Cut Costs, Costs, Costs … is the Mantra Nowadays
So it should be. Times are tough and mailers have a duty to their company's shareholders to reduce overheads
and trim marketing costs wherever possible.
This doesn't necessarily mean cutting mailing volumes. Not at all. The show must go on and the objective
must be to at least maintain active customer database levels and to find ways of doing this for less.
This may mean doing things in a different way – using different mailing points (for regional or global mailings)
or different service providers offering cost reductions and/or improved efficiencies.
For instance, many international mailers in the U. S. faced with higher IPA and ISAL postal rates, are shifting
customer and subscriber acquisition mailings offshore – and printing, lettershopping and posting within the regions into
which they mail (especially in Australasia and Asia). This way they save 10 cents a piece, 15 cents, 20 cents and more.
Why not? It doesn't take a lot to organize, especially if you do your homework and choose your suppliers
carefully.
The above may sound like stating the obvious but I've been amazed at the stories I have heard of suppliers
charging double to offshore clients… and getting away with it. So there are no short cuts, you must do due diligence.
You should also be careful not to deal exclusively with a provider whose solutions are built entirely around their own
infrastructure as your total savings can then be constrained by that infrastructure. You're probably better off dealing
with more than one supplier at least. It may also help to have an independent party in the country from which you mail
to check quality and make sure every single piece gets posted.
* * * * *
The Advantages of Mailing into Europe From a Developing Country
It's not widely realized that if you
want to mail into Europe, it's cheaper to do this from a developing
country than do this from within Europe or from the U.S.
Under the Rheims Agreement the terminal dues payable by European
countries to each other for delivering the mail within Europe are
more than double the UPU rate for developing countries sending mail
into Europe.
For instance you can mail a 20 gm package using a discounted first
class bulk airmail service into Europe from Hong Kong or Singapore
for a cost of 21 U.S. cents (with the exception of Switzerland,
UK, France and Germany where the rates are higher). Delivery takes
4 - 5 days. This compares with the standard cost of mailing from
London to continental Europe destinations and vice-versa of around
40 U.S. cents per piece. The cost of mailing IPA (the U.S. equivalent
to a discounted first class bulk airmail service) from the USA into
Europe is 42 U.S. cents. Mailing from a reliable developing country
into Europe therefore yields a saving of more than 20 cents per
piece – which is not small change.
Postal administrations in Europe, of course, don't like the competitive
edge this offers to posts in developing countries. Developing countries
argue their citizens can't afford to pay higher postal rates based
on the high terminal dues (likely to become higher at the next UPU
Congress in the Cote d' Ivoire in October 2004).
At this next UPU Congress developed countries will unite to ensure
developing countries pay the full terminal dues to have their mail
delivered in Europe and elsewhere. On the other hand, developing
countries will unite in arguing against paying these higher terminal
dues. Right now, it's stalemate. At the UPU Congress, each country
has one vote – and there are a lot more developing countries than
developed countries! It should be an interesting Congress…
* * * * *
Larger Mailers Have Clout to Negotiate List Rental Fees.
By this, I don't mean the standard fees that list brokers earn from listowners when brokering their lists. I do
hear of small list brokers sharing their commission with mailers (against the rules of international list brokerage) – but
such companies rarely survive.
What I do mean is that if certain lists are used often and in reasonably large quantity by reputable, blue-chip
mailers then a discount can usually be negotiated by the list broker with the listowner on the mailer's behalf. This is
another way to save costs. It takes an effort – but if you have clout you might as well use it.
* * * * *
Can Email Be Used to Cut Acquisition Costs?
If you still think that email marketing is the ultimate solution to cutting acquisition costs, then think again.
Unsolicited email is considered a pestilence everywhere by governments, business and consumers alike.
Untargeted email outside permission based lists will incur you the wrath and contempt of the market-place, and do
immeasurable harm to your brand.
Even permission based lists no longer perform as they did in the heady days when email was still new. As Seth
Godin, one of the early gurus and proponents of permission marketing, said recently at an “Interactive Marketing”
dinner in New York: “99% of opt-in email lists are bogus, worthless garbage. If someone wants to rent you an email
list, it's probably not worth renting”.
