I remember it well! The strategic concept of Marketing Services Provider was first presented at the MFSA Fulfillment Conference 2002 in Memphis by Mr. Chuck Blakeman, the Marketing and Business Development Manager for Denver's Holden Marketing Support Services. His intention was to acknowledge the potential role of three separate Holden businesses - printing, fulfillment, and mailing - to function as an integrated, cohesive whole in providing the necessary production tasks for clients' corporate marketing campaigns. It was a rebranding of Holden's business to their market but also a rallying cry of a new direction for his employees.

In subsequent years every national and regional conclave of graphic communications entrepreneurs gathering under the PIA, NAPL, IPA, DMIA (now PSDA), etc., etc. banners jumped on the band wagon beating the drum to the same tune as originally delineated at this early millennium MFSA Fulfillment conference. MSP momentum mounted as software vendors introduced increasingly sophisticated Internet applications - some later to be dubbed web to print - and the digital print engine manufacturers poured mega bucks into proclaiming the logarithmic response improvement from variable data printing and multi-media marketing programs.

Not surprising, there appears to be few firms left to convince of the obvious benefits of abandoning the commodity production-centric models in favor of the more service-centric, client friendly implication of a Marketing Services Provider. A key problem remaining is the only folks who seem to know how to get to the Promised Land are vendors who have hired "independent" consultants to author white papers on the various elements comprising the MSP. That is until the MFSA Fulfillment Conference 2009 just concluded in Tampa. This conclave concentrated on numerous case studies presented by proven MSPs, which described for attendees how their firms became Marketing Services Providers. This article will exam the lessons shared.

Plant Tour Highlights; Valpak and Jagged Peak

The plant tours on day zero before the conference kicks off traditionally set the pace for this annual national fulfillment gathering. Cox Target Media's Valpak plant in St. Petersburg has been reported extensively in the trade press. Costing $222 million, it did not embrace any proprietary technologies. In other words every piece of leading edge equipment had been proven in other applications. Of that investment figure $48 million was for the 467,000 square foot plant (10 acres under roof). This is barely $102/square foot of construction cost, which is particularly inexpensive considering that a special engineering design has been incorporated to assure the plant can withstand a Category 4 hurricane.

Three Valpak observations are particularly worth describing. A robot made in Michigan is used to open the USPS-furnished cardboard sleeve, automatically retrieve and insert a carton full of Valpak envelopes, and move non-stop to a pallet to be shrink-wrapped for delivery to the USPS. It was interesting to note that the engineering team from Valpak visited a USPS facility, which also had a robot (different manufacturer) unloading pallets of mail, removing the same sleeves, and placing the mail container on another pallet. The difference was that the USPS robotic operation had more labor cost associated with it because the USPS robot was not non-stop. While the USPS is currently perhaps not in a fiscal position to recapitalize many of its operations, this appears to be an area that they could learn from and save money by borrowing this proven idea and investing in a different robot manufacturer.

Whether it be a highly automated plant like Valpak, or one with lesser automation like most of the Marketing Service Providers, all could benefit from the techniques and philosophy followed by Valpak in empowering their equipment operators. For example, every Valpak job is 10,300 pieces with 10,000 delivered to the post office. So a waste margin of only 3% or 300 envelope packets exists for every job. In addition the run speed goal on each of the inserters is 52 minutes per job.

Early in an observed production run, the Bowe Bell + Howell inserting machine was observed to be experiencing nearly 6% spoilage according to the LED counter placed in easy view of the operator. A quick investigation proved the high spoilage was due to a single furnished insert. It was creating jam-ups in the feeder due to a wavy curl of the light stock. The operator knew what was expected of her, was given accurate measuring tools to help her gauge her progress, had been trained to deal with most mechanical problems, and was empowered to bring in maintenance help to replace grippers, for example, if extra help was needed. Employee empowerment and acknowledging that good management must include timely measurement are proven best practices. A manufacturer of any size can and should follow these precepts.

Valpak has 200 franchisees throughout the country selling their unique shared-mail coupon packets. Each franchise typically runs a job every month averaging 30 coupons per packet. Their South Eastern Michigan franchisee is the most successful typically running close to the maximum of 120 coupons in their monthly packets. While the Valpak central manufacturing facility in St. Petersburg provides all necessary production functions from coupon design to printing to addressing to inserting to mailing for a prestated cost, the franchisee can purchase the design and printing from other vendors if they or their clients prefer. Detailed specifications are provided in this case.

