Print/Envelopes: Long live the statement

Could the rise of digital print and online billing see the death of paper-based statement marketing, asks Claire Foss.

As an average UK householder with two kids, a car and a mortgage, Mrs Helen Seedhouse receives at least five statements every month directly to her home in Nottingham, each of which is opened and read. The statements contain essential, if somewhat boring, information.

But what might not be immediately obvious to Mrs Seedhouse is that each time she reads a statement, she's also being sold everything from loans and Isas to insurance for her boiler.

The synergies between statements and marketing are obvious: customers are more likely to open, read and engage with statements and bills. Once the technology to produce tailored messages is in place, running costs are low. Brands including HSBC, BT and GE as well as most utility, telecoms and financial services are engaged in statement marketing programmes.

They are mining a rich seam. Transactional mail constitutes a third of the UK's total mail, according to a Triangle Transactional Mail survey in January, of which about 70 per cent was generated from financial services.

With full-colour digital print making its mark on the medium, allowing pictures, colour and designs onto bills, statement marketing is likely to grow further. DSTi Output has offered a full-colour digital service since 2004, and earlier this year, REAL Digital International launched a colour digital print offering. The technology allows customers to print their statements in full colour, and even includes images.

"It's about targeting and flexibility. If you send a statement, 90 per cent of people will open, read and retain it," says Andy Ruddle, managing director of REAL Digital. "With colour digital print you could have an offer, image or logo on every page of the pack, making it more interesting for the consumer, than just a legal requirement. If you can make the pack work harder by having information printed on the sheet of specific interest, that's going to get attention."

As a result of innovation in print and computing technology, take-up and sophistication have increased in recent years. With the growing ability to digitally print envelopes too, (see box, page 54) campaigns can achieve increasingly impressive returns. As Chris Pitt, head of direct marketing at HSBC UK says, "It's something you wouldn't not do."

Rise of the paperless society

The potential spanner in these works is the rising takeup of online billing.

Since January, 200,000 HSBC customers have opted to receive one or more of their statements online. From September, a service called OneVu will offer customers the chance to securely view and pay statements from within their online bank account, eliminating the need to visit individual websites to look at statements. It begs the question of whether, as the world begins to look online for more of its communication, could paper-based statement marketing be killed off before it has had a chance to really flourish?

For many clients, the shift to paperless has already begun. Sky, for example, operates an opt-in system for its digital television customers that pay by direct debit. Unless they specifically request a statement, users are expected to log on to Sky's interactive service, where they can view their billing information.

Some companies even advertise the option to suppress statements within the documents themselves. BT sends out seven million paper bills and 2.26m electronic bills each month, many containing a message advertising paper-statement suppression.

However, the company has many 'dual billers' – only 550,000 BT customers rely solely on electronic means.

For Rebecca Barfield, marketing manager for voice retention at BT, there is a sense of becoming increasingly reliant on online channels. "Uptake is quite slow at the moment, but there are a lot of projects in the pipeline to increase it. Most people see that e-billing is the way things are going, so we're going to encourage that." She stresses that change will, however, take time, as there are still many people who prefer to receive paper-based communications.

For many clients, the environment is a driving factor in their push to become paperless. BT plants trees for each paperless subscriber, while HSBC is publicly involved in several environmental schemes.

But despite the rise in e-billing, some in the industry believe that paper-based statementing and statement marketing is a long way from receiving its last rites.

As data quality has improved, so has the targeting of statement messages – with a correlating improvement in response rates.

According to Adrian Baker, director of communica-tions and media at Dunnhumby, variability now allows targeting to be extremely precise.

"Tesco creates about 12 million mailings four times a year, and within that you would have up to four million different variations. We're not dealing with high-level granulation; we're talking about very customer led-personalisation."

The results from such levels of insight are impressive. DSTi Output, a document and transactional mail specialist, regularly sees response rates of 10 per cent, with the best response levels touching 30 per cent from transactional mail campaigns.

But, of course, statement marketing using the same levels of data variability and insight could continue very easily in an online environment, with potentially simpler methods of tracking and measuring response. Angus Walker, sales and marketing director at Adare Lexicon, believes that a shift to online may even enhance the possibilities for statement marketing.