Email as a tool for one-step acquisition is dead. As part of an intelligent, well-planned 2 to 3 step acquisition
process email can be made to work, and as a tool to communicate with customers within an existing relationship it's
very much alive. This is where it fulfills it's proper role.
* * * * *
New Mailer Networking Opportunity
Over the years I've attended (and sometimes spoken at) many international direct marketing events and
conferences – in New York, San Francisco, Toronto, London, Milan, Hong Kong, Singapore, Tokyo and elsewhere.
It is remarkable to observe that while service providers pack the halls and aisles of such events, mailers and
direct marketers (to whom such events are targeted) resolutely stay away.
Why do they stay away? Because when they walk from conference room to lunch room, they get pestered by
service providers plucking at their elbows – and they don't like it.
So my congratulations go out to Al Goodloe who hosts the Publisher's Multinational Direct Conference every
year in New York (and publishes a monthly newsletter of the same name) who has decided to change the format of his
conference next year. Henceforth, it will be limited to a maximum of 25 international mailers and held in a private
room at the Harvard Club. It will be by invitation only, and no service providers will be allowed. Great idea! It will
be a superb networking opportunity for mailers – and provide a lot of valuable material for subsequent issues of Al's
newsletter. And participants won't hear one service provider deliver a pitch – thinly disguised as a presentation! I
hope others will follow Al's example.
* * * * *
If You Don't Yet Use Telemarketing for
Customer, Subscriber, Donor or Member Retention – Start Thinking About Doing So.
I don't know one international periodical publisher who isn't already using telemarketing to renew subscribers –
or about to begin. The critical conversion from new subscriber into first renewal is where telemarketing can really pay
for itself since this is the point at which most new subscribers are lost.
With the heavy reduction in international telecommunications costs and the growing realization that
relationship marketing is what direct marketing is all about, telemarketing has become a vital tool.
In my own operation in Manila we have 10 Filipinas engaged in global customer retention. They phone
everywhere in the world outside the Philippines. The system we have ensures that each girl continues to call the same
customer so they get to know them – and build a relationship. Average order values are 60% higher than orders
through the post (although I understand the industry average is 50%), and the renewal rate is 82% on an average order
value of US$285.
Out of curiosity I recently visited half a dozen large call centers in and around Manila and found nearly all of
them service U.S. clients only using inbound and outbound calls.
Not only are their costs 40% below U.S. Call Centers, but tests show (universally) their performance is
significantly better. One of the reasons perhaps is they tend to employ college graduates only – who are 80% female,
articulate, English-speaking, intelligent and service oriented.
Another country offering international call center services is India. However, I'm told international consumers
don't seem to like the Indian accent very much – even after what's euphemistically described as “Accent Neutralization
Training”!
* * * * *
Parcels and Mail Lodged with Your Post Office
May In Fact Be Delivered by Private Operators
A couple of issues ago I mentioned
that Jim Wade (who heads the USPS's international business interests)
had remarked in a public forum that “USPS can work better in the
commercial area than with most Posts”. This attracted the following
letter from Lawrence Chaido of Transglobal Consultants (who is a
well known guru within the international postal industry):
Dear
Mr. Thornton,
“It is with a great deal of pleasure and enjoyment that I read and
evaluate the information and comments that are contained in the
MLA Newsflash monthly newsletter. At a time of much confusion and
changes within the international Mail Arena, this newsletter and
several others are to be congratulated for their aid to international
direct mail executives.
Given the growing costs in terminal dues and the prospect of cost
based terminal dues, combined with deregulation of monopolies within
the postal arena, your comment from Mr. James Wade is very appropriate
and of importance. As you know this comment was made as the USPS
embarked upon their first commercial agreement with Consigna (UK)
and their commercial delivery network General Logistics Systems.
This agreement called for the delivery of Expedited Mail and Air
Parcels by commercial means to the GLS hub in Frankfurt directly
from US Postal International Distribution Centers and then throughout
Europe using non-commercial, non-postal means. These types of postal
– commercial agreements are becoming more and more important as
you state in your article. Although it is too early to comment upon
the success of this agreement I am sure you will keep us all advised
of similar agreements within the pages of your newsletter.