Due to the recessionary economy, Valpak's franchisee partners are encouraged to run free coupons for local social service agencies to aid in their fund raising and campaigns to recruit volunteers. Valpak absorbs the cost on these coupons and gives these social service agency coupons a "free ride through," i.e., the franchisee incurs no cost from Valpak for these public service efforts. Not only is this smart public relations it is simply the right thing to do. Again a firm does not have to be a multi-million dollar print-mail vendor to provide similar valuable in kind services in their own communities. The volunteer members of each agency's Board of Directors are business executives in the community and as prospects for the Marketing Service Provider would look favorably on such in kind contributions.

Jagged Peak is a former collateral fulfillment company that has made the transition to a supply chain fulfillment network for products utilizing proprietary e-business software. Their targeted market is manufacturers, who have never sold their products directly to consumers. Utilizing Jagged Peak's web enabled software, consumers can now buy products from any of JP's 35 client manufacturers. These products will be delivered from one of nine warehouses strategically located throughout North America resulting in an average of 1.92 days of client wait time for ground delivery of the requested order.

A vital conceptual breakthrough occurred for Jagged Peak when the company was forced to look at their business model from the end customer's eyes. They learned that one hour faster order processing resulted in three days less "client wait time" (CWT). Concentrating on CWT has resulted in significant improvement in service and decreased overall costs. The stated goal now is "Every order ships same day!"

Not in the Brick and Mortar Business

Jagged Peak owns only one of the nine warehouses. The other eight are contracted partners. Historical zone shipping records are monitored by the proprietary software to determine when shipping quantities are large enough to justify additional warehouses in areas that need to have their "client wait time" reduced. For example, two additional warehouse locations in New Jersey and New England will be added to the network within the next 60 days.

The process of choosing a warehousing and fulfillment partner is quite simple. A list of requirements and expectations is provided by Jagged Peak. If agreed to, a list of prices that the potential partner will be paid for product storage and picking & packing to provided to the vendor. If agreed to, a contract is provided as the final stage. If this is also agreed to, product is shipped to the new warehouse with start up only days later.

Jagged Peak's software provides inventory management, a "perfect order" to be picked, and contracts with third party shipping sources. A recent new partner is MFSA member W.A.Wilde out of Holliston, Massachusetts. Ted Kulpinski of W.A.Wilde Company indicated that the installation of JP's software, called EDGE, to receive the orders was accomplished in less than two days.

Jagged Peak sells their EDGE OMS (Order Management System) software package either as an application service platform (ASP) of $1,000 - 1,500 per month or as a server-based sale at $18,000 - 25,000/server plus 18% annual maintenance. Webex demos are available of the software's features by contacting Brent Tarter at 800-430-1312 or go to www.jaggedpeak.com/ JP_Platform.htm.

The tour day finished with standing room only presentations by each of the eight vendors that were sponsoring the fulfillment conference. All but one had booths at Print '09 only weeks earlier. Many of these firms issued press releases at Print '09 of significant enhancements to their offerings.

In his keynote speech Ed Marino, President of W. A. Wilde Company, emphasized the importance of a strategic plan for becoming a Marketing Service Provider. "In analyzing what capabilities your firm does not possess in meeting client needs, consider forging a partnership rather than a corporate acquisition," opined Marino.

Product Videos on YouTube

Alin Jacobs, President of Direct Marketing Alliance, may possibly be just such a specialty outsourcing partner. In his presentation he described how his firm has been following closely the rapid evolution of social media. They have started a video studio to prepare viral videos for their clients to be placed on YouTube as well as clients' websites. Early market response has kept this new enterprise busy.

Recognizing the expressed urgency of Chief Marketing Officers to measure the return on investment for their programs, The Alliance also invested in a marketing lab to test the effectiveness of the various elements of a marketing campaign. This has not met the same degree of enthusiastic market acceptance in this current lagging economy though they feel such measurement services will be vital to good marketing management.

"Making the transition to a Marketing Services Provider began in 2002 for TFC," remarked TFC President Connie Hill (tfcinc.com), "As we saw collateral volume begin to shrink." Wanting to become more entrenched with their clients and avoid the purchase decision based solely on price, a vision was presented to TFC's top management team. Following their buy in, business elements were put in place including a software development and employee retraining investment of $2 million.

