Mail Use Grows Despite Rate Increase

By Chantal Tode

March 13th, 2006

Two months after a postal rate increase that averaged 5.4 percent across the board, direct mail quantities have not declined and, in some cases, they're even on the rise, according to several mailing services companies. The U.S. Postal Service, however, says Standard mail volume is growing but is weaker than officials expected.

American Mail Communications, Farmingdale, NY, handled 30 percent more direct mail in January than in the same period last year, president Greg Demetriou said.

"There was not one sector of our mix that took a hit," he said. His shop handles direct mail for advertising, fundraising, marketing and membership clients.

Volume also is up this year at catalog printer Arandell Corp., Menomonee Falls, WI.

"Most [of our catalog customers] have been accepting of this change and are moving ahead with their campaigns," said Don Landis, vice president of postal affairs at Arandell.

Joseph E. Schick, director of postal affairs at Quad/Graphics Inc., Sussex, WI, called the rate increase "a non-issue," adding that "some customers may have pulled back on their mailings slightly, but we haven't seen anything noticeable as a result of the rate case."

From Oct. 1 to Jan. 31, the USPS planned for a Standard mail increase of 4.7 percent, but the actual increase was 1.5 percent. There have been no significant changes to the state-by-state circulation strategies, according to the February issue of Libey Economic Outlook by Donald R. Libey. Intermediate-term and long-term outlooks remain positive, Libey said.

Mailers cited several reasons why the increase has had so little effect, including the relatively low level of the increase compared with previous double-digit raises. However, they aren't as optimistic about the next one.

"It's been four years since we had an increase," Schick said. "And, the 5 percent increase was manageable for most mailers."

However, mailers are turning their attention to the next rate case, which likely will be filed this spring. Because rate cases can take as long as 10 months to be decided, any ruling based on the next case probably would take effect next year. USPS board chairman James C. Miller has said to anticipate a mid-single-digit increase in 2007.

Others fear it may be higher.

For example, all of the postal union and management association contracts expire in 2006, which could influence rates in 2007 and beyond. In addition, while the last increase was an across-the-board rise, mailers this time expect variable increases, if not a full reclassification.

"Everybody is really concerned about what we are going to see in the next filing, and what it is going to mean to everybody in the industry," Schick said.

Another reason the recent increase has been relatively painless so far is that mailing services companies tried to prepare their clients as much as possible.

American Mail Communications got "proactive in the fall and kept in front of clients to remind them of the right way to do things so they wouldn't incur increased costs," Demetriou said. As a result, around November the company started getting phone calls from clients with questions related to design, paper stock and other areas where they could save costs, he said.

In addition, many mailers are making an extra effort this year to have clean, current mailing lists, he said. If they're not, "we're try to tell them that they need to save money and that usually gets their attention."

In contrast, Landis said Arandell hasn't seen a change in the interest in list hygiene as a result of the postal increase.

"Catalogers know the importance of list management, and annually we have seen an improvement in mailing lists," he said. "Whether there is a rate increase or not, all catalogers are looking to reduce costs."

Chantal Todé covers catalog and retail news and BTB marketing and Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

Senior Editor Chantal Todé covers catalog and retail news and BTB marketing for DM News and DM News.com. Reach her at ctode@dmnews,com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting http://www.dmnews.com/subscribe.php

Target Consumers Who Have Money to Spend

By Jim Koppenhaver, Echelon Marketing Group

July 21st, 2006

Direct marketers face their share of challenges these days. Traditional prospecting is less effective than ever before. Not only is there a limited universe of new names, but regulatory issues and the mandate to do more with less make targeting the right prospects difficult at best. What’s more, consumers across the board are simply inundated with offers of all kinds, often to the point of inertia.

Traditional segmentation techniques used by marketers in all industries include incorporating age, household income, home value and other demographics into segmentation models. And we know that recency-frequency-monetary (RFM) segmentation that is based upon past purchase behaviors also is widely used. The problem is that many of these techniques either have been fully exploited or just are not reliable indicators of a person’s capacity to spend and do not let marketers truly qualify consumers.

According to the 2005 DMA Statistical Fact Book, only 37 percent of companies rated household-level targeting models as “very effective.”

Even the best marketing model falls short when it relies only on income, geography and other quantitative information. To make the most of their budgets, marketers must look to information that provides a deeper understanding of consumer needs, wants, propensities and ability to purchase.

