Pitney Bowes Adds Spokes to Mail Wheel

Author Name: Nancy Doucette

New software application designed to be life preserver to industry awash in information "Knowledge is power," according to 16th century philosopher Francis Bacon, and there's enough knowledge on the Internet to "power" just about any industry. But like any resource, the "power" has to be channeled to be truly useful. Enter Echo', a Web-based knowledge management application from InfoMation Publishing Corporation, based in Burlington, Massachusetts. Echo uses standard browsers (Internet Explorer or Netscape, release 3.0 and higher) to retrieve and integrate information from a variety of external and internal sources, including the World Wide Web, news feeds, Internet news groups and in-house company resources. It continually updates information and delivers only the information and data users want. The end result is a customized intranet, Internet and/or extranet solution.

InfoMation's newly named president and CEO Bob Portrie intends to take the Echo product to the several vertical markets which the organization is targeting. The insurance industry is among the three most important vertical markets, he says. And that's a good fit for Portrie given that just prior to his joining InfoMation Publishing in December 1997, he was president and chairman of AT&T InView, a business focused on developing and marketing technology solutions for the insurance industry.

InfoMation Publishing's mission is to "solve the problem of information overload...by building best-of-breed knowledge management applications." Barbara Shelhoss, vice president of marketing for InfoMation Publishing, explains that Echo "provides less information of higher relevance." In other words, less is more.

TORONTO—Big mail equipment, systems and services purveyor Pitney Bowes, Stamford, CN, recently purchased Canadian marketing services firm Digital Cement, based here, for about $40 million in cash. It represents another strong, unique spoke in the wheel of businesses Pitney Bowes has collected lately that all revolve in some way around what it commonly refers to as the mailstream.

Pitney Bowes has been highly active on the acquisition trail for some time. It has acquired 70 companies in the past six years, some of which have been Canadian.

Earlier this year, it completed another significant takeover with the purchase of geodemographic systems and location intelligence provider MapInfo, Troy, NY, for a reported $408 million in cash. MapInfo has a strong presence in this country through its Psyte cluster system developed in Canada by Compusearch which MapInfo bought six years ago to form MapInfo Canada.

“We have almost a leapfrog strategy in moving from traditional mail services,” says Pitney Bowes spokesperson Carol Wallace. “We are turning to software technologies as well as forward thinking marketing where we see the mail operations getting very entwined with the marketing department. There are a lot of very strategic campaigns and executables around that where we really needed to acquire the marketing expertise in house to bring those things together because it is something our clients have really been demanding.”

“Executive decision-makers clearly need and want the capability to transform their existing customer experiences to drive growth, while also delivering cost efficiencies across the entire mailstream,” says Digital Cement CEO and Founder David Ceolin. “Together we can drive both growth and cost efficiency as a result of Pitney Bowes’ ability to transform the mailstream, and Digital Cement’s use of the mailstream to transform the customer experience.”

Fortune 500 supplier

Digital Cement supplies Fortune 500 clients in consumer packaged goods, telecom, financial services, retail and healthcare with a suite of consultative offerings. They encompass strategic planning to address business needs, customer experience planning to maximize customer lifetime value, channel and platform integration to deliver unified customer communications, and customer analytics to ensure that marketing programs achieve their desired results. Major clients include Kraft Foods, FedEx and John Hancock.

The company employs about 120 people, most of whom work out of the Toronto office. It has about 50 consultants engaged in strategic services, some of whom work on client sites. Strategic services also involve analytics and measurement staff. A creative department produces the direct mail and email campaigns for clients. It also has a technical services side of the business and employs a sales staff to find new clients.

Digital Cement President Robert Portrie characterizes it as a professional services firm engaged in three core businesses— strategic consulting, marketing promotions, and program analytics. Like many of the big consulting firms, it will do a study of a client’s business and advise the client on the direction to take. Unlike the others, it will stay and build the pathway that takes the client in the right direction.

