Toward an OptimizedMailstream

White Paper

Mailstream

EXECUTIVE SUMMARY

Every organization depends on the mailstream. Comprising thedata, software, hardware and services that annually move morethan 500 billion unique mail pieces and packages around theworld – along with countless billions more electronic documents–the mailstream represents the nervous system of the globaleconomy.

This Pitney Bowes White Paper examines the mailstream indepth and provides a foundation for understanding the potentialbenefits for organizations that bring their mailstream into the21st Century. It is organized into five sections:

■ The Mailstream Imperative: How organizations can benefit from the mailstream – and why they ignore it at their peril.

■ The Optimized Mailstream: How it’s possible to utilize new processes and information technologies to create a mailstream optimized to meet strategic needs.

■ The Challenge: An exploration of the hidden costs of an inefficient mailstream, the source of multiple pain points for organizations in search of strategic answers to the question of how to accelerate profitable growth.

■ The Benefits: How an optimized mailstream improves productivity, increases customer loyalty and enables organizations to address new market opportunities and capture new revenue streams.

■ Toward an Optimized Mailstream: Steps organizations can take to establish an optimized 21st-Century mailstream.

This white paper concludes that today, more than ever, anoptimized mailstream is key to creation of new value – viaefficiency and customer satisfaction – in an increasinglycompetitive world. It also suggests the benefits to organizations

from an ongoing dialogue with Pitney Bowes about theirmailstream challenges and how they may be proactively andeffectively addressed.

THE MAILSTREAM IMPERATIVE

The Problem – Inefficient Business Communications Processes

From the world's first postal service in ancient Persia to thepresent-day global information network, the mailstream hasfulfilled humanity’s need to connect, make transactions, andexchange goods and services.

Today the mailstream consists of the data, software, hardwareand services that annually move more than 500 billion uniquemail pieces and packages around the world, along with thecreation and exchange of countless more physical and electronicdocuments within organizations. It is the nervous system of theinformation economy.

Every company, non-profit entity and government agency notonly feeds this mailstream but is tasked with managing theirown. Within a singular organization, the mailstream would bedefined as the creation, production, distribution andmanagement of all documents – intended for internal or externalaudience – as well as packages. The ubiquitous mailstream is formany organizations, a series of processes woven into theeveryday workflow.

Yet many organizations still regard the mailstream as a fixedcost over which they have little control. They all too oftenoverlook significant inefficiencies and suboptimal businesscommunication processes within their mailstream.

The Solution – An Optimized Mailstream

Successive waves of technology over the past forty years havemade it possible for organizations to optimize their mailstream:

■ The information technology and communications revolutions of the 1970s elevated the mailstream from a

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fixed cost center to a dynamic engine of productivity andrevenue growth.

■ The business-process reengineering and supply-chain management revolutions of the 1980s leveraged the mailstream to enable orders-of-magnitude improvements in the way goods and services were producedand delivered.

■ The web and broadband communications revolution of the 1990s transformed the mailstream into a global, real time medium.

In short, the mailstream – if it is optimized – has the potential tofundamentally transform the global exchange of goods and services.

Like modern data and voice communications networks, themailstream is a strategic business-critical asset that touchesevery person, every department, entire enterprises, supply-chainpartners, and – directly through physical mail, e-mail and theworld wide web – customers themselves.

THE OPTIMIZED MAILSTREAM

Transformation Through Information Technology

Previously, the mailstream was a means to an end, a conduit fora series of linear transactions connecting Point A to Point B. Itfacilitated commerce but imposed a fixed overhead cost onevery transaction. For most organizations, the mailstream was anecessary and relatively fixed cost of doing business.

The modern mailstream is something altogether different. Theevolving global electronic information infrastructure andquantum leaps in computer processing power have dramaticallyaccelerated the velocity of global communications whilecollapsing historic limits imposed by time and geography:

■ E-mail, the world wide web and broadband communications have expanded the mailstream, enabling

real-time exchange of messages, data and documents. Accessing customer and business data that resides in multiple databases – and integrating it into the mailstream’s key processes – support superior customer communication management and allow businesses to make smarter decisions more quickly.

■ New database management, data warehousing and data quality systems enable companies to deliver the right message to the right customer at the right time. They provide precise tracking of every message, document or package traveling through the mailstream.

■ Business intelligence and analytics software, along with other new information management technologies, providefeedback for precise management and ongoing improvement of communications processes.

A Personalized, Multi-Channel Information System

This information-driven mailstream has enabled the “mass-customization” of communications, creating personalconnections on a global scale. This expansion of personalizedcommunications has increased the volume of certain types ofphysical mail, especially via two critical applications:

■ As a key part of the e-commerce fulfillment process, by securely delivering packages and physical documents to consumers.

■ In the optimization of multi-channel customer communication, by allowing customers to receive communication via the channel they want, when they want it.

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White Paper

Mailstream

The result is a flexible, multi-layered and multi-channelinformation system that is ushering in an era of real-time, one-to-one communication on a massive scale.

