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The personal touch: insurers are tapping into on-demand printing technology as a flexible and cost effective marketing tool to target customers.

A growing number of insurers and financial services companies are using on-demand digital printing to personalize information for customers as well as to combat rising marketing and printing costs.

On-demand printing uses electronically stored files to enable marketers to more efficiently send out personalized marketing materials and tailor messages to individuals. It has been around for nearly a decade, but its mark across the industry is relatively new. And while many insurers are now embracing this technological tool to assist with 401(k) and defined contribution prospectuses, enrollment kits and various other forms, many believe use of on-demand printing soon will extend its reach into other areas.

Meeting the "On-Demand"

The evolution of on-demand printing allows insurers to print what they need, when they need it, with no waste.

On-demand printing, also widely referred to across the industry as print-on-demand, is a fully digital printing platform that combines the use of images and text created by stored electronic files and traditional printing methods to personalize information and print small quantities cost effectively. While in the past many documents created by on-demand printing were printed in black-and-white, companies are increasingly implementing full color into digitally printed materials, particularly with the dramatic drop in color printing and equipment costs.

"Print-on-demand is all about getting content to its lowest form and then reusing it over and over again," said James Scott, chief technology officer for Covington, Ky.-based Fidelity Wide Processing, the printing unit of Fidelity Investments. He believes this benefit, combined with improving efficiencies, makes the technological tool an ideal fit for insurers and financial services companies.

"In these financial and regulatory industries, materials age quickly and information changes, so print-on-demand is perfect for producing short runs of printed documents while driving highly personalized, customized interactions with customers."

But just how does the technology work? For Fidelity, a personalized brochure or marketing material is created on a desktop computer and the file is sent directly to a laser printer--a far cry from the time-consuming traditional approach of designing a model brochure that is then printed on an offset press, often in a large quantity. "The key is having electronically stored content authored for digital reproduction," said Scott. In addition to the ability to produce shorter print runs, it gives users the ability to change content from one document to the next.

On-demand printing combined with database publishing form an incredible marketing tool across the industry because companies can communicate with consumers about things that are important to them, said Lori Mahoney, marketing specialist for Springfield-based MassMutual. By using plan level as well as individual demographic data, targeted messages can be formed and sent that best meet a person's own needs and situation. "This type of plan level and personalized communication is what is more likely to motivate a person to join their 401(k) plan or buy a certain product or service, not generic mailings." This technology caters to a person's behavior and buying preferences, she added.

While the technology is just now gaining much recognition across the insurance industry, the concept of on-demand printing is not new. Some experts believe on-demand printing dates back to the early 1990s with Xerox's introduction of its DocuTech printer line.

Its use is expected to grow across many markets. On-demand printing is now experiencing a 20% annual growth rate across various industries, with projected growth in the U.S. market from $21.4 billion in 2000 to $52.5 billion in 2005, according to research by CAP Ventures, a strategic consulting firm for providers and users of business and visual communication techniques and services. In addition, more companies are expected to switch from traditional offset printing as they discover economic and creative benefits of on-demand digital printing.

Value Proposition

Many insurers are now taking advantage of on-demand printing ... and it's paying off.

"Our main objective is that print-on-demand helps our clients," said Mahoney of MassMutual. In terms of fiduciary responsibility, it helps educate employees about the best ways to invest money and helps motivate employees not interested in joining their company-sponsored retirement plan, she added.

MetLife Retirement and Savings recently turned to ADP Investor Communication Services, a division of Automatic Data Processing Inc., to create and produce on-demand print services for its 401(k) plan participant enrollment materials for small and mid-sized employers. MetLife selects and combines company-specific plan information from an Internet-based electronic library to form streamlined booklets. After documents are defined, ADP prints the custom information on MetLife predesigned cover and text stock, binds the booklets and then distributes them.

