Spring ‘05

An executive advisor from Pitney Bowes

CUSTOMERCUSTOMER ACQUISACQUISITTION,ION, CUSTOMERCUSTOMERGROWTHGROWTH How mail integrates into customer communication to increase efficiency and effectiveness

CUSTOMER

Going through channels: Integrating communications

“The Internet will mark the end of mail” and other misguided predictions IN THIS ISSUE

Top CEOs and U.S. Postmaster General John Potter discuss reform and the future of mail

Think global, mail global: An international perspective 2 Going through channels: Integrating communications 6 Misguided predictions about the end of mail 12 CEOs and the Postmaster General on the future of mail

16 Think global, mail global CONTENTS 18 Mitigating the coming postal rate increase 20 Changing environments require ongoing innovations 22 Meanwhile, in the real world...

LETTER FROM THE EDITOR

Dear Colleague,

Many of us in business, particularly marketers, can become enamored with the next new thing. We sometimes forget that proven methods are often the most effective. And we totally miss that “old” tools are becoming “new” again.

An example of this is mail, one of the most trusted and successful methods of acquiring and retaining customers. Despite the proliferation of electronic communication, paper-based mail continues to thrive, and can have a symbiotic relationship with other communication channels.

In this issue of Pivotal Thoughts, you’ll find insights from leading chief executives, examinations of misguided predictions, and information on how smart companies are using mail as a key element of their integrated marketing and customer communication efforts. Our goal is to provide senior executives with important and practical information for running their businesses more efficiently and effectively.

I hope that you find Pivotal Thoughts to be worthwhile reading, and I encourage you to send me your thoughts. If you decide not to use the mail, you can also send any comments, suggestions or ideas for future issues to me by e-mail at [email protected].

Sincerely,

Matthew L. Sawyer Editor-in-Chief It’s what’s inside the envelope that counts GOING THROUGHTHROUGH INTEGRATING COMMUNICATION TO ACQUIRE AND GROW CHANNELSCHANNELS CUSTOMERS

Acquisition of new customers and retention of capture and care, one achieves the same kind of existing ones. They may be the two most critical diversification nirvana that financial advisors activities that any business undertakes. After recommend in an investment portfolio. all, one can build a better mousetrap, and create an impressive distribution and delivery This relationship among communication system for it, and develop a surefire marketing methods explains why every one of them is plan for it. But if there’s an inadequate plan for thriving today — even in the face of channel- finding new customers and nurturing current specific obstacles such as don’t-call lists, ones, then those customers are bound to wind anti-spam software, TV commercial pass- up at the mousetrap maker across the street. throughs, and rising postal rates.

Those who are successful at developing a communication plan to acquire and retain Integrating multiple customers are generally those that discover channels in a cohesive the value of integration — that is, combining mul- plan for customer tiple different communication methods in a capture and care achieves cohesive mix. the same kind of diversification nirvana that financial advisors This stands to reason. There is no one ideal recommend in an investment portfolio. customer capture and communications channel that optimizes reach, frequency, message focus, GOING target specificity and cost-effectiveness. Each channel has its strengths, which are balanced by Marketers know full well that reducing or the complementary strengths of the others. eliminating any one channelT simplyH becauseR it OUGH While advertising, for example, is strong on faces roadblocks is an ill-conceived exercise. It brand-building and reach, directGOING mail is strong upsets the delicate balance that makes for on targeted messaging and measurable ROI, effective, successful customerC communicationsHANNELS and electronic communication is strong on —ensuring that the right information is speedC and cost-effectiveness.H A N Ndelivered Eto the right Lperson at theS right time. Of course, each channel also has respective In large part, this accounts for the healthy state weaknesses in some areas, for which the of mail, even in the face of recent electronic others compensate. When one integrates multiple technologies, such as e-commerce and e-mail. delivery channels in a cohesive plan for customer

2 “The Internet and email seem to provide it in the mail, you know that somebody’s going affordances that make them very attractive to receive it, and you know they’ll go to their alternatives over mail, but only for some rather mailbox, and you know they’re going to touch it.” specialized and perhaps limited forms of communication,” says Fouad H. Nader of Direct mail continues to be a major player in the research firm Adrenale Corporation.1 marketing mix, even amid the growing influence of Internet advertising. Forecasts of Internet While it’s true that e-mail, for example, is now advertising expenditures have been dramatically the delivery method of choice for personal cor- reduced from the outsized predictions during respondence (personal e-mails now outnumber the dot-com boom. As the chart below indi- personal letters by 33 to 1), physical mail cates, direct mail is maintaining and even gaining remains a vital part of the communications mix share, due to its effective lead generation for businesses and organizations worldwide. capabilities and attractive cost-efficiency ratios. Mail continues to share this relationship with electronic communication. One example: Email So, what exactly are the attributes that mail campaigns and website registration can funnel brings to a communications plan? And what names into a database for more targeted and makes it so valuable a tool for acquiring and effective direct mail campaigns. retaining customers?

Mail retains its status as the preferred mechanism CHANGING SHARES OF VARIOUS MEDIA IN THE US • • • • • • for delivery of such marketing content as publi- • • • • • • • • • • • • cations, retail catalogues and direct advertising. • • • • • • 100% And it accounts for two-thirds of transactional • • • • • • • • • • • • activity such as billing and payment.2 80% • • • • • • • • • • • • • • • • • • 60% • • • • • • “The one thing about a letter,” says U.S. • • • • • • • • • • • • Postmaster General John Potter, “is when you put 40% • • • • • • • • • • • • • • • • • • 20% • • • • • • • • • • • •

'82 '85 '88 '91 '94 '97 '00 '03

Newspaper TV Magazines Radio Internet Direct Mail

Sources: Pitney Bowes analysis based on Veronis Suhler Stevenson (2004) and DMA (1995-2004) data

12 4 3 65

3 Mail has the power to build relationships has already made the investment to deliver Growth and profit lie not in single transactions, information to a customer, why not optimize but in ongoing relationships. As businesses that investment by adding information that can around the world seek customers that will buy generate feedback and revenue? It is a way of today and tomorrow, they’re looking to grow broadening one’s customer base and revenue ongoing relationships and profitability within opportunity by making mail work harder and their existing customer base. That is why CRM smarter — and at negligible cost. has been a mainstay of corporate marketing strategy and processing improvements for better than a decade. That is also why there has been “A well-crafted mail piece has the advantage of being able to a growing appreciation of the strategic value of get through to every home and communications in building relationships. business and make regular contact with customers”

Customer relationships aren’t built overnight. It Murray D. Martin, President takes steady contact to forge a bond with a and Chief Operating Officer of Pitney Bowes. prospect, then to cement that bond with a prospect-turned-customer.