Dick Kettle, CEO of Charlotte's Creative Marketing Solutions (formerly Creative Mailing Solutions), was part of this panel discussion. CMS (creativecms.com) added digital printing and began to partner with web developers early on both for their own marketing image as well as the campaigns for their key clients. Software expertise was an integral part of both firms' offerings in facilitating multi-channel, multi-touch approach to custom and personalized corporate marketing campaigns.

Both executives emphasized the importance of continual communications with all employees from monthly meetings to newsletters. There was a lot of change and they did not always have all the answers. But it was essential for the entire firm to stay focused on meeting client's dynamic marketing needs.

After the first couple of long standing clients came on board adding credence to the new direction of the firm, selling new prospects was a difficult skill to learn. Dick added, "Sales reps must be comfortable in the (client's) boardroom." Connie's expressed the concern, "There were fewer deals in the pipeline. Certainly larger deals but with twelve month sales cycles." "While interest was expressed from prospects farther away, the company could not afford extensive travel expense," she remarked. Kittle agreed, "Decisions (by prospects) were multi-layered and more selling had to be done virtually with Go To Meeting' software."

One of the universal frustrations of print and mail firms adopting the Marketing Service Providers strategy has been the apparent difficulty of getting the traditional sales force to adapt to the new sales style perceived to be required. Tom and Jason Quinn in tag team fashion gave a totally new perspective on why this difficulty exists and a current case study illustrating a possible solution.

Selling Service Different than Selling Product

Tom is MFSA's Director of Fulfillment and long-standing organizer of this annual fulfillment conference. Few fulfillment professionals know the organizational reality facing firms entering this competitive arena as well as Tom. The entry point for most printers and mailers (P/M) into this Marketing Services Provider domain is the addition of fulfillment services often coupled with digital printing. The P/M has made this diversification move because one or two key clients have driven them to add new services or lose the current volume provided by these large clients. Hence, the P/M top management is truly not as dedicated, initially anyway, to this diversification move as they are dedicated to NOT losing the big client! Consequently, the new expansionary service(s) is really a defensive strategy.

The new department heads are often hard working, loyal employees that are accustomed to multi-tasking. Technical knowledge is garnered from articles in the trade press, a book or two of "How to," and instructions to sign up for the next PODI and Fulfillment Conference. MIS is often a crude extension of the existing business systems as understood and taught by the company's in house accountant/book keeper. Pricing is a simple hand labor rate extension for fulfillment and a modest mark up on the "perceived" click charges for the digital copier. It's no wonder that many owners perceived this business move as a "low cost of entry."

Dreaming of what a gravy train this can be, the owner eagerly accompanies his foreman to their first MFSA Fulfillment Conference and later Print on Demand gathering. He is perplexed to learn that (1) the prices he is charging his large initial clients are a fraction of their market value, (2) dedicated software providing order management, inventory control, and Internet accessibility are essential, and (3) there is much to be learned about this "service" business as it is not a "product-centric" effort.

In quick order the company accountant confirms that these new ventures are losing money. After the first couple of existing clients are on board, the boss does not know how to get any more clients. His sales force opens doors for more work but argues vehemently to keep prices low or give the storage away simply in hopes of getting more hours on the litho cylinders.

The extraordinary technical knowledge of the sales professional, the detailed job specifications, the heavy equipment features, functions, & benefits, the quick selling cycle, the finely tuned aggressive closing skills, and the buying decision based upon price were part of the sales process that got the company to this point. The MSP and fulfillment sales process are quite different; long sales cycle of 3 months to 2 years, consultative (listen, ask questions) sales skills, buying decision based upon solution/business improvement, and sales contact(s) at the highest level of the organization. So how does the owner get the organization on board and garner some much needed profitable volume to this new venture?

An Ugly Duckling To Guide the Flock

Jason Quinn, Tom's son, has had experience running fulfillment entities and sold dedicated fulfillment software. He is now the Director of Marketing Services and Distribution for Edwards Graphic Arts in Des Moines, IA with the expressed purpose of laying a road map for the print sales force in helping this traditional general commercial printer to the MSP promised land. They have brought on board the necessary fulfillment, W2P, and data management software capabilities needed. They are rebuilding their website as part of the rebranding effort. Jason has identified one and possibly two of the existing eight sales representatives who really "get" the MSP concept.