Another advantage on-demand printing brings is that it now allows users to go into a proprietary system and make necessary changes rather than having to pull a book out of the system and move it into a traditional Macintosh computer environment to make changes--something Mahoney said was desperately needed in the industry. To build an enrollment book, for example, on-demand printing and database publishing allows MassMutual to have a large proprietary virtual library of its company's marketing copy, plan parameters, client logos and special images, and select specific items. "Each time we send a request to this database to print a book--or books--we kick off a process," said Mahoney. "The business rules we created for our enrollment books are used to read the data feed, and these business rules tell the system what copy and images to pull down to build the book for a set of plan employees or for one individual employee." The process also can pull down copy and images that relate to a person's demographics, such as 30-something images used for a 35-year-old employee's book. Once the data is received, the entire process can take two or three minutes to assemble the electronic versions for a large file of employees. They are then sent to print. "In the end, each book can essentially be different and this is where the power of on-demand printing comes into play. The printing system produces each book as though it's unique."

For Fidelity, information submitted by customers over the phone or processed by real-time feeds from the Web by 7 p.m. are placed in the mail that day thanks to the speed of on-demand capabilities. "It's providing quick turnaround because we don't have to pull lots of materials from stock, instead using the concept of 'cellular processing' where we have printers and people readily available to send orders directly to the printer," said Scott.

Many insurers now rely on on-demand for their 401(k) and defined contribution marketing efforts. For example, Guardian Group Business Unit will begin a testing program for on-demand printing early this year to create and distribute individual employee group insurance enrollment kits. "When we looked at the speed of new product development, the cost and waste of holding preprinted material and the actual printing cost it becomes less expensive to use on-demand printing," said Tom Martorana, vice president, operations and marketing of the unit. However, he said the decision was not just Financially motivated but also had the advantage of speed to market of new products. "Plan designs and products change quickly, print-on-demand allows us to create digitized forms, customize them and change them rather quickly so we can keep pace with product areas, primarily in operations and customer-facing activities."

In addition to speed to market and economics, on-demand is an effective tool to reach customers. Research indicates that customers want simple, easy-to-read materials quickly, said Martorana. "By redesigning information and making it more customer-centric, we think we'll be able to help people make more informed benefit decisions."

Guardian also plans to test a second phase of its on-demand printing testing program later this year. Information will be taken from its quoting engines, print-on-demand forms will be automatically prepopulated and then printed. There will be no manual intervention except on an exception basis, said Martorana.

Hartford Life began using on-demand printing in its 401 (k) business in mid-2003. "It became increasingly important to be able to create a system that allowed us to be flexible in terms of putting together proposals more easily than we could in the past," said Chris Chaia, director of marketing. "We can now create a variety of pieces and modules that allow us to, based on the sales opportunities at hand and what an adviser is presenting, take modules and put them together and deliver them faster." In addition, print-on-demand lets the company edit and make changes to materials online. "At the turn of a dime, we are able to see changes reflected in proposals to employers."

While Chaia said it's too early to measure cost savings generated from Hartford Life's on-demand printing initiative, its tangible benefits are making it easier to sell products. "From a service efficiency standpoint, this has exceeded our initial goals by being able to do online editing, creating greater confidence levels for our advisers, and a variety of benefits on the back end."

In addition, many insurers are finding that on-demand printing enhances cross-selling of products. "We're always looking for ways to distinguish ourselves in the marketplace and it becomes tougher as everyone is a quick follower. It always comes back to service. So if there's a way to distinguish ourselves and use technology to increase the level of service, then that's the answer," said Doug Allee, assistant vice president of MetLife Retirement and Savings.

Companies such as Principal Financial also are finding that on-demand printing helps increase customer response rates and satisfaction levels. Prior to print-on-demand, the company collected data from its mainframe and produced reports that were plain, black and white, difficult to read and comprised of several sheets of paper, said Donna Callahan, senior document consultant. "The new format is in color and easy to read. And while the process changed a bit, the format of the document changed a lot." One way Principal Financial is relying on print-on-demand is to add customized information to 401(k) participants' statements, including personalized balance information, investment mix and various pie charts.

While many companies rely on vendors and off-site printers to assist with on-demand printing needs, some insurers, like MassMutual, decided to take the matter into their own hands. "Several years ago we looked at this technology and where we wanted it to go," said Mahoney. The company signed with an outside vendor; however, she added that building a database with an outside company is a long and often expensive process. "And in the end, they own the technology and we own the words." MassMutual decided to build its own proprietary database publishing product that reads the company's record-keeping files.