"A document is a static piece of paper and, even if you're using the latest technology, it can take a long time to get that to the customer. But if you're using e-billing it is much quicker and allows you to set up a one-to-one communication with the consumer."

There are those who believe that paper statements will always have an advantage over digital media.

"E-billing can be ineffective, as it's easy to hit the delete button.

It does not have the same lifespan as a paper-based statement," says Malcolm Webb, sales and marketing director for DSTi Output. "We would expect someone to look at a statement for 45-50 seconds, but an SMS for five seconds.

Then there's the issue of spending so much on making the e-bill interactive, that any cost savings will have been completely negated."

Webb also noted that for most clients, takeup of e-billing has been disappointing, with most only reaching 25 per cent of the original predicted levels.

One client saw only two per cent of predicted takeup.

David Jeffries, head of marketing at mail stream software provider Pitney Bowes, has no fears for the immediate future of the paper statement. "We've seen strong investment in mailing technology, and people are basing that on their forward predictions." He adds that the web is increasing the volume of statementing: customers go online, change suppliers, interact and drive transactions through the internet that actually result in hard-copy billing and statements. For example, online retailer Firebox.com is looking at adding marketing messages to the invoices it dispatches, with orders from its website.

Change and development is inevitable. Whatever medium is used to communicate with customers, digital print and online billing have raised the bar, client and customers are driving the move online, and direct marketers and printing services must adapt.

Adare's Walker believes that the ability to offer both services to brands is critical to the future of any billing services provider. "There's no conclusive proof that paper-based communications are going to disappear in the near future, but certain suppliers will vanish if they fail to utilise this technology, alongside paper-based requirements."

While online billing purists are still a minority group – a survey by Royal Mail last summer showed that 74 per cent of online billers still wanted paper statements – the advent of simple and secure technologies such as OneVu and clients moving towards online will certainly have an impact. The message for brands using transactional documents as a marketing channel is clear: the technology for on- and offline statement marketing is here, but brands and their suppliers need to work out how to integrate them.

POWER POINTS

– Customers are more likely to open and read statements – Some believe that paper-based statements are a long way from receiving their last rites

– Others believe online will enhance possibilities for statement marketing

CASE STUDY: EDF Energy

Brief: To let customers know that they could accrue Nectar points through EDF

Target audience: EDF Energy customers

Supplier: In-house

EDF Energy is one of the biggest gas and electricity companies in the UK and supplies energy to more than five million homes. It wanted to let its customers know that they could receive Nectar points from EDF Energy by registering their details for the points to be credited to their account.

To communicate this, EDF decided to use two boxes on their statements and to add an extra printed sheet dedicated to marketing messages from EDF and Nectar. This sheet could display a customer's Nectar points total where applicable.

As well as this, relevant inserts would be placed with the statement in the same envelope. Customers could reply via a slip on the bottom of the bill or via a unique responsive URL or telephone number.

Results were impressive. About 1.8 million EDF customers – about 40 per cent of its customer base – are now registered.

Of those, more than 85 per cent signed up as a result of receiving their bill statement.

"The takeup by customers has been much higher as a result of having a specific agenda," says Travers Clarke-Walker, marketing and sales director, customers branch, EDF Energy. "The conversion rates that we currently receive are encouraging and sustainable and prove that statement marketing has a place in our communications."

EDF Energy has recently signed up with the OneVu service to offer its customers online billing through internet banking and is in the process of redesigning its paper statements.

NEED TO KNOW – HOW DIGITAL PRINT IS BEGINNING TO TRANSFORM ENVELOPES

The envelope industry has traditionally been slower than other sectors to take on new technologies. However, while traditional print methods still make up most of the market, digital print is slowly starting to make inroads into the territory. And there's no doubt that a personalised envelope can achieve that all important doormat stand-out.

When AXA wanted to strengthen its direct relationship with customers late last year, it decided to extend digital personalisation from the pack contents out onto the envelope.

Agency Sharpen Troughton Owens Response designed the pack, and REAL Digital printed the envelope and contents. The resulting campaign used personal information on the envelope around a distinctive hand design and broke its target response rate by 50 per cent.

