Check Out Check Products
Educate customers about value-added features for profit-boosting results.
One product that distributors know will be in constant de-mand from customers is checks.
Although there may be fluctuations in the type of check products (continuous vs. laser, for instance), the product itself is still a necessity, say manufacturers. "Checks are growing every year," said Sandy Horner, president of Diversiform Software Compatible Checks, Alexandria, Va. Despite the economy's ups and downs, businesses still need to pay employees and suppliers, she said. "The dollar amount on the checks might change, but they still need the checks."
Product niches within the category reflect customers' desire for convenience. Continuous checks are declining as customers move to cut-sheet and value-added products, said Bill Reid, Printegra's director of marketing.
Horner echoed that assessment, adding, "We say continuous is losing ground, but my purchase of continuous stock is holding steady." Orders lost or converted to cut-sheets seem to be compensated for by new orders on a fairly even basis, she noted.
Add Value and Profits
Reid outlined another trend that Printegra has seen that can result in greater profits. "We have seen a consistent movement by distributors to add value to check products by upgrading the level of document security and/or fraud protection," he said. Features include those integrated into the paper, such as toner grip, artificial and true watermarks, and chemical sensitivity. Printed features such as thermochromatic ink, void pantographs, microprinting and warning borders are also popular. "Over 80 percent of the check business we get is a repeat for that distributor. Previously, distributors would often quote only on a customer's existing check and features," Reid said. "Now, our distributors want to know all of the options that are available so that they can propose the best solution for their customers."
He suggested that distributors provide customers with an annual review to determine if their current check product serves their needs or if an upgrade is in order. The manufacturer offers a variety of support materials to aid in the selling process, such as samples and end-user informational brochures.
Often, customers who had previously been unconcerned about security features change their tune if they, their suppliers or even nearby businesses have been the victims of fraud.
The standard of minimum fraud protection also changes as more features become commonplace and bank tellers, retail cashiers and accounting departments become more educated in spotting the features. "Most customers list the security features on the check in a warning band or on the back of the check," Reid said.
In addition, a new law known as the Check Clearing for the 21st Century Act, or "Check 21," may lead to the use of more security features, Reid said. The act, which takes effect Oct. 28, allows banks to use electronic images, rather than the actual paper checks, when settling transactions with other banks across the nation. The intent is to cut down on the time and cost of processing checks. It is estimated that it costs the financial industry approximately $7 billion to process approximately 42 billion checks annually.
Faster processing times would enable banks to detect fraud sooner, industry experts say. More sophisticated imaging equipment will be able to detect forged signatures and other tampering, even those made by professional thieves. Thus, the more protection built into a check, the more effective the new equipment to be used at check processing facilities will be.
"The major banks that I have spoken with say that initially, it will be very expensive to begin processing checks this way," Reid noted. "But, in the next five years, you'll see an increase in the number of scanned checks at the point of deposit."
Growth Markets
Pressure-seal checks represent another growth market for distributors, Reid said. Although pressure-seal and mailer products are nothing new, short-run folder/sealer equipment prices have plummeted over the past three to five years, making the product affordable at last for companies who process 20,000 or fewer pieces annually, he said. "It's perfect even for those doing payroll once a week."
Previously, it may have cost approximately $8,000 to $10,000 for equipment to eliminate fold and seal operations, which was not cost-effective for smaller businesses. The same equipment now runs between $1,400 and $5,000. "The small- to medium-sized company will find it much easier to cost-justify this solution and gain from the efficiency that it provides," Reid commented. "We believe that the market is in its infancy."
Target markets for short-run regular business checks and pressure-seal checks include education, manufacturing, medical, staffing agencies, property management, utilities, title companies, government, and direct mail applications for coupons and rebate checks.
Options are also opening up for small check customers with limited budgets, Reid said. "In responding to the needs of our distributors who regularly compete with direct mail competitors for small check customers, we have upgraded the options available in our Limited line of checks. The upgraded product line provides distributors with an improved product without increasing the cost."
Printegra's FormSource Limited line of software-compatible checks added teal, red and brown ink colors, as well as free camera-ready logos for a more customized look. Limited customers wanting additional security can upgrade to Copy Alert Security paper, featuring the ODT void pantograph.
Horner noted that with the purchase of NEBS by Deluxe, distributors will face increased competition. "Deluxe will be aggressive at sending out information to the end-user offering discounts," she said. She believes that distributors should still be able to compete effectively on price and service. "But, you might need to lose a bit on the next order to keep customers," she said.
Online Convenience
With both convenience and choice as major selling points, online ordering of check products is gaining rapid acceptance. More than 50 percent of Printegra's customers use the manufacturer's Web site to place orders, Reid said, because they receive a three-day turnaround on new or exact repeat orders, rather than the standard five- to seven-day period. "Our customers like the Customer Service Online (CSOL) feature on our Web site," he said. "It allows them to track orders 24/7 from the time the orders are received at the factory until the customer signs for them."
Printegra is in the process of upgrading its customizable online print procurement solution—ePrintline, which launched last fall—to allow distributors to more easily upload price and products. Distributors can offer end-users the ability to create a customized proof and order checks, forms, print shop products and non-Printegra products online. Currently, there are two versions—one designed for vertical markets, such as users of specific software packages, and a corporate ID version. The manufacturer is planning to launch a third version, including Printegra's entire line of software-compatible checks and form products, by October.
In short, there's a lot of opportunity in the check market, particularly for distributors who stay on top of the latest developments in products, ordering and banking legislation.
Check it out!
By Janet R. Gross
- People:
- Profits Reid
- Sandy Horner