Aug 28, 2007
Mail is Healthy: Let the Innovation Begin
By Scott Gerschwer
The mail industry is as healthy as it has been in over a decade.
The overall volume of mail has reached more than 500 billion pieces per year in the USA alone. Worldwide, mail use is rapidly growing in newly developed nations; competition in the de-regulated European Union has further stimulated growth. Japan is now a leading global market and the mail industry in China is developing at an astonishing rate.
The digital revolution has added volume to a market that many thought that it would render obsolete, as companies like eBay and Amazon and Netflix have all shown a reliance on mail as a delivery channel. Contrary to what one might intuit, households with digital broadband access get 40% more mail than other households.
Transactional mail, once thought to be a ripe target for electronic substitution, is showing signs of growth in the business to consumer sector. More personal handheld communication devices mean more bills; even though more and more bills are paid online each year, consumer preferences remain strongly in favor of mail as the medium through which businesses are to communicate with them.
The direct mail market continues to show robust growth after years of speculation that electronic media would replace it as a communication medium. More significantly, the health of the mail channel seems impervious to postal rate increases as mailers continue to take advantage of the otherwise low investment/high rate of return offered by mail. According to the US Postal Service, consumers read 78 percent of the advertising mail they receive, nearly 10 percent respond to offers, and 21 percent bring coupons and advertising mail with them when they shop.
The time is right for fresh innovation, new leadership, and a clear eye toward the future of the medium. Competitive organizations are going to invest in technologies that more efficiently create and deliver mail, that process mail with greater security and efficiency, and that make better use of variable data and digital color print to communicate better with recipients.
So what are some of the new technologies improving the industry?
Mail Induction Technology
As postage costs continue to rise, organizations that obtain discounts by presorting the mail, either physically or before the data is rendered into print, will gain a clear advantage. Advantages will also be gleaned from co-mingling the jobs of various clients into a single stream based on the most sensible sortation possible, making use of "hybrid mail" technology (which leverages the Internet to get the data closer to its final destination before printing and processing the mail piece).
A number of years ago, in his zeal to make the government of New York City as efficient as possible, then-Mayor Rudolph Giuliani enlisted the help of several document and mail industry giants to create technology that would allow workers at various agencies to create a constiutent document at their desktop and-- with the push of a button-- send that piece to a centralized mail operation facility, thereby leveraging economies of scale with regard to postage, reducing the cost of ink and paper at the desk level and drastically reducing the $4 billion that the city spent on mail each year.
The project was ultimately abandoned because at that time the technology was simply unavailable: the cost of creating customized software on that scale was impractical. But the technology has caught up with his visionary desire: a desktop-to-mail-center solution is now available.
In a similar vein, one of the largest financial services firms in the world spent a decade creating a state of the art mail operation that would be the most efficient facility of its type. Justly proud of their achievement, the executive sponsors were shocked to find that 65% of the mail that was sent by the company was not sent through the facility for processing; most of the organizations? mail was sent by agents in storefront offices or working from home. The technology that could allow those agents - where ever they may be located - to send the data to the central mail operation for processing is also now available.
Just in Time Manufacturing in the Mail Operation
The secure induction of data into the mail stream is only one improvement in the industry. Mail operations have long been dependent on pre-manufactured assets to create the final mail piece?mainly in the form of envelopes and inserts. In some cases these must be ordered, printed, delivered and stored for weeks or months before they are to be used. Clearly this is an egregious departure from the "just in time" manufacturing techniques adopted in virtually every other industry.
Creating inserts and envelopes during the print/mail finishing process brings the industry into the 21st Century. Dynamic Envelope Creation(TM) is a holistic method for making mail. The entire piece is created from a single roll of white paper in two easy steps: print and process. At a recent visit to a major mail operation, this writer once counted sixteen steps to create a mail piece. Clearly there has to be a better way: dynamic envelope creation may be the answer.
Targeted Marketing
Marketers are increasingly improving their use of targeting technologies to take the junk out of marketing mail. A targeted mail piece is 30% more effective than a generic piece. Studies show that pieces with multi-dimensional personalization and color generate results that are 400 to 500% better than generic, black and white, impersoanl pieces. The reduced size of a targeted mail run - 5000 pieces on average - eliminates a major barrier to entry for printers interested in adding mail to their service offering. As generic runs of several hundred million pieces gives way to smaller, more highly targeted runs the value of color and variable data increases exponentially. Leveraging dynamic envelope creation to place personalized call outs or even coupons on the outside of the envelope will make the mail even more effective.
Security and Privacy
Security concerns will continue to drive strict regulations regarding the processing and distribution of documents. Health care and financial services have already experienced significant - some might say draconian - legislation that has impacted the processing of physical documents, ultimately driving toward a completely automated process with little or no operator intervention.
Again, Dynamic Envelope Creation provides a remedy. The individual piece is never taken off the printer and left to sit in a staging area before being finished. The printed roll is fed into the finishing system and converted into sealed envelopes. Since the portion of the piece to become the envelope always follows the content there is no chance of inserting the wrong document into the envelope. The operator simply trays the sealed output at the end of the process.
Footprint and Flexibility
Another hot technology is the flexible system. With floor space at a premium and operator costs a heavy burden on profit margins, mailers are looking to leverage equipment to do as much of the work as possible. Having equipment with the flexibility to process jobs as they arrive in queue with as little set up time as possible is important. It becomes a question of how many jobs can be done in the least amount of time using the least amount of square footage possible.
The more variety a mail service provider can squeeze out of a single asset, the smaller the footprint. If you can do away with a staging area and reduce the amount of personnel needed to produce the mail, you can reduce your overhead and process mail at a higher margin.
Increasing the amount of automation from the data stream to induction in the mail stream is the only way to reduce the price pressure on your operation. Automating, reducing the number of human touches in the process, can significantly raise one's profit margins. The process must be automated from end to end.
In conclusion, the good health of the mail industry - unexpected but welcome - demands that new leaders step forward and accept responsibility to move the technology forward. The revolution is already underway. Organizations that sleep on these improvements do so at their own peril.
###
Scott Gerschwer
VP Global marketing, Megaspirea International
Scott Gerschwer leads the worldwide marketing effort for Megaspirea Inc, a privately-funded technology company that introduced the concept of Dynamic Envelope Creation. He is a Visiting Professor of Communciation at Western Connecticut State University.