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The Search for Intelligent Mail

Connecting VDP campaigns to the Intelligent Mail Barcode is a smart move

By Andy Brown

What does a United States Postal Service mandate have to do with variable data printing? For most printers and mail houses, the answer is very little. As of January 1, 2009, when use of the Intelligent Mail Barcode is required to receive postal discounts, all that printers will have to do is upgrade a font and test for compliance.

On the other hand, imaginative companies who work closely with direct mail marketers already see how the IMB can add value to personalized campaigns. It takes a creative leap to join 1-to-1 marketing applications to the IMB, but distributors and printers who make the connection demonstrate ingenuity and give prospects another reason to buy from them.

The Rundown on IMB
The intelligent mail barcode was born from USPS efforts to improve the efficiency of its operations. Before the IMB, two bar codes were responsible for helping automate the routing and tracking of mail pieces: the Planet and Postnet. In simplest terms, the IMB is a consolidation of these bar codes, which carry ZIP code information that helps the USPS route and track mail during the delivery process. “Folks have been thinking of the IMB as a replacement of Postnet and a way to improve USPS processes, but it’s just now setting in that there are a host of other benefits to appreciate, especially when you talk about direct mailers,” says David Robinson, director of address quality for Pitney Bowes, Stamford, Conn.

Its primary appeal to mailers so far is that combining multiple bar codes leaves more free space on the direct marketing piece. “We know we need relevance in our mail pieces,” says Robinson. “We’re all looking for something that says ‘open me and read me.’ In addition, you’re combining all the other codes that today make the aesthetics of the mail piece look a bit crowded.” The extra real estate offers more flexibility for design. The idea is that mailers will use that space to create even more relevant direct mail, the kind that commands recipients’ attention and drives them to act on the offers.

More importantly, the IMB is designed so that it can encode twice as much data as its predecessors within the same size bar code. This is far more capacity than necessary to accommodate USPS routing and tracking needs, so imagine the IMB as a hard drive with lots of unused memory. The extra storage space allows mailers to encode individual mail pieces with unique IDs, up to 1 billion per mailing. It’s that capability that creates opportunities for sophisticated marketing applications. The power to track each mail piece, to gauge precisely when it’s going to reach the recipient—and his or her response—is what makes the IMB’s marketing potential so powerful, says Cameron Bellamy, president of GrayHair Software, a Mount Laurel, N.J.-based company that works with distributors, printers and mailers “We can drill down to that exact where and when,” he says. “The IMB is literally a unique license plate for each piece of mail.”

The Evolution of Intelligent Mail

The quickest way to grasp the intelligent mail bar code’s impact is to look at a direct mail piece. Before the IMB was developed, the USPS relied on two bar codes—Planet and Postnet—to automatically route and track mail. Along with the bar codes, subscribers to the USPS’ Address Confirmation Service (ACS) also needed a line to identify their participant ID. Not only does the IMB combine all the information into a single bar code, it offers more accurate tracking information, so mailers can precisely connect each mail piece to a unique recipient.

1. Ancillary Endorsement: This provides the Postal Service with the sender’s instructions of how to handle the mail if it is undeliverable as addressed.
2. Planet barcode: This contains tracking information for the USPS Confirm program.
3. ACS participant ID: This code identifies the sender to the USPS.
4. ACS Keyline: This identifies the recipient in the sender’s mailing list.
5. Postnet barcode: This contains sorting information specific to the recipient’s address.

Source: OneCode ACS,USPS, www.usps.gov

Out-of-the-Box Applications
The ability to know accurately within eight hours when a mail piece will reach its recipient is causing marketing departments to shift their management of direct mail. As this shift occurs, distributors have an opportunity to step in with advice, consultation and support. “One of our primary focuses is to help mail owners understand and manage the in-home mail date rather than a drop date,” says Bellamy. “Instead of hoping the mail gets there and attempting to plan around it, we’re making it an exact science.”

For instance, knowing when the pieces reach recipients in a given geographic zone allows marketers to time direct mail with radio and TV spots and newspaper ads. Timothy Reimann, marketing director at GrayHair Software, suggests an even more sophisticated application: “We set up a project for a large retailer in North America, for 645 big box stores. We got the names and email addresses of each store’s general manager. When their prescribed market area reached a saturation date for an in-home mail delivery of the coupons or free offers, the general managers were emailed a notification that read, ‘This mailing is in the majority of the homes in your area, so watch out, staff up, etc.’”

Another similar application targets mailers who employ call centers. For example, “For a single campaign or mailing, we can add credit bureau data,” says Reimann. “For example, as a client retrieves the mail data on a reply device, such as a business reply card, we can easily append age, gender or ethnicity, perhaps for a particular region. Then with the appended data, we can automatically alert a call center to staff up for a specific language, or add CSRs at a specific time.”

The Check’s in the Mail
Distributors who have trouble penetrating marketing departments could start by touting the IMB to operations and finance departments instead. Typically, when a company invoices its customers, they have 30 days to pay their bill. If they miss their payment, a reminder, called a dunning letter, is mailed approximately two weeks later. If the bill still hasn’t been paid, someone from the collecting company usually makes a phone call. The collecting company incurs costs for each of these communications. “For companies mailing invoices and statements, each dunning letter that is mailed as a follow-up costs roughly $1 to $2 per notice,” says Bellamy. “Every phone call, factoring in all related costs, can be worth $6 to $10. To actually shut down an account and restart it once the bill is paid costs $14 to $20 or more.”

