Expert advice

Jul 1, 2005 12:00 AM, By Katherine O’Brien

Variable data printers share their success stories

Variable Data

What does it take to succeed with variable-data printing? Mike Panaggio, CEO of DME (Daytona Beach, FL), a direct marketing firm, cites a sports analogy. Speaking at a Xerox panel discussion at last year’s DMA conference, Panaggio recalled Dick Fosbury’s pioneering high jump technique in the 1968 Olympics. "In 1968, Fosbury was a laughingstock," said Panaggio. "He was jumping backwards." But Fosbury’s technique enabled him to jump 7 ft. 41?4 inches, good enough to set an Olympic record and win a gold medal. By the 1972 Olympics, all high jumpers had adopted the Fosbury Flop. "That’s what ROI is all about," said Panaggio. "You have to be able to show that [the campaign] works. It’s as simple as that."

You’ll find some familiar names as well as some digital printing newcomers on the following pages. All are setting the digital printing bar a little higher.

DME: Marketing is fundamental
Prior to founding DME (Daytona Beach, FL) in 1982, Mike Panaggio was a securities and commodity broker working for Prudential Bache in Rochester, NY. Two clients, both doctors, had gotten in over their heads with some real estate investments. "But their problem wasn’t money, it was marketing," recalls Panaggio. "Lo and behold, I realized marketing came very easy for me. Before I knew it, I was down in Daytona Beach [permanently]."

Today, DME is a 650-employee direct marketing firm integrating telephony, e-mail, Web-based communications and CD-ROM technology into campaigns for Auto Nation, Toyota, American Express Financial, Microsoft and other customers. DME helps its clients retain existing customers, reactivate former or dormant customers, and acquire new customers.

Panaggio says that while some companies can cite their acquisition budget down to the last penny, many underestimate the importance of keeping those customers. "We concentrate on retention-based marketing," he explains. "We push really hard on that side of the business because it’s the easiest way [for clients] to build a business and keep it strong."

DME’s 11-acre complex features 20 departments occupying 120,000 sq. ft. of office, production and warehouse space. "We’re approaching $80 million in sales," reports Panaggio. "Our margins have been increasing over the last four years to where over 10 percent of our sales is profit. We’ve got an EBITA that’s close to 15 percent."

What’s the secret to DME’s succeess? "We are not just a vendor," says Panaggio. "We want to be a part of our customers’ strategy and then we want to help execute every detail of that strategy."

Panaggio, the son of a college basketball coach and brother of an NBA assistant coach, adds that a sports background has influenced his management style. "A coach has to recruit the right players and play in the right league."

In addition to hiring good employees, DME chooses its customers carefully and emphasizes the fundamentals. "It doesn’t matter who has your playbook—you have to execute it," says Panaggio.

Constant tracking and testing
Proving ROI is another fundamental activity for DME and its customers—Panaggio says tracking results is the best way to determine a project’s success. "In some cases [with new customers], there’s no data, so we have to start from scratch," he explains. "It’s going to take longer to find the right program. Once we get it to work with an acceptable ROI, there’s constant testing. What works today might not work tomorrow, so you’ve got to be ready."

A Jacksonville, FL-based DME division, Red Rocket, tracks ongoing monthly campaigns for a group of auto dealerships. Mailings are sent twice a month—individual dealers can select a four-color personalized postcard, mailer or letter. Dealers then can access comprehensive online reports that show total campaign investment and revenue generated by their sales and service departments. Dealers also can click on customer survey results to see individual respondents’ buying intentions.

"Anybody can give you feedback on response rate," declares Panaggio. "We had to go much deeper than that. We developed reports and programs that let us go into the dealerships’ point-of-sale system, and, on a daily basis, pull all of the transactional information. That gives us some good information, because transactional information (what you bought) is 10 times more predictive than demographic information (where you live)."

DME’s print production highlights include two Halm envelope presses, two Heidelberg presses, 12 high-speed one- and two-color laser printers and four Xerox iGen3 digital production presses. "We begged Xerox to let us open up Daytona Beach [in 2003]," recalls Panaggio. "At the time, the iGen hadn’t been released yet, so there was no way they’d [put one] in Daytona Beach over a bigger city. But we managed to get enough support to do it."

DME started with three iGen3 presses installed over the course of 2003. A fourth machine was installed in 2004.

DME’s keen interest in the iGen3 press was born of a huge production headache. The company had just started doing work for Auto Nation, a coveted direct mail account with locations in 18 states. DME was using Xerox laser printers to overprint on offset preprinted forms customized for dealerships. "The proofing we had to do was maddening," says Panaggio. "We were making mistakes because so many of the forms looked the same. We were losing money on the account and were faced with dropping it or finding a [different way]. That’s when the iGen was just coming out—we begged all the way up the ladder to Anne M. Mulcahey. And they finally gave in."

Panaggio credits a great deal of DME’s subsequent success with the Auto Nation account to the iGen3 press. "Things turned around to the point where we became its main service marketing partner on the retention side of the business. Our business with Auto Nation has grown five-fold in the past three years. That was business we didn’t have before."

The XMPIE workflow software Xerox recommended to DME integrates design logic and data across multiple media, enabling designers to use their favorite software. The system can simultaneously create personalized-response Web sites and associated print pieces with personalized URL links on the fly, during printing.

What’s next on the Web
Panaggio says DME sees more Internet-related opportunities. Earlier this year, DME did a 30,000 piece postcard mailing for two NBA teams to generate ticket sales. The two team’s postcards featured identical elements, but one team opted for a prominent personalized URL for all recipients on one side of the card, while the other team featured a picture of three players. "The response blew our mind," says Panaggio. "We couldn’t believe the response to using a personal URL. It’s such a lesson in direct marketing: People are busy. Don’t distract them from raising their hand and saying ‘Yes, I’m interested in buying tickets from you.’"