Principles for Building a $100 Million Company - Interview with Mike Panaggio, CEO of DME
By Barb Pellow
February 28, 2007 -- As part of the PODi Conference the week of February 11, 2007, I had the opportunity to moderate a session entitled “Interview with an Innovator.” The term “innovator” has a number of synonyms. An innovator is a modernizer, a trend setter, a go-getter, a visionary, an avant-gardist, a reformer. People like this are pioneers, inventors, forerunners, and developers who have mastered the art of discovery. They set a different pace, they lead, they are the “gurus.” Mike Panaggio, Owner and CEO at DME, illustrated that he is synonymous with the term innovator.
DME, one of the most successful digital color printing sites in the U.S., understands that its business is marketing services—not printing. The company was founded in 1982 by Panaggio as a vertically-integrated marketing service provider. Early on, his vision was to step out of the box and combine new technologies and marketing media with innovative design to create integrated communications that are truly personalized and targeted to individual customers. From this initial vision, DME has grown into a company that had 2006 revenues in excess of $100 million with more than 700 associates, growing at more than 20% annually.
During the course of the interview, Mike provided the audience a tremendous perspective on the business principles he established to build a $100 million business.
- Select the right customers and verticals and create programs that offer recurring revenue models.
While DME has clients in a number of different industry segments, its primary focus has been on the automotive segment. More than 40% of revenues are linked to DME's ability to create and implement high-tech lead generation solutions for automotive retention based marketing as well as build parts and service marketing programs for auto dealers. DME’s parts and service marketing achievements have resulted in national recognition from such automotive industry leaders as Toyota Motor Sales, USA, Inc.; AutoNation, Inc.; and American Honda Motor Co., Inc. DME has established a solution that integrates dealership data with customer survey responses and other proprietary information. The company leverages this data to drive campaigns using a combination of direct mail, e-mail, telecommunications, voice broadcast messaging, video, the Internet, and Web surveys. According to Panaggio, “We have positioned DME to be a company that provides the right medium for delivering the right message to the right customer. We are leveraging technology to produce integrated cross-media campaigns and then we track, test, and communicate campaign results so that our customers have a clear understanding of the value that we deliver. Providing data on campaign effectiveness is critical to ensuring repetitive programs.”
Panaggio also explained, “We maintain a select group of customers because it takes market intelligence and extensive resources to really satisfy the needs of those companies. We work with a customer in developing a personalized marketing strategy, and that’s when we know we’re more than a vendor. If a customer doesn’t let us in at the strategy stage—and just wants us to print for them—we know that account is not going to be long-lived.”
- Find the best resources—People, production, software
Panaggio also believes in investing in “the best” in terms of people, equipment, and software solutions. Panaggio said, “Early on, I purchased some used equipment and I quickly learned that to be the leader you need to invest in the latest technologies.” When you walk through DME, you do see the latest. DME is equipped with state-of-the-art IT technologies, digital color presses including iGEN3s and Xeikon engines, Xerox Nuveras, and Kodak Digimasters. DME recognized the increasing role that video continues to play in one-to-one marketing. To help pioneer the use of Web-based video marketing content, DME formed its own in-house video production department. The cornerstone of the department is DME’s on-campus greenscreen production studio, which is capable of shooting hi-definition video with three studio cameras. From a personnel perspective, Panaggio told the PODi audience that he employs more than 120 IT resources that provide Web services, database management, programming, and application support.
- Make your place of business your most potent marketing weapon
A visit to DME is a proof point that its place of business is its most competitive weapon. DME developed an integrated marketing tour of its facility that explains the importance of “knowing your customer” and building campaigns to treat every customer as an individual where the information that you share is relevant. The experience is built around a fictitious character named Jack Schmidt, and Panaggio reports that the overriding message is, “If you don’t know Jack Schmidt, you won’t get Jack Schmidt.” To gain insight into the DME tour experience, view the interactive demo at http://www.dmenet.com/directmarketing/jackschmidt.html. During the first quarter of 2007, DME is updating the tour experience. According to Panaggio, "Digital print and data technology have expanded DME's capabilities so much farther than the tour from only three years ago. This new tour will capture the dynamics of what we do now and what we're already creating for the future." DME is continuing to evolve its most competitive weapon—its place of business.
