Transpromo equals affordable market opportunities

As the business environment grows increasingly competitive and companies continue to tighten their expense controls, marketers are gaining interest in leveraging transactional documents as an integrated element in the overall customer communications experience. An increasing number of companies are turning to transpromotional communications—which are transactional documents that include promotional and other messages imprinted upon them—as a way to increase the value of mundane statements, notifications, confirmations, and other transactional documents that have long been considered simply a cost of doing business. The results achieved by Parajett AB (based in Landskrona, Sweden) on behalf of grocery retailer client ICA Group are a clear demonstration of why marketers are excited about this new communications vehicle. ICA has had a customer loyalty program in place since 1994, and has 2.2 million active cardholders of its branded Bankkort+ MasterCard. The company had been inserting general direct mail offers with its statements but was looking for a way to increase the 2% to 3% response rate it was achieving with this process. Parajett worked with ICA to redesign its statements to include personalized offers based on the recipient’s buying patterns and preferences. Using a database of 4,000 images, Parajett leveraged GMC’s PrintNet software and its five Xeikon digital presses to produce newly designed transpromo statements. In a pilot test with 80,000 customers in two cities in Sweden, ICA garnered a 35% response rate, increasing responses by more than a factor of 10!

TransPromo communications can be used to cross-sell or up-sell a company’s products or those of partners, educate customers about how to better leverage the company’s Web site (thus reducing call center volume and call duration), or to fulfill other customer communications needs.

The Market Opportunity

In its 2007 Household Diary Study, the United States Postal Service reported that U.S. households received 150.9bn pieces of mail and sent 21.2bn. Of the mail sent to households 31.9bn  pieces (21%) were bills, statements, confirmations, requests for donations, and bills/confirmations for charitable organizations-in other words, transaction documents. These documents are generally considered a cost of doing business, and are either produced internally in corporate data centers or outsourced to data center service bureaus.

Even with their utilitarian status, however, transaction documents have been viewed as a marketing platform for decades, primarily through the use of preprinted inserts. Amidst all of the complexity and clutter that people have to deal with every day, however, this method of advertising has become somewhat tired, and many recipients simply throw away inserts without even reading them. Even the tried-and-true perfed extensions that recipients must tear off of an envelope before sealing may not be noticed, particularly now that more consumers are paying their bills online and tossing the return envelopes in the recycling bin.

TransPromo communications can breathe fresh life into the document by blending full color messaging on the face of the statement, as an “onsert” versus an insert. The 31.9bn transaction documents that are sent every year can serve as rich customer touchpoint marketing opportunities. The addition of color and targeted messaging makes transactional documents more functional, and their messages are more likely to be noticed and acted upon.

In a recent multi-client study conducted by InfoTrends entitled Trans Meets Promo: Is it More Than Market Hype?, 1,000 consumers were surveyed. Research indicated that 96% of transaction documents are opened, but even more importantly, these documents commanded the consumer’s attention. In fact, the average consumer spends 2-3 minutes reviewing each transaction, and over 20% of consumers spend 5 minutes or more.

Figure: On average, how much time do you spend reviewing each monthly statement that you receive in the mail?

trans_meets_promo

The Technology Factor

The drive on the part of marketers to seek more effective customer touchpoints is one element of the TransPromo opportunity. Equally important to its future success is the availability and affordability of the underlying technologies that are required to produce these documents.

The good news is that the technology is here today. Industry vendors are meeting the TransPromo challenge by offering affordable, high-speed inkjet devices. The introduction of new high-speed continuous feed products from companies like Kodak, HP Indigo, InfoPrint Solutions, Océ, Screen, and Xerox will cause running costs to drop below the 2.5-cent level. Additionally, new software solutions, integration with mobile technology, and new concepts like location-intelligence can take TransPromo from concept to reality.

Leveraging TransPromo to Educate and Build Loyalty

In addition to commanding attention at a time when many consumers are suffering from information overload, transactional documents can be used to communicate valuable educational information. For example, healthcare providers like Humana are using their statements as tools to promote wellness and provide cost-saving insights related to using generic drugs. Many companies choose to include answers to the most frequently asked questions, or directions for finding important information on the Web to reduce the volume and duration of customer service calls.

Transaction documents can also be blended with loyalty-building custom publishing solutions. Life insurance providers can embellish their statements with custom articles on the benefits of specific types of annuities, and financial advisors can provide custom published retirement savings advice with 401-K statements.