“A well-crafted mail piece has the advantage of While some predicted that technology would being able to get through to every home and decrease mail’s effectiveness, evidence to the business and make regular contact with cus- contrary abounds. Technology, in fact, is making tomers,” says Murray D. Martin, President and mail more powerful than ever, by integrating Chief Operating Officer of Pitney Bowes. And mail data with other parts of business. just as importantly, unlike other methods, mail can do this in a non-intrusive manner. This is Today, technology and analytics are being particularly important given the growing body of employed to unleash mail’s power and connect regulatory constraints and screening technologies organizations with the information they need to such as fax blockers, caller ID, and “do not call” enhance impact and performance. An example registries in the U.S., and anti-spam campaigns is “intelligent mail,” which flags every envelope, in the U.K. and elsewhere. self-mailer and package and contains rich information that indicates its identity and One of the reasons that mail is such an effective verifies the authenticity of the mail piece. relationship-builder is that it gives a business Intelligent mail technology not only provides the opportunity to spend more time, more often, information about the origin and destination of with more key stakeholders than many other any specific mail piece, but also its route, for types of communications. In part, this is end-to-end tracking and tracing. because of the myriad different mail pieces that a typical customer receives. Invoices. Delivery “There is information on every mail piece,” says confirmations. Statements. Surveys. Inquiry Cathleen Black, President of publishing responses. Every one of these represents giant Hearst Magazines, which publishes and another opportunity to strengthen a relationship. mails 18 magazines in more than 100 countries. This information, when used strategically, can That is why best practices in integrated mail provide visibility into the mail stream that can and document management help optimize reduce costs, streamline processes and customer contacts; they enhance the quality improve efficiency. and value of each mail piece. After all, if one

4 Mail reduces communications waste Mail is visceral and inefficiency Perhaps, however, the overriding reason that True, physical mail is more expensive than elec- mail is still such a powerful communications tronic; however, it can be more efficient and medium, quite simply, people like receiving it. increase return on investment. “No matter who you are, people still like that “Through the mail, we are getting a better ROI moment when they go to the mailbox, six days for our advertisers,” says S. Scott Harding, CEO a week,” says Judy Marks, president of of ADVO, Inc., the largest shared mail company Distribution Technologies at systems integration in the country, handling 600 million pieces of titan Lockheed Martin. “Families fight over it at advertising a day. “They are measuring it, times. It works. It’s ubiquitous. Whether you they’re monitoring it, and they’re seeing double- send something as a package, an advertisement, digit growth.” whatever, it’s all about customer relationship management.” Mail also does a better job than most other channels at reducing waste. Address manage- Ann S. Moore, Chairman and CEO of Time Inc., ment software helps ensure the accuracy of which spends $600 million a year on postage to names and addresses on mail pieces. This is deliver its publications, agrees. “Market the first step to enhancing responsiveness and research we’ve conducted privately said that not strengthening customer relationships. And only does the American consumer love to go to businesses that don’t take this step typically the mailbox, but the American family loves the forfeit 15% of their mail investment to men and women who deliver to that mailbox.” undeliverability — not to mention the expense of handling large volumes of returned mail that “There are many reasons why people want to ultimately end up being discarded, and the labor get mail,” says Michael J. Critelli, Chairman and cost of resending that mail. Add it up, and and CEO of Pitney Bowes, “and there are many the waste is staggering: more than $7 billion in good economic reasons why people want to out-of-pocket costs for “undeliverable as send it.” addressed” mail each year.

Poor address management can impact revenue “Through the mail, as well. If the mail contains a bill that is we are getting a better ROI delivered to the wrong destination, the result is for our advertisers” lost or delayed revenue. If a marketing direct mailer doesn’t get delivered, the result is a lost opportunity to generate revenue. Address S. Scott Harding, CEO of ADVO, Inc. management helps prevent this problem, leading to enhanced efficiency and reduced waste. In addition, better-designed documents delivered through the mail can significantly reduce calls to service centers from confused consumers.

1. Source: “Electronic Substitution for Mail: Models and Results; Myth and Reality,” December 12, 2004. 2. Source: Pitney Bowes and Arthur D. Little.

2 5 "THE"THE INTERNETINTERNET WILLWILL MARKMARK THETHE ENDEND AND OTHER MISGUIDED OFOF MAILMAIL" PREDICTIONS

“The paperless office is close.”

Business Week, 1975

It’s curious how business predictions come and Nevertheless, the soothsayers persist in positing go, isn’t it? Admittedly, technology is a wonderful that online technology will surely mark the end thing. But business professionals would be well of mail. Yet, your family’s mailbox is as stuffed advised not to attribute supernatural capabilities now as it’s ever been. to it. A quick glance at the recent past (like, say, the late 90s) will reveal that hyperventilating “The precipitous decline of total mail volume over new technologies can have some rather due to electronic alternatives that has been deleterious effects. predicted for over a decade has not happened,” says researcher Fouad H. Nader of Adrenale The business world is full of intelligent people. Corporation.1 And although intelligence does not necessarily translate to clairvoyance, a favorite pastime of Let us have a look at seven current, prevalent late seems to be using the advent of electronic predictions about electronic and mail communications to predict a lessening of the communications — and conduct a reality check reliance of mail — when, in fact, a growing body on each one. of evidence shows that these two delivery methods actually work quite well in concert.

6 Prediction #1: The Internet will mark the end of mail The fact is, Internet users receive more mail Perhaps for peer-to-peer correspondence, that than non-users do. There’s good reason for this. is indeed the case. In 1992, 80 percent of Demographically, Internet users are generally personal and business correspondence was more affluent. And as Chart 1 shows, the more delivered via the mail. Ten years later, with the affluent people are, the more mail they receive. explosion of e-mail, that number had been The rising line indicates Internet access by sliced in half. household income; the rising bars indicate volume of mail received by household income. But that’s only a small part of the picture, Why are the two trending in parallel? Because because mail delivers much more than personal the pessimistic pundits were wrong. letters. In fact, the peer-to-peer correspon- dence that e-mail has increasingly replaced Prediction #2: never accounted for more than 1 percent of the E-mail will replace mail total mailstream. The other 99 percent is publications and direct marketing advertising “Sixty percent of mail will be delivered electron- and financial statements and important ically by the year 2000,” The Wall Street Journal documents and more. And as Chart 2 shows, predicted in 1987. “Electronic mail is zapping mail is more than holding its own in the publi- first-class deliveries and could replace 25 cations, advertising and transactional services percent of snail mail by 2000,” quotes TIME categories. magazine in a 1998 issue.