Using IMB data, GrayHair knows when reply mails have been sent as soon as they’re scanned by the first post office. The company compares reply mail lists with clients’ dunning lists on a daily basis to determine whether the bill is in the mailstream. If so, the client knows to stop the collections process immediately, avoiding unnecessary costs. “Each dunning event for a company can be minimized and save thousands of dollars by implementing a tracking program to report on customers who really did put the check in the mail,” says Bellamy.

Reimann offers a parallel example: When a credit card company called three times to confirm he’d received their offer, he was amazed that they continued to incur the cost of contacting him. “If they had used us, they’d know I didn’t get it,” he says.

Make That Personal Connection
It’s up to innovative companies to create IMB marketing applications that customers can use. By itself, the IMB is nothing special. In fact, anyone can download the font specifications for free from the USPS website. It helps streamline mail routing and tracking, but the USPS benefits most from the increased efficiency—so much so that printers, lettershops and mailers have been slow to adopt the new bar code. To nudge companies along, the use of the IMB is mandated by 2009. Mailers who don’t use the IMB after that won’t receive postal discounts.

In other words, the IMB will be the standard, but whether printers and mailers make use of its extended possibilities is a matter of business model. For distributors and printers who sell personalized marketing campaigns, the IMB is a potential value-add.

“Let’s say a large car manufacturer is doing a specific mailing to California, the biggest selling state for their hybrids,” says Bellamy. “When someone responds by mail to their high-quality automobile brochure, once the response is scanned by the Post Office, they immediately know who replied. We can add to that mailstream data, in near real-time, whatever is available through a credit bureau or list provider. Mailers often follow up with additional collateral material or a personalized mailing, possibly cross-selling a product or service.”

Printers and distributors trying to convince skeptical marketing executives of VDP’s higher response rates have an ally in the IMB. Attaching the IMB to a personalized mailer allows companies to know specifically when the customer gets the mail, and if and when they respond to it.

The IMB also allows companies to refine their marketing tactics. They may learn that sending mail early in the week receives a higher response in one area than sending it later in the week. Combine this type of knowledge with personalized graphics and individual offers in a transpromo document, and the result is a cutting-edge marketing application: “Say you’re a car financing company that sends monthly invoices, and you know that six months before the lease is up is the best time to include new car pictures and new offers with the invoice,” says Robinson. “What the IMB will provide is the potential to track the success of these programs much better than you could previously. That’s driving excitement about the IMB—it supports what the industry is doing anyway.”

Across the Spectrum
How the IMB will fit into printers’ business models is still unknown. As more mailers discover the benefits of IMB, their vendor partners will have to determine how extensively to incorporate it into their business models. “It depends on how they’re learning to commercialize it as an additional service,” says Jason Lund, graphics product manager at Videojet Technologies Inc., Wood Dale, Ill. “A lot of our customers are motivated internally to do this, but a lot of it is their customer’s request.”
Kevin Conti, director of mailing efficiency for Group One Software, a Pitney Bowes company based in Lanham, Md., concurs: “You can use the IMB just for delivery in its simplest implementation, as a replacement for Postnet. As long as you have the font and the printer is capable of printing that font, then that’s the lowest level of sophistication.” On the other hand, companies that offer mailers more complex solutions also are emerging. “From a printer’s perspective, there are more service providers, whether they’re other printers, lettershops or presort houses. The IMB is a way for them to add value in the step and embed unique tracking information. We see a lot of people looking at the IMB from a service provider standpoint asking, ‘How can I implement this so I can offer these services?’” says Conti. “It doesn’t mean that service providers have to develop the technology themselves. The key is bringing these solutions bundled to their customers in some way.”

In this model, distributors have an advantage. They can partner with the best printers, lettershops and software companies to offer a complete solution to their customers. Bellamy of GrayHair Software, suggests one scenario: “When we’re working with independent brokers, our system is set up so each client of the broker has their own web portal, landing page, user ID and password. They only see their own data,” he says. “There’s a referral fee that we build for the broker and the printer.”

Choosing a successful business model means knowing how a VDP campaign is put together. The process of executing a marketing campaign offers a number of opportunities for distributors and printers to get involved, from data gathering and preparation to IMB encoding, printing, verification and tracking. The early adopters of the IMB are large mailers who prefer to track the data themselves, but as the IMB becomes widespread, tracking is one of many services that mailers could outsource, especially as it becomes more cost effective. “Companies that have invested the resources to build their own software applications to read USPS bar codes are now saying, ‘If we have to change our systems to accommodate a new bar code specification, then we have to build something new,’” says Bellamy. “There’s a very compelling reason for those companies to let the mail tracking experts do it. Each company is making a ‘build or buy’ decision. Most realize the best use of IT and management resources is a ‘buy’ decision, which results in an immediate positive impact on ROI.”

Some printers and distributors are diving in head first. “I don’t think they’re at a point yet where they fully grasp how to use the data,” says Lund. “Going forward, I can see the mailers and printers becoming more comfortable tracking the mail piece. Direct mail printers will find ways to commercialize these services.”

Andy Brown is managing editor of Print Solutions magazine. Email comments to abrown@psda.org.