DME HOLDINGS — IN A FULL COURT PRESS
IT’S HARD not to think that elements of the DME strategy sound like clichés—customer focused, team approach, people are its biggest asset, and so on. There’s no doubting the results, though. The organization has grown from a small traditional print/direct mail shop (Direct Mail Express started in 1982 with seven employees) into a direct marketing powerhouse with more than $100 million in annual sales and 650 team members.
Management definitely walks its talk. Focusing on customers’ needs, for example, led DME to install three Xerox iGen3 digital color production presses in 2004 and add a fourth in 2005. It also has taken the company in very different directions, with a large (72-seat) inbound/outbound call center operation, state-of-the-art video studio and Web operations center among the more than 20 departments situated on an 11-acre campus in Daytona Beach, FL.
A full-size gym complete with personal trainers on staff and an on-site hair salon are just two of the perks the company offers associates as part of a commitment to their overall well-being.
Mike Panaggio is the visionary and driving force that is enabling the company and its employees to realize their potential.
“I attended college as a phys ed major, and my dad was a basketball coach, so I had a lot of experience playing basketball and being coached,” Panaggio recounts. “I’ve applied a lot of that experience to business. This is basically Team DME. We don’t get all hokey about it, but the fact is there are certain fundamentals used in managing an organization that are the same skills I learned as a player and coach’s son.”
Despite its size, DME has what its CEO describes as a small, select group of clients. They tend to be large and well-known companies, though, the likes of Southeast Toyota, AutoNation and Microsoft.
“We maintain a select group of customers because it takes market intelligence and extensive resources to really satisfy the needs of those companies,” Panaggio explains. “We work with a customer in developing a personalized marketing strategy, and that’s when we know we’re more than a vendor. If a customer doesn’t let us in at the strategy stage—just wants us to print for them—we know that account is not going to be long lived.”
In one case, the close ties DME had with a customer (Sales Systems) proved so beneficial to both firms that their respective managements decided to formalize the relationship. DME Sales Systems, in Orlando, is now a 50/50 partnership headed by Larry Oliphant, who transitioned into being president and CEO of the new organization along with having a 50 percent ownership stake.
“We’ve become a marketing innovation partner to DME’s massive production organization,” Oliphant notes. “We work with our customers on strategy and program management.”
He defines DME Sales Systems’ target client as any “serial marketing” company that works through a decentralized sales structure (agents, dealers, franchises, etc.), so it needs to do local marketing. They don’t all have to be big names, adds Oliphant, noting that one client is a tile and grout cleaning business with about 100 franchisees.
Where he sees the biggest opportunity, though, is in the $10 million and above companies that have become fixated on how many leads they can get for how little money, along with making sure to spend all of the marketing budget for the year. The future is in getting vice presidents of marketing to focus on the bigger picture and ask the important questions about the role of marketing and what really works, Oliphant says.
“We are going back to the fundamentals—test, collectively (with the client) execute, track and repeat,” he says. “It’s all about testing. We’re not selling results. We’re selling the ideology that you have to look for the answer. You have to test in the marketplace.”
Marketing Central engines are one of the core offerings that DME Sales Systems is taking to customers, Oliphant says. Users of these online marketing portals have the ability to pull lists, build direct mail pieces and create personalized Websites to execute personalized direct marketing programs.
For the organization as a whole, Panaggio sees testing as critical to getting customers out of the “creative abyss.” Many companies will procrastinate when it comes to launching a personalized direct marketing initiative because they are afraid of doing something wrong and wasting money as a result, he explains.
“That’s where testing comes into play. You can eliminate a lot of that procrastination by saying, ‘OK, let’s do something, but we’ll test the idea by starting small.’ By doing constant testing, we become a marketing laboratory for them,” notes the company exec.
When so much testing is being done, some of it can become a loss leader, Panaggio concedes. Thus, it helps to be a privately held company on a very sound financial footing.
In addition to Panaggio and Oliphant, the list of people with a stake in the overall organization includes Kathy Wise, COO of DME and Mike’s sister; and Mike Walther, president of DME. Tom Panaggio (brother) and Jorge Villar have ownership stakes in a sister company, Response Mail Express in Tampa, which specializes in pre-designed, pre-printed stationery and marketing products for the financial sector.
The organization also has acquired sales entities that specialize in the automotive and gaming sectors, points out Walther. This was done to gain the intellect required to serve those markets, he says. “That intellect is the company’s scarcest resource.”
All of the business units operate independently to a degree, with an account manager or sales representative serving as the point person for a client, notes the company’s president. Each area has its own manager who is given a lot of leeway in running that operation and is empowered to make decisions, he explains.
“We determine a due date for a job and then the work is sent out in parallel to the different departments,” he continues. “As long as we make our deliverables, we don’t centrally schedule the activities in between. We believe in enabling managers to manage.”
Everything is tied together at the top, in the client data, Walther says. In addition, a custom-developed business management system is used throughout the organization.