2003 US MAIL VOLUME BY INCOME (chart 1) 20 • • 80% • • • • First-Class • • 70% 15 Standard A 60% 50% 10 40% • •••••••••••• • • • • 30% Pieces

5 20% Internet Penetration per household •••••••••••• 10% per <7K -10K 10K -20K 20K -30K 30K -50K 50K ->65K week 0 0% ••••••••••••••••••••••••••••••••••••••••• Annual Income (USD$) Source: US household diary 2003

MAIL’S SHARE IS EVOLVING (chart 2) MESSAGES Mail e-mail Instant messaging TRANSACTIONAL Fax SERVICES Voice mail Mail • Electronic billing • Electronic payment • ADVERTISING • Direct Mail • TV Mail's • Radio share Print • PUBLICATIONS Internet • Mail Telemarketing • Retail • Online • • 80% 40% 3.4% 2.5% 6.7% 6.3% 72% 67% ••••••••••••••••••••••••••••••••• '92 '02 '92 '02 '92 '02 '92 '02

Source: Pitney Bowes and Arthur D. Little 7 Prediction #3: Online shopping will mean curtains for mail Not so far. In fact, Internet commerce has They’ll have to widen their definition of “done.” actually proven to be an enabler of mail. The In truth, most of the increased usage brought soothsayers, perhaps, neglected to consider about by burgeoning cable modem and DSL that while ordering has gone online, merchan- services is not for mail-related transactions. dise must be physically moved from the seller’s There’s actually little overlap between what mail warehouse to the buyer’s home or business. does well and what e-communication does well. And even the widest e-bandwidth can’t accomplish such a feat. Online and Chart 3 shows the most prevalent applications off-line retailers such as eBay, Netflix, for broadband communication today — and Blockbuster, Wal-Mart and Amazon rely on mail there isn’t much that replaces a traditional mail- as part of their business model. And couriers based activity. Downloading videos and music? such as UPS and Fedex and the U.S. Postal Publishing personal Web pages? Service are doing very well by online shopping, Videoconferencing? Playing online games? thank you. Those are brand new activities and capabilities brought on by a new technology. They didn’t Prediction #4: exist a few years ago. And they certainly don’t Broadband technology will make mail obsolete replace any mail-related applications. “Sure,” they said a few years ago, “as long as electronic communication is hamstrung by snail-like dial-up speeds, mail stands a chance. But wait until broadband technology becomes prevalent, widening the pipe and accelerating the flow of information. Mail will be done.”

BROADBAND VS DIAL UP - BROADBAND MAY NOT IMPACT MAIL (chart 3)

Download videos/movies • • 5.7 • • Online games/gambling • 4.95 • • Download music • 2.69 • • Reference & research sites • 2.37 • • Instant messages • 2.29 • Not mail related • Possible mail e-mail, mange photos • 1.86 • • High-likely mail Web based e-mail • 1.67 • • • Make purchases 1.63 • • • Carry out financial transactions • 1.56 Relative likehood of use with • broadband vs. dial-up • Send e-mail • 1.08 ••••••••••••••••••••••••••••••••••••••• 0 1.00 2.00 3.00 4.00 5.00 6.00

Source: Forrester, October 2003 (European Online Users) 8 Prediction #5: Documents and financial statements are being delivered online, not by mail Businesses and other organizations have con- Research indicates that customers prefer to siderable economic incentives for forwarding receive mail over other forms of communications PDF versions of reports, announcements and for important documents. Two-thirds want all financial documents to customers instead of their documents delivered by mail. Three-quarters sending them via mail. want new product announcements delivered by mail. And nearly nine in 10 customers want There’s just one problem: as Charts 4 and 5 financial documents delivered by mail. show, customers don’t want them that way.

CONSUMERS IN TECHNOLOGY-INTENSIVE COUNTRIES STILL PREFER TO RECEIVE LETTER INVOICES (chart 4)

INVOICE Letter -3% 72% RECEPTION CHANNEL

e-mail -29% 16%

Text message -74% 1%

UNDESIRED

MOST DESIRED

Internet -31% 11%

Source: Finland Post, 2003 ••••••••••••••••••••••• ••••••••••••••••••••••••••••••••• -75% -50% -25% 0 25% 50% 75% 100%

CONSUMERS STILL PREFER MAIL AND PAPER FOR A

Financial documents • • 93% • 86% • • New product announcements 75% • All types of documents 73% • • 66% • 62% • • • • • • • • 2001 20032001 2003 2001 2003 • ••••••••••••••••••••••••••••••••••••••••• Source: ICR 2001 & 2003 Mail Preference Surveys

9 Prediction #6:

Online bill pay will eliminate check-writing and check-mailing There’s another side to the story as well. There’s no doubt that online bill pay is a growing Further study of the Forrester data shows past trend. Analysis of Forrester Research data forecasts for EBPP are being revised downward. projects households using electronic billing and Much to banks’ dismay, consumers aren’t presentment (EBPP) will grow from 17 million embracing EBPP technology. Citing monthly in 2003 to 31 million in 2008, while those that bank fees for the service (37%), security/privacy don’t use EBPP will decline from 92 million in issues (43-46%), a dislike for direct debit (30%), 2003 to 86 million in 2008. Of course, the potential and the ease of writing checks (46%), many result is a marked decrease in check-writing consumers are sticking to their check-writing, and check-mailing. check-mailing guns.

Not so fast. Analyzing that same Forrester study, if all bills and payments in those house- holds are replaced by EBPP, the erosion of mail will be about 0.33 percent per year.

“Making paper copies of anything is primitive.”

Alvin Toffler, The Third Wave, 1980

10 Prediction #7:

With young people becoming a larger part of society, the new communications methods will become entrenched, and mail will go away The newer generations don’t prefer mail and never will, goes the thinking. Unfortunately, that thinking isn’t based on hard fact. The genera- tional effect of various communications methods is still not understood. What is under- stood, however, is that mail volumes correlate directly to income and education. That is, the more people earn and learn, the more mail they send and receive.

Prediction #8:

The Red Sox will never win the World Series It’s funny how predictions come and go, isn’t it?

Those who wish to forward the simplistic notion that two information delivery systems — Internet and mail — are mutually exclusive may want to take another look at the data.

“It’s very difficult to make predictions, especially about the future.” Another axiom from Yogi Berra? Actually, it was uttered by Niels Bohr, the Nobel Prize-winning physicist, in 1922. And 83 years later, it appears to be as valid as ever.

