DIRECT MAIL: THE HAMMER IN A MARKETING SERVICES PROVIDER'S TOOLBOX

Print Solutions Magazine - February 2010
At the 2009 Print Solutions Conference & Expo in Chicago, many participants attended the presentation, "How to Position Your Business as a Marketing Services Provider." If you want to position your business as a marketing resource, then learning direct mail and its role in the mix is a key element to success. If you understand mail and its relationship to other media channels, then you have the knowledge to guide a customer toward winning marketing strategies. Direct mail isn't easy. If it were, everyone would be doing it and, lo and behold, we would have another commodity. Direct mail expertise is uncommon and sets you apart as a marketing services provider. It is loaded with multiple components and each can be profitable.

More than ever, end users want help from a trusted source who understands their goals and can handle the details. That's the distributor's role. Companies need expertise to acquire new customers and new business from existing customers, build loyalty to retain customers, educate customers and build meaningful customer contacts.

Postal University, Here I Come!
Proficiency in the world of direct mail requires investment. As a distributor, the ideal position is to orchestrate the direct mail program for your customer. The power of direct mail is elevated by testimonials touting the benefits customers receive as a result of direct mail from other media platforms such as e-commerce, search, email and social media. Rudimentary knowledge of all aspects of the mailing side of the equation (beyond print) is necessary.

This knowledge can come from many sources, including PSDA, which provides information through seminars, networking, conferences, publications and trade shows. Many member companies provide expertise in mailing operations and offer a wide range of products related to mail. The United States Postal Service (USPS) offers local education through its Postal Customer Council (PCC) programs (usps.com/nationalpcc). It also offers two free bi-monthly publications, Mail Pro and Deliver Magazine. Deliver gives you good ideas on the marketing side as well as trends and case histories. The USPS also publishes rules and educational tools online at usps.com, pe.usps.com, and ribbs.usps.gov. Distributors seeking a consultative level of competence in direct mail should immerse themselves in the knowledge bases available.

Don't Be Discouraged by Negative Postal News
There is much discussion about recent steep declines in postal volume. In fiscal year 2009, postal volume declined 12.7 percent overall, with a 16.5 percent decline in Standard Mail, the category associated with direct mail advertising. The recession hit direct mail hard. Savvy mailers have a keen eye on tendencies of consumers to purchase, and will mail only if they think consumers are in a buying mood.

2010 is expected to be different. The good news is prices for First Class and Standard Mail will not increase in 2010. Those same savvy mailers do not want to be left behind when consumers start buying again. A recent Direct Marketing Association study predicts more than $1 billion in additional direct mail marketing spend in 2010, a 2.5 percent increase from 2009. The study also reports that non-catalog direct mail sales produced $445.8 billion in 2009. Compare that to $26 billion in revenues generated by email marketing. The ROI of direct mail was an impressive return of $15.22 for every dollar spent last year.

What this tells us is direct mail is still widely embraced as a revenue generating powerhouse. The dramatic decline in mail volumes is not a harbinger of direct mail's future. There are several technologies at work that will increase the value of direct mail as a marketing tool and reduce mail volumes over time. For some of us, hearing about a reduction in future volumes is troublesome. No one in the mailing industry is predicting mail volume will return to its record 2006 level of 213 billion pieces. The 177 billion pieces mailed in 2009 is expected to decline further in 2010. Will volume reverse and come back somewhat?

Probably, but no one knows to what extent.

The spray and pray method of direct mail is over. Technologies that take direct mail to an unprecedented level of value are already in the distributor's playbook. Personal URLs (pURLs) and variable print are common, and 1-to-1 marketing will continue to blossom. Even those who once signaled the demise of mail now see it as a necessary complement to the success of any multichannel effort. Driving better internet and in-store traffic with direct mail is another good reason to keep direct mail in the mix.

While advances in personalization will shrink mail volumes by being lean and selective, the USPS is implementing new rules to improve effectiveness. These will reduce mailing counts by eliminating wasteful, undeliverable as addressed (UAA) mail. For distributors offering direct mail services, this is good. It increases the percentage of valid mailing addresses and provides a strong argument for sustainability. Don't underestimate the benefit of practicing and promoting an environmentally sustainable model for mailing campaigns. The USPS has placed a high priority on reducing UAA costs (more than $1.6 billion per year) and being a sustainable business enterprise. Mailers are required to update their mailing lists within 95 days of the mail date by participating in an approved Move Update process. This new standard began in November 2008, but on January 4, 2010, it took on another dimension.

Move Update and Performance-Based Verification (PBV)
In 2010, the Postal Service will apply PBV technology at the mail acceptance units. With PBV, mail can be read and verified in process. Some mailers will use MERLIN to test mail readability, but what matters is how it performs on USPS equipment. First Class Mail and Standard Mail seeking postal discounts will be tested at acceptance units of the USPS for change of address (COA) errors. Even if an approved Move Update process was applied within 95 days preceding the mail date (note: single-piece First Class Mail rates apply if this wasn't done), a $.07 per piece Move Update assessment charge will be levied if COA accuracy does not meet a prescribed threshold of 70 percent.

Here is an example of how this process will work:
    1. Samples from the mailing are given the PBV Move Update test.
    2. The test looks at all addresses in the samples that should have received a COA update.
    3. Of those, if five or fewer have not been updated for a COA, the mailing will not receive an assessment fee. The entire mailing passes.
    4. If there are more than five addresses not updated, then those as a percentage of all addresses that should have been updated will be calculated.
    5. The mailer is given a 30 percent error rate allowance. If, for example, 40 percent of COA samples are not updated, the $.07 charge is applied to 10 percent (40–30 percent) of the total mailing. For a mailing of 100,000 pieces, the charge of $.07 would be applied to 10,000 pieces (10 percent of the total) and equal $700.
    6. Any extra postage is paid in order for the mailing to proceed, or the mailer has the option to redo the addresses, an unlikely scenario.

For distributors working with customers' mailing lists, it is important to understand the ramifications of Move Update compliance. Assessments can add up and potentially harm the profitability of a direct mail campaign. The closer to the mail date Move Update approved software can be run, the better the address quality. This is one area where paying attention to detail is key. The more informed you are about the rules and pitfalls, the better you will be at orchestrating customer mailings. Knowledge builds customers' trust as well. There is help readily available from suppliers with expertise in the mailing process. The distributor does not have to know everything just where to find the answers and, perhaps more importantly, the questions.

Steve Brocker is vice president of sales and marketing at Western States Envelope & Label, Milwaukee, Wis. He is also one of two representatives from the Envelope Manufacturers Association (EMA) appointed to the Mailers Technical Advisory Committee (MTAC). MTAC meets at Postal Headquarters in Washington, D.C., for two days each quarter to focus on eliminating obstacles to mail growth.

For 101 years, Western States Envelope & Label has been a nationally recognized time-tested envelope and label manufacturer with the versatility required for envelope converting, envelope printing and custom label printing. Over 1,600 products are in stock and ready to ship daily.

For more information, call (800) 558-0514 or e-mail steve.brocker@westernstatesenvelope.com.

Originally from Print Solutions Magazine®. February 2010 © Copyright 2010. Published by PSDA, Alexandria, VA 22301
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