Look Who’s Arguing for Higher Postage

It was a busy past week for postal reform followers, as the Senate Homeland Security and Governmental Oversight Committee convened a hearing on a bipartisan measure to implement various Postal reforms. Perhaps the most contentious part of the Senate’s current bipartisan proposal was the centerpiece of the 2006 Postal Accountability and Enhancement Act: The annual rate cap on postage increases tied to the Consumer Price Index.

Well, it was a busy past week for postal reform followers, as the Senate Homeland Security and Governmental Oversight Committee convened a hearing on a bipartisan measure to implement various reforms that would enable billions in necessary U.S. Postal Service (USPS) savings. The House Oversight and Government Reform Committee already passed a postal reform measure earlier this year—without one vote of support from Democrats. Whatever bipartisan effort the Senate can put forward matters greatly, since votes of majority Democrats are needed in the Senate (and eventually the House) for passage, and also to garner White House support.

Perhaps the most contentious part of the Senate’s current bipartisan proposal, based on comments filed and testimonies given, was not five-day delivery or relief from funding mandates of pre-retirement of health benefits (though both of these have their own list of supporters and detractors), but rather the centerpiece of the now-in-effect 2006 postal reform law (Postal Accountability and Enhancement Act): The annual rate cap on postage increases tied to the Consumer Price Index.

Marketing mailers—USPS customers—insist that such a cap remaining in place.

It is this measure of fiscal discipline that acts as the single most important indicator to mailers that the Postal Service will operate within its means, and mailers will have predictable increases in postage that can be budgeted for with a high degree of certainty.

Uncertainty, on the other hand, is the specter that advertising mailers most fear—and one that channels ad dollars most formidably to other media. The 2007 rate hike (the last rate hike ahead of the 2006 law’s implementation) clearly showed what exorbitant and unexpected increases can do, such as the case of catalogers in that year.

Now we have postal unions (predictably), USPS management and the PMG (less predictably), the USPS Inspector General, and even a Senate Republican (now that’s a surprise) arguing for an emergency rate hike (a “last resort” allowed under the current 2006 law, if and when exigency is proven) or, as the Senate bipartisan bill would allow, the removal of the CPI cap altogether as the USPS looks to $20 billion in overall relief (much of which it has achieved already in its own cost-cutting to date) to balance the books.

Well, I have my own feelings about the negative effects of exigency—which I shared recently in a post. (I’m not an economist here, just a student of history.)

Yet, to do away with the CPI price cap stricture? That would make disappear the crowning achievement of the 2006 law that USPS customers fought so hard for. Getting rid of the cap means exigency, in practice, could be a permanent fixture in postage increases—and mailer flight to digital and other channels will be the “giant sucking sound” as uncertainty reigns again (my apologies to Ross Perot). As we know from the past: USPS management goodwill, Postal Regulatory Commission oversight, and mailers’ testimonies of warning in rate case hearings are not enough to stop punishing and unpredictable rate hikes. A law that keeps cost increases in postage within CPI, however, largely has halted such malaise.

The losses that the Postal Service is experiencing today have to do with Congressional mandates, not nimble efforts of USPS management and workforce to right-size the Postal Service and its infrastructure to USPS mail volume trends.

Mailers: Stay tuned—and be prepared to mobilize.

PMG Fights Congress on Postal Reform

The U.S. Postal Service reiterated this past week—in hearings before the House Oversight and Government Reform Committee—just how crucial it is that Congress undertake reforms that are necessary for the USPS to accrue the savings to restore its fiscal state. There should be no “half measures,” Postmaster General (PMG) Pat Donahoe stated

The U.S. Postal Service reiterated this past week—in hearings before the House Oversight and Government Reform Committee—just how crucial it is that Congress undertake reforms that are necessary for the USPS to accrue the savings to restore its fiscal state.

There should be no “half measures,” Postmaster General (PMG) Pat Donahoe stated.

First, PMG Donahoe questioned draft “discussion” legislation being devised by Rep. Darell Issa (R-CA) to enable USPS management’s bold efforts to “right size” Postal Service costs and infrastructure to volume trends. As Direct Marketing News reported on July 17:

“The draft did not appear to meet the full approval of the PMG, however, who is adamant that any new legislation remove the U.S. Postal Service’s obligation to prefund employee health and retirement programs. Issa’s plan calls for future payments to be made on an actuarial calculation that will reduce the Postal Service’s annual $5.7 billion prefunding payment, which it defaulted on last year.

“‘We are seeking the authority under the law to control our healthcare and retirement costs. We can completely eliminate the need for Retiree Health Benefit prefunding if we can move to our proposed solution,’ Donahoe said, addressing Issa directly.”

The Postmaster General maintains that being allowed to set up its own healthcare coverage for retirees programs would lower premiums paid by employees, while delivering up to $8 billion in savings annually. Donahoe also is asking Congress to return $6 billion in USPS “overpayments” to the Federal Employees Retirement System (FERS).

