Saturday, December 10, 2005

Intelligent Mailing

We moved about six months ago to a home closer to the downtown core. Part of the moving process entails notifying credit card companies, licensing agencies and so on that our address has changed. I notified a marine supply store of our change since I participate in their loyalty program. I stood in the store and watched the teller enter the new information into the computer.

But it seems that my address never really changed! I just received the store’s Christmas flyer but it was mailed to the old address and forwarded by the post office. What does this have to do with business intelligence?

The store isn’t taking mailing information from the in house database and it’s costing the company money. Let’s say 5% of the population moves annually and the store chain has 500,000 customers and that each flyer costs $0.25 to mail, excluding the cost of production and printing. The store sends out flyers four times per year. The cost of flyers being thrown away is a potential $25,000. From the store’s perspective, it’s a sunk cost. They were prepared to spend that money anyway. But why spend money needlessly? Oh, that’s in year one. If the database is not cleaned up, the numbers become worse in year two and so on.

How can you turn a loss into a potential profit? There are companies that clean and verify mailing lists. This example alone shows you the value. But why not try something else to get your customers into your store while verifying the mailing list. Offer your customers a discount on their next purchase if they come to the web site and verify their address. This will cost the company money in the short run but they will keep a clean mailing list, and more importantly keep a conversation going with the customer. If a customer does not respond after a certain number of mailings, perhaps you don’t want to mail to that person anymore, regardless if they’re on your list or not.

Spending money on the people who are interested in your product or service is intelligent marketing.


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