Postage Meter Firm Looks to Expand Market Share

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LONG BEACH, CA -- Competing against an industry giant is not easy, but that is what Francotyp-Postalia Mailing Solutions looks to do as it faces Pitney Bowes and smaller rivals like Neopost.


Pitney Bowes rents an estimated 80 percent of the 1.6 million postage meters installed in the market. Neopost and Hasler each have an 8 percent share, and 3.5 percent lies with Francotyp-Postalia, a German-owned firm in the United States since 1963.


"Where I see us going over the next five years is to increase that meter market share," said Larry D. Turner, president of Francotyp-Postalia, Addison, IL. "I'd like to see us doubling." Turner was attending the National Center for Database Marketing summer show here.


That is ambitious for a company with only 60,000 customers. Since 1997, Francotyp-Postalia's market share has hardly budged. But it is better than in 1990, when it did not register enough meters with the U.S. Postal Service to even make a rounding error in market share.


"It's a flat industry, and all the manufacturers vie for the same customers," he said. "So there's a lot of switching that takes place."


That makes customer service in areas like billing and servicing a key differentiator. Those two are strongly linked with new products and entering new markets of smaller customers -- key prongs of Francotyp-Postalia's growth strategy.


Take Ultimail, the company's latest product launched in the first quarter of this year. It is a mailing system with a transporter that moves mail automatically and has a postage meter attached. The company sells the Ultimail base for $4,000 to $5,000 and rents the meter -- according to USPS rules -- for $30 a month. USA Today uses the machine to meter its correspondence.


Another market that beckons are small mailers. Francotyp-Postalia's 120 dealers are targeting organizations with three to five employees. Bigger clients include Progressive Insurance in Cleveland, Seattle storage provider Shuregard, Issaquah, WA-based Costco and Lowe's, the Wilkesboro, NC, hardware chain.


Among the products pushed to smaller firms are the standalone postage meters starting at $19 monthly in rent and folders/inserters costing up to $45,000.


Turner claims his company's products help new clients. Jean's Printing, a 29-year-old commercial printer in Rifle, CO, is an example. The firm printed bills, envelopes, newsletters and mailers. But customers also hankered for a bulk mail service. Jean's partner Jay Barner resisted. It took John Scallion, a salesman at Francotyp-Postalia dealer Avalanche Business Systems Inc., to change Barner's mind.


Scallion noted that no company offered a bulk mailing service in a 100-mile radius of that western Colorado region. Jobs were being outsourced to bulk mailers in Denver and Phoenix.


Using Francotyp-Postalia's equipment, Jean's added bulk mailing to its services. It used the JetMail postage meter and other equipment that let one person run a bulk job of 50,000 mail pieces.


Jean's customers now using this option include real estate agents, accountants, a homeowners association and a hospital. It mails catalogs, bills, books, staff mailings, stockholder reports and newsletters. Mailings average 200 to 1,500 pieces.


This extra service not only shaved postage costs for Jean's customers, Turner said, it saved time. Prior to outsourcing, Jean's customers typically took two to three days to get statements out the door. Bar coding and taking advantage of bulk mail rates helped an undisclosed customer save $20,000 in postage.


Francotyp-Postalia is a subsidiary of the same-named parent based in Birkenwerder, Germany. The parent has a 50 percent market share at home, 25 percent in Europe and 12.5 percent worldwide. But its U.S. presence is miniscule.


"The industry is notorious for poor service. But the biggest challenge is, nobody knows us and customers don't know they've got an option," Turner said. "We have $40 million in revenue, but we don't have a lot of advertising. We don't have the money that the 800-pound gorillas have."


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