At this juncture, Rep. Issa’s discussion draft does not include provisions for enabling these savings in full, and the Postmaster General says time is running out-or more defaults will be in the offing. (The next default on payments likely will occur this September, Reuters reports.)

Next, the Postal Service is seeking Congressional approval—and likely Postal Regulatory Commission approval as well—on a five-day delivery plan for residential mail delivery, and the estimated $2 billion in savings it estimates it would achieve there. The false start earlier this year—USPS unilaterally announced its five-day delivery intent beginning August, and Congress promptly shot those plans down the following month—doesn’t mean that five-day delivery is dead. On the contrary, USPS management believes such savings are crucial toward keeping delivery costs in line with volume and revenue: First-Class Mail volume, in particular, continues its decline, despite an improved U.S. economy.

Some of my contacts in the mail industry say that five-day residential delivery is probably (1) inevitable, (2) something direct mailers can adapt their production and transportation schedules to live with, and (3) perhaps necessary for long-term USPS viability, as the PMG reports. While postal unions—and their supporters in Congress—are still not for it, the need for cost-cutting and right-sizing USPS delivery infrastructure remains. Alternate proposals for achieving $2 billion in savings (or revenue from new and existing product lines) so that six-day Ddelivery can remain so far remain elusive.

All in all, PMG Donahoe wants that $20 billion onto the USPS bottom line to come from somewhere—and he knows it can’t come from higher postal rates, not at least until the Postal Service is more lean.

As the PMG told Congress this past week, “The Postal Service continues to face systemic financial challenges because it has a business model that does not allow it to adapt to changes in the marketplace, and it does not have the legal authority to make the fundamental changes that are necessary to achieve long-term financial stability.” (Reuters, July 17).

Harte-Hanks has published an informative discussion of current postal reform efforts, and I encourage interested readers to take a deeper dive: http://www.harte-hanks.com/postology/Harte-Hanks_PostologyReport_2013_July.pdf

We’ve been waiting for Congress to act in a serious manner on postal issues since 2006-if not before. How much longer?

3rd Pick in the 2013 Marketing Cloud Acquisition Draft Is …

Tick-tock. Tick-tock. Gosh, it is almost getting boring around here waiting to see where the next selection will go. Salesforce grabbing up ExactTarget with the first selection was the first big surprise. Not so much the ExactTarget side, because there had been rumors for some time that ET was on the market.

Tick-tock. Tick-tock. Gosh, it is almost getting boring around here waiting to see where the next selection will go.

Salesforce grabbing up ExactTarget with the first selection was the first big surprise. Not so much the ExactTarget side, because there had been rumors for some time that ET was on the market. The surprise was more about Salesforce jumping into the fray. Oh, they definitely needed this acquisition or one like it. For all the great tools that Salesforce has for gathering, organizing, prioritizing and listening to your contacts and gathering data, what they have never had is a robust and efficient way to segment and actually reach those valuable contacts. ExactTarget gives them that one big missing capability through the ET campaign management platform, along with many fresh concepts and ideas in social opportunities.

The other gem in what Salesforce picked up in this acquisition, and what likely drove the total price of ExactTarget so high, is ET’s recent purchase of Pardot to strengthen their own marketing automation growth plans. Even the Salesforce CEO gushed about the inclusion of Pardot in his Twitter post around the purchase, thrilled that the transaction included: “The fastest-growing marketing automation and lead nurturing company for Salesforce users.”

But that price. Wow—$2.5 billion. Worth it? Yes, most likely, in the long term. But in the short term, it is a real drain on the cash flow for Salesforce; probably severely limiting other expansion plans or possibilities. It seems painful enough that now, just a month later, they have had to take out a $300 million loan to carry the cost. I have to believe that Salesforce is certain that the long-term cross-sell and integration possibilities for both companies will make it all worthwhile.

Then a few weeks later, an even bigger shock when Adobe slips in to scoop up Neolane. Another big matchup that fits the overall strategy needs of both organizations. While I hadn’t heard of any open shopping of Neolane, it makes sense that they would be eventually in the crosshairs of a larger enterprise. A strong set of campaign management tools, a top-line roster of satisfied clients, a steady string of industry honors and awards during the last four or five years, and continuous innovation of the product line toward achieving “visionary” ranking across three separate areas in Gartner’s “Magic Quadrant” reports and named a “leader” in Forrester’s “Wave” report. There was a whole lot of upside potential waiting there for the right suitor. Like Salesforce just a little earlier and Oracle in 2012, before the Eloqua acquisition, Adobe was the big man on campus in its primary business, but has stumbled about in efforts to build a suite of contact management and execution tools that would translate to the market segments outside of its solid base of agency clients drawn in by its creative leadership. Neolane will certainly be able do that and bring powerful new strategic offerings to the Adobe table.