REAL Digital does not use pre-printed stationary, but instead prints, cuts and finishes all documents from the same roll of paper. "It had always been pro-hibitively expensive to digitally print envelopes, but this wasn't," said Martin Troughton, managing partner at STO Response. "The premium we paid to deliver it in that format was probably only about 10 per cent." AXA is now considering extending the campaign, and the pack is already in the running for an award. "We'd definitely do it again. We've been looking at rolling it out and it has benefits for other clients. Lots of clients are coming to us with similar problems," says Troughton.

However, the revolution is not quite here yet. The market for digital print within envelopes is still extremely small – Howard Hunt Group marketing director Lucy Edwards admits that they haven't yet seen much digital print activity, but believes that it's likely to arrive soon.

Edward Welch, partner and founder of envelope printing company SCR Envelope Solutions, believes digitally printed envelopes are a niche market. "The digital side is very specialist. It hasn't really hit envelopes yet." He added, "It costs a lot of money, and it's going to be three or four years away (from the mainstream), certainly in overprint. But the market will create it if the market demands it – and if there's value there, it will do."

For AXA, at least, the new approach was worth it. "It created a very consistent look and feel throughout the pack, so that the outer and inner were part of one pack and one overall story," says Cameron Fraser, client value manager at AXA.

"It created a definite impact from what you would normally expect from financial services mailings and therefore gave us the edge."

CLIENT Q&A – WHY WE USE STATEMENT MARKETING.

CHRIS PITT, HEAD OF DIRECT MARKETING, HSBC UK.

WHY DO YOU USE STATEMENT MARKETING?

It's the one piece of direct mail that people receive that they're definitely going to read, and it's cost-effective in terms of getting a message across. It's not something we wouldn't do, really – the cost is relatively low and it's relevant to that person at that point in time.

IS STATEMENT MARKETING UNDER THREAT FROM ELECTRONIC BILLING?

I don't think so. If you look at the way that customers are engaged and manage their accounts now, you can still send relevant messages to them, but through a PC screen rather than their front door. And it might be more relevant as you can insert links and customers can click through and apply to do something there and then. It probably won't be completely abandoned, but we've yet to see how paper and electronic communications are going to settle down together.

In terms of applications, we need to let the technology catch up and we still need customers' signatures for a lot of things. And some people are still more comfortable with paper.

REBECCA BARFIELD, MARKETING MANAGER, VOICE RETENTION, BT.

WHY DO YOU USE STATEMENT MARKETING?

Statement marketing is a great way for us to get a bit more from what we already send to customers – we already pay the postage for the bills, so we do it to get more from it, and to make the postage work harder.

We have two types – an update about a price or service change, or a marketing message to tell customers about something new or something that might be of interest to them. It's got a lot of purposes and it's an easy way to get something out.

IS STATEMENT MARKETING UNDER THREAT FROM ELECTRONIC BILLING?

It would be better to have e-bills for lots of reasons. At the moment, when we send an e-bill, there is an alert to direct people to our offers. E-billing would be easier to track as people would be less likely to call 150 and would just click through – and it would be a purer form of online tracking. By giving out our web address, we would hope that customers would browse around the site. We wouldn't just be limiting them to one message.

TONY PREEDY, DIRECTOR OF MARKETING SERVICES AND E-COMMERCE, OTTO UK.

WHY DO YOU USE STATEMENT MARKETING?

It's cheap and is one piece of DM that people always open – they recognise it and know they have to open it. Customers read it, look at what they have to pay and what they owe, and as they scan the document, the messages are read too. We're sending it anyway, so the marketing team regard it as a bit of a free ride.

IS STATEMENT MARKETING UNDER THREAT FROM ELECTRONIC BILLING?

We don't offer e-billing. Customers can see their accounts online, but we don't send bills via email. We're some way off before we stop sending bills by post. Paper billing will still exist in 10 years' time.

The nature of what is printed on the statements will become increasingly sophisticated – there are companies already going that way, with four-colour personalisation on their statements and four-colour marketing messages, alongside the transactional information.