1. Source: “Electronic Substitution for Mail: Models and Results; Myth and Reality,” December 12, 2004.

11 WHATWHAT ISIS THETHE

TOP CEOS AND U.S. POSTMASTER FUTUREFUTURE GENERAL JOHN POTTER DISCUSS RATE HIKES, REFORM AND THE ROAD AHEAD FOR THE USPS OFOF MAIL?MAIL? by Jennifer Pellett

Excerpted and reprinted with permission from Chief Executive magazine. The full article appears in the April 2005 issue and is available at www.pb.com/executiveview

Neither snow nor rain nor heat nor gloom of night—nor even outdated regulations nor economic woes—will stray postal couriers from their rounds. The latter two additions to the oft-quoted postal service homily, however, threaten to tops $750 million annually, while advertising bring a hefty rate increase that CEOs across company ADVO spends approximately $600 industries, and particularly those in the media, million a year on postage. In fact, 600 million say would endanger the health of their companies. advertising units are processed and delivered daily.

“It would be a killer,” Cathleen Black, President of Hearst Magazines, told participants in a Surprising resilience roundtable on postal reform held in partnership In operation for more than 225 years, the post with Pitney Bowes. “A 15 percent increase office has proved surprisingly resilient in would mean a $300 million negative hit to the previous decades, weathering the advent of the magazine industry, and represent a $15 million telephone and fax machine, among other cost increase for my company alone. That’s a changes. In fact, the USPS has swelled into an very big nut.” organization with more than $69 billion in revenues, 38,000 retail outlets and more than “Our whole supply chain is in jeopardy,” agreed 700,000 employees who deliver to 148 million- Ann Moore, Chairman and CEO of Time Inc. “We plus addresses. actually spend more on postage than we do on paper. Mail is our single largest line item Even today, the overwhelming majority of expense, so this really threatens our business.” Americans remain attached to daily mail delivery despite the availability of alternatives. Magazine publishing is just one sector that “We give our consumers the option of choosing would feel a significant impact. From financial how they want to receive bills, and they still institutions and health care providers to retailers largely prefer hard copies by mail,” said William and advertisers, a wide array of businesses rely Ellis, Senior Vice President of JPMorgan Chase heavily on the U.S. Postal Service (USPS) for Card Services, which mails 40 million card marketing, promotion, product distribution and statements a month. “People are getting more other essential services. For JPMorgan Chase, comfortable with electronic delivery, but for the postage for its credit card arm alone already most part they’re not there yet.”

12 Thanks to restructuring efforts led by U.S. A sense of urgency

Postmaster General John Potter, the USPS is Instilling a sense of urgency is crucial to the now in its sixth straight year of productivity reform effort, added Michael J. Critelli, improvement. Yet, the cost savings will soon be Chairman and CEO of Pitney Bowes. “We offset by the rising costs of postal operations. In wouldn’t wait for a leak to do maintenance on 2005, the USPS forecasts a net loss of $200 mil- the roof,” said Critelli, who co-chairs the lion, a drop attributed to increasing personnel Mailing Industry Task Force and is chairman of compensation costs as a result of rising health benefit expenses, continued erosion of First- the Mailing Industry CEO Council. “But in Class Mail volume, a growing retiree population Congress and the administration right now, and structural cost pressures. there’s a very big bias toward dealing only with those issues where there’s a crisis. So we have Put simply, averting a significant rate hike a dilemma—how do we push this reform now so requires further reform—and fast. But the there won’t be a crisis next year, down the road implementation of new initiatives is complicated or beyond? How do we create that sense of by the need to work within the confines of the urgency without having a negative effect on the outdated Postal Reorganization Act and restric- industry, which is doing quite well?” tions governing pricing and management.

Beyond legislative reform, what else can be Flexibility for the USPS to adjust processes done to deliver greater efficiency—and and systems requires legislation on an issue minimize the impact of a rate hike? “Having the that has been particularly unpopular with post office be a knowledge center for small Congress. “It’s not an issue that any con- businesses in local markets could be interest- gressman or senator historically has ever ing,” noted Howard Draft, Chairman and CEO of wanted to deal with,” said Hearst’s Black, Draft Inc. “You’re stuck with these 38,000 (post who serves on the Mailing Industry CEO office) locations, and I think we have to figure out Council, a nonprofit organization aimed at how to help them be helpful to the small busi- supporting postal reforms, and providing sen- ness market. Because if we can teach small ior executive input into it. She noted that businesses to use databases, online services the issue is as thorny as Social Security or the postal kiosks and they become reform. “Those of us who have spent better marketers, that will grow volume. time in Washington have tried to make And that volume growth will help it an important issue on both sides of keep costs down.” the House and at the administration level and we’ve come a long Some CEOs wondered if competition for way. But if we don’t keep the Postal Service was the answer. pounding away collectively But bringing in private players and individually, has a checkered history. [legislators] will move “Germany is 38 percent on to something else.” privatized,” noted Critelli. “They have

13 U.S. Postmaster General John Potter discusses postal reform with Jim Davis, President of Chevron Energy Solutions and other senior executives.

very efficient service, but 70-cent mail. And in Interim improvements Europe, where competition is supposed to be Even as CEOs and the USPS band together in authorized, the politicians put in constraints. urging Congress to address regulatory reform, You can’t have competition where all but one efforts to work within the current restrictions to competitor is permitted to act commercially.” improve efficiency continue. Partnerships with The problem today is not a lack of competition, players in the private sector already have served he added, “but rather that this is not an inde- to boost efficiency. Large-scale mailers can pendent agency. It’s an agency under a high save on costs by bringing letters, magazines degree of political regulation.” and catalogues to a destination plant, where the USPS takes on “last mile” delivery. “Mailers get Jim Davis, President of Chevron Energy a more reduced rate for bringing mail to that Solutions, agreed that a partial leveling of the unit than they would if their mail entered the playing field hasn’t had much success in the system at its origin site for delivery anywhere in past. “I personally felt the impact of rolling the country,” explained Potter. “And we also blackouts and problems that occurred after the outsource much of our network, from ground California electricity deregulation crisis,” he transportation to mail sortation to private recalled. “So I would put in a real word of companies.” caution that it sounds like a good idea in some cases— utilities being a good example—but on “Some limited pricing flexibility does exist in the whole attempting to open a traditional the 30-year-old legislation,” added Judy Marks, monopoly to competition without doing it all the President of distribution technologies at way has not gone particularly well.” Lockheed Martin.

