The digital revolution is creating a new world for business communication in general and mail in particular. It is also the gravest threat to mail since the advent of the telephone. But it has also created opportunities for new forms and ways to use mail. Mailers who can take advantage of these opportunities will find not only new mail streams but new forms of adding value to mail.

The Communications Revolution

There are three key drivers that lie behind the major shifts in business communication. Understanding these drivers will provide you with the basis for an appropriate response to the new world of communications.

The rise of the sophisticated consumer

There is a long-term fundamental shift in the characteristics of the adult population in the US. The share of those who have gone to college, for example, has doubled over the last 30 years and continues to increase at an annual rate of over four percent per year. There are comparable changes in a range of critically important socio-demographic indicators: the share of households with high income levels is rising; the share of adults who work in information-intensive managerial or professional jobs is increasing; the penetration of Internet access and broadband technology into the home is skyrocketing. All point to a dramatic increase in information usage.

Using information in different ways

These socio-demographic changes are all enabling people to gather and process information in more sophisticated ways. Our studies show that as people get more education or work in information-intensive jobs or live in households with higher levels of income, they use information differently they gather more information before and during shopping trips and from a wide variety of different sources; they value information more when they initiate the contact; and they are much more willing to interact with businesses to find information directly relevant to them. These increasingly voracious consumers of information are creating changes throughout the communications world they are utilizing more information, they are interacting with information and, because of their interest in information that is more directly relevant to their needs, they are fragmenting the information market into ever smaller segments.

The digital challenge

The digital revolution has facilitated the ability of the sophisticated consumer to gather and process information. The rapid expansion of the digital infrastructure has opened a much greater number of channels cable and satellite channels widen the range of television programming and advertising, mobile devices allow communications anywhere at anytime and the Internet provides a wealth of information facilitated by handy search devices. Networked digital video opens a wide range of rich content.The ubiquitous nature of digitally-based information has provided consumers with a means of communicating with businesses when they want, interacting around the data that is of greatest interest to them and getting targeted responses in a timely manner.

Shifts in Communication Strategy

The digital revolution and consumers' desire for more timely, tailored and targeted information is pushing businesses to shift how they spend their money on consumer communications. They are shifting advertising spending towards channels that appeal to smaller market segments cable instead of broadcast TV, special interest magazines rather than national newsweeklies, Web sites in place of general-purpose catalogs.

They are exploring means of allowing consumers to interact with messages to find the one that means the most to them they are setting up Web sites that offer a range of options to consumers or spending more on in-store promotions. They are combining different media to reach consumers at appropriate times and with the most relevant information paper catalogs lead people to Web sites; store visits produce mailed notes about unique offers; and a phone call can follow a visit to a Web site.

Businesses find that more tailored and targeted communications are more likely to get a quick response from customers. With the higher value-added prospects, businesses are shifting an increasing portion of their advertising budgets towards those elements of communications that provide more interaction with customers and that produce timely, tailored and targeted messages. The movement toward more interactive communications is challenging the role of broad-based advertising mail by raising expectations of a direct response to personal needs.

Rethinking the Attributes of Mail

The digital revolution is raising a direct challenge to certain key mail streams. Paper-based payments are already declining rapidly as customers are getting more comfortable · with electronic payments. Even more significant is the threat that electronic bill presentment and electronic statements can be to the tens of millions of bills a year that are sent out from utility companies, telecommunications firms and financial institutions. This is a severe threat to mail, since payments and statements account for about a quarter of all mail.

But the other key mail streams business first class correspondence, first class advertising and standard mail advertising present a whole new set of opportunities for business communications. There are a number of basic factors in the digital age that play into the strengths of mail, these include constant improvements in the gathering of personalized information about shoppers and their interests; a growing interest by sophisticated consumers in providing personal data when such information is relevant to their needs; and new digital printing technologies that are an increasingly cheaper means of providing personalized and timely messages.

Mail can take advantage of certain enduring characteristics of paper-based communications like the strong consumer preferences for paper; the possibilities for high-quality design; their relatively high information content; its ease of use in social interactions; the ability to add personalization and paper's ability to be unobtrusive compared to Internet spam and dinner time phone calls. In addition, mail provides a means for businesses to "push out" a targeted message to a group with common interests without being intrusive.

Mail can also be combined effectively with other channels. It can be used as a personal reminder of a Web visit, a sign of appreciation for being a loyal customer, a special offer to someone who made a phone query or to provide a paper catalog for someone who regularly visits a Web-based store.

By combining some of the best attributes of the new technology applications better information about very small groups of consumers, the pervasiveness of data at the local level and small scale decentralized digital printing technology with the virtues of paper, personalized and targeted mail can find a new role in the spectrum of communications needs. This combination can provide the ingredients of a new competitive advantage for mailers in the new world of fragmented communications.

But to succeed in such a world demands that mailers change the way they think about a range of issues core to mailers the size of a successful mailing, targeted response rates, the maintenance of a mailing list, cooperation with players in other communications channels, the speed of delivery and fostering consumer feedback. Those who adapt to new ways, some counter to the thinking of the past, can be the creators of a new timely, targeted and tailored mail stream.

Greg Schmid, the director of the Managing Uncertainty Program, has been studying and forecasting the basic drivers of mail flows for over a decade. He has worked with many of the major posts around the world and with major firms in the mailing, communications and advertising business. You can contact him by phone 650-856-0174 or via e-mail at gregschmid@sbcgloabl.net.

The mailing & fulfillment services association is a mailing industry services association dedicated to improving business operations and opportunities for its members. Visit them at www.mfsanet.org.