Direct Mail and the Internet

August 10, 2009

So it’s no great mystery why mail volume, including direct mail (advertising) volume is down and the USPS is in a bind. In the last post Neither Rain, Nor Snow, Nor Dead Economy, we went over some of the dismal numbers that the USPS has “posted” in recent months. The financial strain of the recession has accelerated the move of content online, where the costs are less. Printers and the USPS are suffering.

So, is there still a place for printed direct mail in the mix? Let’s turn to the USPS again.  In a surprisingly insightful brief entitled Mail and the Internet, the postal service presents a convincing case for a combination of print mail and online advertising. Here’s the thrust of the argument:

In fact, recent studies by the U.S. Postal Service and a number of independent research groups found that consumers — even heavy Internet users — continue to view mail as a highly relevant and significant part of their lives. It provides a physical and tangible quality consumers find lacking in their electronic communications. But that’s not all. The studies also showed that mail, working side by side with digital media, can have a substantial impact on the use of commercial Web sites.

Much of the specific content of the brief deals with the integration of email, online storefronts and conventional catalogues, but the USPS makes a couple of key points regarding the combination of conventional mail and email in the marketing mix:

  1. While email has outpaced mail as the primary form of (written) personal communications, readers are much more likely to “trash” marketing emails than conventional mail pieces. People still enjoy opening the mail.  Junk email is a nuisance.
  2. Conventional mail is a very effective way to get permission to send an email.  In other words, direct mail is a great way to get potential customers to subscribe to emailed news briefs or promotions.

From here, it’s tempting take on the ROI argument and search out some spurious data to try and prove that the return on investment for conventional direct mail is actually higher than the ROI for an email campaign.  Poor Richard thinks that’s a worthless effort, but can state uncategorically that the ROI for a  well-conceived direct mail or email campaign will always be higher than the return for a poorly implemented campaign of either type.

Nor is it useful to argue that direct mail and email are apples and oranges. They’re more like white grapes and peach . . . the juice goes together really well. And there is great potential to combine conventional mail, email and other online communications to improve the total ROI for the combined efforts. Conventional direct mail combined with personalized URLs (PURLs) provide a great method of sorting through an inexpensive direct mail list for those who are really interested in a product or service.  Respondents sign on to a landing page, where they can ask for direct contact or for more information. They might also be asked if they’d like to subscribe to an e-newsletter or for periodic special offers.

The net result is that more money and attention are focused on those who are most interested (and most likely to buy something) and less on those who aren’t interested. Even more better, you get to measure. While it is possible to partially measure response from conventional mail campaigns with BRMs, coupons or a tracked phone number, the integrated print and email campaign generates better measurable data from the landing page . . . including names and addresses of those who respond. And if they subscribe to an e-news brief or some other such offering, they’re actually asking you to stay in touch.

Back to the USPS and the printing business. Regardless of the trends, there will remain a very real need for the postal service in the foreseeable future. While it’s easy to communicate online, you need a Star Trek transporter to actually send stuff through cyberspace. Similarly, the tangibility and portability (and disposability) of print gives it an advantage over electronic media in many situations. I haven’t seen them passing out Kindle’s at the theatre, yet.

Poor Richard can’t speak for the future of the postal service, but the the technology to produce and manage integrated electronic and print communications is very available. We’re even playing with it at Gralpharaphics (name changed to protect the innocence of the franchise). Not to say that the change isn’t painful.  It was certainly easier for printers when print was king. But change is inevitable . . . and Poor Richard isn’t really ready to become a dinosaur yet.


Neither rain, nor snow, nor dead economy?

August 1, 2009

mailtruckPoor Richard thought it was only printers that had it bad. It had been a while since I had visited our local BMEU (Bulk Mail Entry Unit). The printshop next to Grant’s Lounge (name withheld to protect the sensibilities of the franchise) had a mailing to go out Friday, and no one else was available, so I loaded up the Suburban and headed for the post office.

First, let me say that the people we work at the Macon BMEU are nice folks. Ken, the boss, helped me get started in mailing several years ago.  I called him looking for information and he actually came out to the shop and spent a couple of hours going through the regulations. Randy, Charlotte, Gary and John are always helpful and friendly.  They play by the rules and let us know when we screw up, but they have always been patient and very good to work with.

This part of the post office (the BMEU) used to bustle with activity.  On any given day, There would be several mailers there with at least one who had made a royal mess of a mailing job.  One of the folks mentioned above would be patiently explaining the rules, even if the customer was irate. There is a Merlin machine behind the counter that checks barcodes and machinability. In days past, this machine was generally running. Other postal folks were continually going in and out behind the counter doing the things that postal folks do.