So the 2013 first- and second-round picks have been completed. Where do the prognosticators think the next two or three picks will fall? Silverpop, which had also flirted with Salesforce in the past, seems primed. But who trades up to get them? SAS maybe? Or are they completely satisfied with their own marketing automation tool? They might jump in to keep up with the Joneses in finding a way to up the game on their existing marketing automation capabilities. Or maybe SAS goes for top-gun Marketo, which is always talked about in merger potential conversations, but never seems to work out the final details of a deal. How about Microsoft? Do they take their time, because they had the last move in 2012 when they picked up Marketing Pilot, or do they decide to make the bigger splash with one of the big dog free agents—either before SAS moves, or will they wait for one of the other choices? There are plenty of potentially available independents out there ready and willing to be courted. And there is never a shortage of companies looking to add a ready-to-serve subsidiary to their arsenal.

So who do you think will be the next CRM/Marketing Automation data darlings to join forces toward World Marketing Domination? Take a guess, email it to me, and I will dig up a special prize for the first one—or ones—to get it right.

Why Is Customer Loyalty So Hard to Get? And How Can You Get It Now?

Companies like Apple, Coca-Cola and Harley Davidson must have a secret formula. Customer loyalty for them goes beyond the norm. Calling the people who buy their products “customers” doesn’t do justice. “Raving fans” is a much better description. Billions of dollars are spent every year on customer relationship management in an effort to inspire loyalty. Reward programs are implemented and abandoned when the cost to maintain exceeds the return. Loyalty is hard to get and easy to lose.

Companies like Apple, Coca-Cola and Harley Davidson must have a secret formula. Customer loyalty for them goes beyond the norm. Calling the people who buy their products “customers” doesn’t do justice. “Raving fans” is a much better description.

Billions of dollars are spent every year on customer relationship management in an effort to inspire loyalty. Reward programs are implemented and abandoned when the cost to maintain exceeds the return. Loyalty is hard to get and easy to lose. This is why the companies that have it guard their brand image with a vengeance.

The benefits of good customer/company relationships are well known. When people feel connected to a company, they become lifetime customers and advocates for the brand. Some companies naturally attract loyalty because of their product appeal and exclusivity. The rest have to earn it.

Earning loyalty begins with understanding relationships between customers and companies. Loyalty is hard to get because companies are focusing on the wrong things when they try to build relationships with their customers. Transactional and service relationships are the only type that people want with companies. All of the talk in social media about anything deeper is fantasy. Trying to connect with people beyond fulfilling their needs and expectations is a waste of resources.

Social media is one of many channels that companies use to communicate with customers and prospects. It is an excellent way to share information about the company, products and events and interact with people. It is not a replacement for taking care of the basics that provide the foundation for loyalty. Trying to shortcut the loyalty process by creating viral content is ineffective. If you want an interactive social presence, start with the fundamentals that are endearing to customers.

People want simple and easy more than anything else. Life is complicated and short. They do not want to invest time in the buying process. Simplifying the buying decision and making it easy to purchase, return and resolve issues will do more to create loyalty and increase revenue than anything else. Multiple channels and a variety of tools are available that provide economical and efficient methods to improve the shopping and service experience. To fast-track loyalty for your company:

  • Clean House: Review every process, procedure and policy to insure it is necessary and as efficient as possible. The shorter the paths from initial contact to purchase and problem to resolution, the better. It makes it easy for customers and economical for you.
  • Improve FAQ’s: Answer questions before they are asked. Sometimes this means you have to anticipate the questions because people don’t always know what they need to ask. Including the questions that should be asked in the FAQ’s improves trust and reduces resistance.
  • Supercharge Emails: Add service emails to your marketing mix. Service emails educate and inform customers and prospects so they know what’s happening and how to interact with your company. Educated customers are happier and easier to serve.
  • Offer Self-Service: People don’t really want to talk to your company representatives. They find it easier to solve their own problems when possible. Providing self-service opportunities pleases customers and reduces operating costs.
  • Invite Feedback: Your customers are the best source of information on how to improve your business. Invite them to share their thoughts and make the process as easy as possible. Be sure to always respond with gratitude and information on how the suggestions will be used. It gives ownership and connects people to your company.
  • Do It Yourself: Before expecting your customers and prospects to do anything, try it yourself first. If you developed the process and cannot be objective, ask someone outside the company to do it with you watching. The pain points are quickly identified when this is done.

5 Reasons for ‘Why Now?’

With the lingering, precarious feelings about the state of the economy, along with plenty of concerns about the business climate in general, I find that there is always a great deal of hesitation around beginning any kind of large- or even medium-complexity project focused on data. In many instances, the general consensus from senior management and even ancillary groups outside of the marketing and data management groups is the company has been doing fine with everything just the way it is, with plenty of “If it ain’t broken we don’t need to fix it” or “Let’s focus on increasing revenue this quarter first” pushback to proposed projects.

With the lingering, precarious feelings about the state of the economy, along with plenty of concerns about the business climate in general, I find that there is always a great deal of hesitation around beginning any kind of large- or even medium-complexity project focused on data. In many instances, the general consensus from senior management and even ancillary groups outside of the marketing and data management groups is the company has been doing fine with everything just the way it is, with plenty of “If it ain’t broken we don’t need to fix it” or “Let’s focus on increasing revenue this quarter first” pushback to proposed projects.

