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An executive advisory publication from Pitney Bowes
How your company can usethe mailstream to increase revenues and reduce costs
I S S U E F I V EP I V O T A L T H O U G H T S
Can you see the
?
I N T H I S I S S U E
How the mailstream can increase revenue and reduce costs 2
Eight powerful ways to grow profits through the mailstream 6
Solutions for leading mailstream improvements 10
How to bring customers into the boardroom 12
Meanwhile, in the real world… 15
Key survey findings about communications and profitability 18
It’s mail. And documents. And packages. It’s all around you. And it can
It’s called the mailstream – the sum of all mail, packages and documents, bothtraditional and digital, that flow acrossyour business and to customers and back.It’s an entire matrix of people, processesand technology, from your database toprinting to delivery.
increase revenue and reduce costs.
Mail is evolving at blinding speed. In fact, these
days, the word “mail” is no longer an apt
description for what has become an undeniably
powerful business-building tool.
Today, the creation and flow of mail, documents and packages is increasingly diverse, containing everything from bills and e-statements to direct mail, catalogs and goods like DVDs and prescription drugs.
Some key industry players have coined a term that better capturesthe more complex, more dynamic nature of today’s business com-munications, and the amalgam of technology, data and processesthat manage those communications. They call it the “mailstream.”
Simply put, the mailstream is the sum of all mail, documents andpackages – both traditional and digital – that flow into and out of any organization or household via third-party carriers such aspostal services, UPS, FedEx, daily messenger services, and on-sitemail outsourcers like Pitney Bowes.
The mailstream process starts with the creation of messages, then winds its way through a myriad of technologies and processes,including data mining, printing, preparation and finishing, distribution, receipt, archiving, retrieval, response and database updating.
“Much like the worldwide network of computers that links a virtual marketplace,” says Michael J. Critelli, Pitney Bowes Chairman and CEO, “the mailstream is an economic engine for the global economy.”
Of course, the mailstream could be characterized as a gee-whiz,conceptual exercise in semantics, if not for one overriding fact:Deftly managing the mailstream translates directly to increasedprofit. (Now there’s a word that requires no explanation.) Hundreds of real-life business examples have proven that optimizing the mailstream yields significantly higher revenue and lower costs.
Every piece of mail – whether it’s an invoice, an activation kit or an owner’s manual that arrives via DVD – is an opportunity to up-sell or cross-sell, to acquire new customers, or to strengthenexisting relationships. By optimizing one’s mailstream, one canbetter capitalize on those opportunities.
Drivers of the mailstream
Mailstream technology is transforming the way businesses directthe flow of mail, documents and packages to do more: data management, creation, production, sending, tracking, archivingand securing data in the most cost-effective fashion. It’s a $250-billion business comprising 500 billion (yes, that’s a “b”) pieces peryear – carried by postal services and carriers such as UPS, FedEx,DHL, daily messenger services and mailroom management services.Has there ever been a quarter-trillion dollar industry that couldn’tbenefit from a little more efficiency?
The search for that efficiency, and resulting profitability enhance-ments, has given rise to the mailstream revolution – a revolutiondriven from two interrelated factors: Technology and analytics.
Not only is the combination making mail more personal and versatile than ever before, but it’s also making mail more efficientand cost-effective than other methods.
One reason is that other communications media come with formi-dable obstacles between businesses and the consumers they’re trying to reach – obstacles such as Do-Not-Call lists, spam filtersand TiVo® digital recorders. Mail encounters no such obstacles; it just keeps on coming unimpeded, through rain, snow, sleet or heat.
And that, apparently, is the way consumers like it. In a recentInternational Communications Research survey, over 70% of respondents preferred mail as their medium of choice to receiveunsolicited information on products and services.
2
Acquire new customers.
Grow them.
Retain the most profitable.
It all happens by
optimizing the mailstream.
The remedy is an end-to-end mailstream solution encompassingtechnology, process improvements and expertise. A more efficientmailstream can help a business work better by managing the flowof mail, documents and packages to improve communication. Thismakes it possible to track individual mail, documents and packagesas they travel; to find the most cost-efficient and secure method ofsending them from here to there; to embed them with personalizeddata that’s up-to-date and accurate; and to archive them electroni-cally, regardless of whether they started in print or digital form.
By doing this, the flow of mail, documents and packages becomes more effective, personal and efficient.
The Internet, which was supposed to have sounded the death knellfor mail, has instead taken a different tack: online communicationsare now working in concert with off-line mailings to achieve salesand profits. In fact, Internet users receive more mail than non-users do, with mail volume received correlating directly to incomeand education. The more affluent and educated the consumers, themore mail they are likely to receive.
Problem and solution
Communications complexity brings problems. In many organiza-tions, the mailstream is cumbersome – plagued by old methods andoutdated technologies, and reliant on multiple inflexible processesthat hamper business performance across the organization. Theresult is fragmented, impersonal communications that are difficultto track, hinder customer retention and acquisition, and negativelyimpact the bottom line.
