International Customer, Subscriber and Donor Acquisition
Costs May Be Higher, But Customer Retention Levels Are Alive and
Well
I often get asked
these days about the decline in international response rates.
I wish there was
a simple explanation we could all understand such as the global
economic downturn or the terrorist threat. The fact is response
rates have been declining for several years now at a time when
stockmarkets were soaring and the attack on the Twin Towers hadn't
yet happened.
I would say right
away there's nothing at all intrinsically wrong with the direct
marketing business internationally. On the contrary, the use of
email and telemarketing harnessed to greater care and attention
being given to customer retention and renewal programs has seen
an improvement in "back-end" renewal rates and lifetime
value for almost every international direct marketer/mailer we
know.
It's the cost of
acquiring new customers, new subscribers, new members and new
donors which has
become high, due to relentlessly rising costs and lower response
rates.
A few weeks ago
I was asked by the HKDMA (Hong Kong Direct Marketing Association)
to speak about
declining response rates and what to do about them. There are,
I believe, three areas of particular concern:
1.
Growth in Internet Use: consumers
have been spoiled by the proliferation of free offers on the web
and instant access to such offers and related information. Long
term I don't see this as a problem since direct mail can be used
to drive prospects to proactive web-sites as well as soliciting
response direct.
2.
Growth in Junk Mail:what's new is not "junk"
mail as such (it's been out there for years) but the more insidious
growth in fraudulent and deceptive offers. For instance, I was
recently sent a list of "59 mail orders seams" posted
into Australia and New Zealand from overseas. These seams have
been collected by the South Australia Office of Consumer and Business
Affairs and the New Zealand Ministry of Consumer Affair websites
based on consumer complaints. (If anyone wants a copy let me know.
It lists the companies involved and the fraudulent offers they
promote).
The significance of mail-order seams circulating world-wide in
the international mail system is this:
when recipients read or respond to such offers they have a bad
experience and become less inclined to respond to other (more
responsible) direct mail offers in the future. If you're on a
few mailing lists like I am you'll know how much garbage there
is out there, and the damage it's doing.
3.
Unreliable Mail Delivery: I've written about this
before and I think it's one of the biggest scandals in international
D.M. I'm now told (by informants within the industry) that many
private operators routinely and regularly dispose of 30% of the
bulk airmail they receive and handle. The reason is simple: they
know full well that addressees will never ever miss any bulk direct
mail item which is not delivered to them. If these operators are
under financial pressure to perform (as many of them are) the
temptation to dump or incinerate must be enormous.
Furthermore I'm told that many postal operators in the public
sector have been corrupted in the same way by private operators
with whom they now work. (At this stage I don't want to name names
but would certainly appreciate further feedback).
There's little we
can do about competitors on the internet (except join them!).
There's not much we can
do about seams except report them to the police or local DMA's.
(Perhaps a more orchestrated campaign to close them down can be
initiated in the future).
However, there are several things we can do about mail delivery.
Obtain from your postal operator in
writing exactly how your mail will be delivered, either through
the international mail system, through hubs or by direct injection
into specific destination countries. Bear in mind, what so many
of us have experienced: the more people involved in delivering
your mail the less likely it will be delivered in full. A lot
of mailers (including myself) have discovered the value of using
IPA or discounted first class bulk airmail. You pay more, but
it gets delivered more promptly and with greater certainty, rewarding
you with significantly higher response rates.
Testing is mandatory. Split some major lists and countries A/B
and compare response and delivery time against a different level
of service or postal operator. Don't tell either operator you
are testing so they don't make a special effort to improve delivery
which will invalidate the test.
* * * * *
It's
a Fact That 30 or so Countries Can Be Mailed Locally
But 159 Other (Smaller Countries) Can Only Be Reached
From Offshore Using Multinational Lists
Let's move on to a more congenial topic. In the last issue ofNEWSFLASH,
I described how the Direct Mail Advisory Board (DMAB) to the UPU
(Universal Postal Union) had launched a 300 page "Direct
Mail Guide" and the UPU had developed a corresponding website
containing information on "the state of direct marketing
in over 189 countries".
Richard Miller,
who is a member of the DMAB (and Executive Director of the International
Mailer's Group IMAG) sent me a note with this to stay:
"James I have had it on my mind
since September to correct an impression you left in your critique
about the World Guide in your Newsflash. I would be less than
candid if I did not say that the members of the DMAB Steering
Committee feel you presented a rather narrow and self-serving
view. However, they understand that multinational lists are what
makes your organization run. So, appropriately, the newsletter
is a reflection of your philosophy. There is an error though,
in your understanding about the guide. The hard copy - the book
- is a "how - to" contributed to by 34 DM specialists
from around the world - many of whom you know. It has nothing
to do with country research. The research section is only on the
UPU website and does contain the information you described. The
DMAB wanted to make sure you understand that they are not espousing
any particular international philosophy, but arc providing a service
for members who want country-by-country information and who need
help with the DM basics."
(Full details of DMAB/UPU publications are available from imag@capecod.net).
Referring to the "self-serving" comment above, Dick
Miller is right. My company (MLA) does indeed practice what I
preach by specializing in brokering multinational lists but not
exclusively since MLA knows more about local lists in countries
aroundAsia in particularthan any other organization.