Yesterday’s scene was quite different. Only Ken and Charlotte were there and there was no activity at all. The first words from Charlotte’s mouth were, “This is my last week. I’m taking early retirement.”

And apparently she’s not the only one. The USPS has offered its employees an early opt-out program in recognition of the changes in their business. And the mail business has changed indeed.  The official statement from USPS on the Voluntary Early Retirement (VER) program reads like this:

Automation and technological advances coupled with mail volume reductions has the Postal Service continuing to look for ways to voluntarily reduce its workforce while maintaining excellent customer service.

Source: Liteblue.usps.gov

Dear readers, I hope you don’t think it inappropriate for Poor Richard to read a bit between the lines and hazard some not so bold inferences.

First, the reduction in mail volume is easy to document.  First Class mail peaked in 2001 and (with one year’s exception) has been declining steadily ever since. In FY 2008, the USPS lost $2.8 billion (yep, billion) on it’s operations and total mail volume decreased by 4.5% from the previous fiscal year. It’s a no brainer . . . email continues to replace mail.

The recession has impacted direct mail in the same way that printing has been affected. Direct mail is an easy target for businesses cutting expense. Standard mail piece volume for FY09 was down almost 20% from the same time period in FY08. (Source USPS Financials).

Staunching the flow of red ink seems to be more important to USPS than excellent customer service, though. It seems obvious that USPS is moving toward a much less customer-friendly environment. Bulk mail facilities in smaller communities have already been shuttered with customers told to carry their mailings to centralized units in larger communities.

The postal service is also quickly heading towards enforced online entry of mailings for mail service providers. At this point, the online service (PostalOne) is kind of clunky and complicated. That’s no big surprise. The problem, though,  is that all of the customer-friendly postal employees are taking early retirement. There’s no one to explain the new systems.

Finally, transferring costs to the customer may be exacerbating the problem. Poor Richard thinks that it started with rubber bands. Only a year or so ago, the bulk mail offices actually supplied rubber bands to their mailers for use in packaging standard mail. When mailers were told that there would be no more free rubber bands, most of us just shrugged our shoulders and passed that little cost on to our customers. Since then, there have been a lot of incremental cost increases that we’ve had to pass along. For example, the USPS has added a move update requirement that has increased the cost of list processing. They’re also charging a small fortune for address corrected pieces that are returned to the mailer.

Postal rates and costs continue to increase while the perceived cost of electronic communication is low.  Even when the potential impact of mail can be very positive (high ROI), it is perceived as an expensive way to market.   Simply put, the cost to mail has gone up while the perceived value of mail compared to the alternatives has diminished.

This is not a winning scenario for the USPS . . . and it does explain the drastic changes at the Post Office.

So we have to ask the question. Is printed mail, especially direct mail, still a worthwhile endeavor? Is there a place in the new economy for the US Postal Service?

NEXT POST – Direct Mail and the Internet


Neither Rain Nor Sleet, nor ?

May 3, 2009

A Summer Sale.

That’s what the subject line of the email stated.  I nearly clicked the junk button, but a quick glance at the sender held my attention.  DMMAdvisory.  Wait a minute, that’s the U.S. Post Office.  They don’t have summer sales . . . what’s up here?

mad-letterDMMAdvisory is the USPS email link to keep mailers informed about all sorts of goings on at the Postal Service.  The DMM is the domestic mail manual.  Actually, I think it’s the domestic mail manuals . . . there’s a bunch of them (if you’re curious, you can look at ‘em here).  Usually, the DMMAdvisory is all about new rules that are going to be issued because they’ll make the USPS more efficient or rescinded because even though the USPS will be more efficient, everyone else will be less efficient.  The Advisories also talk a lot about Intelligent Barcodes, Move Updates, and services like PostalOne!, the online portal where mailers like AlphaGraphics are supposed to enter in all of their mailing data to make the USPS more efficient.  And we’ll be glad to do it, too . . . just as soon as the USPS figures out how to make the website work.

I’ve never seen a DMMAdvisory that talked about a summer sale. I got kind of excited about that, thinking maybe this was something we could use to promote mailing services. So I clicked on the link to find out about it. What I got was a 32 page .pdf document.  The USPS doesn’t advertise a sale, you understand, they file a Notice with the Postal Regulatory Commission. That kind of advertising wouldn’t get results for the rest of us, but apparently it works for the USPS.