14 Last year, the USPS in association with the said Hearst’s Black. Reform would also help Postal Rate Commission authorized negotiated the USPS control labor expenses, which service agreements (NSAs), which essentially account for about 80 percent of costs. The Postal give incentives to mailers to hit certain volume Service wants to be able to negotiate benefits, a thresholds. rising expense that is a detriment for many industries but particularly for the postal system. Contractual agreements between the Postal Service and individual companies, NSAs offer a Providing benefits for a mailer… rate reduction to a company on each piece of and its customers mail over its forecasted annual mail volume. A Intelligent mail is finding more and more takers. test NSA in September 2003, for example, pro- A Canadian package service used Pitney Bowes vided financial company Capital One a rate technology to eliminate invoicing and reduce reduction on all First-Class Mail over the 1.225 the load on its mailing counters, because billion pieces it had forecasted sending annually. postage payments are indicated in advance. The “We incented them to migrate advertising funds mailer’s customers gain benefits from the from other media to First-Class Mail,” technology as well: It eliminates the need to explained Potter, who reports that the USPS produce a manifest. It allows package induction has 10-plus additional NSA proposals pending with a postal carrier. And perhaps more and dozens more companies have shown inter- attractive, it can result in shipping discounts. est. “As a result of the combination of cost reductions and increased margins, after the “Finally,” Black noted, “reform would also first year, we are $21 million to the good in enable improvements in products and pricing by terms of the bottom line.” giving the USPS the freedom to offer new prod- ucts and to adjust prices as long as the overall Technology also plays a critical role in the level of prices doesn’t go up more than inflation evolution of the post office: Improvements to in each class of mail.” information networks are enabling near real- time mail tracking; wide-field-of-view cameras with enhanced optical-character recognition capabilities have been deployed in postal plants nationwide; and 2,500 automated kiosks were installed in postal branches in 2004.

But despite great strides, CEOs see postal reform as an essential next step. “Reform would help the USPS to operate more like a business, enabling improvements in governance and a more sophisticated management structure,”

Michael Critelli, Chairman and CEO of Pitney Bowes Inc.

15 THINKTHINK GLOBAL,GLOBAL, AN INTERNATIONAL MAILMAILGLOBAL:GLOBAL: PERSPECTIVE

Mail-based customer communication is critically In Europe, deregulation is topic number one important to companies around the globe. In “The characteristic that currently defines the nearly all parts of the world, organizations are business environment in Europe is the determi- using the mail to seek out, acquire and develop nation of the European Union to bring about the ongoing relationships with customers. deregulation of all postal markets,” says Patrick Keddy, president of the $650-million In Canada, an intelligent partnership Pitney Bowes Global Mailstream Solutions in Package delivery is a growing and increasingly Europe, Africa and the Middle East. important competitive category in the mail industry worldwide. More and more large By 2009, the EU’s timetable requires that all organizations are deploying Web-based net- postal markets be fully commercial and open to worked shipping systems that allow individual anyone to obtain a license to compete with the users to select carriers, create shipping labels, existing home posts. There will be no monopoly and schedule delivery right from their desktops. or reserved areas and no right of “final mile” delivery. In short, the European mail market will In that regard, Pitney Bowes has forged an truly be open competition in every sense. extraordinary partnership with Canada Post, a Canadian package delivery service. Using Pitney As one can imagine, the prospect of an open, Bowes technology, shippers print labels with deregulated marketplace is creating enormous detailed shipping information. In the process, change among all organizations that use mail to they gain Canada Post’s robust tracking and communicate with prospects and customers on reporting capabilities. With the joint solution, the Continent. customers can automate their shipping mani- fests, and they no longer need to complete In Mexico, ING identifies its customers tedious paperwork. ING Mexico, a division of Dutch-based financial giant ING Group, needed to track its customers. For Canada Post, the solution has eliminated But that proved to be a tough challenge, invoicing and reduced the load on mailing counters, because Mexican citizens are not required because postage payments are indicated in to supply a unique ID such as a social security advance. The mailer’s customers gain benefits number. To resolve the issue, ING knew it needed from the technology as well: It eliminates the a sophisticated name-matching algorithm. need to produce a manifest. It allows package induction with a postal carrier. And perhaps more attractive, it can result in shipping discounts.

16 A solution came forth from Pitney Bowes developed. Thus, industry offerings here Group 1 Software, Inc. Its Customer are of traditional mailing, addressing, Communication Management (CCM) folding, inserting and document application creates a single con- management solutions. solidated view of customers. ING Mexico chose Group 1’s The second segment, which solution because it was robust encompasses China and other enough to handle their complex emerging regions and countries, requirements and flexible enough are largely undeveloped from a to interface with their various mail and document management business systems. ING was also perspective.These regions are just impressed with the breadth and beginning to appreciate and under- depth of local references and the stand the value of commercial strong financial position of Group 1’s postal solutions. parent company, Pitney Bowes. "Mail is a fundamental method for The application was used to consolidate trade and commerce in any country, and customer data from numerous ING business this is going to be even truer in China as lines, and create a single, aggregate view of sectors such as direct mail, telecom and utilities customers’ relationships with the company. start generating larger volumes of mail,"said Deepak Chopra, President of Pitney Bowes Asia “With Group 1’s Merge/PurgePlusTM technology, we Pacific Region. In order to keep up, China Post were able to build our customer-centric database,” decided to work with Pitney Bowes to improve says Roberto Munguia, Chief Data Warehouse the capabilities of its postal system. Manager of ING Mexico. “This constitutes the basis of all of our marketing initiatives, like Pitney Bowes provided the state-of-the-art cross-sell and up-sell campaigns. It allows us equipment necessary to facilitate increased to comply with black list regulations and identify productivity and expansion. In addition, we also and avoid high-risk customers.” introduced an innovative digital postage payment system that allows China Post to reset Asia-Pacific: Land of opportunity meters remotely, via the Web or telephone, and increase mail-metering capabilities in the The Asia-Pacific region spans 40 countries and provinces. This has enabled China Post to holds two-thirds of the world’s population. Is it bolster financial integrity with automated any surprise that global marketers are eager to accounting and planning practices without reach A-P consumers? sacrificing security.

Marketers here must operate differently, creating This new system has allowed China Post to products and solutions that meet current and minimize errors, securely collect revenues and anticipate future market needs. They must greatly increase efficiency - all critical to operate strategically by driving and influencing improving the flow of China's communications changes in the market for the long term. network. Results? Impressive. Reduction in deficits, increased postal productivity, improved The vast A-P market can be categorized into operating efficiency, enhanced budgeting and two major segments. The first, Japan/Australia, is planning capabilities and increased revenues. similar to Western markets: large and mostly

17 MITIGATINGMITIGATING THETHE IMPENDINGIMPENDING POSTALPOSTAL RRATEATE INCREASEINCREASE

The rumors are true -- postal rates are on the "PSI’s knowledge and expertise in helping high- way up. On April 8, 2005, the U.S. Postal Service volume mailers reduce the costs and speed the (USPS) filed a rate case with the Postal Rate delivery of mail complements our existing Commission (PRC) seeking an almost uniform businesses and helps us better serve our high- 5.4% rate and fee increase spread over all mail volume customers,” says Michael J. Critelli, classes and subclasses. Chairman and CEO of Pitney Bowes.