3
Maximizingacquisitionand retentionof best customers
Communicating
the right
message at the
right time
Leveraging datastrategically asa competitiveadvantage
Reduced costs
with real-time
data solutions
Increasingcontinuity andavailability ofcore businessassets
Safeguarded
enterprise
processes
through
business
recovery
Ensuringenterprise governanceand regulatorycompliance
Ensured
adherence to
increasing
regulatory
demands
Improving theeffectivenessand efficiencyof marketing and sales
Synchronizing
multi-channel
communication
to improve
response rates
and customer
loyalty – email,
direct mail,
call center
B E N E
P A Y
The mailstream is about Engineering the flow of
4
Increasingspeed to market andcustomer satisfaction
Efficiently
creating and
delivering
packages and
documents
worldwide
with tracking
and tracing
Optimizingaccountspayable andminimizingcustomer dissatisfaction
Effective
creation,
production and
distribution
of physical
and electronic
statements
and invoices
Maximizingcash flow andminimizingfloat
Utilizing
flexible payment
options
Helping ensure a more secure workenvironmentwith increasedup-time
Securing work
environments
for employees
and customers
– lobbies,
mail centers,
package
delivery areas
Maximizingyour businessintelligencequotient
Moving
incoming and
outgoing
documents
and packages
throughout
your enterprise
F I T S
O F F
communicationTM
, both physical and electronic. It’s about...
5
So, how exactly can an
organization increase
profits by taking full
advantage of mailstream
opportunities? Here are
eight ways that today’s
businesses – of nearly
all sizes and types – are
using the mailstream
to increase profitability.
There may be one or
more that applies to your
organization’s goals.
Eight powerfulways to grow profits through the mailstream
business, but found massmedia like radio and televisiontoo pricey and not targetedenough for its needs. SoHakata tried direct mail, sending out letters to two localzip codes. Then they addedpromotional coupons for discounts to a broader area,and also began identifyingcustomers, sending thank-younotes, and offering incentivecoupons. It worked so wellthat their delivery staff grew to 20 people.
In fact, Hakata got direct maildown to such a science thatthey launched an entirely new business: helping otherrestaurants devise their owndirect mail campaigns.
Direct marketing
One of the mailstream’s mostpowerful drivers is one youprobably know quite well:direct marketing. While first-class mail has remained flat at best over the past 30 years,direct marketing mail hasgrown steadily. In 1975 directmail spending was about 17%of overall advertising spend-ing. By 2005, it had increasedto 23%1.
Why is direct mail growing?High response rates, return on investment, and direct measurability of success. It is also less intrusive than telemarketing, garners betterresponse rates than email marketing, and is more personalized – and far morecost-effective – than broadcastor print media.
For years, Hakata Restaurant
in New York City had a good-sized in-store clientele. Therestaurant wanted to grow its
1
6
Personalization and color
print on demand
A relatively new driver of the mailstream is technologythat allows marketers to personalize and color print on demand. One of this technology’s most steadfastproponents: General Motors.A devotee of CustomerRelationship Management(CRM), the company has long recognized that when ittargets the right customerswith the right message at theright time, it experiences dramatic increases in salesand savings.
The company started with adatabase generated by its GM Credit Card, then usedinformation from its ownerdatabase, to model its cus-tomers individually. As a result,GM has created personalizedmessages for potential cus-tomers at the times they aremost likely to be looking fornew vehicles. Once a customerexpresses interest, GM createsan on demand fulfillment kitwith brochures and materialsindividualized for each potential buyer.
“There is something specialabout having a picture of theexact car you want in yourhand,” says Jack Bowen, headof the GM program. “When
you look at that sexy C-6Corvette, you just say, ‘Oh,man, I got to have that.’” Sofar, the company has targeted3.5 million of its 5 millioncardholders with unique mod-els and offers. GM has dou-bled its mail response rate,while significantly reducingthe cost of those offers3.
GM isn’t alone. According toone study, personalization andfull-color direct marketingmaterial across various indus-tries has had a profound effecton customer response andpurchase behavior. The met-rics: 34% faster response rate,48% increase in repeat orders,25% greater average value ofeach order, and 32% increasein overall revenue4.
2 3an ingenious use of the mailstream for multi-channel marketing. The company iscalled 1-800-DENTIST®, a network designed to makefinding a dentist easier andless intimidating.
The founders deployed amulti-channel strategy mixing television, radio andthe Internet that effectivelyrecruited consumers.Recruiting dentists, however,was a trickier proposition;mass media wasn’t the mostappropriate, or cost-efficient,spend to reach such a highlytargeted audience.
But direct mail was. When thecompany started in 1986, itsent out 500 pieces of mail to dentists. This year, it’s send-ing 360,000 pieces of mail. In 1986, the company had dentists in one media market:Los Angeles. Today, the com-pany has thousands of memberdentists in 210 markets.
Multi-channel
integrated marketing
More and more companies are soliciting through onemarketing channel, deliveringthrough another channel, andgetting feedback through yetanother. This has given rise to integrated marketing whereall channels work in unison.
A prime example is Capital One.Just a few years ago, most people didn’t even know thename. Capital One had nostorefronts and a weak brand.Only 40% of consumers recognized the brand.
