Spring ‘05 An executive advisor from Pitney Bowes CUSTOMERCUSTOMER ACQUISACQUISITION,TION, 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