Mr. Thornton, on behalf of myself, I must again congratulate you
for your good reporting and ask that you continue to provide us
with additional information as it becomes available.”
I'm sorry to have to deliver bad news received after this letter
was written. The International Herald Tribune reported recently
that this parcel delivery program in the EU, based on commercial
rather than postal delivery, has become a “nightmare” – with a flood
of complaints about continual delays and high fees.
My concern is that commercial delivery (rather than postal delivery)
of MAIL doesn't meet the same fate as the USPS's attempt to develop
commercial parcel delivery in Europe!
I recently spoke to Theo Jongsma, CEO of SPRING, at a Triangle Postal
Conference in Amsterdam. Spring only handle mail – not parcels.
He told me clearly that SPRING's strategy is to contract private
commercial operators to deliver mail to urban areas in destination
countries outside the postal system. Delivery of mail to the more
expensive rural areas would be left to local postal administrations.
In principle, this is fine and this may become the way post is going
to be delivered in the future as “postal liberalization” begins
to bite. In practice I would want complete assurance that every
piece of my mail is going to be delivered, and at a competitive
rate (ie. at a discount to cover the “risk” element).
My advice to mailers is this: find out from your service provider
exactly how your mail will be delivered and then test one mailing
point and service provider against another. Test again – and then
again – and make sure neither service provider knows you're testing…
* * * * *
Maybe You Shouldn't Use International BRE's After All
Before leaving postal issues entirely, here's a disturbing anecdote I received from a friend of mine recently.
He runs a large health product marketing company and wanted to test an international Business Reply Envelope
in Brazil before entering the market. The BRE was addressed to Zurich in Switzerland with a special reference number
provided by Swiss Post for tracking purposes.
In the first test, only 10 out of 50 test BRE's dropped in Brazil and addressed to Zurich were received. They
took an average of ten days to arrive.
In the second test, no BRE's at all were received.
Personally, I've found official looking, BRE's tend to reduce response internationally and maybe this little story
indicates one reason why…
* * * * *
India Could Become a Great DM Market –
Once It Becomes Possible to Operate Legitimately
In Asia we're sitting on the doorstep of three of the largest (and relatively undeveloped) DM markets in the
world – namely Japan, China and India.
My company is becoming very active in all three of these markets, and each one of them has their own
particular challenges and idiosyncrasies.
India certainly has its fair share of these. Every major mailer into and within India (virtually without
exception) is purchasing lists from what is called – the “grey” market.
These are lists which have been stolen and sell for 1 rupee a name (about US$21 per 1,000). If you rent lists
legitimately in India they are normally supplied for 4/5 rupees a name (US$80 - US$100 per 1,000). (Lettershopping
done by the listowner).
I was told recently that even some branches of the Indian Post Office are not safe. They have photocopiers
lined up in backrooms copying address labels and supplying them to the “grey” market. Even international banks are
receiving stolen lists at the same time as their own lists are being stolen.
However, Nikki Sachdeva who runs MLA's office in Mumbai is hopeful. A few days ago the Indian direct
marketing staff of a major international insurance company told her they “were sick of testing grey market lists”.
This sentiment from a blue-chip mailer is welcome – and easy to understand. Each time a mailer takes a list
from the grey market they are perpetuating a corrupt and unlawful system. These lists may be cheap but most of the
time you don't know where the names actually came from, how old and how targeted or untargeted they are – and
whether or not they'll perform.
For this reason every domestic mailer and every major international mailer interested in building a customer
base in India has a vested interest in seeing a proper list infrastructure established.
They will then know exactly how the names they rent have been sourced, what selections are available for
better targeting, they will be doing business legitimately and they'll be in control (assuming they take very strict
precautions indeed to secure the names on their own database). The cost of list rental will be higher, but the response
will be more predictable.
It is good to see signs that a collective will amongst direct marketers in India to support a professional and
legitimate list infrastructure in their country is gradually beginning to emerge. Once this really does begin to happen,
India will no longer remain a DM backwater.
