Sector report: Lettershops

 

Lettershops have long been the overworked, underappreciated workhorses of the direct mail industry. Direct marketers love to talk about the data, about the creative and then, hopefully, about the results but, though any good marketer understands that the magic is in the details, that final step before a campaign hits the mail rarely receives the attention that it deserves. Lettershops are expected to get it exactly right, every time—and cheaper and faster too, thank you very much.

For this month’s sector report we meet with a variety of lettershops in the Greater Toronto Area and it was remarkable how clearly differentiated each company has become. Beyond variations in size and services, each company was keenly aware of their niche within the industry and focused on the evolving needs of their clients.

“It’s a great time to be a lettershop!”

 

Walking into Marketing Kitchen feels more like visiting a creative agency rather than a classic lettershop. From ornate chalkboard art to fun photos of employees blown up on the walls, its clear Audrey Jamieson, owner and president, is out to do things a little differently.

“The company I purchased had great bone structure,” says Jamieson. “It had nice workflow, it had amazing people and it had a fantastic client base. What they were not doing was that they weren’t really evolving with the times.”

Since purchasing the company in May of 2014, Jameson has upgraded the software and security protocols, as well as bringing in colour digital print capabilities, including the digital colour envelope printer, and a handwriting machine. “I was able to service the existing client base with the tools that they had and then as I grew that client base I sort of organically added more machinery, technology, people and experience.

“It’s all about the customer and the customer experience,” Jameson continues. “It has to be seamless. The goal is that they never have to ask for anything other than a quote—everything else just lands in their lap when they need it, everything’s taken care of and we really help them do their job.

“We want to be there for our customers to say, ‘we’ve got this. Let us help you on the direct mail side. You don’t have to be a direct mail expert. You come up with the strategy, let us know what you want to do and then we’re going to work with you and ensure that the mail does produce results for you.’”

Jameson has nothing but praise for the continued evolution of Canada Post: “Canada Post is a true partner to us. They’ve got fantastic incentives out there to introduce people to direct mail. And they are innovating. Postal Code Targeting opens up so many doors for us.

“We need to lend the expertise that we have because it is such a crowded advertising world right now with so many channels to choose from,” says Jamieson. “It’s a great time to be a lettershop! You just have to be a little more creative, a little more innovative.”

Security has emerged as a key consideration

“One of the things that we’ve been focusing on and that we believe has changed [within the lettershop industry] is the focus on security,” says John Leonard, vice president of sales and marketing at Cover-All. “For us, that’s a really big deal and that’s a change that we’ve tried to implement over the last five or six years.

This change is driven by the growing understanding of the value of data on the part of marketers, customers and criminals alike. “The increase in data that we as marketers are collecting on [customers], I think that’s making people more paranoid and we need to be more sensitive in protecting this data. I think that’s pushing the requirement to be more focused on data security,” Leonard observes. As we know, in the age of increasingly sophisticated data-driven marketing, it is not unusual for companies to be incorporating not only identifying information such as names and addresses but also significant financial information and other data that is extremely valuable to nefarious types in the segmentation and even the creative of direct mail campaigns.

 “We hold an 27001 ISO certification,” says Leonard. “It’s a third-party certification where there’s a set of about 500 or 600 protocols that we have to adhere to and then we have a third-party auditor come in once a year and spend a few days with us going through everything, right down to how often we change our passwords. We have double authentication to get on to our laptops; our laptops are encrypted at rest so our data is encrypted at rest.

“All these protocols  are something that—10 or 15 years ago you would never have heard of [lettershops doing this]. We believe we’re probably the only lettershop, not in the statementing space but in the promotional space, that has that ISO 27000 certification. For us that’s a pretty big deal.

“It is not sexy to talk about it but we think it’s important that our customers know how seriously we take this. Your database in many cases is your lifeblood and we take it really seriously.”

Classic direct marketing channels converge

 

“There’s a real evolution happening in marketing, in retail,” says Ron Peacock, president of The CF&R Group of Companies. “Volumes are changing. We are seeing so much change in the consumer package goods business.

“I worked for A.C. Nielsen—Art, Jr. himself,” says Peacock. “My claim to fame is, you know the little bar code you see on coupons? I was the guy that developed all that stuff.” The CF&R Group of Companies includes CF&R Services (CF&R stands for contests, fulfillment and returns), The Marketing Resource Group and Bradford Direct, which was acquired through asset purchase in July of 2015.

Sharon MacPherson, who had been with Bradford Direct Inc. since 1994, joined the Group as general manager of Bradford Direct and notes that the transition has allowed her to significantly expand the services offered to their not-for-profit client base.

“When Denis [Brillon, president of Bradford Direct Inc.] was building his business he would get the great big mailings and things like that,” says Peacock. “Those days are gone. Those big mailings are gone. No one prospects with those mailings anymore so, if anyone’s waiting for that—it’s just not going to happen.