The slower economy has elongated the transition plans, but the company is confident of the exciting new direction that Jason is helping pave. So the "in house consultant" role model, much like the youth story of the ugly duckling, might be a viable solution for other firms in the future.

Brett Olszewski, K/P Corporation's Chief Sales and Marketing Officer, addressed some vital issues that drive client loyalty. According to a recent CMO Council survey "loyal clients are 15X more likely to increase their spend with favored vendors than high-risk, intermittent customers." Companies typically lose 5-10% of its clients each year and acquiring new clients costs 5-6X more than retaining them. "Know how your clients value your services," advised Olszewski, "And demonstrate your knowledge of their business."

Benchmark Performance in the Contract

Operations benchmarking statistics have been reported in previous MFSA Fulfillment Conferences. Jim Rushing has headed this committee's work up. He announced that after the first of the year members may go to the MFSA website, enter their ops statistical results for each of the thirteen catagories, and get immediate feedback on their performance versus all other participants.

Leading practitioners all strongly recommend that statistical performance indicators should always be included in the fulfillment contracts with clients. These would be shown to clients as part of the Quarterly Business Review meetings with fulfillment clients. Should clients want better performance that can typically be accomplished with more labor costs. Should a client express concern about your firm's actual performance level in a particular category, the MFSA industry benchmark will provide an independent authoritative reference point.

"Social media is not a fad, but a fundamental shift in how we do business," concluded John Foley, founder and President of InterlinkONE in his well received feature presentation. YouTube.com, Twitter.com, Facebook.com, and LinkedIn.com should not change the way our firms market but should all be additional tools in helping us communicate more effectively with clients, prospects, suppliers and employees.

Small Parcel shipment contract negotiations have never been more important as all logistical networks are reporting excess capacity and willingness to renegotiate. Mike Erickson, President of AFMS Transportation Management Group (afms.com), advised these key steps for successful contract (re)negotiation; (1) understand your package characteristics, (2) review each service component, (3) analyze all accessorial fees, and (4) study the profile for cost reduction strategy.

Howie Fenton, NAPL Senior Consultant, offered tips gleaned from leading print on demand and web-to-print applications, which are invariably integral parts of successful Marketing Service Providers offerings. Vertical market expertise allows a MSP to leverage knowledge from a successful campaign into a complementary one. Printinthemix.org shows the compound annual growth rate of direct mail into specific vertical markets. Financial services (insurance) and Healthcare/Pharmaceuticals lead the way at 6.9% and 6.4% respectively.

Accreditation Should Be Part of the Game Plan

The timeliness and pertinence of any conference content is a direct reflection of the number of First Timers that show up. A full 30% of paid attendees to this 17th Annual MFSA Fulfillment Conference were first timers. Hopefully they flew SWA or JetBlue so they did not have to pay for extra luggage hauling home the exhaustive handouts and checklists provided by popular and long-standing heralded speakers Tom Quinn, Jim Rushing, and John Raffner. The beginners break out sessions included: Introduction to Fulfillment, Getting started right in fulfillment, Mailing Services and the Fulfillment/MSP Industry, and How to price fulfillment and MSP.

Finding credible Marketing Services Providers will hopefully become more confusing to corporate buyers throughout North America as the result of attendees at this Fulfillment Conference putting into practice the proven principles learned here. The most obvious and objective way to remove this confusion is for buyers to select vendors who have received MFSA Fulfillment Accreditation. The 11th such MSP vendor to receive their accreditation was Impact Solutions represented by CEO Tim Johnson. Leading vendors are seeking all appropriate certifications to verify the depth and breadth of the expertise including the various "green" paper certifications, ISO, HIPAA. This MFSA Fulfillment Accreditation ranks among the most respected of the lot.

Now tweet your associates that you plan to be in Charleston, South Carolina early next June when the MFSA Fulfillment Conference will be combined with their Annual Conference.

Article prepared by C. Clint Bolte, C. Clint Bolte & Associates, Chambersburg, Pennsylvania. For additional information please call 717-263-5768 or e-mail to cbolte3@comcast.net.