Are marketers getting their piece of the consumer-spending pie using traditional segmentation systems? Probably not. Today’s technology offers much more. The solution? Focus on discretionary income.

Marketers have a new way to identify and target potential customers. The starting point is to understand an individual consumer’s capacity to spend, a reliable and important indicator of the likelihood to buy. Capacity to spend depends on discretionary income.

Discretionary income consists of the funds remaining after consumers take care of essentials such as food, clothing and shelter. As Abraham Maslow, the psychologist who created Maslow’s Hierarchy of Needs, suggests, it is only after those needs are met that people consider how to use their remaining discretionary dollars based on their interests and their lifestyles.

Measures of typical gross household income tend to be unreliable and do not target consumers effectively. Marketers instead must focus on assets and discretionary income, not simply gross household income. The shift in focus must be toward the dollars that are left after income comes in and money spent on basics and essentials goes out. Without an understanding of a prospect’s ability to purchase, no amount of persuasive copy, award-winning graphics or hard-to-beat offers will yield results.

There are tools that can be used to segment, prioritize and target current and prospective customers based on their true ability to buy, viewing wealth based in part on liquid asset factors, not just income. The objective is to rank consumers based on spending power and combine it with propensity data.

To understand why this is important, consider two households with the same income, say $150,000, and that are in the same life stage. These two households have substantially different spending power and patterns depending on their tastes, attitudes, where they live and their financial asset base. If one’s dominant asset is their home, for instance, then that household is less likely to make a major purchase than the household whose dominant assets are liquid. These are the factors that determine what each consumer can afford to buy and on what products and services consumers choose to spend their money.

The key is to identify, segment, target and communicate with those households that are most likely to have the ability to buy — and to determine those households with limited spending ability. This lets direct marketers better allocate precious resources and target those consumers who are truly worthwhile prospects.

With such a segmentation approach, marketers can:

• Precisely target prospects with the ability to buy a particular product or service.

• Rank current customers based on purchase capacity.

• Enhance customer profiles by combining spending power with transactional history.

• Customize offers and marketing messages based on the purchase capacity of each audience segment.

• Identify valuable new prospects.

• Avoid contacting prospects with low or no purchase capacity, thereby decreasing marketing costs while increasing average purchase amounts.

All marketers, regardless of industry, can benefit from a focus on discretionary spending. It starts with acquiring and applying actionable information that can help reveal those prospects and customers who have not only the interest to buy, but also the discretionary funds to make the purchase.

Beer is Back as U.S. Drinkers' Beverage of Choice

Latest Gallup Poll Results: 41% Prefer Beer vs. 33% Wine

By Jeremy Mullman

Published: July 25, 2006

CHICAGO (AdAge.com) -- Beer may have some life left yet.

Last summer, as sales tanked, many of the frothy beverage's obituaries were sourced to a poll conducted by the Gallup Organization that found beer was no longer the beverage of choice for most Americans, who more frequently drank wine (39%) than beer (36%).

Gallup findings
But, in a reversal, the just-released Gallup poll this year found that beer is again the beverage Americans drink most often, beating wine by a 41% to 33% margin. (Liquor, however, climbed to 23% from 21% last year.)

"We think this is a real sign that things are starting to turn," said Bob Lachky, VP-global industry development at No. 1 brewer Anheuser-Busch Cos. "This is a reflection that, in terms of real sales, people still look to beer more often."

Image revival
After last year's Gallup data was released, Mr. Lachky led an effort at A-B to revive beer's image through the "Here's to Beer" ad campaign, which emphasized the social value of the beverage. TV spots directed by Spike Lee asked celebrities such as "Sopranos" star Michael Imperioli and sportscaster Joe Buck who they would like to have a beer with. The effort included an internet component as well.

A-B invited rivals Miller Brewing and Coors brewing to participate in the category push, but both declined, figuring, correctly, that A-B -- which has a nearly 49% share of the U.S. beer market -- would wind up funding the ads anyway.

No hard sales data
Mr. Lachky said he saw the latest Gallup figures as a sign the campaign is succeeding, although he acknowledged that he has yet to see any actual sales data suggesting beer is regaining share from wine and spirits.

"We are getting some indications that hard liquor's share is flattening a bit," he said. "But it is a little premature to say beer is growing share back."