The problem with the first is, quite simply, if corporate data has been ignored, or even just on the back burner for any length of time, it is most assuredly broken. Perhaps it is not critically broken yet, but losing clarity, focus and relevancy in keeping up with the evolving goals of the organization. Bloated with obsolete or irrelevant information and systems fragmented; lagging behind on improvements and upgrades, databases become slow, unreliable and frustrating for both the front-line users and for their management teams who are looking for answers that are surely there but, unfortunately, cannot be mined with the speed and efficiency expected. Of course, when this occurs the frustrations grow and we begin to see various business groups take what pieces of data fit their responsibilities and start building and updating the silos which eventually hamper, rather than contribute to, enterprise-wide success. There is no feedback of newer and more relevant information to the main repository; there is no coordination of contact strategy or organized tempo or voice to communication. What evolves is chaos in overlapping or possibly opposing communication from different areas of the same company. It is a sure way to spur the erosion of customer respect for your products and services, along with a vision of incompetence from prospective customers confused by who you are and where you are trying to lead them.

The problem with this is most organizations will not recognize it as a problem. The groups creating the silos and working from there are perfectly happy to have their own source of whatever data they need. No hassles with requests or production queues. They are able to report the results of their efforts in isolation so management only has to see the rosiest picture. Unfortunately—and exactly because of the isolation factor—little if any sales, lead generation, updates or contact changes ever make it back to the primary data warehouse and the remainder of the organization is not able to share in the refreshed information that will help their efforts, as well.

The cure for that, and the answer to the “Let’s wait” feedback, is for the marketing and IT leaders to jointly be prepared with a roadmap of “Why now” proposals for the value of organizational refresh and consolidation that can resonate across the enterprise.

1. Cost containment: With a single platform view of customers and prospects, with vigorous updates and enhancements from every touchpoint, campaigns are able to be streamlined, based on full knowledge of RFM. Consolidation of duplicated software and vendor charges that are being utilized across multiple silos will allow every department to free up much-needed budget space.

2. Increased Productivity: With budget room made available, allocations can be shifted to incorporate the speed and upgrade solutions within the existing resources. Increasing both throughput and volume while optimizing manpower performance and efficiency.

3. Reducing Risk: Utilizing a centralized team to oversee data operations ultimately reduces the risk and exposure caused by violations of corporate policies, governmental regulations and industry best practices. Contact preferences are able to be maintained and shared across all corporate business units on every channel.

4. Customer Journey: No responsible marketer deliberately sets out to overwhelm, annoy or even spam existing customers and prospects. Without centralized deployment and tracking, however, you will be doing exactly that, oblivious to the damage you are doing to your reputation.

5. Increased Revenue: Removing all of the risks, poor decisions and duplication of effort alone will create a much more streamlined approach to providing all of the proper and most effective strategies for finding, developing, nurturing and hopefully establishing long-lasting client relationships. Consumers, regardless if in a B-to-C or B-to-B environment, buy from companies they respect and trust. Revenue grows and is sustained just as steadily by the quality of your relationship with customers as it is by the quality of your products and services.

Healthy, professional relationships and contact strategy are the value-added-benefits you can quantify and demonstrate to even the most ardent rebels across the company. Use the data you have readily available in your system to show every business unit leader the facts. Prove to them the upside potential that a solid, professional and, most of all, highly reliable marketing automation or CRM solution can provide in boosting revenue year over year. Stealthily, but honestly turn the naysayers into advocates with clean and simple facts.

Do that, and the conversation shifts from “Why Now?” to “How Soon?”

Don’t Get Trashed — Is Recycling Discarded Mail Profitable? — Part II

In our previous post of “Marketing Sustainably,” we introduced an expert discussion on whether or not recycling collection of discarded mail, catalogs, printed communications and paper packaging is profitable, and why this matters is an important business consideration for the direct marketing field. In this post, we continue and conclude the discussion with our two experts, Monica Garvey, director of sustainability, Verso Paper, and Meta Brophy, director of procurement operations, Consumer Reports.

In our previous post of “Marketing Sustainably,we introduced an expert discussion on whether or not recycling collection of discarded mail, catalogs, printed communications and paper packaging is profitable, and why this matters is an important business consideration for the direct marketing field.

In this post, we continue and conclude the discussion with our two experts, Monica Garvey, director of sustainability, Verso Paper, and Meta Brophy, director of procurement operations, Consumer Reports. The conversation is based on a Town Square presentation that took place at the Direct Marketing Association’s recent DMA2012 annual conference.

Chet Dalzell: If much of the recovered fiber goes overseas, what’s the benefit to my company or organization in supporting recycling in North America?