Finally, think of all the notifications we receive from the dentists, doctors, and lawn care specialists that we have had longstanding relationships with. Savvy marketers are seeking list access to promote products through these notifications and to incorporate value-added coupons.

Barriers

Although consumer preference for TransPromo communications is growing and the technology to produce the applications is more affordable and accessible, the key barriers to TransPromo implementation lie largely with the people, organizational structure, and marketing processes within the enterprise.

Those that are selling the benefits of TransPromo initiatives must first be able to demonstrate a return on investment for these programs. ROI continues to bubble up as one of the key inhibitors to TransPromo implementation. Interestingly, however, marketing respondents to our survey indicate that a 6% lift in response rates (on average) is enough to justify the re-engineering of applications. There is an increasing amount of empirical evidence in the marketplace that TransPromo communications can deliver far in excess of a 6% lift. This means that with more case studies and information sharing relative to real TransPromo results, the sales process for TransPromo communications is likely to become easier.

Anecdotal learning through InfoTrends’ one-on-one interviews with marketing and operational executives points to the fact that for many organizations the key selling point is not incremental revenue, but rather reduced costs.Working cross-functionally in the organization to document potential cost savings is critical. These cost savings might include reduced postage and printing costs as a result of consolidating some direct marketing campaigns into the TransPromo platform, which eliminates mailings. It is also important to consider the cost benefits from reducing call center call volumes and call duration.

In large enterprises, the largest implementation obstacles are people and consensus building. It takes a village to implement effective TransPromo applications, and this village must include marketing, operations, IT, and (in some instances) a business line manager and an agency. Each of these departments has different needs and issues, and each requires different expertise to ensure that those needs are met and issues are resolved. To successfully implement a TransPromo application, everyone’s voice needs to be heard. Building a harmonious TransPromo consensus can be difficult for some organizations, but overcoming this obstacle can make the road to implementation much smoother.

Keys to Success

Despite some lingering barriers, the TransPromo opportunity is real and the tools and technologies exist to support it. Keys to success include:

  1. Organizational alignment.
  2. Clarity in business objectives.
  3. A marketing campaign that includes the right offer, the right data, analytics, and good design to initiate a dialogue with the recipient.
  4. A closed-loop process that delivers reliable metrics quickly.

Reaping the Benefits

Technology is no longer holding back the implementation of TransPromo. The key issue today is overcoming the complexities associated with corporate infrastructure, the people, and the processes. This can be a major undertaking, but the opportunities are enormous. TransPromo is a simple and elegant solution that can benefit marketers as well as consumers. These benefits include:

  1. Increased consumer attention: Transaction documents are the one type of communication that is consistently read. The average consumer invests 2-3 minutes per transaction document.
  2. Cutting through the clutter: Whilst the average customer may receive as many as 3,000 advertising messages per day, he or she receives less than 12 transaction documents monthly.
  3. Appealing to current customers: By their nature, TransPromo documents are addressed to a well-known target market, current customers. Research has shown that a 5% increase in current customer business can equate to as much as a 50% increase in bottom-line profits.
  4. Cost-efficiency: Companies are already mailing statements, so incorporating promotional information onto these documents is extremely cost-efficient.
  5. Increased clarity: The clarity associated with TransPromo documents and digital color communications can lead to reductions in call center activities.
  6. Generating a dialogue: The tools and technologies currently exist to transform multi-channel communications into customer dialogue generators.

Bringing these benefits to bear on behalf of the enterprise requires:

Leadership, vision, and a champion to get the project initiated in the organization..

A desire to depart from the status quo and take a fresh approach to market strategies and customer touchpoints.

  1. Organizational collaboration.
  2. Market understanding and sharing about the true economics for TransPromo.
  3. Effective use of existing data to garner customer mindshare and wallet share through a relevant communications and offer strategy
  4. Measurement for continual improvement.

Embracing the Opportunity

In a difficult economy, marketers understand that growth only comes from increased purchase rates. Transpromotional marketing is designed to communicate with a customer who already knows you and your business: there is a relationship. TransPromo provides the opportunity to reach customers with meaningful interactions, and mundane statements can become the ultimate touchpoint for business growth.

If you are interested in learning more about the TransPromo market, InfoTrends has a variety of published and soon-to-be published documents on this subject. These include:

  • The TransPromo Revolution: The Time is Now!
  • TransPromo: The Opportunity is Real

For more information on these and other reports, please visit InfoTrends’ online report store at http://store.infotrendsresearch.com/.

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