As might be expected, Pitney Bowes maintains In addition to the vital function of presorting a close relationship with the USPS at local, mail, all offices provide specialized and comple- regional and national levels, to ensure that our mentary mail-related services, metering and clients can take maximum advantage of postal transportation services. PSI’s certified operating savings and efficiencies. centers have met the stringent requirements of the U.S. Postal Service’s Mail Preparation Total In addition, we’ve developed and acquired a Quality Management Program, making them number of technologies and services that are the pre-sorter of choice for large first-class specifically designed to minimize the impact of mailers and their service providers. The mailing postal rate increases and keep mailing costs at industry benefits from pre-sort operations and a minimum. Among them: workshare partnerships as they help to keep postage prices lower, improve speed and accuracy Intelligent, cost-saving presorting of service and ultimately enhance the overall value of mail. Using the latest technologies, Pitney Bowes performs the detail-intensive functions of first and standard class presorting of mail — the Reducing international delivery costs service that makes the most difference in For organizations that mail overseas or into qualifying for substantial postage-rate dis- Canada, Pitney Bowes offers substantial counts. Our PSI Group subsidiary, the nation’s postage savings and exceptional transits for all largest pre-sort company, is a national business communications, from first class mail mail-processing organization with operating to publications. International Mail Express centers located in 25 cities to service businesses (IMEX), a Pitney Bowes company, is a full- of any size or kind. PSI prepares, sorts and service international mailing services provider aggregates over 10 billion pieces of mail a year, that consolidates over 28 million pounds of expediting delivery for and sharing postal dis- letters and flat-sized mail per year headed to counts with its customers. Each office is the international addresses to reduce postage costs major third-party presort operation in its market. and expedite delivery.

18 With proprietary software to reduce transporta- Reducing mail costs with new technologies tion costs, and processing centers in New York, One of the most significant, and maddening, California and Virginia, IMEX specializes in expenses of mailings is the cost of returned developing the most cost-effective routes for mail. Fortunately, there are some impressive getting letters, flat-sized mail, publications and technologies that help ensure that the right literature to their final destination outside the U.S. mail, in the right format, is going to the right recipients. Another method of achieving cost savings on international mail is through geographic consoli- One example is Address NowTM software from dation. World Distribution Services (WDS), a Pitney Bowes. To ensure that cross-border mail Pitney Bowes company, specializes in overseas pieces are formatted correctly, Address NowTM and Canadian mail and parcel delivery services. recognizes each country’s proper postal format Unlike other posting methods, WDS avoids and facilitates the right layout of address com- sending foreign mail generated in the U.S. ponents. This global solution minimizes the through multiple posting administrations. chances of costly return mail while greatly Instead, overseas mail enters directly into more improving fulfillment, delivery and customer than 190 countries’ postal systems from satisfaction. Chicago’s O'Hare International Airport.

Another efficiency-enhancing technology is The savings can be considerable since your high-speed direct mail inserting systems, such international mail is delivered as close to the as the Pitney Bowes DM Series Digital MetersTM. foreign recipient as possible. WDS also has Improving direct mail productivity at a lower established significant postage discount agree- cost, these machines use smart motor technology ments with foreign postal authorities. The to insert up to 18,000 envelopes per hour — result is consistently fast, less costly delivery of dramatically reducing cost per mail piece. mail and parcels.

Controlling costs amid higher rates In addition to its foreign mail distribution, WDS An increase in U.S. postal rates does not have to offers a host of value added services, including be debilitating. With smart and efficient use of Canada Post and Royal Mail (UK) postal code cost-saving measures, and the help of Pitney presort data processing; high-speed inkjet Bowes, organizations can lessen the pain. addressing; automated poly wrapping; free mail transit reporting and free weekly return of non-deliverable mail. WDS transit testing and monitoring capabilities often serve as a benchmark for the industry.

19 CHANGINGCHANGING ENVIRONMENTSENVIRONMENTS REQUIREREQUIRE ONGOINGONGOING INNOVATIONSINNOVATIONS

As mail and other customer communications Intelligent mail is not a U.S.-only concept. continue to evolve to better meet business Private and public posts around the world are demands, Pitney Bowes will keep delivering beginning to use the technology. Hays DX, a pri- innovations that make the channel work harder vate post in the UK, uses Pitney Bowes mail and smarter. The company has invested more tracking technology to track the mail that they than $1 billion in new technology over the last process and increase the value of their services. decade — far more than any other company in the mailing industry. Today, Pitney Bowes With intelligent mail, which puts a special expertise extends well beyond the mailroom, barcode on the return payment envelope or and positions the company as the only business statement, businesses can track where the pay- solutions provider that offers a truly integrated ment is in the mailstream. Utility companies, approach. for example, know when a customer puts a remittance envelope in the mail. Anyone who Intelligent mail mails a check can call to verify that it will arrive in time. The recipient can verify that the remit- “Intelligent mail” integrates information about tance envelope is on the way, and avoid the the mail with our customers’ business processes expense of sending an unnecessary past due and postal operations. Pitney Bowes is collabo- notice or making a collection call. rating with the U.S. Postal Service to implement standards and systems to make every mail Intelligent mail can also be a tremendous asset piece — including packages — unique, traceable to financial institutions, helping them guard and trackable. against credit card fraud. If newly issued cards are not received in a certain timeframe, there’s The USPS currently offers the Confirm® service, a chance the cards might have been stolen. which uses a barcode to track both inbound and Thus, financial institutions can make quicker outbound letter mail. Providing information decisions to de-activate the cards and contact about where a mailpiece is within the postal their customers. system, Confirm® can be used to predict when customers will receive a piece of mail. With TM future advances in intelligent mail technology, dMail users will also be able to track mail from the Another product of our investment in new tech- pickup point to the final delivery point. nology is a solution that links physical documents to a company’s server. It’s called dMailTM digital solutions.

