Digital Mail Advisory Council

On January 24th in the downtown Manhattan offices of JPMC, the inaugural Digital Mail Advisory Council was launched. Co-sponsored by Madison Advisors and Digital Postal Mail, the event was graciously hosted by JPMC at their 1 Chase Manhattan Plaza location. Several Sr. Executives from Bank of America, JPMC, and Wells Fargo, as well as Fidelity Investments, and representatives from Cox Cable and Nationwide Insurance met with the objective to collaborate, strategize, and drive best practices for the delivery of digital mail. 

Madison Advisors has been tracking the Multi-Channel delivery migration since 2003 through our Operational Viability Assessments, and more recently through our targeted Enterprise research studies on paper suppression and migration to eDelivery channels.  The industry trends show stagnation in customers migrating from paper to electronic delivery.  All of the participants indicated having similar customer reporting migration issues to the new digital mail platforms. The group acknowledged the plateauing of electronic adoption within customer base, and shared best practices for incremental improvement. While several pockets of impressive improvement are available, in total the market has not moved significantly in the past 2 years. 

During that span we’ve seen postage increase, along with other operational costs in supporting paper delivery of statements, invoices, letters, notices and checks. Even the US Treasury has adopted a print suppression strategy – don’t print and mail. Starting in May 2011, all recipients newly applying for benefits will receive only electronic payment, and as of March 1 of this year, all Social Security recipients will no longer receive a paper check.  However, Enterprise mailers under the same cost pressures don’t have that luxury due to consumer preference pressures, and are forced to continually trim costs, or reduce service. 

Banks, by nature of online banking and bill payment services, have some of the highest online enrollment of any business sector. Yet half of those enrolled have not turned off paper statements, throttling eAdoption at roughly 25%. Other verticals varied by application (trade confirms having high suppression, insurance policies having low suppression), and demographics. While all who participated indicated that several tactics and methods had been used to drive electronic adoptions, most had resolved to the fact that the low hanging fruit had all been harvested. 

Several key issues were addressed, including reversion rates, conversion offers and methodologies, new account handling, customer education.   Somewhat surprisingly, the consensus was the desire for some level of teaming to achieve the digital mail density challenge facing enterprises & customers today. 

The common belief is that consumers don’t subscribe to Digital Mail Box platforms for lack of content, namely their mail – statements, bills and letters. Enterprise’s, constantly looking to cut costs, are reluctant to take on project expenses to support new Digital Mail Platforms for lack of customer traction.  

Based on the strategic priority, and the impact to the bottom line, leaders in these Fortune 100 companies have a strategic imperative to drive electronic adoption. The day closed with discussion around next steps, and how to bring the critical, large mailers together to drive mail density and attract customers. A few key banks, a wireless carrier, major utility, and an insurance provider would provide sufficient critical mass to drive significant, incremental adoption. 

Look for more new findings here as the council takes form.

Good bye, GMC

We are actively launching our 4th edition of our Document Composition CCM market study; our bi-annual assessment of the technologies used to generate and manage customer communications.  Over that time we've seen numerous changes in the market since our first assessment in 2002. Our early taxonomies included multiple tiers, as there was clear and distinct differentiation between the product sets, such as Doc 1 and Lytrod. Many of those distinctions are gone, and the tool sets are increasingly robust, making selection even more difficult for the consumer. We continue to provide project support to assist where we can.

Regarding GMC, we knew CEO René Müeller was looking to make a move, as he is closing in on retirement, even saying as much in his letter to the GMC community. The street scuttle was he  had goals to go public, but needed twice the revenue in order for that to be viable.

Based in Appenzell Switzerland, there was a strong national desire to keep it in Europe, so we assumed that few, if any, of the US firms were really in play. A quick assessment of the EU options (back recently from Drupa, continent still in financial disarray), doesn't overwhelm one with options. Perhaps Oce, before the acquisition by Canon, would have been in the mix (they also have had a long term relationship that ended in 2009-ish), but there aren’t many suitors left, correct?  The Landa Nano press folks didn't mention software in when we spoke with Benny, and the big iron guys are scrambling to figure out how to remain relevant in the digital age. 

While we assisted (and recommended) Xerox in their acquisition of XMPie, most of these software acquisitions by larger hardware vendors makes little sense. When we review the game film, the recent transactions, including Group1 & Pitney Bowes, Doc Sciences & EMC, DocuCorp/Skywire & Oracle, Exstream & HP, and even Kodak with Creo (albeit not exactly the same), it's hard to find the strategic value in those relationships. In almost every case, the acquiring firm struggles to value sell the components together. Its never made sense to us for most of these relationships.  Even software buying software, as in the case of Metavante buying CSF, the seemingly large cross & up sell opportunities just didn't materialize. Sure there is always the poster client that bought the entire suite, but we'd argue those are the exceptions, and not the rule.