So the bank made a decisionto establish its brand througha national integrated market-ing campaign. But mostimportantly, it began placingthe brand on the outside ofthe millions of envelopes sentout each year. The bankbacked up its new direct mailcampaign with its now ubiqui-tous “What’s in your wallet?”®
TV advertising campaign, aswell as Internet ads. Soon, theCapital One logo was every-where. And it paid off: Somemeasures of consumer aware-ness soared from 40% to 98%2.
Multi-channel integrated marketing isn’t the exclusivedomain of large companies.Two entrepreneurs in southern California devised
7
Enhancing e-commerce
In a true testament to thepower of the mailstream, e-commerce companies are nowasking how off-line mail canbuild their online businesses.
During the holiday season lastyear, millions of Americansopened their mailboxes to find a catalog from, of all companies, eBay®. It was a 32-page glossy publicationthat included just a handful ofthe 29 million items currentlyfor sale on the site5.
eBay’s catalog demonstrateshow online companies haveembraced the off-line environ-ment that was once calledirrelevant. Amazon.com andRedEnvelope have introducedcatalogs in recent years.Online sellers have acknowl-edged that, as good as theirsites may be at processingorders, a physical catalog isfar better at generating orders.
Statistics bear that out. A survey conducted by the U.S.Postal Service® last year foundthat consumers who receivecatalogs from an e-taileraccount for 22% of that com-pany’s website traffic and 37%of its e-commerce dollars6.
Strategic distribution
Online marketers can takeadvantage of the mailstream’sunique distribution character-istics. A few years ago, anunknown company calledNetflix had a rather Quixoticidea: Take on video rentalgiants. Instead of duplicatingthe brick-and-mortar businessmodel, Netflix decided itcould rent films at a fractionof the cost if it offered videosvia a combination of onlineordering and mail fulfillment.
Without the overhead of store-fronts, Netflix can charge customers lower fees than traditional video rental stores– starting at $9.99 per monthfor unlimited rentals with oneDVD out at a time. Accordingto California-based marketanalysis firm Adams MediaResearch, no one orderedvideos this way in 1998. Thisyear, Adams reports, 4.7 mil-lion Americans will subscribeto a mail-order DVD service.And by 2009, Adams predictsthe number will jump to 17million7. Netflix expects tohave $940 million in revenuesby the end of 20068.
Transactional marketing
One of the most powerful driv-ers of the mailstream is some-thing you see in your mailboxevery day. It’s transactionalmarketing – that is, statementsfrom companies to their cus-tomers. These companies knowthat their customers want tosee the bill or transaction onpaper, even if some choose torespond over the Internet.
Greater Cincinnati Water
Works (GCWW), for example,wanted to reduce billing-related inquiries by makingbills easier to understand.They also wanted to increaseefficiency and reduce costs. Sothey chose new software thatintegrated document creation,production, distribution andarchiving.
Today, GCWW has reformattedbills that customers say aremuch easier to read. They canalso customize messages onbills. It can show the remain-ing balance on a customer'spayment plan, for instance, or tell a customer that thecompany could not read ameter because of a snowstorm.
Customers also see graphstracking their water consump-tion over time.
The improved transactionalmailings have resulted ingreater efficiencies. GCWWarchives all bills and docu-ments electronically, so thatits call service agents caninstantly retrieve them onlinewhen a customer calls. Thenew mailings have loweredcosts by reducing the numberof pages per bill. And the new system collects bills intobatches so they can be pre-sorted for discounts from thepostal service. Improved trans-actional mailing has clearlysaved time and money for bothGCWW and its customers.
654
8
Date-certain delivery
The U.S. Postal Service®
delivers its mail on time.That’s a fact on which manycompanies have built theirbusiness, with the promise of “date certain delivery.”
Take Connecticut-basedCanine Fence Company®, whichinstalls invisible electronicfencing around a homeowner’slawn. An electronic collar chipsignals the family dog to staywithin those bounds.
The secret to the company’smarketing success is a clevercombination of weatherreports and the U.S. mail. Inthe spring, employees sit withbins of promotional mailers.The first time they see a fore-cast for 75 degrees and sunny,they drop 200,000 pieces ofmail. Why? Because the firstday of warm spring weathereach year is when thousandsof suburban dogs make abreak for it, just as surely asthe swallows return toCapistrano. At the momentthat canines are bolting into
street traffic or digging up the neighbor’s daffodils,Canine Fence’s mailer arrivestouting their electronicmethod for keeping Roverfrom, well, roving.
Canine Fence is now a $25million company with 200employees in eight states. Thecompany found that directmail was far more effective in reaching its potential customers than television,radio or newspapers. Whileradio delivered a cost per lead of $1,000 and TV of$900, mail’s cost per lead is only $184.
The re-shape of
things to come
As customers are bombardedwith more and more messages,marketers must work harder tocreatively engage them. In anew effort to grow the mail-stream, the U.S. Postal Service®
has introduced a programcalled Customized MarketMail®.It allows companies and advertisers to develop creativeshapes for their direct mailpieces.