Monica Garvey: The benefit—companies can promote that they support the use of recycled paper because they believe that recovered fiber is a valuable resource that can supplement virgin fiber. Recycling extends the life of a valuable natural resource, and contributes to a company’s socially responsible positioning. While it’s true that the less fiber supply there is locally, the higher the cost for the products made from that recovered fiber domestically, it’s still important to encourage recycling collection. Because recovered fiber is a global commodity, it is subject to demand-and-supply price fluctuations. If demand should drop overseas, and prices moderate, there may be greater supply at more moderate prices here at home, helping North American manufacturers; however, this is very unlikely. RISI, the leading information provider for the global forest products industry, projects that over the next five years, world recovered paper demand will continue to grow aggressively from fiber-poor regions such as China and India. Demand will run up against limited supply of recovered paper in the U.S. and other parts of the developed world and create a growing shortage of recovered paper worldwide.

CD: Is there a way to guarantee that recovered fiber stays at home (in the United States, for example)?

Meta Brophy: Yes! Special partnerships and programs exist that collect paper at local facilities and use the fiber domestically, allocating the recovered paper for specific use. ReMag, for example, is a private firm that places kiosks at local collection points—retailers, supermarket chains—where consumers can drop their catalogs, magazines and other papers and receive discounts, coupons and retailer promotions in exchange. These collections ensure a quality supply of recovered fiber for specific manufacturing uses. It’s a win-win for all stakeholders involved.

I recommend mailers use the DMA “Recycle Please” logo and participate in programs such as ReMag to encourage more consumers to recycle, and to increase the convenience and ease of recycling.

CD: What’s the harm of landfilling discarded paper—there’s plenty of landfill space out there, right?

MG: Landfill costs vary significantly around the country—depending on hauling distances, and the costs involved in operating landfills. In addition, there are also environmental costs. By diverting usable fiber from landfills, we not only extend the useful life of a valuable raw material, but also reduce greenhouse gas emissions (methane) that result when landfilled paper products degrade over time. There are also greenhouse gases that are released from hauling post-consumer waste. While carbon emissions may not yet be assessed, taxed or regulated in the United States, many national and global brands already participate in strategies to calculate and reduce their carbon emissions, and their corporate owners may participate in carbon trading regimes.

CD: You’ve brought up regulation, Monica. I’ve heard of “Extended Producer Responsibility” (EPR) legislation. Does EPR extend to direct marketers in any way?

MG: EPR refers to policy intended to shift responsibility for the end-of-life of products and/or packaging from the municipality to the manufacturer/brand owner. It can be expressed at a state level via specific product legislation, framework legislation, governor’s directive, or a solid waste management plan. EPR has begun to appear in proposals at the state level in the United States. EPR, for better or worse, recognizes that there are costs associated with waste management on all levels—not just landfilling, but waste-to-energy, recycling collection and even reuse.

These waste management costs currently are paid for in our taxes, but governments are looking to divert such costs so that they are paid for by those who actually make and use scrutinized products. Thus EPR can result in increased costs, were states to enact such regulation on particular products such as paper, packaging and electronic and computer equipment. Greatest pressure to enact EPR most likely focuses on products where end-of-life disposition involves hazardous materials where recycling and return programs may make only a negligible difference. Many will state that the natural fibers in paper along with the extremely high recovery rate of 67 percent makes paper a poor choice for inclusion in any state EPR legislation. That is also why the more we support the efficiency and effectiveness of existing recycling collection programs, the less pressure there may be to enact EPR regulations directly. It will likely vary state to state where specific concerns and challenges may exist.

CD: Does the public really care if this material gets recycled? Do they participate in recycling programs?

MB: Yes, they do. Even a public that’s skeptical of “greenwashing”—environmental claims that are suspect, unsubstantiated or less than credible—participates in recycling collection in greater numbers. Both EPA and American Forest & Paper Association data tell us the amount of paper collected is now well more than half of total paper produced, and still growing—despite the recent recession and continued economic uncertainty. Recycling collection programs at the hometown level are politically popular, too—people like to take actions that they believe can make a difference. And as long as the costs of landfilling exceed the costs or possible revenue gain of recycling, it’s good for the taxpayer, too.

CD: At the end of the day, what’s in recycling for my brand, and the direct marketing business overall?

MB: I see at least three direct benefits—and nearly no downside. First, a brand’s image benefits when it embraces social responsibility as an objective. Second, being a responsible steward of natural resources, and promoting environmental performance in a way that avoids running afoul of the Federal Trade Commission’s new Green Guides environmental claims—positions a brand well in practice and public perception. And, third, and I see this firsthand in my own organization, both the employee base and the supply chain are more deeply engaged and motivated as a result, too. Certainly, in the direct marketing business overall, there are similar gains—and I’m excited that the DMA has embraced this goal for our marketing discipline.

How to Make a Billion: The Costs of ‘Undeliverable as Addressed’

The USPS recently shared some interesting data on the volume and cost of undeliverable as addressed (UAA) mail. That tab was $1.3 billion in 2010, and that was just the cost to the Postal Service, which has to incorporate these costs into its rate-setting. All this UAA is money down the drain to the mailers—who designed, produced and labeled it and applied its postage—and to the Postal Service that has to deal with its final disposition.

The USPS recently shared some interesting data on the volume and cost of undeliverable as addressed (UAA) mail.