We know a little about Neopost, however they lack a large US presence. This may actually be good for GMC, as it won’t alienate most of the current N.A. GMC partnerships or relationships. One thing our history of assessments and these acquisitions do tell us is that firms are never the same. Strategies and goals need to align with the parent company, budgets and R&D are more scrutinized, and go to market protocols are modified. GMC was the last "large" independent firm in the market, however there are others vying to take GMC's spot. We'll continue to keep watch. 

Good Bye, GMC

Madison Advisors recently hosted multiple senior executives from seven fortune 500 firms in Chicago in our first Customer Communication Management Executive Roundtable. The concept grew from the idea that leadership within these firms needed, and wanted, more peer interaction outside the influences of vendors or product sponsors. The believe was that by removing these external influences, a more open and candid conversation would occur, and these peers would begin to share freely, even though their firms might be competitive. We invited senior leadership from IT and Operations, and we also had representation from Marketing and Line of Business. From the session feedback, I believe we hit a home run.

We established goals at beginning of the session, and captured those for review at the end of the day. Our agenda was structured, but fluid, to ensure we could flex, but keep us on track for the day. It included 3 short presentations with Q&A sessions, with plenty of break time. Marco Boer from IT Strategies started the day off with his read on the future of color inkjet production printing. This was a relevant topic with the audience, as only two firms had full color production capabilities, but all were currently looking at adding that capability in the next 12 months. Madison Advisors also covered current trends in the CCM and Enterprise Marketing Portal space, as well as future trends for the group to contemplate going forward. The bulk of the morning and afternoon was spend in two breakout sessions, each one hour with each group reading back to the entire group for 10 minutes each. It was in these breakouts that much of the interaction and sharing took place; including both what worked and what didn’t at their organizations.

The reception and dinner is where most of the peer to peer interaction occurred. Our 4 course dinner at Takashi was also a highlight of the day, lasting a bit more than three hours. The group occupied the entire first floor, and we had several courses accompanied with selected wines. Both of our dinner sponsors, Xerox and GMC, joined the group for dinner and shared their future strategies for color inkjet production devices.

As much as the information exchange was the draw to the day, the networking and opportunity to meet many of their peers may have been the best take away. The true test of the value of the Roundtable is if they decide to return to Chicago this fall during Graph Expo to repeat the process and continue the dialogue. Look for us there.

Digital Mail Box - the next big thing

The introduction of Pitney Bowe’s Volly electronic mail delivery portal legitimizes the Digital Mail Box space, and signals the next big thing for consumers looking to park all of their document clutter in the internet cloud. While other offerings have been around for a little longer, those smaller firms left the question of security, stamina, and authenticity that are all answered by Volly. Backed by Pitney Bowes, a 90 year old, fortune 500 company that knows “a little” something about communication delivery, Volly would only make marginally more sense had the USPS launched it.

Madison Advisors' tracking of customer electronic adoption indicates that conversion rates have stalled out. Currently the aggregate rate hovers in the low double digit percentages depending on industry and document type. Yup, that’s right, all the free Wi-Fi hot spots, iPads, smart phones, Prius raffles, tree give a-ways, and one time discounts in the last 10 years has barely made a dent in our consumer paper consumption. While the companies that send that mail have an obvious incentive to not mail you your bill or statement, the value for consumers has been elusive. That CAN change with the Digital Mail Box – a single, secure, convenient and permanent place to archive all consumer documents that now clutter our lives.

Certainly there will be some anxiety, there always is with new, transformative shifts. Do you remember the first time you reluctantly put your credit card number into the computer for a purchase? What a leap of faith that took. Chances are you conducted that same transaction process multiple times this past December alone. As we saw with online purchases, there are ways to make those documents secure, or AS secure as they are reported today within the walls of the companies that store them. Our risk would be to discredit this solution due to unwarranted concerns that represent no incremental exposure or risk. It’s not difficult to find companies with significant data breaches daily, either social security, credit card, or account numbers. Today’s “security theater” deployed by most firms should not represent the high water mark necessary for success of this new delivery alternative.

While there is money to be saved by firms not mailing you your bill or statement, they might not be as excited about this new Digital Mail Box solution as you are. Why? The answer is the potential disintermediation of those firms from your online life. Those firms are afraid they could be made irrelevant in the digital frontier if they allow you to get their/your data somewhere other than THEIR website, where they can control what you see, the user experience, maybe some ad spend, and your information access. Depending on the market, their concern is legitimate. Where will people choose to view their bank statement, at the Digital Mail Box, or at the Bank’s website while transferring funds? We’d argue that it’s both, as it is today. And lets ensure we inform the firms we do business with that this is how we’d prefer to receive our documents and information. It doesn’t have to be either or, but should be both. Plus, there is a way to support both and NOT store it twice, thereby reducing the Bank’s storage costs!

