Salmat is not what you’d call a small company. More than 7,000 staff. Operations in eight countries and all states of Australia. Almost $880m in revenue. More than 60% share in business-to-consumer communications in Australia, across print, call centres and email. The company founded by Peter Mattick and Philip Salter in 1979 reaches into the homes of the nation, with customers among all the blue-chip telcos, banks and retail giants. But this monolith hasn’t forgotten the little guy – or the opportunities in the smaller end of town.
Salmat has just announced a full-scale roll-out of its ‘Local Direct Network network’ operations, offering small to medium enterprises (SMEs) the same kind of one-to-one communications it provides corporate clients. Think your local plumber doing variable-data. A local catering company marketing to key target groups at a neighbourhood level.
Leading the SME strategy is chief executive Grant Harrod, a man more familiar with big business. Before joining Salmat, he was chief executive of Corporate Express. He spent 13 years at the company (now owned by US giant Staples) with senior-level roles in sales and marketing as well as operations. Corporate Express is another heavy hitter – it turned over $1.3bn in 2009, the year Harrod moved to Salmat. Before he worked at Corporate Express, South African native Harrod had been at IT reseller WPA, which was acquired by Corporate Express in 1995.
He was hired by Salmat largely for this corporate know-how. One major criteria was to “industrialise” the business, he says.
“Salmat has a phenomenal culture, built up over the past 30 years with Peter and Philip at the helm. But they and the board wanted to see Salmat evolve to the next chapter, and that requires a different set of skills and focuses. So my principal role has been to instil a culture for the future.”
Even with a CV of Harrod’s pedigree, coming in at the top of such a multifaceted – not to mention publicly listed – company can’t have been an easy transition, especially with the founders’ names still above the door. What did he learn from an job change of this calibre?
“Hang on tight,” he laughs. “I’ve always taken the view that you break it down into little pieces because it becomes almost impossible to digest in its totality. Surround yourself with really good people. There’s no such thing as a great leader without a great team.
“The component parts of running a business are the engagement of your people and the satisfaction of your customers. Your ability to grow is determined principally by how satisfied your customers are. Those are the two most critical inputs.”
Harrod may be a corporate type with a track record of running big companies servicing even bigger clients, but his eyes are firmly on the little guy. Already present in the homes and shops of Australia, Salmat is coming to a town centre near you through the LDN Network.
“Historically, most of our focus has been on the large corporates. In all of our business activities, the lion’s share of the work we do is for top 100 companies and government organisations. But we had these assets sitting there that were just chugging along, doing their thing,” he says.
“The assets” at the core of the initiative is Salmat’s network of 18,000 contract walkers, which provides a distribution web that covers 99% of the nation. These contracted workers are overseen by 1,000 full-time Salmat area managers from coast to coast, with jurisdictions for around 3,000 “distribution blocks”.
“A few years back, the company made a number of acquisitions in the LDN Network – especially within our letterbox business. It had acquired these letterbox distribution companies to establish this network but hadn’t really done anything with it. It hadn’t really established a strategy. In some respect, they were probably in danger of going nowhere or going backwards.”
The network provides access to the smaller enterprises operating out of regional centres and larger towns. So far, it has set up 15 shopfront outlets in regional centres such as Castle Hill in New South Wales, Bundaberg in Queensland, and Dandenong, Victoria. “These are burgeoning little economic centres in their own right, where you have got predominantly SME business operating. “
Harrod points out that the SME market makes up the bulk of the Australian economy. If there’s money to be made, Salmat wants a part of it.
Harrod says the company hadn’t previously put much into understanding what SME clients were looking for. That has all changed and Salmat is set on finding out how to tap into the SME sector.
“The overwhelming feedback we got was they wanted to access the targeted communication services that were more generally available to the larger corporates, what we would classify as one-to-one. Direct mail would be one-to-one. Letterbox distribution would be one-to-one. Voice is one-to-one. They were being left predominately with channels that were more broad based.”
The idea that small, local businesses are marketing further a field than they can operate profitably is an unfortunate reality of the traditional marketing sphere. The most accessible, easiest choice is general mass-media marketing, perhaps through a local paper, TV network or radio station
“For small retailers, they can’t service customers outside their immediate catchment pool. If you’re a tradesman and you are generating business that is 50 kilometres away from where you live or work, you suddenly have a disproportionate cost in travel,” says Harrod.
But identifying the need doesn’t immediately guarantee the result. The target client – owner-operators, small-town business people – are “extremely time poor”. More to the point, Salmat is not particularly experienced in communicating with this group. They don’t have marketing departments or procurement managers. They don’t have ‘budgets’ – their bottom line, bank balance and pay cheque might be one and the same. “These things are looked at more personally. There is a high degree of sensitivity around investment they make. They want a high degree of certainty around the returns,” says Harrod.
While this kind of customer is a new breed for Salmat, it’s a familiar face to the thousands of regional printers around the country. And these print providers have a role to play in Salmat’s LDN Network. After all, printed collateral will be the most common communications channel.
The print needs are provided for by a couple of hundred suppliers on Salmat’s roster. Harrod might describe the strategy as being about providing one-to-one media communications on a localised level for SME businesses, but to the average printer, it’s print management, plain and simple. Should regional printers see Salmat as another middleman trying to get in between them and their local clientele?
