Nectar's next generation of personalised DM

With a huge and complex database, and nine million regular recipients of direct mailings, loyalty card business Nectar has been doing transpromo for longer than transpromo has been a word. Head of print and production Simon Grinsted talks to Michael Barnett about personalised DM and the brave new world of colour digital printing.

In the past year, the concept of transpromo print – using consumer data to print targeted promotional messages on transactional documents – has exploded, with technology manufacturers enthusiastically rushing to market with new machines capable of handling variable data in full colour at high speeds. Océ, for example, did not contain itself until drupa to announce the JetStream, instead flying the world’s press into Munich last December for the launch.

However, Nectar – the reward card scheme run by Loyalty Management Group (LMG) that offers consumers sponsored discounts in return for points earned through purchases – has been doing this kind of thing for quite some time. The company says that half of the UK’s households own a Nectar card, and since 2003 its quarterly points updates have been combining details of a user’s points balance with coupons targeted according to purchasing habits. Nectar has also had the benefit of avoiding the potential conflicts of other transpromo print (being told what you owe and simultaneously how you can spend more), since the raison d’etre of the Nectar point is to reward customers for money already spent.

When it started up in 2002, Nectar had no in-house print production department, outsourcing those services to agencies – first WWAV Rapp Collins, then Harrison Troughton Wunderman – but by 2004, it had completed a process culminating in all prepress and procurement going in-house.

It was at this time that Simon Grinsted, who had formerly managed print in the US and Germany for clothing giant Adidas, took the helm of the in-house print and production. “The first job was to audit and assess how we were doing things,” he says. “The ad agencies and the management agencies that had been running the print production were running it quite traditionally through multiple-process production, with offline personalisation and finishing and we were picking up quite a few wrong addresses, and the wrong matching of pieces.”

Nectar began sending its points updates to card holders when the print was still in the hands of the agencies. At that time, the quarterly mailings comprised 30 million items annually. In 2008, that has been pared to 28 million, while 14p has been shaved off the average cost for one pack.

“If you think about it,” says Grinsted, “for less than the cost of a second-class stamp, we’ve produced a highly personalised piece of direct mail, and posted it, and it’s reached the customer within a week. That’s the efficiency that we didn’t have at the point of the original traditional way of doing it, where our mailings through the agencies would cost more and would take three or four weeks to get to the collector.”

The fulcrum of the cost reduction strategy, according to Grinsted, has been the adoption of inline personalisation and finishing, courtesy of supplier Mohn Media in Gütersloh, Germany, part of the Bertelsmann Group. For the points update mailings, Mohn uses Kodak Versamark personalisation on 16-page web offset shells. The principle reason for the choice, aside from Grinsted’s previous experience of German suppliers, was that Mohn has “a range of inline equipment as opposed to people in this country who would only have one inline piece”, he says.

Out of around nine million direct mail pieces each quarter, approximately seven million would be unique combinations of data, so to all intents and purposes, the mailings are one-to-one communications. As such, accurate management of data is crucial to maintaining high response rates (as is security, for which Nectar has created a specific role at the company to ensure that all legal obligations and industry standards, including the incoming ISO 27000 series of data security standards, are met). All data processing is done in-house by Nectar and the data stream delivered in mailsort order to the print factory.

By introducing the inline production suppliers, Grinsted says that Nectar has cut out the risk of address mismatches. The benefits were particularly seen in a re-card mailing in 2007, consisting of 10 million replacement cards sent to around eight million different addresses in one- and two-card packs. Mohn’s equipment ran too fast to match the cards, and so RR Donnelley’s French facility was selected for the job.

“It took three reels of preprinted stationery and a card, which fed in off a hopper,” says Grinsted. “As the card came through its feed it read the magnetic stripe, it triggered the personalisation on the stationery reels so there was always a 100% match, and then it attached the card. The last reel was the envelope, which was made up around the piece, so it was all inline production – without the printing – but with all the matches included.”

Production line sampling found only one pack with a mismatched address out of the eight million items. Not content with this, LMG’s print and production department is in the process of implementing Unica Affinium software to further hone its data-driven workflow. Affinium offers cross-channel campaign management, presenting the opportunity for greater online and offline campaign integration in the future.

The next two to three years are likely to see the sophistication of personalised marketing, and particularly personalised print, increase dramatically as the technology manufacturers race to meet the demand for more targeted, more accountable methods of reaching customers. This could eventually prompt greater migration to on-demand models of printing, Grinsted predicts, where a Nectar card or its like could be swiped at a given location and a newspaper, magazine or book, for example, would be printed and delivered to a customer within hours; but he believes that this is years away yet as the print industry is still essentially geared up for mass production. Even the most sophisticated of new printing technologies still place their greatest emphasis on productivity.

Chief amongst these is the rise of full-colour digital printing with variable data. Nectar has already used colour digital print for DM applications, although only in runs of around 30,000 for its B2B loyalty scheme, Nectar Business. The mail piece in question was printed on Xeikon technology.

Until now, Grinsted says, no machine has been capable of printing to Nectar’s wider requirements: “There hasn’t been the equipment out there that can produce it quickly enough at a low enough cost in colour digital. There’s also a lot of duff equipment out there – people are flooding the colour digital transpromo area of the market and you’re starting to see a distinct difference in the quality, speed and performance levels.”

However, he also believes that the market has taken an important step forward: “drupa this year was the first time I’ve seen a piece of colour digital kit that could work for us universally, that could potentially produce all our statements and match in timing how we do it conventionally. That was the JetStream from Océ.”

But despite the potential of the JetStream, its competitors, imitators and inevitable successors, there remain few print outfits at present that could viably offer colour digital services on the scale required by Nectar. It would probably require a printer to purchase two of the machines, Grinsted says, one of which Nectar would fill entirely for around eight weeks of the year. Nectar would potentially be capable of providing a constant data stream that could change the mailing schedules it works to, but this would not suit sponsors like Sainsbury’s with marketing and logistical time cycles that fit a quarterly mail drop.

Finding enough business on a week-to-week basis to justify the cost of the machines would be the printer’s challenge, and with direct mail volumes dropping, it would be a risky investment. However, says Grinsted: “As soon as someone’s got those machines, I’ll be knocking on their door.”


• www.nectar.com