FIVE YEARS AGO THE NERVE CENTRE OF NICK Dixon’s business was a wood panelled lounge inside Howitt and Sons. It had sofas, was decorated in a 1970s style and of course it had its own cocktail bar. It was a throwback to the company’s heyday when Patrick Howitt’s flamboyance and hospitality brought some stylish business to the Nottingham factory and enabled him to grow it into Heidelberg’s biggest UK customer and operator of its first web presses. Howitt was at the forefront of the industry.

Today the hub of the Lateral Group is the second floor of an office block looking out on to another 1970s icon, London’s Barbican estate. A leather sofa remains, low and black under a matrix of logos from the group’s major customers, and a flat panel display opposite shows the corporate website. The group’s own logo is etched into the glass-panelled meeting room and above the reception desk. It is very 21st century. The office floor is open plan and there’s a discussion under way about how to fine-tune a web page so that a visitor imparts the information required and receives due reward. This is a company vastly different to the old Howitt, and one which is at the forefront of today’s printing industry.

At the helm is Nick Dixon, who is now Lateral’s ceo. Five years ago he bought Howitt out of receivership along with Rick Taylor and Michael Hunter, colleagues from a successful time driving Colourgraphic to the fore in the UK direct mail and promotional print sector. At the time Howitt had Heidelberg M600 webs, sheetfed litho and a rudimentary lasering business. At the time, print was driving the business. It is still the cash generator of the business, responsible for £40 million of the group’s £50 million sales and employing 330 of Lateral’s 400 staff. But it is no longer alone and it no longer drives the business. First came the acquisition of ELR, once a pioneer digital printer in Edenbridge and since renamed Dialogue Solutions; and then came Data Lateral as the data crunching arm of the business, and its sibling business Shift Click as the specialist internet operation. This designs the websites which gather the personal data that is used by Data Lateral to segment audiences and manage marketing campaigns online, on paper or on both.

Combined with back office and fulfilment functions, these companies offer 11 different services and points of contact for clients to do business with the Lateral Group.

It is all about improving the effectiveness of marketing or as Dixon explains: “It’s all about helping our clients engage with their customers; and helping our customers to sell more of their stuff through better communications, and to drive cost out of the process of doing so.”

The latter part of that message is one that print management companies have used to gain traction and win business in recent years. But promising to drive out costs without any other benefit is starting to wear thin and value for money is starting to creep in to the print management proposition.

Dixon isn’t convinced this simplistic approach is right. “The mechanics do not stack up because as the product changes, how can you measure value for money? We are about improving the effectiveness of print spend, which can be measured. This is very different to the cost reduction model.”

The strategy that the Lateral Group is now rolling out had first been sketched out at Colourgraphic, making the initial idea about nine years old. When the team wanted to get back into the thick of the UK market, Dixon says the first idea had been to buy a print management company, as these had all the necessary client contacts that would be needed to develop a data-centric business. But at the time, valuations on print management businesses were sky high.

“It would have been a great route in. The idea was to offer solutions across all channels of marketing,” he says. Instead they were offered Howitt and grasped it. “It had great clients and a great reputation,” says Dixon.

The other parts of the group have quickly come together and then realigned to perform either as a group or as separate entities. This is one reason why each has retained its own identity and can offer its specific services to customers. Together, however, they can provide what Dixon calls Integrated Communications Management.

The process is not complete; for example, more work needs to be done to strengthen the back office, Dixon says. But the major overhauls are complete. Print management has been added as part of Dialogue Solutions, arguably the part of the group that has changed most. Dialogue has developed Market Power, an internet-based application for franchises and multi-site companies to manage print purchasing, while head office retains control over brand integrity and what is spent.

That is one option in the Integrated Communications Management process. As an end-to-end process it starts by developing the strategy for the client, understanding the customer’s aims and objectives. The next step is identifying the prospects and the ways to communicate with them as individuals or as tightly segmented groups. One email campaign for O2 offered 106,000 possible combinations of the message and offers. Then comes collating the response generated and looking to enhance that through a combination of online and print communications, fulfilment or call handling. And the circle can begin again, either refining the offers sent out or changing the emphasis from customer acquisition to customer retention. For Domino’s Pizza the aim is to move customers from irregular buyers to a different category of more lucrative customer (see panel).