“It could be an online experience, direct mail, or various media. Sometimes we’ll do it internally and other times work with other agencies,” he says. “There are great agencies out there that do TV ads that we don’t do. We will use third parties for email deployment. We used to deploy the emails ourselves but we found it is more cost effective to use one of the really large engines out there.

“For every strategy there is an experience and for every experience there is a measurement plan. So we have a very deep analytics group that measures every single program we do so we can continually improve it.”

Kraft Foods program

One example of the consultative approach and follow-up by Digital Cement is the work it has done on the highly successful customer relationship management program it helped develop and run for Kraft Foods. What started as a small Canadian venture six years ago has grown into a program participated in by 15 million households across North America.

Kraft corresponds with four million of these opt-in consumers every week. Portrie says Kraft is the largest publisher of magazines on the continent next to Reader’s Digest. It sends publications and/or emails to consumers with helpful cooking tips and recipes. The program is available in English, French and Spanish.

“You want to be able to reach out to a consumer in a very targeted, individualized basis. So if you are a Cuban American mom in Miami who has a diabetic daughter, we will be sending you emails and recipes taking that into consideration.”

It calls for compiling and managing a huge customer database, he says. People are asked if they want to receive an email weekly or monthly or just get the magazines. They may indicate a desire to be able to contact the call centre. People can personalize their experience with the Kraft program so it becomes more meaningful to them.

In Canada 27 percent of the packaged goods sold in food stores are generic brands, he says. A Kraft product may be on the shelf next to a competitive Loblaw brand that is 10 or 15 percent cheaper. A shopper who customarily buys Kraft foods may decide to try the generic product.

Historically, Kraft would send customers coupons in the mail to retain their business, he says. Alternatively, they might get in-store flyers to get them to buy Kraft.

Digital Cement argued that the company had to build relationships so that consumers were thinking about Kraft products before they even entered the store, he says. The idea was to get them so predisposed to Kraft that they would ignore competitive products or sale prices.

“You may promote a recipe for dinner that contains four different Kraft items. A mother planning the evening meal may take that recipe in the morning and buy exactly what it calls for to avoid any mistakes in the preparation.”

Fast growing segment

“Marketing services is one of the fastest growing segments in the mailstream because it helps businesses better manage communications with their customers,” says Pitney Bowes President and CEO Murray Martin. “Digital Cement’s innovative strategies use the mailstream to help large corporations increase the lifetime value of their customers.

“Their offerings complement our existing direct mail applications, add to our suite of integrated marketing services solutions, and enhance our ability to support the needs of large customers. In fact, since our partnership began last fall, we have combined to deliver high value solutions that help customers enhance the marketing effectiveness and mailstream efficiency of their customer interactions.”

Last October, Pitney Bowes first struck a strategic partnership with Digital Cement by taking a minority stake. Portrie indicates the plan then was for Pitney Bowes to move to full ownership eventually.

One member of the Pitney Bowes acquisition team was a Canadian who had known Ceolin for several years and followed the progress of Digital Cement, says Portrie. He recommended taking a long look at Digital Cement which he saw as operating in a complementary manner. It led to discussions and the initial investment.

Last fall, Pitney Bowes Chairman Michael Critelli saw the alliance with Digital Cement as an extension of his company’s mailstream growth strategy. It expanded its presence in the marketing services space while building upon the direct marketing platform established with the acquisitions of Imagitas, AAS and PMH Caramanning.

Imagataves handles and markets the national change of address list in the U.S. for the United States Postal Service. AAS provides online tools for co-op marketing, sales training and asset management. PMH Caramanning manages loyalty programs.

Propitious timing

For Digital Cement, the timing was right for a partnership when Pitney Bowes first came calling. Not long before that Digital Cement directors had gathered to look more closely at how they might grow the business.

“When Pitney Bowes came upon the horizon we basically saw a company that had been in business for 90 years and had a presence in every Fortune 100 corporation in the U.S.,” recalls Portrie. “It potentially allowed us the access to get to the C-suite at those companies to start a discussion about our business.”

