How do you make one plus one equal three? Because when you boil it down, that’s the essential logic behind any effective business merger: separating the strengths from the weaknesses in both partners to the ‘marriage’, then combining the strengths into a greater whole. This was the philosophy that spurred on businessman Fred Humphrey’s decision to integrate Melbourne mail processor Datasend Australia into his own mailing operation, Direct Mail & Marketing (DMM).

Melbourne-born Humphrey is a foundation director of Four Trade Only, which became DMM. He began his career with retail giant GJ Coles (as it was known then), eventually managing its in-plant print centre. It was in his next role as a sales rep at Output Media that he met Chris Glasgow. In 1986, the pair decided to branch out and form Four Trade Only. With the rising popularity of direct mail, the web business was transformed into Direct Mail & Marketing in 1996, initially using its reelfed acumen as a launch pad. 

DMM is based in Dandenong South in Victoria. Its clientele spans the gaming industry, not-for-profits such as the Victorian Automobile Chamber of Commerce (VACC) and the National Stroke Foundation, and retailers such as Spotlight Australia. This diverse range of clients require an equally eclectic range of printed and electronic communications.

The nuptials with Datasend, announced last December and consummated in March, have created a $30m-plus direct mail communications force in Australia – the largest privately owned mailing and marketing enterprise in Victoria.  

Humphrey says: “We were after growth through acquisition and we were looking at other customers, both in Australia and New Zealand, then we were approached by one of the directors of Datasend Australia, and we ultimately struck a deal. 

“We were looking for growth – with customers that complemented our range of existing customers but were different. With Datasend’s customers, we now have more of a retail focus,” he adds.

The other man behind the merger plan is Steve Strang, who came on-board as DMM’s chief operating officer in 2008. Before this, New Zealand-born Steve Strang had established a career in digital printing and marketing services. 

He migrated to Australia in 1998 after completing a print apprenticeship at Moore Business Systems in Auckland. After a few years of travelling, he returned to Melbourne in 2001 and worked as the operations manager at DMC Outsourcing for five years. “Outsourcing was a big buzzword in those times,” he says.

Strang completed a Masters degree through the GAMAA Scholarship programme and was hired by Excel Australasia as its general manager. “They were a digital print and online company, and it’s where I cut my teeth on that technology, which at the level offered by Excel, was quite new. The good thing about printing in Australia is the opportunities.”

Strang is no stranger to growth. “I came here a little over 10 years ago as a printer, and now I’m the COO of a $30m company,” he says.

So he knew that in terms of expansion, Datasend “had reached its ceiling. It needed help to take its next step.”

Initial talks began in October. DMM brought in accountants HLB Mann Judd to audit Datasend, and an agreement was inked in December. Bonding the two companies was a three-month process that culminated with the green light for the new operation in March.

“We were aiming for late February, but it became early March,” says Strang. That said, he is pleased with the progress. It was a huge undertaking. It meant new infrastructure, combining personnel and integrating technology.

Under one roof

With the Datasend brand officially mothballed, a key decision was to locate the merged entity at DMM’s existing headquarters. This spacious facility is in Dandenong South, midway between Dandenong and Frankston, within easy road access, and a short hop to the Australia Post mail centre.

But where was everyone going to sit? It was a question at the fore of Strang’s thinking. The building, which includes a sprawling 4,000m² production and storage area, underwent a $200,000-plus upgrade, complete with electricals, refurbishing of offices, and new signage.

“And where was everything going to fit? That was another of the challenges. Also, the timing of it, so we wouldn’t be jeopardising any clients,” he says. 

Making a blended family of two discrete sets of personnel has gone smoothly, says Strang. Before the acquisition, DMM had 65 permanent staff and Datasend had 42. The combined company has a headcount of 87. “There were some redundancies, and that’s never pleasant. Another issue we had was people actually accepting contracts to cover themselves, then resigning later.”

Staff and management of Datasend’s plastic wrapping division were not taken on board, but have since begun working for an independent business spun off around the former plastics division. 

“We brought in Karen Gately, a consultant from national human resources firm Ryan Gately, to talk to the combined staff in four sessions, in terms of occupational health and safety, and basic rules involving who they report to, their expected conduct, and all the basics required when you bring together two workforces from two different companies with different company cultures.”

If he could have the past three months again, what would he do differently? Strang says he wouldn’t change a thing. “But where we came to snags was communicating with Datasend. Quite a few of their staff were initially quite shocked about the news. It made things a bit difficult because they were a bit bewildered by the whole process.”

But Humphrey says he had confidence in senior management at Datasend, and he made a practice of spending time with its staff some two months before the shift. 

“We made sure everyone was on the same page and knew they had the same rights. We gave them confidence that they were going somewhere, and we kept them informed. We offered them employment agreements as soon as possible, not make them wait till the last day. 

“As soon as we knew we could use someone, we would offer them a work agreement. That was the way we agreed to proceed in our talks with the Datasend board. It gave an enormous boost in confidence and morale, and it meant people were showing up for work, and there was continuity during the interim.” 