DME’s ownership structure and financials are also factors in its ability to invest so heavily in tools, facilities and people.
Partners in Its Success
Like its customers, the company is very particular about the vendors with which it chooses to do business. Panaggio considers Xerox and XMPie, which sells the company’s variable data software of choice (PersonalEffect), to be partners in DME’s efforts to develop the potential of digital printing and variable data.
“We want an unfair advantage from our vendors,” Panaggio says. “We want their top salesperson, their most creative people and their best technicians on our account.
“We try to talk to our customers in the same terms—that DME is an unfair advantage for them,” he continues. “No matter what level of service they might get from somebody else, we’ll try to beat it.”
That philosophy is part of the explanation for the breadth of in-house capabilities the organization has developed. “We’re so service oriented, our phones will ring at any time of day or night,” observes COO Kathy Wise. “You typically can’t find that same level of responsiveness if you outsource.”
Wise says the company made such a big commitment to digital color printing all at once because that was the direction it needed to take its customers. “We knew we needed digital color capability to produce great products, and that business would flow in as a result. Making that initial investment showed our confidence in the capability, so our customers would feel confident in it too,” she explains.
Along with its four Xerox iGen3 digital color presses, DME continues to run more than a dozen monochrome laser printing systems, including Xerox and Kodak Digimaster models. Panaggio considers all of the company’s digital output to be variable data communications, not printing, and an extension of its database and marketing services.
Regarding the company’s bold move into digital color, he states, “I wanted to put pressure on the organization to make it work. At first we didn’t have a lot of work to put on the iGen3 presses, but having them on-site energized the entire company. As it stands now, we have no open capacity on our iGens for the entire year.”
DME does still have a traditional printing department, outfitted with a four-color Heidelberg Speed-master 74 and two Halm Jet two-color presses. It primarily produces four-color shells for imprinting on the black laser printers. Any other commercial printing that may be required for a marketing campaign is outsourced to other printers.
Wise says the reason for turning to the outside for commercial printing when DME has brought many other capabilities in-house is because it focuses on value-added and unique services. “Printing is more of a commodity,” she explains.
DME’s business is growing from all angles—digital four-color, call center, Web services and even black laser work, Panaggio reports. When it comes to services like database work and the call center, the company has always looked to develop its own resources, notes its CEO. He feels more secure operating a business that way than outsourcing to India, for example, even if that is the big trend.
“I have a lot more confidence in American workers than in their overseas counterparts,” Panaggio comments. “Companies are slighting themselves when they try to save a few dollars per hour on phone center work. It tells customers how much you really think they’re worth.
“We do a lot of internal staff development and instill a culture within all of our operations. I can’t develop that culture in India, only here in Florida,” he points out.
The call center proved to be a case study for that philosophy. Since it was new to the business, DME hired a consultant to design its original call center and ended up with the standard, impersonal setup.
Panaggio decided to take over from there and design the second half of the call center to better fit the DME culture. That included breaking up the space with live plants—instead of manufactured dividers—to absorb sound and to give off oxygen. The individual work areas feature desks imported from Germany and ergonomic chairs.
“The call center operation has been a success almost from day one. It runs 24/7,” Panaggio notes.
As president, Walther says he views the organization as being somewhere in between a direct marketing agency and a production facility. “We are a high-tech direct marketing company with industry specific knowledge.
“I think our vision is getting more focused than it used to be,” he continues. “We’re less willing to try anything within our economic means, but we are experimenting more now than ever within a pretty tight mission statement.”
PURLs of Wisdom
One of the growing uses for the video studio is to create streaming media for personalized URLs (PURLs). DME is aggressively promoting PURLs as a response vehicle because giving mail recipients a way to respond online has proven to dramatically boost response rates, Panaggio reports.
“By the end of the year, all of the campaigns we produce should be featuring personalized Websites because it doesn’t make sense to not offer that response option,” he says. “We’ve developed a program that allows us to create personalized URLs simultaneously with the mail file, so there is no additional cost. Except, of course, for the creative work required because you must have content to put on the personal Websites.”
Investing in the business and its staff is a form of advertising at DME, asserts its CEO. “A company our size normally would probably spend around $1.5 million a year on advertising. Instead, we put that money into making the DME product better. We think that’s our best advertising,” he explains.
Oliphant agrees that the DME campus serves as a great sales tool. Taking prospects on a tour of the facilities and then sitting down for a white-board session to discuss strategy often wins business.
Panaggio concedes that it costs a little more to run a business the DME way, but says there’s a real payoff in productivity and enthusiasm. “We want to be known as THE best place to work,” he notes.
Wise adds that it’s important to hire people who are really driven, “because we are always pushing the envelope, if you’ll pardon the pun. Being flexible and adaptable is the name of the game in this business. We will train good employees to become anything they desire, as long as they have the drive and ambition—along with the aptitude, of course.”
Given the strength and depth of its team combined with an overwhelming home-court advantage, the scouting report on DME calls for a winning streak.
