By Charlotte Boc
US Marketing Manager, Financial Services
Pitney Bowes Inc.

Customer acquisition and retention, and high direct mail costs are pressing issues that independent insurance agents and brokers face today.  In addition, new and existing players in the virtual and traditional worlds are continuing to intensify competition.  However, by applying best practices and an integrated, end-to-end approach to mailstream management, you can help gain a competitive edge and stay ahead of the game.

The Role of Customer Advocacy

According to a Forrester Research study, “Customer Advocacy 2006: How Consumers Rate Their Banks, Brokerages and Insurers,” customer advocacy remains the best predictor of future purchase intent among financial services consumers.¹ What does this mean?  Independent insurance agencies that are perceived as doing what’s best for their customers – not just what’s best for their bottom line – are the organizations with which consumers are most likely to engage.

How can mailstream management help? The mailstream is the sum of all mail, packages and documents, physical and electronic, that flows across business – to customers and back. It’s a matrix of people, processes and technology, from document composition to delivery and response. In other words, it’s a vehicle for managing vital communications to your customers. For an industry that depends heavily on reputation and customer perceptions, optimizing the mailstream is no longer an option, it’s a matter of survival.

Leveraging Direct Marketing to Reach Your Customers

Considering what a major role direct marketing, in particular, plays in the U.S marketplace – and that the mailstream is a critical component of the infrastructure that supports the discipline – mailstream management should be a top priority for any business. According to the Direct Marketing Association, marketers spent $166.5 billion on direct marketing in the United States last year.  In addition, the DMA estimates that measured against total U.S. sales, these expenditures generated $1.93 trillion in incremental sales, or 10.3 percent of total U.S. GDP.²  Whether or not your agency will get a share of those direct marketing-driven sales will depend significantly on how well your mailstream is managed.

Also, while many insurance agencies might assume that their direct marketing efforts won’t be important in the future due to the rise in usage of online payment practices and e-statements, this couldn’t be further from the truth. According to a study by the Envelope Manufacturers Association Foundation, “Because It’s Personal: A Study of Consumer Use and Preference For Envelopes,” 78 percent of respondents said they preferred to receive bills in an envelope in the mail. Also, while many consumers enjoy online access to information like account statements, 82 percent of the EMAF study’s respondents said they prefer to have a hard copy to keep as a record.³

Take into account that every piece of mail – whether it is an insurance quote, homeowner’s or auto insurance update, monthly statement, loyalty or acquisition mailing, claims check or copy of a policy – is an opportunity to up-sell or cross-sell, to acquire new customers, or to strengthen existing relationships. Everything from envelope design (e.g. consistent company logo usage) to inserts can make a difference between your message being read or being tossed out, sometimes unopened. Adopting relatively simple, but critical processes can positively and significantly impact the effect of your customer communications.

Conversely, a fragmented mailstream can result in lost opportunities, damaged customer relationships and a bleak bottom line. In many organizations, the mailstream is cumbersome – still plagued by old methods and outdated technologies, and reliant on multiple inflexible processes that impede business performance across the organization. The result is disjointed, impersonal communications that are difficult to track, hinder customer retention and acquisition, and negatively impact profits. Also, consider whether your materials, such as inserts, are targeted or will they make a customer or prospect ask: “Who do they think I am?” A misdirected offer can make a customer feel disenfranchised and is likely to reduce loyalty and the chance for cross-sell.

To drive home the connection between customer communications and their effect on the bottom line, a survey conducted by Harris Interactive on behalf of Pitney Bowes in December 2005 identified areas where businesses need to improve customer communications through better mailstream management:

• Nearly half of U.S. adults surveyed (49 percent) said they would be less likely to become or remain a solicitor’s customer due to poorly targeted communications, such as addressing mistakes or inappropriate offers.

• Nine in ten U.S. adults surveyed (92 percent) reported having received multiple copies of the same piece of mail.

• Nine in ten U.S. adults surveyed (91 percent) have received offers or solicitations for a service or product they already subscribe to.

• About three-quarters of U.S. adults surveyed (74 percent) have received inappropriate offers or solicitations from businesses in the mail. 

However, the survey results also suggest there are a number of ways that businesses can use the mailstream to help ensure business solicitations are more effective.

• Seventy-three percent of respondents say they are much more or somewhat more likely to respond to solicitations that are timely.

• Seventy-six percent of respondents say they are much more or somewhat more likely to respond to solicitations that are relevant to their interests.

In other words, know your customer.

Identifying Potential Problem Areas

To help identify potential problem areas your agency may be experiencing in the mailstream, consider the following: How many direct mail pieces are coming back “undeliverable as addressed” because the customer moved? How much postage is wasted on duplicated solicitations? Ironically, the problems that are plaguing customer communications – mostly data and address quality-related – can be solved very easily through the right mailstream management tools. On the other hand, independent insurance agents and brokers should be aware that faulty mailstream processes can lead to huge financial waste, a result of using flawed data and archaic systems. If the mailstream includes an estimated 100 billion pieces of Standard Mail^® per year – just imagine the impact of even a few cents loss per piece on a small percentage of that number.

If acquisition and retention can be enhanced by providing customers with offers relevant to their interests, and in a timely manner, independent insurance agencies need to determine whether they have the equipment and processes in place to implement sophisticated campaigns with customization and personalization desired by customers. Also, consider the following: Does your agency use inserts to cross-sell specific products and services to the appropriate customers? Does it leverage outside business relationships to deliver customers with other targeted offers? Co-marketing with strategic partners can also help offset direct marketing costs. 

In addition, there are some segments within the mailstream that are less obvious and therefore often overlooked. For insurance agencies, attaining the best track and trace capabilities is essential in light of the growing need for audit trails.  For example, certificate of mailing is important to show proof that policies, updates to policies and cancellation notices were mailed and when this occurred. Also, the ability to forecast cash flow can be greatly enhanced with an advanced track and trace capability.  For instance, special barcodes can be applied to return payment envelopes or statements, which allows an insurance company to track a specific payment or document on its journey through the mailstream.

The Rewards of Achieving Mailstream Best Practices

The opportunities for improving customer communications, and therefore acquisition and retention, through mailstream management are endless for independent insurance agencies.  From basic document composition to sophisticated call center integration and response tracking and analytics – the key to an optimal mailstream is not only addressing each area along the communications flow, but also ensuring that these segments work seamlessly together. Pre-sort solutions are another impressive way insurance agencies can cut costs and boost profitability. Consolidators employ the latest technology to perform the detail-intensive functions of presorting First-Class Mail^® and Standard Mail^®, which can qualify insurance companies with significant postage discounts – saving you pennies per mail piece and potentially thousands per mailing.

The achievement of an end-to-end mailstream solution that encompasses the appropriate technologies, process improvements and expertise should be every independent insurance agency’s goal – no matter how large or small it might be. In an environment where direct mail spending is estimated to reach $64.4 billion this year⁴ and postal rate increases will become more regular, rewards like higher profits, lower costs, and loyal customers (more of them, too) should be all the incentive needed to aim for achieving mailstream best practices. Strive to be different, be the best and be flawless.

¹  DM News, “Being in the Customer's Corner is Best Bet For Financial Firms Forrester Says,” by Melissa Campanelli May 23, 2006

²  DMA Web site: http://www.the-dma.org/aboutdma/whatisthedma.shtml

³  EMA Foundation, “Because It’s Personal: A Study of Consumer Use and Preference for Envelopes,” 2006

⁴  DM News, “Internet, Mail Top ’07 Ad Channels: Universal McCann Report,” by Mickey Alam Khan, December 7, 2006