With the rise in popularity of product placement, blogs, SMS and RSS feeds as tools to create consumer awareness, some consumer marketing organizations are questioning the degree to which traditional direct mail should remain in their marketing mix. Printing and postage costs are on the rise, as is the paper and electronic noise level swirling around today's consumers. While overall direct mail spending grew over seven percent in 2005 (Source: DMA/Winterberry Group/Universal McCann estimates), traditional printing has grown at a much slower rate as direct mailers turn to digital printing as a way to remain competitive by delivering more personalized, impactful messages.

Direct Mail Faces Stiff Competition from E-Marketing

Direct mailers face a daunting competitive challenge from e-marketers when it comes to production and delivery costs, delivery and response times and access to marketing campaign metrics. The average email campaign costs 42. to produce and deliver and seven to 10 business days to complete, compared to $1.12 and four to six weeks for a comparable direct mail piece (Source: GartnerG2). Much of the time and costs incurred by direct mailers are derived from offset printing and postage. Outbound emails can be readily modified for personalization and targeted content and enhanced with html and color graphics. Response links provide an effective call to action for convenient and almost immediate consumer response.
According to GartnerG2, response times for email campaigns average three days, compared to three to six weeks for direct mail campaigns. For direct mail campaigns to remain relevant and competitive, marketers need vehicles to quickly and cost-effectively deliver personalized, targeted messages that will garner consumers' attention and elicit timely responses.

Not Opting Out, Filtering or Discarding

Consumers have more control than ever over their accessibility to direct marketers. Do-not-call lists, customer-controlled email filters and regulations requiring opt out/unsubscribe provisions for paper and electronic mailings empower consumers to eliminate communications they deem undesirable. Consumers can filter the online content they consume through RSS feeds and other subscriptions, reducing their browsing time and thus their exposure to web marketing. Fourth-Class direct marketing is often discarded by consumers without any examination at all. Much First-Class direct marketing makes it through the front door but is sorted out shortly thereafter. Even targeted marketing that may be appropriate and of interest to a consumer is often filtered out before it can be read and evaluated.

Despite all of the challenges facing today's direct mailers as they compete for consumer awareness, most ignore what may be the customer communication with the greatest potential. Invoices and statements are among the mailings most likely to be retained and carefully read by consumers in a timely manner. According to a study conducted by LMR/MarketingUK in 2003, bills and statements garnered an average consumer attention span of 42.5 seconds, compared to 18.8 seconds for direct email and 15.2 seconds for direct mail. Despite these compelling metrics, most direct mail marketers do not take advantage of billings as a vehicle to communicate to their customers. The same UK study concluded that banks, utility suppliers and mobile phone providers leverage less than 25% of their customer communications to deliver marketing messages. Clearly, many organizations are missing prime opportunities for upselling, cross-promotions and brand reinforcement.

Consumers Still Strongly Prefer, Read and Retain Paper Billings

There is a broad misconception that mailed billings will soon be displaced by electronic payments and will therefore erode as an effective marketing vehicle. Despite the increase in e-statements and online payment options, the vast majority of American consumers still prefer to pay by check in response to a paper invoice. According to a Pitney Bowes analysis, approximately 19 billion bills and 6.5 billion statements were delivered to US consumers by mail in 2003, compared to 1.5 billion sent electronically. The same study indicated that most of the consumers who viewed their bills online continued to receive paper invoices via the mail. A 2006 Pew Research Center survey indicated that 69% of those surveyed paid their bills by check or cash, compared to 28% who paid electronically or online. Among Internet users surveyed, 63% paid by check or cash, and 35% paid online or electronically. Many consumers retain their invoices and statements and refer to them more than once.

Marketing messages integrated into thoughtfully designed statements or billings may well get more attention than any other piece of direct mail. With new processing technology, marketing messages incorporated into statements can even ease the purchasing process for up- and cross-sell items. An invoice can now include an optional payment amount that incorporates the cost of the product featured in the statement's marketing message. The customer need only check a box on the remittance coupon to accept the offer and include the additional amount of the purchase in his or her payment check. Response rates for these integrated marketing campaigns significantly exceed traditional inserts because the product offerings are always noticed, the buying decisions are immediate and there are no additional forms to complete.

Integrated Remittance and Billing Operations Can Leverage Key Consumer Intelligence

Synthesizing billing and promotional activities can be challenging, particularly in large organizations where treasury and marketing functions may be separated both geographically and organizationally. Traditionally, the missions and goals of treasury organizations have focused exclusively on the revenue collection cycle without capitalizing on the customer attention elicited by their mailings. Today's forward-thinking companies are increasingly viewing revenue collection as a strategic customer communication that can affect customer satisfaction, customer retention and new product/service initiatives.

For marketing organizations to effectively leverage the billing cycle with targeted communications, they need visibility into customer profiles; revenue collection schedules; and format and function of printed statements and invoices. Companies that outsource remittance and billings to different third parties may find their database formats too disparate for effective integration. Given the marketing efficiencies and improved customer service that result from a holistic approach to the revenue collection cycle, there is a compelling argument for consolidating and integrating billing and remittance operations. 

According to a groundbreaking study conducted by Frank Romano and David Broudy, color documents customized based on consumer intelligence had a 500% improvement in response rate compared to standard direct mail. Web-based tools are ideal for developing customized materials based on database-driven consumer intelligence because they consolidate remittance, billing and marketing data while providing and controlling access privileges. The most advanced tools, not yet widely available at digital printing operations, enable application of dynamic business rules for customizing invoices and statements in real time. Based on a customer's profile and history, appropriately targeted marketing messages and incentives can be incorporated into the statement or billing or inserted as part of the First-Class mailpiece. Web-based templates are intuitive to use and greatly accelerate the document design and approval process, thus optimizing revenue collection cycle times. Some web-based solutions are seamlessly integrated with digital printing for variable and distributed print runs. Make-ready costs and wastage can be virtually eliminated, and mail delivery times can be minimized by printing and mailing from multiple regional locations.

Color Benefits All Types of Consumer Communications

Recent developments in color digital printing technology are making it an economically viable option for companies with variable data and widely dispersed customer bases. No longer restricted to small print run applications, digital color printing is growing eight times faster than traditional offset printing (Source: Xerox/CAP Ventures). Color delivers palpable benefits to the revenue collection process, including enhanced company image, better customer comprehension and improved rate of response. More timely payments and reduced exceptions offset much of the cost of communicating in color. Additionally, digital color printing of billings improves brand recognition and facilitates integration of compelling, targeted marketing messages, such as special incentives and cross-promotions. The Romano and Broudy study found that personalizing a document and adding color increased responses rates by 135%, compared to a 44% increase in response rate from personalization alone. Depending on the type of promotion, marketing messages can be incorporated into the statement or often printed in conjunction and inserted into the same envelope without incurring additional postage.

Astute Managers Understand the Value of Each Customer Outreach

Every customer communication has the potential to reinforce brand, improve customer loyalty and create awareness of new products and services. Recurring communications that are anticipated and closely addressed by consumers may be the best opportunities of all. Companies that can work cross-functionally to take advantage of their revenue collection activities can deliver highly relevant direct mail materials that enhance customer satisfaction and improve customer loyalty.

Todd Haycock is Director of Postal Affairs with Regulus. He is Vice President of Major Mailers Association (MMA) and is actively involved in the Postmaster General's Technical Advisory Council. Contact www.regulusgroup.com.