One of the first customers forCustomized MarketMail wasdoughnut titan Krispy Kreme.They designed a coupon mailer in the shape of an actual box of the company’sdoughnuts. Attached to themailer was an offer of “buy adozen doughnuts, get the second for a dime.”
The results of the campaignwere spectacular. Instead of the standard response rateof 2% to 3%, Krispy Kremegarnered an 11% response rate9.
The innovations
will continue
Organizations of all sizes
are discovering the need to
communicate with their
customers continuously to
build loyalty and grow future
business.
As customers insist on more
convenience and cost-
effectiveness, more reliable
delivery, more security,
more transparency and more
impact with each piece of mail
or data, the mailstream will
continue to innovate.
7 8
9
Envelopes in your server
Imagine a technology that hard-wires envelopes to a company’sserver. It’s called dMailTM mail processing solution.
Physical mail is the lifeblood of payments, correspondence andcompliance throughout an organization. Effectively managing maildeliveries is critical. The dMail digital solution from Pitney Bowestakes incoming mail, transforms it into digital files, and instantlydelivers it to every individual who needs to take action on it. Mail is also stored on the company server, capturing added economy and security at nearly every point along its route. In sodoing, dMail software transforms paper-bound inefficiency into a highly productive mailstream that enables far more effective use of resources.
The dMail solution isn’t only about technology; it’s about soundadvice as well. Pitney Bowes helps organizations determine target-rich areas for significant ROI, and works with clients’ teams todevelop customized solutions. With Pitney Bowes, on- or off-siteprocessing are seamlessly integrated with systems and workflow andoptimized to fit business rules and management practices. In short,Pitney Bowes helps sort out digital opportunities for managingmail deliveries, wherever they reside.
To deliver and optimize such technologies, Pitney Bowes not onlyadheres to the most effective and celebrated quality methodologyin business today – Six Sigma – but shares it with clients toenhance quality and achieve significant ongoing savings acrosstheir mailing operations.
Starting with 25 black belts in March 2003, the Pitney Bowes SixSigma 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 notonly 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.
Pitney Bowes has a wide range of solutions to
help organizations efficiently produce a more
powerful, customized mailstream. Our software
takes customer–specific information from various
databases and adds personal information, color
and graphics that add meaning and impact to
mail pieces. Here are two of the most effective
Pitney Bowes mailstream technologies:
A pair of aces: Two Pitney Bowes solutions for leading your mailstream’simprovement
M A I L S T R
10
Tracking every mail piece
“Intelligent mail” integrates information about the mail with ourcustomers’ business processes and postal operations. Pitney Bowesis collaborating with the U.S. Postal Service® to implement stan-dards and systems to make every mail piece – including packages –unique, traceable and trackable.
The USPS currently offers the CONFIRM® service, which uses a barcode to track both inbound and outbound letter mail. Providinginformation about where a mail piece is within the postal system,CONFIRM can be used to predict when customers will receive apiece of mail. With future advances in intelligent mail technology,users will also be able to track mail from the pickup point to thefinal delivery point.
Intelligent mail is not a U.S.-only concept. Private and public posts around the world are beginning to use the technology. DX, a private post in the UK, uses Pitney Bowes technology to track themail that they process and increase the value of their services.
With intelligent mail, which puts a special barcode on the returnpayment envelope or statement, businesses can track where thepayment is in the mailstream. Utility companies, for example, knowwhen a customer puts a remittance envelope in the mail. Anyonewho mails a check can call to verify that it will arrive in time. Therecipient can verify that the remittance envelope is on the way, andavoid the expense of sending an unnecessary past due notice ormaking a collection call.
Intelligent mail can also be a tremendous asset to financial institu-tions, helping them guard against credit card fraud. If newly issuedcards are not received in a certain timeframe, there’s a chance the cards might have been stolen. Thus, financial institutions can make quicker decisions to de-activate the cards and contact their customers.
More solutions, too
As one might suspect, dMail technology and intelligent mail areonly two in a full array of Pitney Bowes offerings that make themailstream more efficient. Other solutions include addressing,folding, inserting and mail finishing systems of all sizes. Theyinclude data quality and customer communication managementsoftware. And they include mailing and marketing services.
Through Pitney Bowes world-class process expertise,
businesses can:
• Optimize postal spend (get significant postal discounts, reduce return mail, improve response rates)
• Facilitate regulatory compliance• Enhance data security and business continuity • Reduce mail and document costs by 15% to 40%
By managing data in multiple delivery channels with
Pitney Bowes solutions, businesses can:
• Streamline documents and expand digital channels, so documents move quickly through every channel
• Implement processes so teams work smarter • Gain visibility into outbound and inbound mail for better
document tracking • Improve cash flow forecasting and predictability
Through Pitney Bowes mailstream know-how, businesses can:
• Achieve superior client communications with the latest contentmanagement technology
• Enable one-to-one marketing to improve client relationships • Apply enterprise integration to synchronize communication
across multiple channels – mail, phone and web – to achievea single client view
• Leverage innovation across the enterprise for competitive advantage
Mail can do things today that were never before possible. It hasevolved to enable more efficient, effective, personal and versatilecommunication. That is why Pitney Bowes believes in the future of the mailstream as a vital tool for communications and commerce in the 21st century.