So embrace the brave new world, and let your document providers know that you want a simpler solution – a single, secure, convenient and permanent place to archive all consumer documents.

Multi-Channel Resolution - Insurance

While away on holiday, my 10yr old son & I played a new game. It doesn’t have a formal name, and there is no real winners or losers, but helped pass the time on our way to Alaska from Texas. I’ll call it the “Wouldn’t be funny if…” game for lack of a better term. It’s simple, you just start a comment with “Wouldn’t be funny if” and the some statement. It’s enlightening to play with a 10yr old, who is not constrained by all the learning, social, and political norms restricting adults. So you get “Wouldn’t be funny if a bear jumped out of the woods and bit our tire off?” Or “Wouldn’t be funny if that glacier slid down the mountain and into the side of our ship?” The best one was “Wouldn’t be funny if there were no TVs and everyone had an iPhone(iPad) and got all of their (calls/mail/movies/television/email/internet/maps/music) stuff there?”

What I realized is that we are not far from that reality. With the new Kindle and iPad, these portable internet devices will soon handle more functions that today are either addressed in the physical world or by other devices, single use items that lose relevance quickly. Does anyone use their 1GB iPod or iPod Stick anymore? How many 256k thumb drives are in your desk drawer?

Working with insurance firms recently has reconfirmed the need to accelerate our migration to multi-channel delivery, agents clamor for it, insured demand it. It was the number one executive issues listed in the past survey we conducted, and several firms have cross functional teams assembled to address it. Some of them are closer to the future than others, and often times they are their own worst enemy – siloed functions, antiquated administrative and communication systems, and lack of executive vision to lead the firms forward. We’re working on new research to help better clarify the issues and provide clarity on the strategy forward. It makes me wonder, “Wouldn’t be funny if customer communication was simple, understandable, accessible, personalized, relevant, and timely?”

Multi-Channel Reinvention - Pitney Bowes

This is not your father's Oldsmobile, the mid-90's ad campaign rings true for other firms as well. One of those is Pitney Bowes, and its chairman Murray Martin used the derivative "this is not your father's Pitney Bowes" last week at the tech analyst and innovation days held at their world headquarters in Stamford. That introduction, in addition to a personalized video welcome which included references to up coming vacation destinations and recent industry awards, told me that I was in for something new and different this visit.

Pitney's traditional businesses have been under siege by Internet based alternatives, like so many others. This will continue, however their response has been to seek out strategic acquisitions, and then carefully combine those capabilities into robust solutions to address current and future business needs. Firms such as MapInfo, Digital Cement, and Group 1 Software are just a few of the dozens of firms acquired by Pitney since 2000. Combining those unique capabilities to offer greater value to the market was the goal, and today we are seeing the first glimpses of these offerings, such as its Small Business Portal, Crime Stopper, and PBSend.

That said, Pitney is still firmly grounded in the physical mail delivery business, but it is encouraging to see their push into alternative, multi-channel strategies and solutions. Customer communications management (CCM) is a key strategic plank, and their Hybrid Mail solutions look to strike that balance between the physical and electronic delivery models. Their managed mail/print services remains the lion's share of revenue, but business, and margins, in those markets is flat to declining. The transformation clock is ticking!

After listening to the senior leadership team, we are convinced that executing on the "new" PB strategy is well underway, with noticeable dividends. However much work remains to be completed. Other solution providers in the space should be put "on alert" to the reinvention taking place at PB.

Multi-Channel Customer Intimacy

Just wrapping up our inaugural member Spring Summit conference at the Hyatt in Reston Virginia. The day and half event was attended by 30 members, sponsors and thought leaders sharing ideas and go to market strategies for solving multi-channel customer intimacy issues. A mix of technology, services, outsourcing and consulting firms shared capabilities and go to market insights. Broadridge sponsored the event and Doug DeSchutter keynoted the second day, sharing their market leading e-delivery strategies to assist their clients to increase multi-channel adoption and ultimately retention.

TouchPoint's public launch was announced to be scheduled for June 15th in NYC in conjunction with Digital Marketing Days. Xerox, another TouchPoint sponsor, will be keynoting the address Tuesday, and along with DM title sponsor XMPie, will be hosting a reception to announce the launch. Expect clients, members and sponsor of TouchPoint to be present.

Stay tuned for more.