“Our SME model is about bringing clients to the industry. So whereas a buyer’s agent tends to sit between two individuals in an existing relationship, our goal is to deliver customers to our print partners, which is fundamentally very different.
“It is taking on their new-business process on their behalf. With our network, coverage and reach we will be able to do that more effectively than you may be able top do in your own right,” says Harrod.
Print management
Printers may or may not agree that there are good and bad print management (PM) models. But no one can deny Salmat’s print management credentials. PM has long been a facet of the Salmat offering. ‘Business process outsourcing’ is one of its major activities. Some of this is provided for by its considerable internal resources, including its high-speed digital printing battery (more on that later). But other platforms, and print in particular, are sourced from its panel of suppliers.
Harrod has a long-term association with the PM field – Corporate Express has an active PM arm. He says the approaches are very different. Corporate Express’ core competency is around logistics, so its PM model plays on this. “They are coming at this from a logistics-distribution platform and, therefore, tend to deal with the very complex print management requirements [such as] distributing material to multi-branch organisations, where it is a just-in-time logistics challenge.”
Salmat comes at print as one of many communications platforms. The company has a vested interest in most channels. While many print-related companies like to promote their cross-platform marketing capabilities, Salmat has a better argument than most to call itself a true ‘multi-channel communications company’.
But print is a big part of that. “Even in our BPO business, Salmat has managed very large quantities of print spend both on our behalf and on customers’ behalf. Customers recognise this is an area we live and breathe every day. We are purchasing print. We have a print procurement team. We are engaging with the industry. We have warehousing so we can do distribution,” says Harrod.
If much of this sounds like a similar sell to other print brokers out there, Harrod says think again. “We are very different to what you would consider to be the expense-reduction type managers out there.
“Their role in life is acting as a buyer’s agent, working on behalf of the buyer to secure the best possible deal. Certainly we want to do that, but our focus is to work with the industry. Our background is that we are a printer. We understand the printing industry personally. We still are a printer when it comes to highly personalised digital printing.”
“One of the greatest challenges in printing is dealing with waste and inefficiency. And that’s the scourge for everyone. It is the scourge for the industry. It is the scourge for the customer. The opportunity to manage the client and their activities and how they behave to drive the best efficiencies that the printer can benefit from is a role we can play.”
Stakeholder issues
Harrod talks about Salmat’s stakeholders – its customers, its staff, its shareholders and its suppliers. Like any business, the needs of any one of these groups can come into conflict with the requirements of the rest. Surely providing the best result for customers in terms of price is at odds with paying suppliers top dollar? Harrod agrees that it’s a delicate equation.
“We are trying to build a sustainable business here. We are trying to work with all of our stakeholders and balance their sometimes conflicting needs. Our ideal is to create a business that makes decisions that will benefit the majority.”
When it comes to print suppliers, he adds: “We didn’t just sit there as someone who is going to just take everyone to tender and smash the price. We want to improve the whole process and work with the industry and our clients. We are reliant on those print partners. Our SME strategy doesn’t work without their support. We want to see them survive and benefit because of that Salmat can bring to them.”
With all this talk about PM, don’t forget that Salmat is also a printer in its own right, and a big one at that.
Salmat’s focus is in a very focused vertical market of high-volume, high-speed personalised collateral, such as bank statements and phone bills. To this end, the company recently announced a substantial spend on two Océ Jetstream 2200 presses, the first in the region.
Harrod says the investment is all about colour. Is it about supplying a demand for colour or driving a demand for colour? Both, he says. While suppliers in the transactional print space have been extolling the virtues of colour documents, the market hasn’t been as ready to switch on as some might expect. Spending millions of dollars on new variable-data print capacity might seem like an expensive exercise in the tail wagging the dog, but it’s a calculated one.
Rival Computershare announced a similar investment a few weeks earlier (in Infoprint IP 5000s, which provide similar high-speed colour capabilities). That two sector leaders arrived at similar investment strategies at the same time should point toward a coming boom in colour statements.
“We are convinced about the effectiveness of a bill or statement to communicate. Statistics show that 95% get read. And in an environment where you have increasing clutter through other channels and concern around cut-through, we genuinely believe there will be a resurgence in mail. There is no doubt that messaging is far more effective in a colour environment than a mono environment,” says Harrod.
But isn’t there a risk in making such a big spend in kit to print transitional documents when we hear so much about the threat of bills going online? Harrod agrees there has been a “move toward electronic presentment” because “the customer lost its way with the bill and saw it more as a cost than an opportunity”.
But despite this, the ‘threat’ of electronic bills is less of a problem than some might think. “The shift to electronic is very subtle. It is averaging around 3% per annum. We have seen certain events that may have stepped that up but if you look at it over the past five years, it’s only about 3% per annum. And only about 3% of all bills are presented electronically.”
Harrod reckons even this fraction could shrink if his “resurgence” comes to pass. But even if a move away from print speeds up, Salmat, with its call centres and email divisions, is one of the few printers in the country that will see the upside.
“That has been part of our objective: to invest in what we see as threats, particularly technology threats.”
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