The changing value of mail in a digital world

Ben RhodesMarketing Director, Royal Mail MarketReach

Today’s presentation

• In the next 30 minutes, I want to do two things:

1. Provide an overview of mail’s changing role – and value – as a business tool

2. Show some early outputs from the work we’re currently doing

• First, a little about the role of MarketReach …

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About MarketReach

• Over the last 15 years, the environment for mail has been re-defined

• This has increased the inherent value of mail to business and created new uses for marketers that previously did not exist

• The role of Royal Mail MarketReach is to help our customers see, realise and measure the new value of mail for their business

• As Marketing Director, I have two priorities:

1. Prove the unique value of mail for business

2. Enable our customers to realise this value in their business – with minimal pain and maximum return

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1. Mail’s changing role and value

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Mail is a business tool

• The use of mail as a business tool overtook the social uses of mail a very long time ago

• Today, mail has three core uses, each of which has inherent commercial value for businesses:

1. as a ‘media’: – to find new customers, on its own or with other media

– to complement and increase the effectiveness of advertising campaigns

2. as a medium for communicating directly with customers, with the aim of increasing loyalty and/ or spend

3. as a channel for doing business, in ways that are complementary to digital

• The future of mail is rooted in its value as a business tool

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Mail’s timeless strengths

• Mail has always had value as a business tool in three distinct ways:

1. Creating and, particularly, deepening relationships with customers:

– qualitatively: brand engagement, advocacy and loyalty

– quantitatively: frequency, breadth and value of purchases

2. Enhancing sales and marketing activity, throughout the customer journey. Mail can increase ROI and impact for both:

– on-going Programmes: customer comms and loyalty programmes

– time specific Campaigns: advertising, activation and acquisition

3. Being more powerful in getting people to know, think, feel or do things than other alternatives.

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A re-defined environment

• But mail does not exist in a vacuum.

• The environment in which mail is used constantly changes and the application of mail’s strengths constantly evolves in line with this

• Never has that been more true than today: in the last 15 years, the environment for mail has been fundamentally re-defined as a result of:

1. the impact of all things digital on consumer and business behaviours

2. the greater strategic emphasis businesses are placing on customers

3. the revolution in what is possible by combining big data with digitised production

• Together, these transform mail’s value for business and its uses for marketers

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Our forward agenda

• Over the next three years, we are investing in a major programme to define, prove and help marketers realise the new value of mail in their business

• The research and analysis we’re doing to explore differing aspects of ‘The new value of mail’ is, literally, unprecedented worldwide

• It will create a wealth of powerful, original and challenging content that we believe should be of primary interest to marketers, that will be launched in April 2014

• Today, I want to preview our work in two areas:

1. Mail’s value in complementing advertising

2. Mail’s value in complementing digital

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2. An early preview of some current work

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Mail’s value in complementing advertising• Over the years, a strong body of evidence has built up that mail makes

advertising campaigns work harder by increasing their ROI and impact/ effectiveness

• Until now, however, there has not been a concerted effort to prove this and to understand how best to plan and deploy mail alongside advertising campaigns

• That’s the work we’re now doing

• Two examples today:

1. meta-analysis of IPA Advertising Effectiveness Data launch by Peter Field

2. Neuroscience work comparing consumer response across a range of media

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IPA meta-analysis: mail increases campaign effectiveness• The meta-analysis findings quantifies mail’s ability to increase the

effectiveness of campaigns:

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Campaigns with mail have a 27% higher impact in long term sales

Campaigns with mail have a 40% higher impact in acquiring new customers over the long term

IPA Databank meta-analysis – 15th September 2013Conducted by Peter Field Marketing & Communications Strategy

Campaigns with mail show an increase in average market share that is more than double for those without

• The early findings of the meta-analysis of ROI impact also strongly suggest that the ROI from campaigns with mail is nearly three times higher