Poor Richard, feeling brave, waded into the document. The first important fact I discovered is that Standard Mail is an important investment for American business and that it is incumbent upon the USPS to encourage American businesses to invest:

The current state of the economy has forced businesses, particularly Postal Service customers, to pull back on important investments necessary for ensuring their continued prosperity. The precipitous decline in the use of Standard Mail for marketing products and services is an illustrative example of the unwanted choices many postal customers have had to make because of the economy. The Postal Service believes it can, and should, find ways to help its customers increase their use of mail during these challenging economic times (pp. 1 -2).

On p. 3, Poor Richard discovers that the sale will run from July 1 to September 30.  A 30% discount for 3 months, that’s some sale! Oops, not so fast . . .here’s a catch on p.4:

The “Summer Sale” program will run from July 1, 2009, through September 30, 2009, and will provide a 30 percent rebate to eligible mailers on Standard Mail letters and flats volume above a mailer-specific threshold. The threshold is calculated by taking the percentage change between a mailer’s postal fiscal year-to-date (October 2008 through March 2009) volume and the volume mailed in the same period last year, and applying that percentage to the volume the mailer mailed between July 1, 2008,
and September 30, 2008.

So, the deal’s not so sweet.  The 30% discount only applies to the increase of mail volume in relation to the ratio of last year’s to this year’s mailings from October to March, factoring in of course the projected daily volume of pork belly contracts in the same period and the average shoe size of a U.S. mail carrier.

Reading on, Poor Richard discovers another hitch:

Qualifying mailers must be able to demonstrate volume of at least one million Standard Mail letters and flats, between October 1, 2007, and March 31, 2008, for one or more permit imprint advance deposit account(s), precanceled stamp permit(s), or postage meter permit(s).

This is looking less like a sale to Poor Richard. One million Standard Mail letters effectively rules out 100% of my customers. In fact, it probably rules out 99.9% of the mailers in South Georgia. And reading further:

Mail service providers (MSPs) are not eligible for the program.

It also rules out mail service providers, like AlphaGraphics; who if they might be large enough to aggregate and mail a million pieces of mail or so for their  customers and wanted to promote mailing services and pass along a little discount, would not be eligible to participate.

“Not a sale at all,” thinks Poor Richard.

The next couple of pages communicate the Postal Service’s intent to contact eligible mailers by letter and then direct them to a website to register to participate in the summer sale. The projected additional revenue for the USPS from the sale is between $38 and $95 million with costs at around $1 million to administer the Summer Sale.  A respectable projection of return, but qualified with this statement:

In particular, an overestimate of the additional volume generated by the incentive or an underestimate of the administrative effort required could unfavorably affect expected financial performance. (p.7)

Unexpected costs related to the malfunction of the response website are also presumably not included. The remaining 23 pages of the .pdf file encompass further justifications of the US Postal Service’s desire to try a “sale,” the regulatory provisions which allow them to do so, why the Postal Regulatory Commission should approve the request, and 17 pages of appendices that detail applicable postal rates, projections on pork belly contracts and historical data pertaining to the average shoe size of a US Postal Service Mail Carrier.

Poor Richard might humbly suggest that if Standard Mail is indeed in “precipitous decline” (and I have no doubt that it is), this proposal is unlikely to rectify the situation. I might also point out that a rate increase is scheduled for May 11 that will presumably do little to reverse the decline or encourage postal service customers to “invest in their continued prosperity” through a return to conventional mail.

Mail volume, like print volume, is decreasing; but there remains a need and demand for both services, at least in the near term. Mail has come under competitive pressure since the introduction of the telegraph, but in today’s communications environment, the pressures on both mail and print are extreme.  Barring a collapse of the Internet, mail and print volumes will continue to decrease. That said, there are still applications where printed mail is the best solution. Direct mail is demonstrably more effective with the 45 and over age group (dinosaurs like me, irrespective of Facebook enrollment). E-mail blasts will never have the impact of a well-written letter, especially if it is personalized.  Even “junk mail,” because it is tangible, has measurably justifiable place in some marketing campaigns.

Because the cost to disseminate printed mail is  higher than electronic communications, it is necessary to justify its value.  Specifically, this can be measured as ROI (return on investment) in any campaign.  It is also important to make it easier for customers to access and understand both printing and mailing. Poor Richard thinks that the US Postal Service is not succeeding in this area. Recent changes to the postal code (Move updates and the IM barcode) have been cumbersome to implement, difficult for mail service providers to understand, and completely inscrutable to our customers.  These changes have not really provoked anger among USPS customers, because they expect this kind of clumsiness, but the customers are very definitely not encouraged to increase their volume of mailing.

Perhaps the USPS should consider doing something proactive for their customers to encourage them to continue to consider mail as a viable means of communication.  Do you think a sale would work?