20 Physical mail is the lifeblood of payments, Large-volume inserting correspondence and compliance throughout an Many organizations today find themselves doing organization. Effectively managing mail deliveries larger and more complex mailing applications TM is critical. dMail digital solutions from Pitney to reach more customers and grow their busi- Bowes take incoming mail, converts it into digital ness. Perhaps it’s adding personalized inserts files, and delivers it electronically to individuals and messages to statements or invoices. who needs to take action on it. Mail is also Perhaps it’s using sophisticated direct marketing stored on the company server, capturing added campaigns to target specific customer seg- economy and enhanced screening at nearly ments. Perhaps it’s sending out newsletters to every point along its route. In so doing, the keep customers and/or employees connected. dMailTM digital solution transforms paper- bound inefficiency into a highly productive mail Worthy initiatives all. But implementation can stream that enables far more effective use encounter rough spots: Volume and complexity of resources. of customer mailings can outgrow system capacity. In-house mail operations may be slow TM Engineering the flow of communication and unresponsive. Outsourcing overflow can isn’t only about technology; it’s about sound be costly. advice as well. Pitney Bowes can help organiza- tions identify possible areas for significant ROI, Pitney Bowes FastPac® Inserting Systems are and works with clients’ teams to develop designed for these situations. They are ideal for customized solutions. With Pitney Bowes, organizations that have outgrown small desktop on- or off-site processing are seamlessly integrated inserters, or those that would like to reduce or with systems and workflow and optimized to fit eliminate outsourcing costs by bringing mail business rules and management practices. In production in-house. short, we help sort out digital opportunities for managing mail deliveries, wherever they reside. The innovation reinforcer: Six Sigma For more information on dMailTM digital solutions, To deliver and optimize such technologies as visit www.pb.com intelligent mail and the dMailTM digital solutions, Pitney Bowes not only adheres to the most effective and celebrated quality methodology in business today -Six Sigma- but shares method- ologies with clients to enhance quality and achieve significant ongoing savings across their mail and document management operations.

Starting with 25 black belts in March 2003, Pitney Bowes Six Sigma program has grown to over 70 black belts today, and is yielding financial benefits well above the original estimate of $250,000 per project. Internally, process improvements have not only boosted customer satisfaction to record levels, but also have reduced general and administrative expenses by more than $24 million in its first year alone - with the results expected to triple by the end of 2005.

21 MEANWHILE,MEANWHILE, ININ THETHEREALR EAL WORLD...WORLD... Saving millions for Bank of America One of the largest financial institutions in the The bank turned to Pitney Bowes to implement U.S., Bank of America has hundreds of offices a “mail smart” solution. Our Business Manager nationwide, and it needed its document man- information management system is linking the agement processes to keep up. bank’s 34 mail centers, so it can centrally man- age mail operations. This will provide the bank "With so many locations across the country,” with unprecedented insight into changing mail recalls Robert Kee, BofA’s Senior Vice President volumes and postage spending across all its of Document and Supply Chain Management, “we mail centers — helping to save millions in were looking for a provider that could imple- postage and operational costs. ment an integrated mail and document strategy to meet the needs of our growing business.”

23 When sushi meets smart mail…

Hakata, a Japanese restaurant in New York City, Hakata’s marketing campaign has been so saw its business take off after installing digital successful that a second location is in the mailing systems with Pitney Bowes works. And now that its neighbors have SmartMailerTM 7 software. The restaurant is now witnessed the power of mail, Hakata has added sending out as many as 30,000 targeted a new line of business: direct marketing for mailings each month to prospects beyond its other eateries — sending out another 250,000 immediate neighborhood, where it operates a pieces per year for six other restaurants. robust delivery business. SmartMailerTM 7 soft- ware even presorts mail electronically, reducing Hakata’s per piece postage costs through USPS discounts.

24 A winning solution for a secure national lottery Mizuho Bank Holding Group, which operates the national lottery of Japan, relies on Pitney Bowes intelligent inserting systems to record the numbers on each of the 120 million lottery tickets it sends to retail outlets each month.

Our VitesseTM and 9 SeriesTM Inserting Systems process tickets in groups of 10 into envelopes. By tracking each insertion, the bank’s sub- sidiary, Takara Pack, knows that the correct number of tickets — in the correct sequence — are placed in each envelope and sent securely on its way.

25 Helping eBay® offer customers online postage

When eBay, “The World’s Online Marketplace,”® “Now, without leaving the eBay or PayPal® sought a company to create a system for online sites, our customers can simply purchase postage, it turned to Pitney Bowes. Today, we’re postage online and print shipping labels from the exclusive online postage provider for the their computer,” says Gary Dillabough, Vice company. When a business sells on eBay, the President of eBay Strategic Partnerships. “The user prints a shipping label with one click, and technology provided by Pitney Bowes is an inte- Pitney Bowes charges the postage to the user’s gral part of eBay’s Online Postage solution, PayPal® account. Millions of packages have allowing us to make shipping more integrated, been shipped via this new capability since it was fast and reliable for eBay buyers and sellers.” launched in February of 2004.

26 Personalized communication based on individual 1 to 1 preferences For Brittany Ferries, Europe’s foremost ferry company and operator of self-guided tours, Pitney Bowes software pulls raw XML data from the company’s reservation system, engineers this data and prints it on each customer’s travel confirmation. As the document moves through the inserter, a digital barcode instructs the system to add informational flyers that are unique to each traveler’s situation – such as visa requirements or tips on traveling with pets. By making their communication more personal, their customer relationships grow stronger.

27 PITNEYPITNEY BOWES:BOWES: ENENGINEERINGGINEERING THETHE

FLOWFLOW TM OFOF COMMUNICATIONCOMMUNICATION

Pitney Bowes is a world leader in integrated Linking paper to digital formats, mail and mail and document management, working with transactional documents to customer response nearly all the FORTUNE 500 companies, and relationships, our solutions continue to developing processes and technologies for cost impact higher and higher value processes in the efficiency, security enhancement and improved communication chain. customer communications. Helping companies simplify and manage their By engineering the flow of communicationTM complex mail and document processes, Pitney we provide solutions to two of the most important Bowes reduces costs, increases impact and challenges facing management today: how to enhances customer relationships. More than 80 cut costs and boost productivity inside the years of technology leadership has produced organization, and how to grow revenue outside many major innovations in the mail and document it. To these ends, we offer unique capabilities for industry, as well as more than 3,500 active engineering the processes, technologies and patents with applications in a variety of markets, financing that help business-critical communi- including financial services, government, cation flow more efficiently within the organization Cmanufacturing,OM printing andM marketing.U NICATION — and work more effectively outside it.