According to the USPS, “Total UAA volume dropped from 9.3 billion pieces (4.71 percent of total mail volume) in FY 1998 to 6.9 billion pieces (4.11 percent of total mail volume) in FY 2010. (This reduction, while significant, falls far short of previous Postmaster General Jack Potter’s goal of reducing UAA mail by 50 percent by 2010.) Historically, UAA mail runs in the range of 4 percent to 5 percent of total mail volume, and the percentages of total volume vary by class of mail. Periodicals mail, for example, has a UAA percentage of about 1.5 percent, while Standard Mail usually runs about 6.75 percent. Interestingly, the volumes of UAA mail that the USPS forwards or treats as waste both experienced declines, but the volume of UAA mail that the USPS returns to sender actually increased.”

All this UAA is money down the drain to the mailers—who designed, produced and labeled it and applied its postage—and to the Postal Service that has to deal with its final disposition.

That tab was $1.3 billion in 2010, and that was just the cost to the Postal Service, which has to incorporate these costs into its rate-setting. Add to this bill the cost of 7 billion pieces that went nowhere near the intended recipient—and that’s a fortune off the bottom line. Some of this is inefficiency. Marketers in particular—primarily who use the Standard Mail category—must do a better job in data hygiene and the use of postal addressing and preparation tools.

It may be helpful, and profitable, for mailers to make sure they are undertaking every feasible effort to keep their mailing lists clean—and to avoid this hefty bill. The Direct Marketing Association has an online tool to help marketers make sure their list hygiene and data management efforts are up to par.

It’s called the Environmental Planner & Optional Policy Generator, and it’s based in part on the DMA’s “Green 15” Environmental Principles. But the green focus is dual in nature. Avoiding mail waste through proper data management also applies green—as in money—back to the bottom line! Consider these suggested activities from this planner to get back some of this billion-plus that are lost to UAA:

________________________________________________________

I. LIST HYGIENE AND DATA MANAGEMENT

Our company continually endeavors to manage data and lists in an environmentally responsible manner with a focus on reducing the amount of duplicate, unwanted and undeliverable mail [to both consumers and businesses]. To achieve our goals in this area [If applicable to the goals and/or nature of your organization, please select one or more of the following options.]:

A. We Maintain Suppression Lists

  • We maintain in-house do-not-market lists for prospects and customers who do not wish to receive future solicitations from us (as required by DMA’s Commitment to Consumer Choice).
  • We maintain a more detailed suppression file that enables customers and prospects to opt off our organization’s marketing lists on a selective basis, such as by frequency or by category.

B. We Offer Notice & Choice

  • We provide existing and prospective customers with notice of an opportunity to modify or eliminate future marketing contacts from our organization in every commercial solicitation (as required by DMA’s Commitment to Consumer Choice).
  • We provide periodic notices and opportunities for prospects to opt in or opt out of receiving future marketing contacts from our organization.
  • We provide customers incentives (such as the offer of a discount on their next purchase) for notifying us of duplicate mailings and incorrect addresses.
  • We offer customers a choice to receive communications from our organization electronically.

C. We Clean Our Lists Prior to Mailing

  • We use the Direct Marketing Association (U.S.) Mail Preference Service (MPS) monthly on all applicable consumer prospecting lists. In addition to use of MPS, we maintain clean, deliverable files by using (Please check all that apply):
    • ZIP Code correction
    • Address standardization
    • USPS National Change of Address (NCOA)
    • Other USPS products such as
      • Address Element Correction (AEC)
      • Delivery Sequence File (DSF)
      • Address Correction Requested (ACR)
    • Predictive models and RFM segmentation
    • Other: (Please specify.)
  • We use the DMA “Deceased Do Not Contact” list to eliminate names of deceased persons from mailings.
  • We use the Foreign Mail Preference Service on applicable mailings to the United Kingdom, Belgium or Germany.
  • We use the mail preference services of other foreign national direct marketing associations, where applicable.
  • We [ encourage/ require] our client mailers to use MPS.
  • We [ encourage/ require] companies and organizations that rent our list of customers to screen consumer names through MPS, and to maintain their own do-not-rent and do-not-mail in-house name suppression lists.

D. We Merge/Purge Our Data

  • We match outside lists against each other to prevent duplicates.
  • We use match definitions in merge/purge that minimize duplicates.
  • We match outside lists against other commercially available suppression files where appropriate.

E. We Test Market Offers

  • We test a sample of a list before mailing or marketing to the entire list.
  • We test different versions of advertising and marketing offers, in mail and other media, to select those offers and media combinations that receive the best response.

For more information, see DMA Environmental Resource Guide, “Mailing List Management: A Key to Waste Reduction,” pages 63-70.

________________________________________________________

Now the entirety of the UAA issue is not attributable solely to less than adequate data management, but it is likely a good portion of it is. We know the DMA Board of Directors—in adopting its first environmental public goal which in part commits to reduce UAA by 25 percent from 2009 to 2013—very much intends for marketers to avoid losing these billions down the line.

