It is accepted wisdom that the response rate to direct marketing initiatives runs at between 0.2% and 2.6%. Still, that is sufficient for many marketers to build a business, even though the volume of direct marketing has dropped in recent years.
Imagine, then, that you could achieve the highest response rates in direct marketing history (a history that goes back to 1867) at relatively low cost. That is the promise held out by transpromo, a relatively new marketing medium that carries the potential to revolutionise business-to-customer marketing. (The word transpromo derives from the use of transactional documents to promote products or services.)
Transpromo combines the power of new-generation printing technology with customer database analytics to provide highly personalised, even one-to-one, communications to large numbers of customers.
When combined with understanding of customer behaviour, transpromo can boost response rates by many orders of magnitude. Studies conducted by the Rochester Institute of Technology have shown that personalised communication increases response rates by up to 44%, personalisation and colour by up to 135%, and personalisation, colour and one-to-one content by up to 500%.
Wikipedia states: "Transpromotional documents combine CRM and data mining technology with variable data printing and location intelligence. This powerful combination reduces the cost of traditional statement printing by sharing the print spend with marketing spend, while reaching the prospect base of all existing customers. Many companies do this to some extent, including Chase Bank, Citi Bank, Comcast, American Airlines and Amazon.com."
Putting it to work
A company that has most graphically illustrated just how successful transpromo can be is Reader's Digest Canada. Reader's Digest globally depends to a great extent on the success of its direct marketing, as most of us know, having received its offers of books, music and magazines through the years.
Reader's Digest has consistently outperformed the rest of the direct marketing industry, sometimes achieving double-digit response rates, relative to the 1%-2% of the rest of the industry.
When combined with understanding of customer behaviour, transpromo can boost response rates by many orders of magnitude.
Konni Hoferichter is MD of Bytes Technology Group company LaserCom.
However, the company was blown away by what it achieved while executing a customised campaign through the Xerox 1:1 Lab in Canada: 74% increase in sales; and up to 83% increase in response rates for Reader's Digest books. These results were achieved on an initial test conduced by Reader's Digest in conjunction with Xerox and direct marketing specialist Transcontinental.
They selected 47 000 customers: a control group received a traditional promotion package, while two test groups received fully variable mailings.
Five tests were conducted: the standard package, offering music only; a customised package; two fully customised packages, one with no Sweepstakes; and a fully customised package, cross-selling multiple products.
The highest response rates and sales came from the final test, with 35% higher response rate for CDs, 78% for DVDs and 83% for books, and overall 74% higher sales.
Speaking locally
In the South African market, I foresee the major area of application as being in the domain of existing invoices and statements: they represent an existing, or sunk cost, something companies simply have to do as part of their operational expenses.
So every month they must send an invoice or statement to their customers, and their customers then open these statements: up to 95% of these postal items are opened, with an average of three minutes spent on the statement by each recipient. No other communications medium rivals that.
My organisation, on behalf of its customers, issues eight million postal items a month. Eighty percent of the cost of each item is tied up in the manufacture of the envelope and the Post Office's charge, so adding one or two extra pages, or customising the existing content to communicate in a personal manner is a relatively low cost. In fact, industry analyst InfoTrends calculates the cost per additional page at just $0.06.
In the next Industry Insight in this series, I will look at how to begin with transpromo.
* Konni Hoferichter is MD of Bytes Technology Group company LaserCom.
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