Overall, insurers believe digital printing is as effective as traditional offset printing. In addition, its value can be bundled into a "one-stop-shop" with the convenience of having all aspects of a print project--including printing, binding, packaging and shipping--available from one vendor.

But like any new venture, there are usually a few bumps in the road. For most insurers, adjusting to the new technology and establishing standards proved a bit challenging initially. But, overall, insurers' transition into the on-demand world has been relatively smooth. "For us, the key to success was getting our outside vendor in the same room as our business partners to whiteboard everything we wanted to achieve from the system, in addition to identifying every scenario, product variation and distributor need," said Chaia. Prior to implementing its system, Hartford Lift collected data from its partners to ensure it was delivering something they wanted. "Any obstacles we would normally have seen, had we not gone through that process, probably would have come out, but instead everything ran smoothly."

Generating Savings

Many insurers believe on-demand printing makes economic sense. Gone are the days of the traditional "pick and pack" process where companies stored generic materials in warehouses and assembled pieces by hand. Not only does on-demand printing almost eliminate warehousing and inventory costs and reduce the risk of obsolescence, but the time savings generated from its use are immeasurable. "We can't even begin to compare the time savings and flexibility to what it was before. True savings are really in the speed and accuracy of one system talking to another system with little to no human intervention, thus providing cleaner data," said Mahoney.

While some insurers said it's hard to quantify total cost savings, Peter Newkirk, president of Albany, N.Y.-based Newkirk Products Inc., which provides print-on-demand and other printing services for many insurance and financial services clients, believes that on-demand can definitely reduce costs. "It really depends on the application. For example, a four-color marketing piece that is produced in small quantities may cost several dollars each to print offset when all of the pre-press, set up and printing costs are included." The same piece could cost less than 50 cents a piece with digital printing, he added. In addition, he said companies need to consider all the additional related charges, such as warehousing, inventory management and obsolescence costs, that are being avoided.

In addition, the absence of traditional offset printing set-up costs are driving greater cost savings. It costs about $3,000 to set up an offset press run, which makes sense for 20,000 participants but is prohibitively expensive for less than 5,000 pieces of mail, according to a recent Institutional Investor article by Jinny St. Goar entitled "Getting Personal."

Future Boon

Insurers anticipate on-demand printing will be a catalyst for future progress in reaching consumers.

In addition, many insurers are hailing the technology as "the wave of the future" for much of their printing needs. "Businesses will have to have print-on-demand in the future," said Fidelity Wide Processing's Scott. "Quality is now an expectation in everything we do, and the personalized, intimate conversations with customers will be a baseline in the future."

Many believe the technology will continue to be a dominant force in the 401(k) and defined contribution markets as a tool to show plan participant savings values and contribution scenario illustrations. But it will also likely make its way in other areas. For example, MetLife Retirement and Savings plans to evaluate how on-demand printing can assist with customizing plan sponsor proposals and creating a more automated process for year-end plan reports.

But while on-demand printing will likely continue to grow, it's not the answer to every situation, said Principal Financial's Callahan. "You really have to study those situations to make sure it's the appropriate technology to use." However, she anticipates it will remain an effective tool for reaching consumers and prospective customers by assisting in the sales effort and making documents more meaningful.

However, as the technology continues to spike more insurers' interests, Newkirk believes it must also extend its reach into other media. "On-demand printing has a big future. It should be used to personalize communications and printed pieces to targeted audiences." He added that the phrase "on-demand" is beginning to change its meaning as more companies use more personalization techniques with other more transaction-process printing.
COPYRIGHT 2004 A.M. Best Company, Inc.
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Copyright 2004, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Marketing
Comment:The personal touch: insurers are tapping into on-demand printing technology as a flexible and cost effective marketing tool to target customers.(Marketing)
Author:Chordas, Lori
Publication:Best's Review
Geographic Code:1USA
Date:Feb 1, 2004
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