Campaigns with mailCampaigns without mail

Neuroscience: mail engages consumers more strongly than TV• This can lead to greater brand predisposition to boost the effect of

marketing campaigns

Neuro Insight study, August 2013160 adults, UK

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Neuroscience: mail works across all ages

• It is worth noting that – contrary to common belief – younger audiences are as responsive to mail as older audiences

 Neuro Insight study, August 2013160 adults, UK

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The impact of digital

• Digital has accelerated mail’s evolution from a social to a business channel

• It has also re-defined mail’s strengths and weaknesses, drawing out the essentially complementary nature of digital and mail

what digital is strong at, mail is weak at … and vice versa both together are a powerful combination

• A modern digital economy – e-commerce and all that goes with it – could not work without the letterbox: the future of mail is as digital’s best friend*

• Two early views of the work we’re doing looking at digital and mail:

1. Combining big data and digital production

2. How mail and email work together

14* I should add we’ve got a great, long standing friendship with TV as well

Digital: combining big data and digital production• The melding of big data and new

digital production capabilities transforms both the possibilities and economics of one-to-one personalised mailings

• Big data provides an unprecedented source of highly granular, commercial insight at the individual level – what each customer does and the value of this over time – to feed planning, execution and measurement Fully personalised booklet can vary text,

images, tables, prices, products, advertising and accessories based on the customer’s history

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Mail helps drive customers on-line

Mail has become faster, cheaper and infinitely personalise-able

Digital: combining big data and digital production (continued)• Recent innovations in production such as

digital templating have reduced the cost and increased the speed of fully-personalised mailings to levels that were unimaginable not long ago

• Directly connecting – through digital – insight to production, makes mailings cheaper, faster, more personalise-able and more scale-able than ever

• This makes mail more powerful, central and accountable as a business tool

One week after booking, selected Ebookers customers receive a highly personalised travel guide, tailored to each recipient

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Digital: a lot’s happened since 2007

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Just before the iPhone launched in 2007, Royal Mail undertook research which showed email and mail are inherently complementary

Since then, the impact of mobile devices and social media have redefined the roles of both email and mail

It would be easy to assume that all this sounds the death knell for mail, but far from it

The net effect has been to dial up the strengths of both email and mail

UK timeline

Digital: the complementary strengths of email and mail

1. Email and mail continue to play distinct and complementary roles

2. Email is strongest where mail is weakest and vice versa: – Email is better at producing short-term

measurable response

– Mail is better at delivering emotional impact and long-term value in the customer relationship.

3. The ability to reach and engage consumers is the key challenge of the digital age. Mail’s strengths make it more valuable than ever for this

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Email alerts and triggers short-term action

Mail engages and builds long-term relationships

Digital: optimising the use of email and mail

Use email to:

•Alert

•Create short-term action

•Drive click-through

•Get information across in real time

•Promote offers

•Prospect ‘cold’

•Drive up-sell and cross-sell

•Remind

Use mail to:

• Engage

• Create longer-term value

• Encourage keeping

• Properly talk to customers

• Make customers feel good

• Deepen relationships

• Find quality customers

• Drive up-sell and cross-sell

• Drive loyalty

• Deliver the brand

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Mail: read and holdEmail: skim and scan

Mail tangible recognition of loyalty, to tell customers that

they are valued

Digital: email and mail play different roles through the customer journey

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@

Email advertising to a broader audience to promote online/

national offer Email about seasonal sales and short-term special offers to enable a rapid response

Email brand news, to keep customers informed

of more general updates

£ spendNew customer/ potential customer

(added to database)

Mail in the catchment area to promote new

stores opening locally

Mail detailed catalogues and brochures to allow time to

browse/ a considered response

NB: simplified retail example

In conclusion: the new value of mail

Mail adds real value to business:

1.Help marketing campaigns perform better be they acquisition or retention

2.Strengthen existing customer relationships through deeper more personalised engagement

3.Drive customers online and increase performance of e-commerce channels

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