- Be the best place to work in the area
Panaggio realizes that people are its biggest asset and wants to make sure that DME is the best place to work in the area. According to Panaggio, “I know that the surest way to keep DME in a position of strength is to fortify our innovation operations. To do this, we must be in touch with our innovators. That means our staff. Yes, the most important asset we have is one that we actually lease. We do not have a binding contract on any of it, and in most cases it can be gone in two weeks or less. Therefore, we must take special care of it and help it appreciate by appreciating it.”
Mike’s perspective demonstrates the focus that he has on people. A full-size gym complete with personal trainers on staff and an on-site hair salon are just two of the perks the company offers associates as part of a commitment to their overall well-being.
- Focus on sales growth
Panaggio views himself as a combination of a sales rep and a customer service rep. As the CEO, he considers it absolutely essential that he is in front of customers driving the business. Panaggio stated, “If I’m not out there working harder than anyone, how am I going to get others to follow? The speed of the leader determines the speed of the pack.”
- Spend the dollars you make on expansion
Everyone is in business to make a profit. According to Panaggio, the key is using that profit to make your business even more successful. When he makes a decision to invest, Mike doesn’t hold back. His company recently installed four iGEN3 presses. According to Panaggio, “At first we didn’t have a lot of work to put on the iGEN3 presses, but having the latest technology energized the entire company. They saw the management’s commitment to the market opportunity. Today, the iGEN3s are running at capacity.”
- Be proactive and respond to change
Panaggio is a firm believer in the philosophy of Charles Darwin. Darwin is quoted as saying, “It is not the strongest of the species that survives, nor the most intelligent, but the one that is most responsive to change.” DME started as a small traditional print/direct mail shop in 1982 with seven employees. Today, DME is on an 11-acre campus with 120,000 square feet of office space and over 20 departments. It offers traditional and digital print services, match mail fulfillment services, database management, Web operations (hosting over 800 sites and managing PURLs), three customer interaction centers, a variable data programming department, creative services, and a three camera greenscreen studio. Panaggio stated, “By working closely with our clients and understanding requirements, we identified emerging opportunities and then leveraged technologies that would help them more effectively meet their business needs. We were proactive in our innovative approach to the market.”
Panaggio has demonstrated that he is synonymous with the term “innovator”—he is a modernizer, a trend-setter, and a go-getter. He also possesses the unique ability to identify and embrace disruptive technologies. Panaggio saw markets that did not exist or were emerging but difficult to analyze. This vision and willingness to take a risk enabled Mike to build a $100 million business.
Graphic communications service providers need to take the time know their customer’s needs and then look around and understand emerging communication technologies. They need to assess the potential business impact and develop innovative strategies for sustainable growth.
Thomas Edison once quipped, “Opportunity is missed by most people because it is dressed in coveralls and looks like work.” It’s clear to me that Mike Panaggio has had his coveralls on for a long time!
Let Barb know what you think! She can be reached via email at firstname.lastname@example.org.
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Barbara A. Pellow, Principal, Pellow and Partners
A digital printing and publishing pioneer and marketing expert, Barbara Pellow formed Pellow and Partners to help companies develop multi-media strategies that ride the information wave. Whether it is developing a strategy to launch a new product, building a strategic marketing plan or educating your sales force on how to deliver an effective value proposition, Pellow and Partners brings the knowledge and skills to help companies expand and grow business opportunity.
Before establishing her consulting practice, Pellow was the Chief Marketing Officer of Kodak's Graphic Communications Group, where she was responsible for all marketing activities for the division, including business strategy, marketing communications, public relations, marketing intelligence and advertising strategy. Prior to joining Kodak, Pellow was the Gannett chair in integrated publishing sciences in Rochester Institute of Technology's (RIT) School of Printing Management and Sciences (SPMS). As chair, Barb focused on the relationship between traditional paper-based media and emerging electronic new media. Previously, she served as Corporate Vice President of Marketing for IKON Office Solutions; Corporate Vice President of Marketing for Indigo; Vice President and General Manager for the Xerox Document Production Systems Group; and Director of the On Demand Printing and Publishing Service at CAP Ventures, an internationally known firm specializing in the digital document and print on demand industry
She is a frequent speaker at industry events and a recognized author.
Barb can be reached via email at email@example.com and by telephone at 585 554 4144.