Ordering Scallops Online

December 24, 2006

mailbox.jpgI thought briefly about opening the email from Herron Mole. The sender name wasn’t really very creative, but the subject line, “Scalloped!” caught my attention. To me, the names and subject lines that accompany junk e-mail are just as fascinating as the subject matter isn’t.

Here’s one of the best ones I’ve received lately: Remuneration P. Linoleum. I wonder what the P. stands for. I suspect that he is kin to Transforming R. Pachyderm, another of my favorites. One of my acquaintances informs me that these unusual epithets are created by some sort of random name generator. This does little to satisfy my curiosity; it only makes me wonder about the warped brainpower that could program such a thing. It’s like the IRS. What if you took all of that energy and manpower and focused it on something productive?

Spam is about as non-productive a venture as can be conceived. With the sheer volume of it out there, it’s hard to imagine that a mass junk e-mail could ever produce any business. It does definitely obstruct business, especially in a line of work like printing, where proofs occasionally get mistaken for digital junk. But it’s difficult to suppose that even the most deranged hacker could get much satisfaction, fame or return by adding his junk (even by the thousands) to the millions of unsolicited missives zooming through hyperspace.

There was a time when printers were very concerned about e-mail marketing as a threat to direct mail. Direct mail, even for a shop the size of AlphaGraphics, represents a chunk of business that we could not do without. Most of ours takes the form of letters and postcards. A lot of the volume is from schools and non-profit agencies who communicate with parents, prospective students, donors and supporters.

Admittedly, there is a nuisance factor to direct mail. We order odd-sized boxes and packaging supplies from a very good company, U-Line. Over the years, we’ve ordered a lot of stuff from them. I would love to be their printer. AlphaGraphics receives catalog after catalog from them. We keep one around to use as a reference for orders and throw the rest away. We just don’t need an additional catalog each week by mail. U-Line could save a lot of money and reduce their printing costs by sending a catalog every 6 months and a postcard every now and then telling us that a sale is running.

The good thing about direct mail is that it is ultimately governed by economic rules that (obviously) don’t apply to spam. Direct mail has to produce a return to justify the investment. And it has to be well conceived to produce a return.

We can always tell when a mailpiece will be a one-time run. Generally, the printed piece is poorly crafted. The message is not clear and there’s too much information. The mailer thinks that every recipient will read every word, so they pack paragraphs onto a 5 1/2 x 8 1/2 postcard. Wrong. It won’t work. There will be no response to the mailing.

And then there’s the mailing list. A similar attitude can prevail. The mailer thinks, “We’ll send this mailing out to everyone in town, because they’ll all want to read it and place an order.”

Wrong again. The result will only be that more people will throw the mailpiece away. Even though we might get one large mailing job, the end result is ultimately bad for AlphaGraphics. We’d much rather do regular targeted mailings that work for a customer than a massive mailout that flops. And somehow or another, the failure always seems to rub off on us a little. Shoot the messenger. Blame the printer.

Here are some tips for effective direct mail campaigns:

  1. Keep it simple. Make the message easy to understand. Aim for an impression. Most of the impact of direct mail is like mortarfire. It softens the ground and makes the customer more receptive to your other selling and marketing efforts.
  2. Target. Fire rifle shots, not shotgun blasts. Keep a comprehensive customer or audience database. These are your best candidates for a response. Use narrow criteria for purchased lists. Printers and mail houses have some interesting sources for specialized marketing lists. If you run a wedding-related business, mail to subscribers to Bride magazine in the 312 zip area instead of all households with women between the ages of 18 and 25.
  3. Personalize. It’s pretty simple to merge name data into the message on a postcard. It’s even cooler to send customized versions to different customer categories.
  4. Make an offer or a call to action. This is the equivalent of a salesperson asking for the order. Give the potential customer a reason to respond.
  5. Repeat, Repeat, then repeat again. The impact of the first mailing will always be weaker than the fifth. Responses and resulting sales grow as the direct mail message is repeated and built upon with subsequent mailings. Refine the target list, but make sure that the best prospects receive regular communications.
  6. Follow up. Integrate direct mail into the rest of your selling and advertising efforts. If it is possible or practical, have a human being follow up with the potential customer to ask for an order or at least gauge interest.

I did think briefly about opening the email from Herron Mole. I doubt I’ll ever here from Mr. Mole again, though; and I’m not sure that I’d buy scallops from him. I’d only order seafood online from a reputable, established company; one with enough financial wherewithal to send me a postcard or two. Mr. Mole, if you’re really out there, call us . . . we can help.


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