Direct Mail Personalization and Automation: Part 1 of 2, The Process
According to the Bell and Howell, direct marketing is growing "increasingly personal." Personalization and technological advancement have positively impacted the value chain of direct marketers. New technology has simplified the ability of top direct mail companies to provide affordable and high-quality digital printing and multi-channel automation. Each year, 57% of all mail in the U.S. is attributed to direct mail. Companies spend $9.4 billion on direct mail annually. We analyzed the service offerings and workflow processes of the top 5 direct mail service providers. For our purposes, top providers were identified on the 2017 DM200 list as those who have the highest reported sales revenue from direct mail operations. The top 5 companies are IWCO Direct, Quad/Graphics, SG360, Data-Mail, Inc. and Freedom Graphic Systems.
Each of the top providers has automation capability in printing, packaging, sorting, and shipping. These market leaders also serve clients with multiple personalizations and customization options, including handwritten fonts, and custom messaging by offer or by target characteristics such as zip code.
Primir Interquest reports that the majority of direct mail providers cite personalization and targeting as two key growth trends of their industry. The toughest challenges for these providers are pricing, postage expense increases, and the level of investment required to stay competitive. This 2015 trends report is slightly older than our two-year standard. However, it is still relevant because it covers the future trends of direct marketing through 2020.
According to Bell and Howell, direct mail providers view increased levels of automation, personalization, and postage expertise as their greatest business opportunity. Over 50% of digitally printed direct mail pieces offer full personalization of text and image components. Approximately 77% of providers consider personalization as highly important. Close to 64% of providers consider automation as highly important. These sentiments represent a substantial shift in the direct mail industry. Integrated marketing is also an area of industry growth. Direct mail providers are creating more ways to integrate and coordinate with digital channels to bridge the gap between online and offline marketing. Several companies have acquired smaller businesses with “omnichannel” expertise to provide these end-to-end capabilities to their customers.
PERSONALIZATION: VARIABLE DATA PRINTING IS THE PRIMARY TOOL
Variable data printing (VDP) is the technology that allows direct marketers to offer personalized one-to-one marketing on a mass scale. In the past decade, this data printing technology has matured, which has lowered costs for these providers. The process allows for customized artwork for each print piece. Text or graphics are printed based on database information and rules that are established with variable data software. Once a single document is created, providers use VDP to create uniquely personalized pieces to target numerous audience segments and individuals. VDP has been proven to heighten average mail response rates from 2-3% to 10-15%. VDP process elements can vary to provide differentiated colors, fonts, text, graphics, and more. Variable data is positioned on each page by on a record-by-record basis. The overall content is directed by rules contingent on data field relationships. This kind of printing has progressed far beyond adding a personal touch by strategically placing a recipients name. Today, direct mail providers are getting increased results by using “versioning” techniques that create hyper-segmented customization based on audience characteristics such as gender and zip code.
PRIMARY TOOL FOR AUTOMATION: SOFTWARE FOR POSTAL TECH FOR DELIVERY OPTIMATION
Top direct mail providers are utilizing automation to enable postal optimization strategies and advanced logistics services for fast delivery of the product. Advance postal logistics strategies such as data-driven "commingling" are the norm among these top players. Every market leader provides delivery data enhancement tools, mailing lists, and automated printing, packaging, sorting, and shipping.
Additionally, some top direct mail companies, such as Quad Graphics, even have their own transportation networks and fleets to lower cost of distribution. Many of the companies are strategic partners with the United States postal service and have their own national networks of production and consolidation facilities. Several of the top companies offer specific “arrival intelligence” USPS features that allow clients to track when and where their mail was delivered, and which pieces of content had the greatest return on investment.
In sum, 100% of the top five direct mail companies offer automated shipping and logistics help. Every market leader provides advanced personalization through variable data printing, which allows for customized offers by zip code, and digitally printed handwriting font options. Each of these market leaders also utilizes automation to facilitate printing, packaging, sorting, and shipping for the lowest distribution cost and highest investment impact.