E A M S O L U T I O N S
11
Gail McGovern is Professor of Management Practice atHarvard Business School.Before joining HBS, she wasPresident of Fidelity PersonalInvestments, a $500-billionunit of Fidelity Investmentsserving 4 million customers.Prior to that, she wasExecutive Vice President for the Consumer MarketsDivision of AT&T.
Bernie Gracy is Vice Presidentof Business Integration forPitney Bowes DocumentMessaging Technologies divi-sion. He has served as the Vice President and GM ofDNP Software and ProfessionalServices Business, as well asother leadership positions in software and systems engineering, enterprise integration, and business development.
How can the customer’s voice
be heard in the boardroom?
And how can companies talk
back to customers in a way
that resonates with them?
Pitney Bowes brought two
leaders together to share
their thoughts.
PT: Gail, let’s start with you.
How exactly does one bring
the customer – that is, mar-
keting – into the boardroom?
GM: We all know that market-ing is important. Customersare the source of all cash flow.I often tell our students thatmarketing is the only disciplinethat functions exclusively onthe top line. But I believe that the marketing function is largely ignored in the
Companies can also measurethe right things, but measurethem incorrectly. If you’re simply measuring customersatisfaction, it may not captureloyalty. Firms also measureretention and acquisition. But if you’re on an acquisitiontear and you’re losing as manycustomers as you’re gaining,then acquisition in and ofitself is not going to be a goodbusiness driver.
boardroom. If the customer isdiscussed at all, it seems to bevery anecdotally, as opposedto with hard metrics.
So there’s a need to develop a set of metrics that does measure what customers wantand how to do so effectively.Companies have to identifyand measure drivers of customer satisfaction thatultimately drive loyalty.Measuring the wrong driversnot only can negatively impactcustomer satisfaction, but italso can leave customers highly dissatisfied.
HE SAID,SHE SAID
12
PT: A recent Harvard Business
Review article that you
co-authored mentions a
marketing “dashboard.” Does
that come into play here?
GM: Yes. An effective dash-board will get some of thesemetrics in front of boards ofdirectors and CEOs. There arethree parts to the marketingdashboard. The first is businessdrivers. Next is a pipeline for growth and growth ideas.Once these two drivers areestablished, the third is looking at your organizationsand making sure you have the right talent.
PT: Bernie, you’re on the front
lines. What are the practical
implications of this marketing
dashboard for customer
contact strategy?
BG: It’s very important on thefront end. Professor McGoverndiscussed the importance of measuring the right thingsright. In a recent article,McKinsey agreed, and saidit’s time for marketers to be consistent in applying invest-
ment fundamentals to measur-ing marketing’s effectiveness.Finding and exploiting pointsof economic leverage, manag-ing risk, and measuring theright things right. Measuringthose key business drivers that Gail referred to is what’s driving return.
PT: Gail, can you elaborate on
the business drivers that you
and Bernie are referring to?
GM: First and foremost, thosedrivers have to directly and
predictably impact financialperformance. If you’re measur-ing something that doesn’teventually show up in thefirm’s top and bottom line,they’re not the right businessdrivers. We recommend thatthey be leading indicators –which, of course, will varytremendously based on yourindustry and company. If youget a set of business driversand you watch them moveeither positively or negatively,the firm has to be able to dosomething about that. It needsto be actionable.
13
When I think about questionsabout customers, aboutunderstanding what the customer thinks of the valueproposition of the firm, theseare things that I know areessential, that innately anyonewith business acumen under-stands is important. And itbecomes simply a reminder of getting these issues backinto the boardroom.
BG: Actually, Gail’s formercompany, Fidelity Investments,is a great example of a company that understands theimpact of customer communi-cations on profitability. Fourof Fidelity’s five segmentsare based on the amount ofassets that a customer holds.However, the fifth segment isnot defined by assets, but bythe profitability – or lack ofsame – of customer communi-cations. These customersspend so much time on thephone with call centers at the local branch that they’reunprofitable for the company.Fidelity has demonstrated thatorganizations must take aholistic view of marketing andthe customer channel mix tomaximize shareholder return.
PT: Bernie, Pitney Bowes
helps organizations enhance
their customer communica-
tions. How are you counseling
your clients on using
customer communications
to enhance profitability?
BG: We see a key point of economic leverage in bettermanaging and optimizing theglobal mailstream. Today’smailstream is varied; its growth
rate differs by segments. Rightnow, world-class organizationsare finding numerous ways tointegrate the mailstream intotheir business processes toimprove customer communica-tions – for example, in theircall centers, on their websites,in their accounts receivableand billing. In retail and carriercategories, too. By deftly man-aging the mailstream, they’reenhancing their profitability,growing their revenue, creatingcross-sell and up-sell opportu-nities, and driving costs out ofthe system.
PT: So, getting back to metrics,
are there any new measures
being used to gauge the effec-
tiveness of the mailstream?