My original and basic concern about the DMAB's publishing activities
on behalf of mailers was the assumption by them that mailers need
local DM information on 189 countries (representing the full membership
of the UPU) in order to select markets to enter.
In fact there are only 30 countries (35 maximum) where local lists
are available and where there is a sufficient local infrastructure
to mail and direct market on a local basis.
The other 159 country members of the Universal Postal Union can
only be reached successfully from OFFSHORE using multinational
lists through the "offshore strategy" which I, many
other mailers, and my
company MLA, have been espousing for years.
That is to mail into up to 159 smaller countries from offshore
with response offshore. There is no other way into these smaller
countries. This "Test" strategy can also be applied
to 30 larger countries so mailers can compare response by country
which helps them identify which local markets to enter with a
local strategy at Stage Two. This is a "low-risk" strategy
into international markets which far too few mailers seem to know
about let alone practice, and this is a great pity.
The DMA To Publish New DM Report
On 30 Overseas Countries ONLY
To round off this
point, I am happy to report that the International Department
of the U.S. Direct MarketingAssociation, in their wisdom, agrees
with me.
They have decided to publish a new Report containing direct marketing
statistics, growth projections and other relevant data (in conjunction
with WEFA) on 30 countries ONLY. These are the countries
where there is a local DM infrastructure, where local information
and statistics are useful, and where local DM campaigns are possible.
Amen.
* * * * *
How to Cut Your International Mailing Costs
By 40% and More
Now I do want to
say something here which may seem "self-serving"
International postal
rates are about to rise once again from both Europe and the USA,
further increasing
cost pressures on mailers.
MLA will be doing their little bit to help mailers reduce costs.
The combination of printing, merge-purging, laser personalization
and lettershopping in the Philippines and then dropping into Hong
Kong Post and mailing regionally and globally from there is proving
unbeatable anywhere on price and reliability. It has become an
option to consider.
MLA works with a large Philippines printer who imports paper cheaply
from India and produces excellent quality packages. They are backed
up by an associated modern, well-equipped lettershop which provides
laser personalization, merge-purge and machine inserting with
a capacity of a million pieces a day. Costs work out about 40%
below Hong Kong prices.
The overall savings attainable are even greater by airlifting
printed items from the Philippines and dropping them into Hong
Kong Post who offer the most competitive and reliable discounted
first class bulk airmail service in the world. Rates for mail
produced outside Hong Kong and remailed regionally and
globally through Hong Kong are even lower than their standard
rates.
There are five countries where Singapore Post from offshore is
less expensive than Hong Kong (namely
Japan, Australia, UK, France and Germany). Items to these destinations
can be air lifted to Singapore instead - if one is fanatical about
achieving the lowest possible costs overall.
* * * * *
The Jury is Still Out on Email
To what extent can email be used to cut acquisition costs?
The jury is still out on this. There's no dispute at all about
email's role in communicating with and retaining customers within
an existing relationship. It's a direct, one-to-one, inexpensive
way of providing added value and useful information or simply
saying: "We care ..." It works, and with judicious use
of elemarketing, it is enabling every mailer I know to improve
customer, subscriber, member or donor retention.
Customer acquisition is something else. What kind of "cold"
opt-in email lists are out there which work? Precious few.
Permission based consumer email databases are widely available.
Some consist of responders to website offers, some are "harvested"
and others are "incentivised". ("Get paid to read
email. Click Here!").
These people are
not "buyers", although they can be targeted based on
the categories of offer they have opted-in to receive. Such lists can and do work sometimes on a
two-step prospecting basis, but mostly they disappoint.
In the B2B area there are simply very few multinational or international
email lists available. As a listowner I certainly wouldn't agree
to rent my email addresses if they were valuable customers with
whom I was developing a CRM programme. Even one list rental a
month would be too many.
While mail received through the postal system is "anonymous",
email is invasive and there's just too much unsolicited mail clogging
people's in boxes these days. My partner here in a travel business
in Bali (where I've been spending New Year) receives over 600
emails a day before filtering, 150 junk messages a day after filtering
and a net 30 or so real personal or commercial messages. Nearly
everyone I know who's been on the web for a while is sick and
tired of all this unsolicited garbage.
As the Wall Street Journal put it recently: "Apathetic way
to do business... the spammers are ruining the
very use of email for millions of people".
* * * * *
Report the "ROGUES"...
I was interested
to see the latest copy of the U.S. DMA's International Council
newsletter "HOT PRESS". Douglas Sacks, who is currently
chair of the International Council, has decided to set up a "ROGUES
GALLERY" of DM vendors around the world with whom members
are advised NOT to deal based on other member's negative reports. "To kick things off", he
says, "I have some up-to-the minute data on a guy in Mexico
who should be avoided at all costs... this one is a bandit..."
He has horror stories from Singapore and South Africa too...
Good idea, Doug. I know you'll watch out for libel law but make
sure you don't have DMA vendor members slagging off their competitors
out of sheer vindictiveness and for spurious reasons.
* * * * *
These are indeed
"interesting" times. What with mail scammers, dishonest
vendors, sparnmers and postal operators who dump mail, our jobs
don't get any easier. However, the rewards of maintaining customer
databases abroad are as attractive as ever. We just have to work
smarter to get there.