The hard part for small companies is always getting in the door of big companies, he says. A Pitney Bowes partnership promised to crack open those doors.

MapInfo acquisition

Meanwhile, in acquiring MapInfo earlier, Pitney Bowes gained a global provider of location intelligence systems. Its tools and services are used by more than 7,000 organizations worldwide, generating $165 million in revenue for fiscal 2006.

Established in 1986, MapInfo has 940 employees worldwide with locations in the U.S., Canada, Britain, continental Europe, Australia and Asia. It integrates software, data and services to provide greater value from location-based information and drive more insightful decisions for businesses and governments. Its systems are available in multiple languages through a network of strategic partners and distribution channels in 60 countries.

Customers span a diverse set of targeted vertical markets where location is a critical decision-making component. They include telecommunications, public sector, retail, financial services, and insurance.

In the private sector, companies use MapInfo products and services for a variety of purposes including site selection, risk analysis, marketing, customer service, sales territory alignment and routing. In the public sector, government agencies use them to improve public safety, crime analysis, asset management, emergency preparedness and response. Its customer base includes British Telecom, MasterCard, and The Home Depot.

Critelli saw the acquisition strengthening his firm’s position in the growing location intelligence market and enhancing its ability to deliver added value to customers worldwide.

“At Pitney Bowes, we have long understood the importance of location in connecting the right information with the right recipient,” he said in a statement. “Increasingly businesses and governments alike are using location-based information to enhance their reach, performance and decision-making capabilities.”

Envinsa platform

David Ower, managing director of MapInfo Canada, believes the Psyte geodemographic system being North American in scope was a positive attraction to Pitney Bowes. However, he adds this applied to a lot of other products as well including the enterprise technology location platform called Envinsa that is global in nature.

Envinsa provides core services like geocoding, proximity analysis, routing, rendering, and geographic queries. For marketing purposes, Envinsa geocoding could be used to locate customers and determine their demographics.

MapInfo Canada concentrates on the same five vertical markets as does MapInfo in the U.S. It has dedicated teams looking after each of those vertical sectors across the country.

“By going vertical, we are able to focus now more around the solutions required for each of those vertical markets,” says Ower. “So part of our strategy right now is we are looking at increasing our footprint across all five of those verticals.”

One move was the opening of an office in Ottawa this year to better pursue federal government opportunities. It is also expanding in western Canada with the opening in early May of a 1500 sq ft. office in Vancouver. It is currently manned by two people with more anticipated in future.

Pitney Bowes has been encouraging the expansion and has already lent considerable help in the case of Vancouver, says Ower. The 1500 sq ft space is in part of a building that Pitney Bowes had already under lease for office facilities.

Gaining synergies

MapInfo Canada is gaining synergies from being a wholly owned subsidiary of Pitney Bowes. In some cases, it is through common customers.

“We are doing a lot of the site selection and marketing for a lot of the retailers in Canada,” says Ower. “We are finding with a lot of those customers Pitney Bowes provides services as well, whether it is in their marketing activities or mailing or production facilities. We have been talking to a few customers who are very excited about the fact we are now part of Pitney Bowes and they are dealing with a broader organization.”

Other benefits are coming from associations with other Pitney Bowes companies. An example is in the insurance field through collaborations with Group 1 Software, Lanham, MD, another Pitney Bowes company with an office in Toronto. Group 1 provides Canada Post certified postal software including address verification. Ower says the result is a more turnkey approach that serves insurance companies from the actuarial stage through to the customer in both risk assessment and claims management.

“Actuaries would do their risk mapping to spots areas of high flooding or high crime. They would be using our MapInfo products and MapInfo Professional to do that. That information would then get loaded into the database. When a customer calls applying for insurance and gives his address what we would be doing is geocoding that address to determine the risk level. In turn, it would determine the quotation he would get from the insurance company.

“Where Group 1 comes in is in validating that address to make sure it is correct. So when the data is entered into the database and something gets mailed out, the information is accurate. Insurance companies can also benefit from higher successful mailings and bulk discounts.”

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