The year 2006 will be the year businesses realize the importance of a $900 billion market segment called "the mailstream." This newly defined sector is the sum of all mail, packages and documents both physical and electronic that flow from businesses to customers and back. It's a complex matrix of people, processes and technology, from document composition to delivery and response.

Considering what a major role direct marketing, in particular, plays in the US marketplace and that the mailstream is a critical component of the infrastructure that supports the discipline, focusing on improving mailstream management should be a top priority for any business. According to the Direct Marketing Association's (DMA) recent study, "U.S. Direct Marketing Today: Economic Impact 2005," companies spent more than $161 billion on direct marketing in the US last year, and direct mail remains the most popular channel among marketers.

In addition, the DMA study estimated that these expenditures generated $1.85 trillion in increased sales in 2005, or seven percent of the $26 trillion in total sales in the US economy. Within the mailstream lies a huge opportunity for companies to partake of those profits and cut costs at the same time. Whether or not your company will get a share of those direct marketing-driven sales will depend significantly on how well your mailstream is managed.

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 strengthen existing relationships. By optimizing your mailstream, you can better capitalize on these prospects. Adopting relatively simple, but critical, processes can positively as well as significantly impact the effect of your customer communications.

Conversely, a mismanaged mailstream can result in lost opportunities, damaged customer relationships and a grim bottom line. In many organizations, the mailstream is cumbersome still plagued by old methods and outdated technologies and reliant on multiple inflexible processes that impede business performance across the organization. The result is fragmented and impersonal communications that are difficult to track, hinder customer retention and acquisition and negatively impact profits.

What is so surprising about the high percentages of customer communications problems (see Figure 1), which are mostly data and address quality-related, is that they can be solved very easily. Maybe more companies would pay extra attention to these concerns if they fully appreciated the colossal financial waste that results from using flawed data and archaic systems. If the mailstream includes an estimated 100 billion pieces of Standard class mail per year, just imagine the impact of even a few cents loss per piece on a small percentage of that number.

Despite the room for improvement regarding address and data quality, there are other segments within the mailstream that are less obvious and more often overlooked. Tracking and tracing capabilities, for example, can provide businesses with a range of valuable information, and adopting this process has never been more important in light of recent laws and regulations such as Sarbanes-Oxley and the growing need for visibility into financial supply chains.

In addition to visibility, a solid track and trace function can directly, and positively, affect a company's ability to forecast cash flow. For instance, special barcodes can be applied to return payment envelopes or statements, which allow a business to track a specific payment on its journey through the mailstream. Credit card fraud prevention for financial institutions is another area where a track and trace capability has provided a tremendous benefit. If newly issued cards are not received within a certain timeframe, there is a chance the cards have been stolen. By having this information available, ·  financial institutions can then make the call whether to de-activate the cards and contact their customers.

The opportunities are endless when it comes to enhancing your mailstream management efforts. From basic document composition to sophisticated call center integration and response tracking and analytics, the key to an optimal mailstream is not only addressing each area along the communications flow but also ensuring that these segments work seamlessly together.

The achievement of an end-to-end mailstream solution that encompasses the appropriate technologies, process improvements and expertise should be every company's goal for 2006. The rewards, including higher profits, lower costs, increased visibility to cash flow, data security and loyal customers (and more of them) should be more than enough incentive for all businesses to take on the mailstream challenge.

Kevin S. Weiss is President, Mailstream/The Americas, for the Global Mailstream Solutions division of Pitney Bowes Inc., headquartered in Stamford, Connecticut. For more information, please visit www.pb.com.