The results can be spectacular. Dixon says that the finance director of retailer Superdrug flagged concern that so many customers were responding to the summertime campaign organised by Lateral that the profit margins might become depressed. But this was more than cancelled out by the rise in non-campaign sales through the increase in store visits. In all there was a 460% uplift.

In the past year Lateral has twice delivered for the government and the Central Office of Information, first for its Change4Life campaign and more recently for the Swine Flu warning. The latter showed how fast the company could respond. The former was a more carefully conceived campaign with television advertising supported by a door drop to every UK household and then different mailings according to a questionnaire that was filled in and sent back. “It was the first time that all 11 steps in Integrated Communications Management was used,” says Dixon. It will not be the last.

The company has been gaining profile and its message about the effectiveness of inter-linked communications is getting across to companies that are looking for better value during this recession. Where companies used to have managers for online and offline marketing, these are now under the control of the marketing director and with reduced staff levels. The appeal of a company that can manage the entire process is clear. Dixon predicts there is also going to be consolidation among data processing agencies, the vast majority of which are small businesses with few links into other parts of the process. It means opportunity for Dixon and his team. “What we have put together is very scalable,” he says. That won’t include any vast expansion of printing capacity. This could top out at £45 million for Howitts, so there is unlikely to be any investment in new web presses, for example. The digital area could be different, though again Dixon sees little prospect of the group buying a high-speed digital web press for transpromo work, for instance. “We have no need to own the digital engines for that. We can buy the capacity from the market, but we can be involved from the input side,” he says.

“We have been working with one of the high street banks that has to remove £100 million from the cost lines. We suggested that instead of printing and storing all the literature for welcome packs for new account holders, we could supply new customers with either a printed pack or an online pack where appropriate. While it is not a direct mail application, this is using the same customer segmentation tools and knowledge that the marketing side of the business uses.”

Expansion as it comes might also be into Europe. At one time Colourgraphic generated 30% of its revenues from the continent, so Dixon has no fear of operating in a different environment. While there will certainly be organic growth, there could be acquisition as well. “We might need private equity money for the right acquisition,” he says.

With sales of £50 million now and Ebitda of £4.4 million in the latest results, Lateral is not going to struggle to raise the funds should that time come.

Print may be providing the lion’s share of the revenue currently, but the group’s future depends on the success of the smarter parts of the business. “Anybody that is just offering an ink on paper proposition is going to be challenged in the future,” Dixon predicts. Lateral has left that proposition a long way behind. Nine years ago Dixon had a vision about joined up thinking in delivering a marketing campaign. Today that vision has cleared and the group is looking at a solid future.


How Lateral delivers for Domino’s
Getting the right message to the right audience is the aim of the campaign that Lateral has run for Domino’s home pizza delivery. It calls on a number of the services in the group: specifically the ability to crunch databases into prospects; then to apply insight and strategy, first to work out which messages will work for which consumer type, and then to design the simple flyer and offer that will elicit the desired response (thus making a customer a more profitable customer). So a Domino’s customer might be a Blue Mooner, a Crazy Crustie, a Cool Quarterly and so on. Some might be offered the opportunity to increase the value of their order through offering drinks and dips; others might be encouraged to order pizzas more frequently, to try something new, or to find opportunities to have a Domino’s Pizza party.

“We execute this strategy at an individual level to give the best response,” says director of strategy Daniel Cross.

The impact of each mailing campaign is analysed on rolling four-week periods, showing how many customers have been moved into a new sector through the take-up of the different offers, and thus increasing their value as a customer to the fast food company.

The same analysis techniques can be used in different sectors. For a clothes retail company, Lateral showed that the most active online customers were not necessarily the most profitable customers, as many of the clothes were returned unsold. Instead, by targeting the best half of the audience with a new campaign, Lateral delivered the responses from the equivalent of mailing 72% of its prospects. “So we can mail less in order to deliver the same response; or we can mail the same numbers, but with the expectation of a better response,” says Cross. “So the client can work with us to save money or choose to try to grow their business with the same expenditure.”