BG: In key segments, there arevery effective ways. Segmentmarketing, for one, providesinformation about the customer, to be able to drivepersonalization. There are newmail tracking technologies forboth outbound and inboundcommunication. Then you canlook at how those interac-tions are driving measurableimprovement by having themgo to the store, driving cus-tomers toward sales growth,improving call center cross-selling, and driving customersto the web. You can essentiallylink what was once viewed as anon-measurable paradigm intoa customer multi-channel mix to drive profits.
PT: Fascinating insights from
both of you. Thank you for
your time, and for sharing
your unique perspectives.
To request a complete transcript of thisdiscussion on “Bringing the Customer into the Boardroom,” please [email protected].
PT: Bernie, you mentioned
economic leverage. How does
that fit into this equation?
BG: Marketers need to makespecific interventions at thepoint of economic leveragewhere the returns on invest-ment are highest. Especially inthe 21st century, that meansmanaging the dilative effect ofa fragmented, multi-channelenvironment. Think about it:wired and wireless broadbandfor the home, voice data con-vergence into the cell phone,traditional channels like ATMnetworks, kiosks, call centers,interactive voice response,chat, cell service over the web,email, transactional mail anddirect mail. Each of thesechannels has an associatedcost and has some capabilityto track individual customerbehavior.
PT: Let’s bring this back to the
boardroom. Is top manage-
ment addressing this changing
customer environment?
BG: Leading companies arebeginning to leverage multi-channel communicationstrategies with their customersto be able to market moreeffectively to them. Recently,Forrester Research reportedthat senior executives areseeking to understand the cost of communication, itseffectiveness, individual customer behavior, and theprofitability of customer segments. That way, they canunderstand what is the bestand most profitable way tointeract with their customers.
PT: Gail, is that your
experience as well? Is senior
management aware of the
impact of customer communi-
cations on profitability?
GM: Yes. The CEO alreadyknows that this is a key issue.A gentle nudge on the part ofthe marketing executive isprobably all it’s going to take.
14
Pain relief for a large hospital
Genesys is the largest health care servicesprovider in mid-Michigan, with 2,000employees and annual revenues of $320million. Its staff was faced with automatinghundreds of its internal customers’processes – all demanding the integration,cleansing, analysis and delivery of informa-tion. But an organization as large and geo-graphically distributed as Genesys neededto easily access, transform and integratedata from multiple sources, then deliverthat information to reporting applications,spreadsheets or other destinations.
Their search for a solution led them toData FlowTM software from Group 1Software®, a Pitney Bowes company. Thesolution quickly streamlined work processes,enhanced productivity and improved thequality of decision-making throughout the administrative organization.
“Data Flow performed so well, it has proliferated throughout our organizationas a superior way to automate processes,”says Kris Vert, Senior Systems Analyst.“Day in and day out, it has become myprogramming environment.”
“Data Flow has allowed us to producereports easier and faster,” says John Baron,IT Application Service Team Leader. “It hashelped us simplify our business processes.We can get data in users’ hands morequickly, without them even knowing howthe processes involved in getting that datahave changed.”
Since its adoption, Data Flow has helpedGenesys’ IS personnel automate nearly 250discrete and ongoing processes, and isexpected to be used in 200 more. “I can’teven begin to estimate the number ofhours Data Flow has saved us,” Baron says.“Considering the number of hours we’vesaved, it has definitely paid for itself.”
Meanwhile, inthe real world…
15
Cook finds the recipe for
better customer communication
With 16,000 employees and a global network of 1,050 locations, Thomas Cookis one of the leading names in travel services. The company realized that itsgrowing customer communication needs –including ticketing, billing and promotionalmailings – were exceeding its legacy systems’ ability to keep up. It needed arobust customer communication manage-ment solution, without incurring significant expense or disruption.
The answer was the DOC1TM software systemfor the Series 5 inserter from Group 1Software®, a Pitney Bowes company. It simplifies the gathering and manipulationof data, streamlines document creationand distribution, and ensures that infor-mation is accessible and secure. Designedto achieve additional return on investmentfrom existing legacy systems, it aggregatesmultiple data sources, processes thoseinflows into a consistent format, thenapplies that data to billing, marketingcommunications, analysis and/or manage-ment information applications.
“It provides a fully integrated solution,which enabled the implementation of ourcustomer strategy,” said Marian Manson,IT Program Manager. “It was then complemented with software and hardwarefrom Pitney Bowes, to provide end-to-enddelivery of customer communications,invoices, tickets and targeted offers foradditional products.”
The company also realized dramatic savings on paper stock and batch manage-ment – using the product’s centralized generation, print and mail system – whileproviding a consistent interface with thecustomer across all brands and channels.“Archive and retrieval is now availableonline in high street outlets and in the call center for customer query handling,”says Manson. “And our cross-selling offerscan be variably inserted depending oncustomer purchases, which makes our marketing initiatives more targeted.”
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Wherever people move,
home improvement follows
More than 40 million people move eachyear, and it behooves the nation’s leadinghome improvement retailer to monitor and market to them. So they signed on as a retail advertiser for MoverSourceTM,a program that makes the official change-of-address and notification process easierfor consumers and businesses.
