Database: Green Your Data Management
As environmental consciousness seeps into the corporate boardroom, some companies are publishing two annual reports. One report is the traditional shareholder document that contains financial statements and other information deemed relevant to investors and other stakeholders. The other report provides a view of the company's "carbon footprint" and progress toward environmental improvement across the various aspects of its business operations.
Today, many companies are finding opportunities to fulfill both obligations with the same investment dollars. "Green marketing is definitely part of our decision-making construct," says Cathy Halligan, CMO of Walmart.com. "But if it weren't for a business case, a green initiative wouldn't stand on its own."
One area where Wal-Mart and a growing number of companies are making a strong business case for green marketing relates to customer data management, which serves as the foundation for overall customer communications. In fact, companies are using multiple strategies to make their customer communications more profitable as well as more environmentally sustainable.
Direct Mail Addressing
One strategy relates to direct mail addressing. To reach its recipient, an envelope needs to have a correct address. Unfortunately, the rapid decay rate of data within large business-to-consumer companies often results in incorrect addresses.
According to the 2007 USPS Postal Forum, approximately 7.5 percent of all Standard Class marketing mail is undeliverable. The rate may be as a high as 15 percent. The biggest cause of undeliverable mail is consumer moves. According to the U.S. Census Bureau, more than 40 million U.S. residents move every year.
The financial impact of marketing to a mobile society is significant. By some estimates, companies spend more than $6 billion per year on undeliverable mail. Also significant is the environment impact. According to some sources, undeliverable mail translates into the unnecessary destruction of more than 6 million trees. It also results in wasted energy, wasted water, and unnecessary pollution and greenhouse gas emissions.
Direct Mail Content Merging
Another core area of customer communications waste reduction centers on direct mail content merging. Consider the fact that a large financial services organization that has grown through mergers and acquisitions will typically send its customers financial statements and other information regarding their savings accounts, checking accounts, mortgage accounts, brokerage accounts, equity loans and so on. All of these different communications typically go out in separate communications. Using customer data management, companies can merge this diversity of content streams into a single envelope, avoiding excess labor, materials and postage costs while also providing a rich experience for customers around the totality of the relationship they have with the institution.
One emerging trend, called transpromo, represents a confluence of customer data management and technology around digital variable print processes. Marketing materials that previously would have traveled in a separate mailer can now be placed onto a transactional document, such as a billing statement (usually by spraying the message as a billboard inside the bill rather than adding a paper insert).
Piggybacking on a communications vehicle that has a nearly 100 percent open rate enables marketers to not only save money, but also send more intelligent cross-sell and upsell promotions to existing customers while improving the likelihood that their messages will be read. Here, again, the benefits of merging two distinct communication streams into one envelope are obvious from a green marketing perspective.
By investing in improvements in data quality, companies can achieve higher cross-sell/upsell potential. A recent Aberdeen Group survey of 125 diverse enterprises revealed that 77 percent of best-in-class companies, compared with only 3 percent of laggards, improved their year-over-year performance in cross-sell/upsell effectiveness as a result of improved customer data quality practices.
Dramatically reducing the amount of untargeted and returned mail also can result in substantial costs savings, given the high price of paper, printing and postage. What's more, by correcting an address, companies not only ensure deliverability of their customer communications, but also maximize their postal discounts.
All of these business benefits aside, the most compelling reason to embrace direct mail waste reduction is because that's exactly what a growing number of customers want.
"Customers really want to believe that you're targeting and not wasting," says Steve Fuller, senior vice president of corporate marketing at L.L.Bean, the $1.5 billion catalog mail-order and retail store merchant of outdoor clothing. "They trust that you're doing the right thing. And companies have that responsibility to their customers."
For its part, according to Fuller, L.L.Bean has a whole department dedicated to data hygiene. "We actively look for ways to combine households to reduce duplicates and avoid mailing to nonresponders."
So, too, does the largest retailer of them all. "We actively update customer profile information to ensure that folks that don't want to receive print communications don't receive print communications," says Wal-Mart's Halligan. "Data hygiene is a core part of our marketing activities, such that we try not to send any customer anything that he or she doesn't want. We place a high degree of importance on the integrity of customer information. We want to communicate with customers in a relevant and compelling way."
Best Buy, one of the world's largest consumer electronics retailers, is also working to make its direct mail communications increasingly relevant. This means moving away from broad-based promotion tactics - for example, sending all customers a coupon for 10 percent off their next purchase - and toward event-triggered incentive programs and precision marketing, based on customers' past purchase behaviors, geo-demographic and psychographic characteristics, and value to the brand.
"The intention is to be able to offer up only content that we know is going to resonate with the consumer," says Matt Smith, VP of customer insight at Best Buy. "We're undergoing a transformation - from mass print to targeted print, from targeted print to targeted push electronic, and from targeted push electronic to opt-in pull electronic." According to Smith, marketing waste reduction is a by-product of that transformation.
Wal-Mart, L.L.Bean and Best Buy are just a few of the marketers who recognize the dual benefit of helping shareholders achieve their financial objectives while mitigating the impact of their direct mail activities on the environment. These companies don't look at direct mail waste reduction as merely "a feel-good thing" or "a PR thing." Rather, they view it as an area where environmental concerns and shareholder interests coincide and where everybody can win.
Jeff Zabin is a research fellow at Aberdeen Group. His research focuses on data-driven marketing solutions for attracting, retaining and leveraging profitable customers. He has written extensively about the value of customer data in the context of direct mail waste reduction. Other areas of interest include social media monitoring, mobile marketing, customer feedback management and digital signage. Zabin is the co-author of two best-selling business books: "The Seven Steps to Nirvana" and "Precision Marketing." He can be reached at firstname.lastname@example.org or (847) 328-4795.