Planning For Fall

I can hear it now. "What are you talking about? Didn't summer just get here?" That is true, but as business owners we have to think and plan 2 to 3 months ahead.

It will soon be time for school to start. Even though a year officially begins in January, for families the year begins with the start of school. And for the next nine months their lives will focus on what the children are doing. Here are some ideas to help you place your business promotions where your customers are focused.

1. When school begins, parents are looking for other types of classes for their children - music, dance, karate, etc.

2. Many will also be looking for tutoring classes to help their kids succeed in school.

3. If you haven't already, plan your end of summer / beginning of fall sale. You need to clear out summer to make room for the Holidays.

4. Think about planning a fall event around Halloween. You can do this on your own, but it is it is more fun (and successful) if it can be sponsored by your shopping center. (A fall event can also be planned around a local football team.)

Study: Local Retailers Missing Opportunity In New Residents

By Chantal Tode
July 24th, 2006

Targeting recent movers can be an effective way for local retailers to replace the 20 percent to 40 percent annual customer turnover rate they typically experience, yet most never contact new residents directly, according to a new study released by direct marketing firm Moving Targets, Perkasie, PA.

A minimum of 20 percent of customers leave a merchant in any given year, according to the report, “How to Overcome Retail-Customer Erosion by Capturing New Residents.” However, 80 percent of new movers are actively searching for a new business to which they can be loyal. This coupled with the fact that most of America moves every five years on average represents a significant prospecting opportunity for local independent businesses.

The study reports the following about new movers: 62 percent eat pizza; 65 percent of female new residents are anxious about finding a good hairstylist; 67 percent say it’s difficult to find an honest auto repair shop; 80 percent redeem gift certificates offered by local merchants and 98 percent appreciate gifts or offers from local merchants.

Because people typically move as a result of a major life transition -- marriage, new job, birth, retirement and divorce are common reasons -- new residents are often faced with a host of new challenges, the report states. They can be lonely, unsure and looking to replace severed social and community connections.
According to research from the U.S. Postal Service cited in the study, an estimated 80 percent of new residents will try new products and services from local business during the first 24 months after a move. On average, new residents spend $7,100 for goods directly attributable to their relocation.

Senior Editor Chantal Todé covers catalog and retail news and BTB marketing for DM News and DM News.com. Reach her at ctode@dmnews,com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting http://www.dmnews.com/subscribe.php

Train Them Well

Making sure your employees are trained well not only serves the customer, but makes employees feel like an important part of the operation. Good training encourages better service.

Here are some Do's and Don'ts of Training

Do offer different ways to learn -- different styles or time frames.

Do cross-train -- it helps employees not feel penned in because there's only one person in the store who knows a procedure.

Do go to trade shows and seminars. Read trade publications so you can keep current and bring in new material.

Do make sure that everyone has consistent training objectives and don't just teach what they want rather than what they need.

Don't assume that the person you're training knows anything.

Don't make it too long. Information dumps are not very effective. There are different learning styles, consider making it interactive so people will remember and use it.

Don't think that everything you put out there is good forever; technology and methods are always changing.

Source: Ripley Hotch, Area Developer Issue II, 2006

Clippin' Coupons

Clippin' Coupons

By Erik Gunther

Wed, July 19, 2006, 4:58 pm PDT

Grocery Shopping

It never hurts to save a few pennies, especially when prices are going up. Some of us frequent restaurants that offer free soda refills, others make a dinner out of free buffalo wings and peanuts at happy hour, and some of the more savvy among us clip coupons. These scraps of paper come in handy at the supermarket checkout line, and searches on "grocery coupons" jumped a whopping 190% yesterday.

But the grocery store isn't the only spot for savings—searches on plain ol' "coupons" rose 40% as well. Maybe we're all in a belt-tightening mode, or perhaps we're trying to stick it to "The Man" in any small way we can. Either way, we present the top 20 coupon searches over the last week...

Dell Coupons Pizza Hut Coupons Printable Coupons Cold Stone Creamery Coupons Chuck E. Cheese Coupons Old Navy Coupons Target Coupons KFC Coupons Las Vegas Coupons Office Depot Coupons

JCPenney Coupons Circuit City Coupons Jiffy Lube Coupons Enterprise Rent-A-Car Coupons Staples Coupons Bed Bath and Beyond Coupons Subway Coupons Amazon Coupons Home Depot Coupons Lane Bryant Coupons

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