MoverSource is a product of Pitney Bowesaffiliate Imagitas, a leading marketingsolutions firm. Offered through an alliancebetween the U.S. Postal Service® andImagitas, it provides an official Change of Address Form – along with helpfulinformation and valuable coupons – to the 43.5 million U.S. residents who moveeach year. Marketing these products allowsthe retailer to deliver valuable informationto consumers before and right after theirmove dates.
The MoverSource program includes severalcomponents. The Mover’s GuideTM includesa change-of-address form and informationkits with helpful savings on moving-relatedproducts and services. The Mover’s GuideOnlineTM helps people process a change ofaddress and access moving informationand coupons over the Web. And aWelcome KitTM mailed to each new home,contains local information such as how to register to vote, the names of localofficials, and national and local savings.
To protect customer privacy, the PostalService does not provide customerinformation or addresses to MoverSourceadvertisers.
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Key findings about profitability, efficiency and communications
Is there a link between profits and efficiency?
Between efficiency of operations and
effectiveness of communications?
In October 2005, BusinessWeek Research
Services conducted a Pitney Bowes-
commissioned study of senior business
executives to investigate these questions.
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The survey cut across a wide swath of companies with at least1,000 employees – nearly two-thirds being corporations of at least 10,000 employees. Similarly diverse were the job titles ofrespondents, ranging from SVPs to EVPs to VPs to the C-suite and Chairmen. A summary of the survey’s findings include the following points:
• Companies believe that both sales and cost-cutting/efficiency are important goals
• Meeting both of those goals continues to be a challenge. • Seeking a consistent stream of small sales wins throughout
the year is generally more successful than gunning for a few large wins.
• Companies improve sales growth and profitability when theyinvest in methods to improve efficiency.
• Many companies do not manage their information or communi-cations systems as effectively as they’d like.
From top to bottom
What is more important to corporate America, the top line or thebottom line? The answer appears to be “yes.”
“Top-line sales revenue/growth” was cited as important by 86% ofrespondents, in a near-dead heat with such bottom-line issues as“managing budgets/costs” (83%) and “improving productivity/efficiency” (82%).
While the twin goals of sales and efficiency are seen as equallyimportant, they’re also viewed as equally difficult to achieve. Asked which of the two will be a greater challenge over the next 12 months, 36% responded “equally challenging,” with 36% citingsales and 28% cost/expense management.
The importance of “small ball”
Swing for the fences, or choke up and slap a single through thehole? Executives overwhelmingly (82%) indicated that a series ofsmall consistent sales wins throughout the year is more effectivethan seeking a few home runs (18%).
As a result, only 26% of executives feel that the mindset of theircompany is more focused on trying to land a few big deals, while74% emphasize a series of consistent “small ball” wins.
Contributors to profitability
What factors are most critical to contributing to profitability?Again, sales and efficiencies both play important roles. Sales toexisting customers topped the list, at 88%, with sales to new cus-tomers cited by 76% of respondents. Sandwiched neatly betweenthe two? Yup. Achieving efficiencies, in both operations andprocess, named by 77% of respondents as a key to profitability.
Tangentially, the next most important source of growing profits isfrom creativity and innovation, with 64% of executives citing it.
Efficiency improvements
When companies invest in efficiency improvements as a profit-enhancer, they generally focus on three areas: sales (89%), customer service (89%) and marketing communications (86%).
That actually establishes an interesting causal relationship:Efficiency improvements lead to greater sales. When tactics areimplemented to improve efficiency and cost-cutting, 57% of execu-tives stated that they had a positive impact on sales growth. How?Via improved customer service and satisfaction (58%), customerretention (52%), market share (41%) and gross sales (36%).
Communicating internally
How are today’s executives communicating internally amongdepartments, divisions and lines of business? Not especially well, it seems. Only 29% feel that their companies manage the flow ofinternal communication “very well” or “extremely well.”
The factors contributing to disruptions in the flow of informationat companies are varied. Among the most cited culprits are:
• “Missing/fragmented info” (77%)• “Too little communication” (75%)• “Information not being received” (74%)• “Communication arriving too late” (72%)• “Not knowing where to send info” (71%)
That said, it’s easy to understand why 56% of executives indicatedthat improving internal communications is a key company goalover the next 12 months.
Communicating externally
While intra-company communications leaves something to bedesired, customer communications seems to be faring significantlybetter. Executives believe they’re communicating with their customers “very well,” thank you, according to 46% of respondents– with another 41% in the “somewhat well” category.
According to the survey, the most important customer communica-tions medium is email (no doubt because of its speed and negligi-ble cost), cited by a whopping 81% of executives as “extremelyimportant” or “very important.” A distant second is voice mail at53%, followed by express carriers (FedEx, etc.) and standard mail, at 39% and 37%, respectively.
The predominance of email is not necessarily good news, however,because executives say the medium is fraught with problems.“There is a mistaken assumption that email communication iseffective,” noted one respondent. “There is a proliferation of emailcommunication that has engaged the Law of Diminishing Returns.”Another cites the ongoing effectiveness of traditional communica-tions. “More traditional forms such as standard mail and expresscarrier are typically utilized with our customers.”