The Postal Service is working closely with mailers and, vice versa, to tackle other ways to manage UAA and to reduce its volume. Certainly, Intelligent Mail barcodes will help, with the ability to track mail whereabouts in real time as it moves through the USPS’s processing and handling. “Return to Sender” UAA is the most costly for the Postal Service to handle, because of the return handling costs—that, too, needs attention.

In the very least, marketers also should work with their mail service providers most closely to design mail pieces for postal automation compatibility, to apply proper data management practices (as indicated by DMA, for example), and—as the USPS embarks on its network consolidation effort—to track their mail most precisely through the mail stream. A billion dollars and more are in the balance.

Helpful Links:
DMA First Public Green Goal, concerning List Hygiene

DMA Environmental Planner & Optional Policy Generator

Be the Wave—Or ‘The New Marketers’ Manifesto’

Don’t ride the wave, be the wave. A friend of mine named Devin, who works as a management consultant, recently taught me this phrase. I simply love it. I interpret it to mean: Make your destiny; don’t succumb to it. For marketers, I think this phrase has incredible relevance in today’s rapidly changing landscape.

Don’t ride the wave; be the wave. A friend of mine named Devin, who works as a management consultant, recently taught me this phrase. I simply love it. I interpret it to mean: Make your destiny; don’t succumb to it.

For marketers, I think this phrase has incredible relevance in today’s rapidly changing landscape. It’s no secret that the ground is quite literally shifting beneath our feet as a radical transformation takes place in the way people interact with companies, and marketers are being forced to pivot in a brave new world that is largely unknown.

What’s happened is the Buyer’s Journey has been turned on its head. For those of you unfamiliar with this term, I described it in a recent post. Buyer’s Journey refers to the process prospects go through as they make their decisions on which companies to do business with or buy products from. It’s is a complex evolution that spans the entire progression, beginning with identification of the underlying need, and ending with product selection.

Not long ago, Buyers were relatively uninformed, and the Buyer’s Journey was controlled lock-stock-and-barrel by the marketer. To be successful, marketers essentially needed to try out different approaches, through trial and error, and see what worked. Kind of like throwing stuff at the proverbial wall to see what stuck. Once you found a successful formula, all you needed to do was repeat it again and again.

Companies simply told their customers what they should buy and what they needed to know to buy it. Not surprisingly, firms didn’t really know too much about their customers. They didn’t need to. All they needed to know was what worked from a utilitarian point of view, not why it worked.

Recent technological advances have completely altered the landscape—evolving it to a state that would have been unrecognizable a mere dozen or so years ago. For one, today’s marketer confronts a highly sophisticated, engaged and informed consumer who is comfortable with the digital landscape, and familiar with the latest gadgets and tools. Native to the Web and connected to multiple Social Media networks via the latest devices, today’s buyer may know as much about a marketer’s products as the marketer’s sales or marketing teams. For most marketers, this is a truly frightening concept.

Now add to the mix that many marketers are quickly discovering, to their great consternation, that the sale is often won or lost before the relationship even begins—as greater numbers of buyers educate themselves using the vast resources available on the Web, which include customer reviews , referrals from peers on Social Media, and so on. The Buyer’s Journey of yesteryear has been turned on its head.

This brave new world calls for a brave new approach—one that not only leverages the latest advances in technology, but more importantly focuses on the central narrative of the new way brands engage with their customers and prospects. No, having a slick website and a cursory presence on social media isn’t enough. Marketers need to use technology to transform how they do business.

Today’s firms not only need to get to really know who their customers are, but where they go, what they do, and what affinities they share; they also need to engage them where they’re comfortable, which is increasingly on their mobile devices and in the vast and constantly changing Social Media universe. I know it sounds daunting, but the good news is that marketers can learn to leverage the same technologies that created such change in the first place.

Let’s take a quick look at mobile. Let’s say, for example, I’m in Chicago on business, it’s dinnertime and I’m hungry. I spot a steakhouse across the street from my hotel. But because I’ve never been there, I pick up my iPhone and open up the Yelp App, where I pull up the listing to see what others have to say. Turns out that someone went there last week and had a really, really bad experience … and wrote a review trashing the place. And it’s the only review. Well, looks like I’m not going there tonight.

But fortunately it’s a double-edged sword. Let’s imagine instead that the owner had employed a strategy to drive customers online, specifically to give a review on Yelp. This strategy could involve placing a QR Code on the menu, along with a special offer for a free appetizer for all who give a review—or maybe a deal with Foursquare, Groupon, ScoutMob … or one of many mobile companies offering merchants tools to leverage this exciting new channel. Now instead of seeing just the bad review, I would see many good ones from happy customers.

And this is but one example of many. Another is the best-practice use of QR Codes for Augmented Reality by Best Buy and other electronic retailers. Armed with a smartphone, you can now scan QR Codes affixed to the in-store displays for products you’re interested in. You can obtain detailed product specs, warranty information … even detailed product reviews. Plus, by connecting to social media, it’s even possible to see what friends or followers have to say.