Humphrey and Strang also spoke to key Datasend clients, assuring them the new operation would be able to offer them the optimum solution for their business.

Datasend was a traditional mail house turning over $10m, and had been located in nearby Braeside, where it ran digital print and mail processing equipment. The kit was mainly B&W digital and some colour imaging. Most of was relocated to Dandenong South.

“We brought across much of their IT equipment as well as their head of IT, Craig McCormack, who worked as a contractor for Datasend, and is now an employee of ours,” says Strang.

Tech wizardry

DMM transferred all of Datasend’s computer servers, which added six more to the DMM system. Then there were peripherals such as new air conditioning for the server room and licences for automation of data processing. In a bit of serendipity, both companies ran a Dolphin MIS, supplied in Australia by CT Consulting, and that helped smooth out the integration of operations. 

But DMM had the lion’s share of the technology to begin with. Its IT team handles SMS, email and PURLs through variable-data software XMPie, which is owned by Fuji Xerox. Over the past two years, it has been integrating XMPie with platforms such as Australia Post’s PRes, as well as OptiMail, DataTools and a range of solutions developed in-house.

Its hardware includes two DocuColor 5000, a Color 1000 Press, and four Nuvera 144 monochrome printers, including a Nuvera 144 MX with MICR capability for cheque printing.  Strang is emphatic about steering clear of high-volume inkjet. He says the capital cost is too high for the quality achievable. In any case, he sees it as a technology more suited to high-volume transactional printing.

The machine that underpins the company’s web division is unique in this hemisphere. This Direct On Line Imaging System (DOLIS) reelfed press is actually a pair of high-speed Xeikon monochrome units mounted on a TOF500 web press. The actual configuration was developed by DMM. The business-forms press combines four-colour process and digital printing, enabling one-pass, offset-quality VDP, with inline finishing. Its main use at DMM is printing advertising collateral and barcode numbering systems for charity and gaming industry mail, and for self-adhesive labels.

Strang says the company’s strategy is to provide complete solutions-based marketing, including online fulfilment. Stimulating print by offering a multimedia mix is tried and tested. Adding online has driven an increase in print order volume and added number of new clients. 

“Our clients love it. Fuji Xerox has told us we’re the biggest producer in Australia on the machines we have.”

With all this hungry hardware, DMM needs the customer base to match. It prints and fulfils for a wide range of VACC clients, some 7,000 of them, with a 24/7 pick-and-pack operation that ranges from an inbound call centre and online ordering, to payment via a PayPal portal, to despatch.

The DOLIS technology offers the National Stroke Foundation competitive pack pricing for mail to its potential donors, complete with a letter, a coupon and a personalised forme-cut label as a gift. The foundation has one of the largest donor databases in Australia.

Strang says: “They’re held up as a flagship to the rest of the charity industry about how you can utilise direct mail to generate a large donation base. They went from 6,000 donors five years ago to a current level of 240,000. What they want to achieve suits our technology and suits what they’re doing. Everything’s done in one pass instead of having to use multiple channels to get the product out.”

Spotlight Australia uses the DOLIS technology for its loyalty programme. The nationwide retail chain has extensive membership benefits. “They’re arguably the largest retail mail-using client in Australia – and one of the key reasons the merger was able to go ahead was Spotlight’s loyalty and support,” says Humphrey. 

Happy couple?

But even with the best will in the world, it’s no easy task to join up two companies, with different cultures and disparate models. 

Humphrey says: “Our short-term aim is to stabilise the new operation. It’s on track and we’re very happy with the position we’re in with both staff and clients.

“Staff and clients are giving us very positive feedback about the whole event. But what we’re also looking to now is to offer all our current and new customers all of our skills and abilities with a wider range of products.”

Strang adds: “There are projects already on the go with Datasend clients, utilising the extra services and products we can now provide.”

But direct mail is a very competitive sector – cut-throat even. What gives DMM its confidence? “Generally, we’re focusing on digital cutsheet, complemented by the DOLIS so we’ve got a couple of different avenues we can offer clients, whether they’re going for low cost or for high-quality colour. 

“We’ve got a lot of strings to our bow that the clients seem to appreciate and for which we’re being rewarded with our increase in revenue,” adds Strang.

Humphrey says: “The point we want to emphasise is our complete solution. Although we’ve only been a merged unit for a month now, the financial side is already coming to a position we want it to be in.”

Humphrey admits that the industry remains compact, but he has turned this to his advantage in the merger. The acquisition “has a lot to do with the size of Australia and the cost of capital equipment. The smaller companies find it hard to survive because of staff and capital costs. But printing and mailing is in a good position, if properly controlled”.

He rejects any notions that Datasend was an easy pickup after the ravages of the GFC. “It’s a case of rationalising resources and offering the most cost-effective ways of doing business.”

factfile

DMM established
1996

Merged with Datasend 2011

Combined turnover $30m

Location Dandenong South

Floorspace 4,000m²

Headcount 87

Equipment Fuji Xerox DocuColor 5000, a Color 1000 Press, and four Nuvera 144 mono printers. Only Direct On Line Imaging System (DOLIS) in the Southern Hemisphere

Business briefing merging

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