An optimized mailstream – data-driven, flexible, secure,universal and efficient – allows organizations to attain newlevels of customer satisfaction and drive new operationalefficiencies.

THE CHALLENGE

The Hidden Costs of an Inefficient Mailstream

Too many organizations fail to grasp the importance of anoptimized mailstream. Many only now are starting to realize thatthere are broken processes hidden within their operations. Theyare only just beginning to understand how much they sufferfrom not rooting out the problem and fixing it. This brokenprocess – their “legacy mailstream” – is inefficient and silo-ridden, constraining profits as it permeates the entirecommunications infrastructure.

Inefficiencies buried deep in legacy processes can be as hard tosee as microbes. Meanwhile, attempts at reform too often aredismissed because the mailstream – no matter how inefficient –is often considered “just the cost of doing business” or “the wayit’s always been done.”

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Attributes of an Optimized Mailstream

Data Driven Flexible Secure Universal Efficient

PersonalizedCommunications

Data-basedDecision-Making

Single View of Customer

Customization

Scalability

Paper-based communications integratedwith digital

On-Site OperationOff-Site OperationNear-Site Operation

Supported with ReliablePartners

ProvenTechnology

Compliance

Process for tracking/tracing and audit

Lower Costs

Improved Productivity

Eliminate Duplication

Closed

Loop

SupportsPaperDigitalPackages

Integrateson allPlatforms

InboundInternalOutbound

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But these latent inefficiencies negatively impact business-criticaldepartments and functions, from accounts payable andreceivable to supply chain management to customer relationship management.

Pain Points Impact Which Business Success Factors

Indeed, ignoring the problem can inflict serious penalties, such as:

■ Ballooning costs. Driving unnecessary costs out of the mailstream is critically important, especially as postage rates increase. Yet the mail remains the most cost-effective, powerful and for many industries, indispensable way to reach customers.

■ Inferior customer relationship management. The inability to access and harness critical intelligence living in different databases thwarts the creation of a single view of individual customers. It lowers service levels, sabotages multi-channel customer communication management initiatives, and hinders retention and recruitment efforts.

■ Inefficient internal processes. The lack of a coordinated, optimized mailstream hinders efforts to integrate or streamline processes across key departments – sales, marketing, finance, human resources, legal – and reinforces communication “silos” within an organization.

■ Greater risk exposure. Businesses reckoning with the meticulous record-keeping or rigorous security and privacy requirements demanded by regulatory mandates – or those that must document their performance as set out in service-level agreements – run a greater risk of noncompliance due to a poorly managed mailstream.

THE BENEFITS

An Optimized Mailstream Satisfies Business-CriticalObjectives …

An optimized mailstream addresses many of those pain points,making a direct impact on five imperatives that confront public,private, non-profit or government organizations, whatever theirsize or class:

■ Streamlining the IT value chain and supporting enterprise-wide process improvements. An optimized mailstream is the linchpin of any organization’s communications network – integrating corporate and customer data and connecting business processes to physical and digital communications. It is fundamental to strategic, real-time decision-making and process reform.

■ Enhancing customer relationships and customer communication management. A productive mailstream is one of the most powerful tools to attract customers, improve customer or constituent satisfaction, retain their loyalty and drive maximum value from relationships. Optimizing the mailstream gives customers more control over the ways in which they interact with companies, improves invoice accuracy and readability, and enhances the overall customer experience.

■ Improving time-to-payment and overall cash flow. From its support of electronic invoice presentment and payment to its ability to control and track when and how customers receive paper-based bills, the mailstream can shrink days outstanding and vastly improve organizations’ accounts receivable processes.

■ Optimizing supply-chain management. The mailstream isa foundation of critical supply chain processes – order management, product customization, inventory management, billing and fulfillment. In an era of

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Mailstream

“virtual” companies, data-driven mailstream managementis critical to success.

■ Meeting legal and regulatory requirements. Privacy, data security and reliable delivery of critical documents are paramount issues for regulated industries, such as financial services and health care. Compliance- and regulatory-driven mailings are among the fastest-growingcategories in the mailstream. Optimized mailstream data, technologies and processes can help to manage the complexity of this business-critical communication.

… Creates Markets and Disrupts Competition …

A decade ago, selling books over the Internet, renting DVDsthrough the mail, ordering prescription drugs from an 800number or a web site and having them delivered by mail, andcreating a virtual auction market were radically new ideas.Today the mailstream makes them as familiar as the local letter carrier.

Those innovative businesses had one idea in common: to createnew value by applying information technology to harness thepower of an increasingly productive mailstream.

An optimized mailstream enables innovative suppliers todevelop new markets and grow revenue by disruptingentrenched competitors. It gives previously underserved or un-served customers a uniquely personal means of interacting (andtransacting business) with them.

