," Locker boasts. "We can back-test elements to keep response rates up and lower cost per thousand. We test to find out which elements are working, which ones pay their own way."

A Loaded Toolbox
Obviously, personalization is more than just splashing a person's name across the paper. And, while Locker says it's important to do that, there also has to be a compelling, one-to-one marketing message that is driven by that specific person's file—his or her personal information, info that is unique to that person. The right message has to be created and the right offer has to be presented to the right person.

"The power of personalization is that you really are given the ability to market to the individual, creating a marketing message just for that person," Locker adds. "That's the flexibility that we feel is our strength at Quebecor World Direct. We know personalization. And we can show clients how to use it."

It's QWD's unique understanding of the direct mail market that is directly responsible for its success. Locker explains that one of the main reasons the company is number one in this area is because it can match solid direct marketing principals with its highly diversified, specialized equipment.

Locker credits senior management for putting a lot of thought into the market and, based on input from customers, investing in a wide range of web press and finishing line systems.

Exactly how diverse and specialized is the equipment? Locker says presses and finishing lines start out with blank rolls and come off the other end as finished, direct mail packages—which are printed, imaged, ZIP sorted and ready to go into the mail. And, he says, this can be done with one or two rolls of paper; consequently, QWD can create complex formats.

With mega facilities full of high-tech printing and finishing systems, QWD offers products that run the gamut—from short run to long run, from double postcard to complex, multi-part, personalized products.

"And, we're a damn good printer, too!" Locker emphasizes. "We print four-color process, lithographic, which is the standard in quality. We're experienced craftsmen and a quality commercial printer, not just the number one direct mail marketer."

Not only is Quebecor World Direct the world's leader in direct mail marketing, it's also the number one producer of high-security, promotional games and coupons, a product line that grew tenfold in the '90s.

The King of Instant Win
When World Color (now part of Quebecor World) acquired Dittler Brothers in 1997, it acquired the largest promotional games manu-facturer in the world—one known globally for its ability to provide high-security games, where winning tickets couldn't be duplicated or wouldn't "disappear" off the line.

"Clients can sleep at night knowing that their high-level promotions are being produced by the most experienced games manufacturer in the country," says Mark Davis, vice president of the Games, Premiums and Specialty Print product line, and former part-owner of Dittler Brothers. Davis has been involved with promotional game technology since the early 1960s.

In 35 years, he and his firms have served a multitude of clients, including some of the biggest promotional game "players" in the world—such as R.J. Reynolds, which recently received delivery of what Graham claims is the largest print order in history, 3.5 billion game pieces.

With such mega clientele (and such mega millions on the line), Davis says R&D is a critical part of the promotional games business.

He says QWD is one of the few companies that has an "active, dedicated and pioneering R&D staff" to develop promotional game formats. As an example, he points to the company's development of temperature-responsive inks, lenticular printing and other innovations, as well as its latest move to the Internet.

E-drive Your Business
One of the company's most recent initiatives is the development of an Internet format for promo-tional games, known as e-drive.

The consumer takes one of QWD's e-drive computer pieces and logs onto the promo advertiser's Website to decode the game piece. Consumers can find game pieces in direct mail packages, newspaper or magazine inserts or point-of-purchase material.

The future holds excitement for marketers and customers alike, Davis says, as QWD's R&D team continues its efforts in e-drive Internet promotions.

"Keep an eye out for significant innovation in promotional games product offerings," he states, referring to a soon-to-be-released QWD product. Apologizing for being guarded, Davis says, "Look out for this next-generation e-drive, which is already in development and slated for debut this fall."

The future will also hold excitement for the Games product line itself, Davis explains. As part of the Quebecor World organization, from which the Games products receive tremendous corporate support, the product line is "virtually assured to be a success." By leveraging R&D and investing in high-tech equipment, he reports that the line will soon double its capacity to manufacture game labels.

"As Dittler Brothers, we were the largest promotional games printer in the world," he says. "Now, as part of the largest printing company in the world, the amount of attention and support that we get from Quebecor World, the entire organization, is fantastic. We are sure to have a very bright future."

The last (but certainly not the least) of Quebecor World Direct's three product lines is Non-imaged Products. The largest of the three product groups, Non-imaged Products generates the greatest volume and profit for the company.

Non-imaged Products
"Non-imaged, or non-personalized, products made up the backbone of the direct mail business up until 10 years ago," Barthen explains. "That's when the direct mail market started looking for a narrower, more demographic focus. With that was the advent of personalized products. And, since then, personalized products have grown at a tremendous rate."