Okay, looks like I’m running out of space. But I guess the main message is: Embrace technology and use it to control your own destiny—don’t let it control you. And the good news is we can take this ‘philosophy’ and apply it to really any type of firm. Take a close look at your company and see how technology can be used to change the way you do business.

Instead of ducking your head in the sand, use new tools—whatever they may be—to give your customers new and improved ways to engage with your company and its products. Delight them. In the end, firms that do so will enjoy great success in coming months and years. Those that don’t … well, they might not be around. Be the Wave.

The Great Marketing Data Revolution

I think it’s safe to say that “Big Data” is enjoying its 15 minutes of fame. It’s a topic we’ve covered in this blog, as well. In case you missed it, I briefly touched on this topic in a post titled “Deciphering Big Data Is Key to Understanding Buyer’s Journey,” which I published a few weeks back. For those of you who don’t know what it is, Big Data refers to the massive quantities of information, much of it marketing-related, that firms are currently collecting as they do business.

I think it’s safe to say that “Big Data” is enjoying its 15 minutes of fame. It’s a topic we’ve covered in this blog, as well. In case you missed it, I briefly touched on this topic in a post titled “Deciphering Big Data Is Key to Understanding Buyer’s Journey,” which I published a few weeks back.

For those of you who don’t know what it is, Big Data refers to the massive quantities of information, much of it marketing-related, that firms are currently collecting as they do business. Since the data are being stored in different places and many varying formats, for the most part the state they’re in is what we refer to as “unstructured.” Additionally, because Big Data is also stored in different silos within the organization, it’s generally managed by various teams or divisions. With the recent advent of Web 2.0, the volume of data firms are confronted with has quite literally exploded, and many are struggling to store, manage and make sense out of it.

The breadth of data is simply staggering. In fact, according to Teradata, more data have been created in the last three years than in all past 40,000 years of human history combined! And the pace of data is only predicted to continue growing. You see, proliferating channels are providing us with an unprecedented amount of information—too much even to store! In a marketing sense, the term Big Data essentially refers to the collection of unstructured data from across different segments, and the drive to make sense of it all. And it’s not an easy task.

Think about it. How do you compare email opens, clicks and unsubscribes to Facebook “Likes” or Twitter followers, tweets or mentions? How does traffic your main website is receiving relate to the data stored in your CRM? How can you possibly compare the valuable business intelligence you’re tracking in your marketing automation platform you’re using for demand generation, against the detailed customer records you’re storing in your ERP you use for billing and customer service? Now throw in call center data, point of sale (POS) stats … information provided by Value Added Retailers (VARs), distributors and third-party data providers. More importantly, how do they ALL compare and relate together? You get the picture.

Now this begs the next question; which is, namely, what does this mean to marketers and marketing departments. This is where it gets very interesting. You see, unbeknownst to many, there’s an amazing transformation that is just now taking place within many firms as they deal with the endless volumes of unstructured data they are tracking and storing every day across their organization.

What’s happening is firms are rethinking the way they store, manage data and channel data throughout their entire companies. I call it the Great Marketing Data Revolution. It’s essentially a complete repurposing and reprocessing of the tools they use and how they’re used. This wholesale repurposing aims not only to make sense out of this trove of data, but also to break down the walls separating the various silos where the information is stored. As we speak, pioneering companies are just now leading the charge … and will be the first to reap the immense benefits down the road when the revolution is complete.

Ultimately, success in this crucial endeavor demands a holistic approach. This is the case because this drive essentially requires hammering out a better way of doing business by reprocessing across these four major steps: Process Workflow, Human Capital, Technology, and Supply Chain Management. In other words, doing this right way may require a complete rethinking of the direction that data flows within an organization, who manages it, where the information is stored, and what third-party suppliers need to be engaged with to assist in the process. We’re talking a completely new way of looking at marketing process management.

With so many moving parts, not surprisingly there are many obstacles in the way. Those obstacles include legacy IT infrastructure, disparate marketing structure scattered across various departments, limited IT budgets and, of course, sheer inertia. But out of all the obstacles companies face, the most important may be the dearth of data-savvy staff and marketing talent that firms have on staff.

Firms are having a difficult time staffing up in this area because this transformation is actually a hybrid marketing and IT process. Think about it. The data are being created by the firm’s marketing department. As such, only marketing truly understands not only how the data are being generated, but more importantly why they’re important and how this information can be put to actionable use in the future. At the same time, the data are stored within IT’s domain, sitting on servers or stacks, or else stored in the cloud. And because the process involves a complete rethinking and reprocessing, it really needs a new type of talent—basically a hybrid marketer/technologist—to make it happen.

Many are deeming this new role that of a Data Scientist. Not surprisingly, because this is a new role, employees with these skills aren’t exactly a dime a dozen. You can read about that here in this article that appeared on AOL Jobs titled “Data Scientist: The Hottest Job You Haven’t Heard Of.” The article reports that, because they’re in such high demand, Data Scientists can expect to earn decent salaries—ranging from $60,000 to $115,000.

Know any Data Scientists? Are you involved in a similar reprocessing transformation for your firm? If so, I’d love to know in your comments.