Pre-Bindery Intellect (PBI) Technology
Helps Catalogers Significantly Increase Profits

Catalog Mailings to Increase Over 1 Billion in 2006

Consumer communication and buying channel options increase, yet catalogs continue their strong influence on buying behavior. In 2005, U.S. households received more than 19 billion catalogs, and an additional 1 billion are expected to go into the mail this year, according to the U.S. Post Office and the Direct Marketing Association. With a robust growth rate exceeding 5%, it's easy to see why catalog executives ask how they can maximize profits and take advantage of this burgeoning market.

Technological advances, plus the creative use of cutting edge address hygiene, advanced data modeling, and recent transaction level information, are providing the answer. It's this combination that creates powerful opportunities to make “mail/no-mail” decisions just days before catalogs enter the mail system. As with the late introduction of hot line names, given the chance every direct marketer would take full advantage of last minute circulation intelligence that:

• Finds additional changes of address

• Identifies and corrects impaired addresses

• Reveals and replaces low performing names with highly qualified prospects

Using a new process called Pre-Bindery Intellect (PBI) technology, gaining this kind of intelligence and having the ability to act on it isn't only possible, it's competitively critical. PBI technology, which joins several processes into one streamlined flow, is a high impact way to adjust record selection and significantly improve your business' bottom line.

Catalog Marketing - Reality Check

Direct mailers understand that when a catalog reaches its intended recipient, it sparks interest and drives demand, regardless of buying channel. The opposite is equally true: When a catalog is undeliverable, fails to reach the correct recipient, or reaches an unqualified recipient, it's a wasted expense. Yes, some performance may occur, but it's a promotion that will fall short of its full potential. Consider a few trends and it becomes clear how difficult and important it is to mail a catalog accurately:

• Postage rates have increased dramatically in the last 10 years

• Paper costs climb almost every year

• Consumers move frequently and are difficult to locate

• Response rates are dropping

• New list sources that respond well are harder to find

Strapped with escalating costs and declining profits, direct marketers have to make tough choices about their marketing plans. Do they move more of their marketing dollars to internet search and email campaigns? Are there ways to increase direct mail response rates and achieve acquisition goals? Can they minimize waste and cost-effectively deliver catalogs to the most promising buyers and prospects? PBI technology, while not the answer to every problem facing the direct marketing industry, is the solution to many challenges that inhibit catalog growth and profitability.

Challenge 1: 830,000 Americans Move Each Week; 415,000 Are Not Identified

No matter how good your circulation plan, it's unlikely you have the optimum mailing address for every recipient at the time your mail drops. Yes, you may process your files through an NCOA product, but do consider that only about 70% of all movers fill out COA forms, and the stringent matching rules imposed by the USPS result in a 70% match rate. So, of the 830,000 Americans who move each week, only about 415,000 are typically identified in any given run.

In addition there are keying errors, marital status changes, name aliases, plain old bad addresses, and address changes that occur during mail processing. All these factors can short-circuit thoughtful plans. The net result is a typical address error rate of up to 15%. With these inaccurate, impaired, and undeliverable records in your mail file, response rates and profit levels suffer—any catalog delivered to “or current resident” responds at half the rate (or less) of a branded buyer

PBI Technology meets this challenge head on. By putting your mail file through advanced address hygiene after the merge and just a few days before bindery operations begin, address quality is as clean and fresh as possible.

What is advanced address hygiene? It's matching intelligence that goes beyond the reach of traditional character-based or sounds-like methods, and standard change of address processing. Begin by thinking about movers and who they most want to reach to ensure mail continues, or discontinues. The USPS may be on their minds, but much more likely it's their bank and other financial institutions they deal with, insurance companies, magazine publishers, and utility services they want stopped or transferred. Advanced address hygiene goes beyond NCOA Tier 1 processing by accessing dozens of these proprietary data sources to fix address elements, correct impaired names, combine married/maiden name variations, and determine the most deliverable address to mail. Because of name variation identification, there'll be more duplicates identified, which cuts down on mail waste and increases the number of multi-buyers and superdupes. Additionally, advanced address hygiene identifies low yield records, meaning those names and addresses that can't be repaired—typically 2% to 5% of a mail file—but can be removed and replaced with records having greater sales potential.

In short, advanced address hygiene ensures that you'll have an outstandingly high deliverability rate to bonafide addresses with the highest potential to respond.

Challenge 2: Identify the 8 TO 20% That Never, Ever Should be Mailed

Mailing catalogs to bad addresses drives performance down, and so does mailing to recipients who are unresponsive or fail to fit your buyer profile. Beyond advanced address hygiene, Pre-Bindery Intellect technology taps into the wealth of behavioral information contained in a co-operative database with over 100 million consumers and in excess of 1 billion product level transaction details to further refine the quality of your mail file.

Using advanced modeling techniques, PBI analyzes your mail file, after the merge purge and segmentation are complete, to identify records whose predictive indices suggest they shouldn't be mailed. You have the opportunity to optimize your mail file by having visibility to the 8% to 20% of the lowest performing names on your mailing list.

Omitting these names is a cost-effective strategy—reducing deliverability waste—but since your mailing is just a few days from the bindery line its usefulness is limited. What you really need is to replace the omitted names with better performing names. And PBI technology offers this capability as well.

Challenge 3: Replace Names With Proven Pre-Tested Prospects

Recency is king. Every direct marketer knows this. It's why hotline names are so valuable. PBI technology offers replacement names from the same co-operative database that provided the modeling universe for performance analysis. The names selected for inclusion in your mailing exhibit purchasing behavior that aligns with the purchasing behavior of the best names in your mail file, and you can choose to take advantage of names with recent buying activity. Case studies have shown that name optimization of this sort lifts profits by an average of 6.3%. In addition, you maintain your mail file size—a critical consideration in light of press commitments.

This optimization capability can also be used as a source of balance model names. If your mail file is short and you wish to identify additional records that offer high potential response rates, PBI's co-op database provides the necessary resource you're looking for.

Dramatic Shift in Processing

Pre-Bindery Intellect drives powerful, last minute access to the most recent data to help catalogers make fast and smart decisions to maximize circulation response rates. The fact that technology is allowing all of this to occur post-merge is a dramatic, strategically important shift in mail file processing. It means that a marketer can act on intelligence just before the moment catalogs enter the mailstream. This is a capability marketers have wished for, and is now available—and the outcome goes straight to an improved bottom line.