“What’s happening is a lot of mail houses are in trouble if they stayed being just a mail house. Then there are the other guys, printers, they want to drive printing and so what are they doing? They are getting in the direct mail business but they just can’t do it because they don’t understand the data requirements that are needed by a lot of clients. Some of the things we do are very unique.

“There isn’t anything we won’t do in the marketing services field,” concludes Peacock.  “We’re evolving into a company that can do everything, anything and nothing—because sometimes you don’t have to do anything the business just comes to you. If we can support the Big Data requirements that our clients are requesting, both in the non-profits and the consumer packaged goods business, our business is going to grow.”

Lettershops must find unique ways to add value

 

“Integration—that word’s never gone away but there’s just so many more things that people can bring in that value proposition,” says Debbie Major, president of the Data Direct Group. “A lot of people can jump in from a lot of different places and bring value. And not everybody has to look the same, as long as you are bringing value to a certain niche that need it. Even though we’re the same but different everybody can become a little bit specialized—there is enough for everybody.

“Not everybody can finish a piece of paper really uniquely,” adds Major. “Everybody can slap ink down on paper, but can you make something unique and outside of the box and make it work?”

“Our industry is changing, but I think [digital] is a compliment rather than competition,” Nam Nguyen, chairman and founder of the Group. Nguyen notes that the barriers to entry in the lettershop business have increased significantly over the past five or six years. “There was a time when all you needed was an inserter to call yourself a lettershop, but now… you have to be able to process mail faster and faster. The smaller lettershops just can’t compete in this area. In the future, all the lettershops will be consolidated.”

While remaining focused on the fundamentals, the Data Direct Group believes that will be the companies who can add greater value that will see growth in this industry.

“We’re looking at the collection of data for the purpose of research,” says Laura Artibello, who recently joined the Data Direct Group after owning and operation Mailennium for 17 years. “Research is the collection of data, gathering facts via various input methods, whether it be on paper or electronic, for a logical output.

“Unless we start asking good questions, we won’t get the answer. And when people are asked good questions they will reply, they will respond. It’s proven in all research. Big companies buy data every day. The banks buy data. They want to know who they can keep and how. It’s the asking of the questions and getting the details. That’s an area where Data Direct is going to be a leader in providing authentic data-filled analysis for a few markets.”

Print brokers are keeping smaller lettershops afloat

 

“I know of two or three other lettershops just like mine that have gone under in the last year,’ says Steve Wilson, owner of Adworks Mailing Services. “The threat alone of the letter carrier strike killed everybody. We had no business for six months.”

Wilson believes that the future of the lettershop industry belongs to larger companies who can offer one-stop service to their clients. “Consolidation is an advantage, for sure,” says Wilson. “An all-in-one shop, that’s what everybody’s looking for and that’s the ideal situation. If it wasn’t for me being in this business for so long, comfortable in what I’m doing, I would be one of those people. If I was 40 years old, for example, I would probably be seriously thinking about taking a printer in. That seems to be the way to survive in this business, to consolidate.”

Wilson notes that print brokers have emerged as a major influence on the industry. These companies are able to offer their customers that “one-stop shop” experience without investing in equipment or taking on employees—in some cases they don’t even have an office.

“It’s more and more print brokers now. At least 50% [of our business], maybe more, is through some kind of print broker,” says Wilson. “There are a lot of brokers out there. They have no overhead so they are using a trade print shop to print the stuff and then they are using us to do the mail prep, kitting and whatever else they want done. There are a million print brokers and they are dealing with the printer, the lettershop and being the point of contact for the customer.”

Eventually, Wilson expects these relationships to become more formalized and that classic mailing service companies like his will fall by the wayside. “The lettershops of the world, to be honest we’re a dying breed. We’re not going to be around forever.”

Direct mail has an attribution problem

Valassis, which began as a one-product, one-industry commercial printer, has grown since its founding in 1970 into a direct marketing behemoth with approximately 7,000 employees in nine countries, including Canada

. Their services include direct mail, newspaper inserts and coupons as well as digital advertising.

Stacey Allen, vice president and general manager of Valassis Canada explains that offering a full suite of off- and online marketing services helps Valassis overcome one of the largest challenges facing direct mail service providers—attribution.

“There’s a certain sexiness to digital that we’re aware of and certainly one of the biggest benefits to digital, I think, from an advertiser’s standpoint is that you see results instantaneously, you know immediately,” Allen explains. “There’s a nice dashboard that comes along with this, you can say ‘oh look, 75 people saw the message and they were on my page for 30 seconds…’ So that [digital] component needs to be part of every campaign, if it’s important to the client to see it that way.

“That being said, when [digital is] not coupled with a print push [response to digital advertising] doesn’t happen to the same extent that [advertisers] need it to. Therein lies the problem.”

For service providers who are strictly involved in the print side of things, it can be a difficult to make the case that, while the best leads might be coming through a company’s website, the print components of a campaign likely played a key role in the decision making process leading up to a customer action.

“The internet still does not have the ability to reach out and grab you. I mean, we’re close, but not the way that a print piece does,” concludes Allen.

 

This article originally appeared in the April 2017 issue of Direct Marketing.