… Generates Productivity Growth …

The mailstream has become a powerful catalyst for productivityimprovements and the reengineering of business processes. Forexample:

■ Mailstream optimization lets organizations manage millions of addresses with 99.99 percent accuracy and maximize postage discounts, while reducing the cost of mailing and the amount of undeliverable and returned mail.

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■ Government entities can combine operations across multiple agencies to reduce costs, consolidate management of inbound and outbound mail, eliminate manual processes, and provide quick access to tracking information and postage spending data.

■ Organizations can send the information customers need and want to see, in the formats they want to see it, when and where they expect it, then track when mail pieces andpackages will reach recipients and be opened.

■ A host of analytical tools allows mailers to evaluate the response to every communication, improving processes todeliver better results at lower costs.

… And Drives Top-Line Revenue and Profitability

Although cost control is a key benefit of mailstreamoptimization, companies leverage it in a multitude of creativeways to increase revenue, cash flow and profitability. For example:

■ Target Marketing. Companies gather detailed informationdirectly from motivated prospects. They spur sales by using that data to immediately create and deliver customized packages of product information and financing scenarios mapped to individual customer preferences.

■ Precision Marketing. Companies time the delivery of monthly statements to coincide with phone calls by sales representatives armed with online client information, reaching customers at times when they are most receptive to discussing their next purchase.

■ Life Event Marketing. Organizations are using better demographic information and intelligent direct marketingtechnologies to increase revenue by reaching clients at life and career milestones such as when they are ready to purchase a home, change jobs or register a car.

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■ A Single View of the Customer. A total view of customers lets companies create individualized communications and rewards programs and make offers through direct mail or the web to drive sales and improve loyalty

TOWARD AN OPTIMIZED MAILSTREAM

An Integrated, Closed-Loop System

How does the mailstream drive revenue growth, increaseefficiency and reduce costs, all at the same time? Byestablishing an integrated, closed-loop system that is morethan the sum of its parts.

Organizations of every size can establish a self-sustaining cycleof value creation by effectively managing the four criticalelements of the mailstream – the creation, production,distribution and management of their mailstreamcommunications.

Create. Organizations can create documents and othercommunications infused with all the knowledge they havegathered about prospects, customers and constituents – withsoftware that ensures correct address information; documentcomposition systems that prepare content for delivery acrossweb, fax, e-mail, print and other channels; and databasemanagement systems providing demographic and lifestyleinformation.

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Mailstream

The Self-SustainingMailstream

Distribute

IntegratedClosed-LoopSystem

Manage

Create

Produce

■ Produce. Even when reaching millions of recipients, it ispossible to deliver the right message to the right person atthe right time – with high-volume printing, folding and insertion systems; reporting, workflow management and analysis software; web-enabled print finishing and production management technologies; and measurement, control and analytical systems.

■ Distribute. Digital mailing systems scale from the smallest custom jobs to the largest volumes, managing documents of all shapes and sizes and integrating physical and digital communications across multiple channels; operators can automatically select the right carrier, confirm delivery and streamline order fulfillment – with pre-sort software and/or services, providing the maximum postal discounts while reducing return mail costs.

■ Manage. Sophisticated data warehousing solutions catalog, index, code and archive paper and digital documents, allowing use and reuse of the information they contain; online web access and call center integration, data management solutions and other technologies give organizations and their customers instant access to real-time data; and analytic solutions enable better decisions based on real-time feedback on campaign metrics.

Delivering the Benefits of an Optimized Mailstream

To optimize the benefits of the integrated, closed-loopmailstream system, organizations turn to vendors such as PitneyBowes with best-in-class products, services and integrationexpertise in the create-produce-distribute-manage cycle ofmailstream solutions.

The right kind of expertise can turn one of the largest problemsconfronting business today – an inefficient mailstream – intounprecedented opportunity for productivity and new valuecreation. By identifying latent problems and opportunities,deploying the latest new technologies and applying rigorous

six-sigma methodologies, it is possible to take advantage of allthe benefits of an optimized mailstream.

SUMMARY

Over the past two decades, the mailstream has been transformedfrom its traditional role as a static channel for delivery ofphysical mail and packages to a technology-enabled, dynamicand multi-channel information system that can be aligned to anyorganization's mission and fine-tuned to deliver dramaticimprovements in productivity and customer value.

Organizations that use the technology-driven mailstream to theiradvantage are prospering. They are achieving efficiencies andleveraging their communications to discover new markets andrevenue streams, retain their best customers and recruit newones from their competitors.

For more information about optimizing the mailstream, pleasevisit www.pb.com/mailstream.

For more information about our products and services, please log onto our website: www.pb.com

©2006 Pitney Bowes Inc. • All Rights ReservedAn Equal Opportunity Employer. • Printed in U.S.A. • WPW1009/0806PB

World Headquarters1 Elmcroft Road

Stamford, CT 06926-0700

The following marks are trademarks or registeredtrademarks of Pitney Bowes Inc: Pitney Bowes,

Engineering the flow of communication. All other referenced marks are owned by their respective parties.

White Paper

Mailstream