Mail Merge

Yolanda Noble, chief executive of Corporate Mailing Matters, argues that reduced international postal costs should come as extremely good news to marketers and the wider business community alike.
In these days of high leverage, where companies are facing an increased burden of regulatory compliance and only steady market growth, savings through flattened management structures, centralised customer service, and business process automation are in high demand.
So when a simple method of delivering corporate cost savings appears on the horizon, it seems like manna from heaven. One such source of celestial nutrition has recently appeared on the horizon, in the form of reduced international postal costs. This will have huge implications for marketers in terms of bulk international mail campaigns and day-to-day CRM activity.
The UK postal market is leading Europe in terms of deregulation, opening up most services to competition. Even domestic letter mail is being deregulated in January 2006. However, there are two particular areas where competition is fiercest – namely, package delivery and international mail.
In order to better understand the level of international mail inefficiency that larger UK corporations could be addressing, Corporate Mailing Matters commissioned research to quantify the situation. Primary research established a model for typical international mailing volumes, and the savings that were being achieved by pioneer users of cross-border mailing consolidation services. That model was then applied to UK companies turning over more than £50 million per annum – a community of some 4,000 corporations across the UK.
The findings were revealing. The UK's top 4,000 companies are losing out on £251 million every year. Over the whole of this community, this equates to an annual loss of around £63,000 per year. However, our study showed that amongst the top 500 companies, losses from lack of international postal consolidation averaged at almost £280,000 per company annually.
As the largest sector in the UK economy, both in terms of market capitalisation and (from the recent spate of glowing annual results) profitability, the banking sector shows up as the largest potential beneficiary from international consolidation services, at £39 million of potential savings per year. Next, another truly globalised sector, the extraction industries, stands to benefit to the sum of around £27 million annually.
More domestically oriented sectors, in the form of retail (£23 million per year) and telecoms and utilities (£20 million per year) come in next, although international supply chains and global operations mean that their international volumes remain reasonably robust.
More internationally focused industries (leisure and transport – £18 million per year; pharmaceuticals and chemical – £17 million per year; and food and drink – £15 million per year; advertising and media – £14 million per year) are not as numerous, but have high international correspondence levels. Insurance (£9 million per year) issues largely domestic communications, and so comes in second lowest of the major sectors studied.
Finally, although the legal sector (£3 million per year) figures as the bottom of our table, it should be noted that legal firms are actually very high users of international mail. The number of UK legal firms that fit our sample is just under forty, which means that these organisations can typically achieve savings in the order of £70,000 annually through international postal consolidation.
The substantial savings will inevitably excite many a financial director. However, international consolidation will have significant implications for marketers with international customers. As well as making international direct mail campaigns more cost-efficient, international consolidation services will provide a greater incentive to carry out small international campaign activity as mail is collected and aggregated from numerous sources before being processed. Therefore, companies with traditionally low volumes of mail going abroad can benefit from the savings and efficiency that international mail discounting brings.
As the rise in customer relationship management (CRM) systems seems to finally be taking off at home, regular CRM activity can now be adopted on a global customer scale. For example, international hotel chains capturing customer data can send special offers to high-value customers, or perhaps dispatch regular mailings with details of local festivals or events. International consolidation services have made global CRM initiatives a reality by providing the communication mechanism between organisation and customer.
With all these possibilities in mind, it is surprising that only around five per cent of larger companies are taking advantage of international postal consolidation services. International mail discounting is a painless method of achieving significant annual savings, requiring no capital investment to achieve this level of return. The deregulated postal services market allows for lively competition and with this in mind, we estimate that international mail consolidation will rapidly rise to some 40 per cent over the next three years.