28 MAJOR INTERNATIONAL LOCATIONS

HEADQUARTERS CANADA IRELAND NORWAY Pitney Bowes Canada Ltd. Pitney Bowes Ireland Ltd A.S. Frankering ASIA 5500 Explorer Drive Unit 14 Stalfjaera 26 Pitney Bowes Asia Pacific and Mississauga, Ontario Parkmore Industrial Estate Postboks 100 Kalbakken Distributor Operations Canada Longmile Road, Walkinstown N-0902 Oslo 9, Norway 3rd Floor Brindley House, L4W 5C7 Dublin 12, Ireland T: 47 2 333 9300 Corner Hall T: 905 219 3000 T: 3531 4608 700 F: 47 2 333 9309 Hemel Hempstead HP3 9YT F: 905 219 3826 F: 3531 4509 729 UK PORTUGAL T: 44(0) 1442 41 61 92 CHINA ITALY Pitney Bowes Portugal F: 44 (0) 1442 41 61 90 Pitney Bowes China Pitney Bowes Italia S.r.l. Sociedade Unipessoal, LDA Unit 1116, 11/F, Tower 2 Via Martiri della Liberta 4/6 Rua Alfredo Lopes Vilaverde Henderson Center 20060 Liscate MI Number 15, Letter B EUROPE, AFRICA, MIDDLE EAST No. 18 Jianguomennei Ave. Milan, Italy Paco des Arcos, Deiras (EAME) Dongcheng District T: 39 0295 009 228 Portugal Pitney Bowes EAME Beijing 100005, China F: 39 0295 351 210 T: 351 21 441 51 53 The Pinnacles, Harlow T: 86 10 6518 3035 F: 351 21 441 02 79 CM19 5BD, UK F: 86 10 6518 7375 JAPAN T: 44 8705 252525 Pitney Bowes Japan SOUTH AFRICA F: 44 8705 449450 Pitney Bowes Hong Kong Ltd. Togoshi NI Building, 7-1 Pitney Bowes South Africa Unit 3101, 31st Floor, Togoshi, 1-Chome PO Box 31025, Kyalami 1684 LATIN AMERICA AND Citicorp Centre Shinagawa-kunor, Tokyo South Africa CARIBBEAN 18 Whitfield Road, North Point 142-0041, Japan T: (27) 1 1516 9400 Pitney Bowes Latin America Hong Kong T: (81 (3) 5750 4111 F: (27) 1 1516 9429 14361 Commerce Way T: 852 3413 7800 F: (81) (3) 5750 4405 2nd Floor F: 852 3413 7806 SPAIN Miami Lakes, FL 33016, USA KOREA Pitney Bowes Espana SA T: 305-817-2275 DENMARK Pitney Bowes Korea Ltd. N1 Escalera C. Panta 1 F: 305-817-2281 Pitney Bowes A/S 6 Floor, Taerim Building Anton Fortuny 14-16 Blok G. Ground Floor 680-24, Chayang-2 Dong 08950 Esplugues de Llobregat OFFICES BY COUNTRY Herstedostervej 27-29 Kwangjin-ku, Seoul, 143-874 Barcelona, Spain DK-2620 Albertslund, Denmark Korea T: 34 9348 03310 AUSTRALIA T: 45 70 221 223 T: 822 458 6111 F: 34 9347 35246 Pitney Bowes Australia Pty. F: 45 70 221 243 F: 822 458 6110 95 St Hilliers Road SWEDEN Auburn, NSW 2144, Australia FINLAND LUXEMBOURG Pitney Bowes Svenska AB T: (61)(2) 9475 3456 Pitney Bowes Oy Pitney Bowes Luxembourg PO Box 408, Hammarbacken 12 T: 13 23 63 (within Australia) PL 109 (Melkonkatu 9) S.A.R.L. Haggvik, 191 24 Sollentuna F: (61)(2) 9475 3415 00211 Helsinki, Finland Route Des Trois Cantons 9 Stockholm, SE19149, Sweden T: 358 9 682 4060 L-8399 Windhof, Luxembourg T: 468 555 33 201 AUSTRIA F: 358 9 692 6227 T: 26 10 88 66 F: 468 272 072 Pitney Bowes Austria Ges.m.b.H. F: 26 10 88 68 Hosnedlgasse 35, Postfach 19 FRANCE SWITZERLAND A-1220 Wien, Austria Secap Groupe Pitney Bowes MEXICO Pitney Bowes Switzerland AG T: 43 1 2583 6210 Immeuble Le Triangle Pitney Bowes de Mexico, Vogelsangstrasse 17 F: 43 1 2583 62134 9, rue Paul Lafargue S.A. de C.V. CH-8307 Effretikon, Switzerland 93217 Saint Denis La Plaine Cedex San Francisco #1393 T: 41 52 354 5757 BELGIUM France Colonia del Valle F: 41 52 354 5700 Pitney Bowes België N.V. T: 33 1 55 93 60 00 Delegacion Benito Juarez Zandvoortstraat 4 F: 33 1 55 93 62 99 Mexico City, D.F. THAILAND B-2800 Mechelen, Belgium C.P. 03210, Mexico Pitney Bowes Thailand T: 32 15 294 611 GERMANY T: 525 55 559 0977 19/F, 719 KPN Tower F: 32 15 294 694 Pitney Bowes Deutschland GmbH F: 525 55 559 8899 Rama 9 Road, Bankapi Huaykwang Tiergartenstrasse 7 Bangkok 1310, Thailand BRAZIL 64646 Heppenheim, Germany NETHERLANDS T: 662 717 0588 Pitney Bowes Semco Ltda. T: 49 62 52 708 100 Pitney Bowes Netherlands B.V. F: 662 717 0766 Rua Dom Aguirre, 438 F: 49 62 52 733 54 Jan Leentvaarlaan 38-48 04671-390 São Paulo, SP 3065 DC Rotterdam UK Brazil INDIA Netherlands Pitney Bowes T: 55 11 5681 2000 Pitney Bowes India Pvt. ltd. T: 31 10 242 11 00 The Pinnacles, Harlow F: 55 11 5523 0670 45 Okhla Industrial Estate, F: 31 10 242 11 40 CM19 5BD, UK Phase III T: 44 8705 252 525 New Delhi - 110020, India F: 44 8705 449 450 T: 91-98-7137-5421

Pivotal Thoughts is an ongoing publication of Created by Direct Ventures, Inc. Pitney Bowes Inc. Corporate Marketing Department. ([email protected]) Barry Sideroff, Strategic Director Senior editorial staff: John Fatteross, Copy Director Matthew L. Sawyer, Editor-in-Chief Anne Kasdin, Art Director Jennifer L. Panaro, Executive Editor Scott Bounty, Production Manager Jennifer Pellett, Contributing Writer, Chief Executive Magazine Pitney Bowes Inc. World Headquarters 1 Elmcroft Road Stamford, CT 06926-0700 US email: [email protected] www.pb.com/pivotalthoughts

Pivotal Thoughts is an ongoing publication of Pitney Bowes Inc. Corporate Marketing Department. Engineering the flow of communication is a trademark of Pitney Bowes. dMail, SmartMailer, DM Series, Vitesse, IntelliLink, Address Now and FastPac are trade- marks, service marks or registered trademarks of Pitney Bowes. All other trademarks, service marks or registered trademarks are owned by their respective companies. © 2005 Pitney Bowes Inc. All rights reserved. Printed in the United States of America.