For more information…
This article represents a condensed version of the findings of the BusinessWeek “Efficiency and Profitability” research study conducted in October 2005. For a copy of the complete document,please contact Pivotal Thoughts at [email protected] or call 203.351.6966.
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Looking for a profit reality check? It’s in the mailstream.
What is the mailstream?
The mailstream is the sum of all the mail and documents, both traditional and digital, as well as packages, that flow across your business and to customers andback. It’s the entire matrix of people, processes and technology, from your databaseto printing to delivery.
Why should I care?
In a word, profit. Companies of all sizes across a full range of industries have proven that optimizing the mailstream results in significantly higher revenue andlower costs.
Grow profit? How?
Every document, package or piece of mail – whether it’s an invoice, an activation kitor an owner’s manual that arrives via DVD – is an opportunity to up-sell or cross-sell, to acquire new customers or strengthen existing relationships. By optimizingyour mailstream, you can better capitalize on those opportunities.
What’s driving this revolution?
Technology, process improvements and analytics. They’re making documents, pack-ages and mail more effective, more efficient, and more personal than ever before.
Aren’t there less expensive ways to effectively reach customers?
Actually, no. Mail is still the least expensive way to achieve impact and effectiveness.
Won’t the Internet mean the end of mail?
It’s a misguided prediction. The Internet and mail work in concert. Internet usersreceive more mail than non-users do, with mail volumes correlating directly toincome and education.
Is there anything else working in the mailstream’s favor?
Quite a bit, including Do-Not-Call lists, spam filters and digital video recorders. They’reputting walls between you and your customer – walls that mail can get around.
Who can help me capitalize on this opportunity?
Pitney Bowes. We’re the only company with in-depth knowledge of the entire mail-stream. From end-to-end. And we’ve been honing that knowledge for 85 years.
For more information on how you can grow profit through the mailstream, visit
www.pb.com/mailstream or call 1-866-362-3569.
Pitney Bowes:Engineering the flow of communicationTM
Pitney Bowes provides theworld’s most comprehensivesuite of mailstream software,hardware, services and solutions to help companies manage their flow of mail,documents and packages toimprove communication.
With $5.3 billion in annualrevenue, Pitney Bowes takes an all-inclusive view of its customers’ operations, helpingorganizations of all sizes enjoythe competitive advantagethat comes from an optimizedmailstream. The company’s 85 years of technological lead-ership have produced manymajor mailstream innovations,and it is consistently on the
Intellectual Property OwnersAssociation’s list of top U.S.patent holders.
With approximately 35,000employees worldwide, PitneyBowes serves more than 2 million businesses throughdirect and dealer operations.More information about thecompany can be found atwww.pb.com.
Pivotal Thoughts is an ongoing publication of Pitney Bowes Inc. Corporate Marketing Department.
Senior editorial staff:
Arun SinhaVice President & Chief Marketing Officer
Matthew L. SawyerEditor-in-Chief
Jennifer L. Panaro Executive Editor
Scott BountyProduction Manager
Created by Direct Ventures, [email protected]
Barry SideroffPresident & Strategy Director
John FatterossCopy Director
Rob Frankle Art Director
1. Source: “Electronic Alternatives and Direct Mail Marketing,” Elena Diakova, Pitney Bowes, July 20052. Source: “What's in your mailbox? Capital One campaign boosts brand awareness and customer loyalty,” Amy Lynn Smith, DeliverTM, Volume 1, Issue 2, May 20053. “Full Throttle: GM Harnesses the Horsepower of CRM,” Dan Grantham, DeliverTM, Volume 1, Issue 2, May 20054. Source: “An Investigation: Direct Mail Responses Based on Colour, Personalisation, Database, and Other Factors,” Broudy and Romano,Digital Print Council, White Paper No. 1, October 19995. Source: “E-COMMERCE REPORT; Internet Retailers Reaching Out to Mailbox Surfers,” Bob Tedeschi, New York Times, November 22, 20046. Source: “Help drive sales on your web site via catalogs,” United States Postal Service®, Catalog Research White Paper, November 20047. Source: “SUNDAY MONEY: SPENDING; More Companies Say, ‘The DVD Is in the Mail,’” Eve Tahmincioglu, New York Times, December 26, 20048. Source: "Netflix Announces Third-Quarter Financial Results," Deborah Crawford, Director of Investor Relations, October 19, 2005. 9. Source: “Great Circle Family Foods - Krispy Kreme,” U.S. Postal Service®, Customized MarketMail TM Testimonials, August 2003
© 2005 Pitney Bowes Inc. Engineering the flow of communication, Pitney Bowes, the Pitney Bowes logo, Data Flow, dMail mail processingsolution, DOC1 computer software system and Series 5 inserter are trademarks or registered trademarks of Pitney Bowes Inc. All other trademarks and/or registered trademarks are the property of their respective owners. Printed in the United States of America.
Pitney Bowes IncWorld Headquarters1 Elmcroft RoadStamford, CT 06926-0700 USTel: 1 866 362 3569
email: [email protected]/executiveview
Printed in the United States of America