While non-personalized products have grown at a "moderate rate" (when compared to personalized ones), Barthen says non-imaged products are still the backbone of QWD's operation, representing about 65 percent of the company's core business.

Encompassing an entire array of products—from order forms and bind-in cards to mail package components to directories and timetables—Barthen says Quebecor World Direct has seen steady growth in its non-personalized business.

Using its Non-imaged Products line, he claims Quebecor World Direct has been able to expand upon customers' requirements and has created a platform to educate them about the value of targeted, demographic mailings (which expands business into the Personalized Products line).

Barthen emphasizes that this should not sway advertisers from non-personalized products; this line does continue to see growth. However, he says QWD is structuring its business to allow itself to shift with the market as it changes. And, he predicts that the percentage of non-imaged to imaged products will shift significantly over the next five years.

Whatever the outcome, Barthen says Quebecor World Direct will continue to cultivate both markets (as well as promotional games), and he predicts continued success in each market—and the overall success of QWD as the world's leading direct mail marketer.

How can a company (even a mega-corporation the size of QWD) so confidently predict its own success, especially when other printing industry consolidators have not been so successful in similar quests?

The answer, Graham says, is that "Quebecor World Direct doesn't operate like other companies. We have a centralized, single-focus operation and a market-driven, customer-based approach that has allowed us to be successful where other printing consolidators have failed."

"With all the consolidations, all the independent printing companies being brought into large corporations, the large corporations have found it difficult to develop a single focus," Covelli interjects. "At Quebecor World Direct, we were successful in taking leading companies and integrating them into a system that has a single focus—one that satisfies what our customers want, need and value in growing their businesses, as well as the markets they serve."

"We're successful because we provide innovative products and allow our customers to maintain a leading edge over their competitors," Graham concludes. "It's a win-win situation. We're building our business one client at a time."


Countdown to M&A

Before 1998: World Color runs four manufacturing facilities to serve a generic direct mail marketplace: the former Wessel plant, in Elk Grove, IL; the former ISA Direct plant, in Aurora, IL; the web insert plant in Gainsville, GA; and the former William Feather Co., in Oberlin, OH.

March 1998: World Color buys Dittler Brothers, gaining entry into the highly sophisticated, highly personalized direct mail marketplace.

July 1999: World Color and Quebecor merge (the largest acquisition in commercial printing history), creating Quebecor World and the large Quebecor World Direct division.


Rise of The Mega Facility

To meet the needs of its direct mail market customers, and meet them all under one roof, Quebecor World Direct created a new Mega Facility in Illinois, affectionately known by Direct division employees as the Effingham facility. Scheduled to be fully operational by summer's end, the 600,000-square-foot facility is packed full of the latest in prepress, press and finishing equipment, including:

  • A Creo CTP system;

  • Six 8/11-unit, double-web, dual-drive presses with in-line finishing;

  • Eight 8/9-unit, double-web, single-drive presses with in-line finishing;

  • Two off-line finishing lines;

  • Scitex imaging capability; and

  • Full lettershop service with 28 inserters, 18 flat cutters, 14 MBO folders and a post office.


"Our customers want value-added services," says Chris Locker, vice president of Personalized Products. "Printers have to be able to provide these services, the value-addeds; they want more than just printing. Our Mega Facility will provide these value-added services that are being required by customers who want to reduce their supplier bases, and want everything done by one company, under one roof."


Scratch-Off Fever
(A Brief History of Promo Games)

A promotional game is a promo that drives consumers to purchase; it should not be confused with the "lotto ticket."

And Mark Davis should know. Former part-owner of Dittler Brothers (now part of QWD), Davis has participated in the growth of the promo game market since its infancy in the early 1960s. Then, his primary contest clients were gas stations and grocery stores.

At the time, the material used to conceal the image on a game piece was removed via a moist tissue, which was messy. Davis says customers wanted something better. So, in the mid '60s, the company invented a removable latex coating, which is commonly referred to as "scratch-off."

The number of customers and variety of game-play formats grew in the 1970s and, in 1973, Dittler Brothers produced the first state lottery ticket using scratch-off. Business continued to grow in the '80s, with the bulk of the customer base becoming quick-service restaurants. It was the unique needs of the fast food industry—to have game pieces attached to food packaging items, i.e., cups, bags and sandwich boxes—that led the company to another innovation: the promotional game label (which, for the first time, says Davis, incorporated fully variable, computer-generated imaging).

In the 1990s, QWD's promo game business flourished, increasing tenfold in a decade, Davis reports. And that business continues to grow stronger today.
 

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