ANALYSIS
Everybody Wins With Greener Customer Data Management

Companies have long recognized the importance of customer data in the context of revenue growth and cost reduction. Today, more companies are also waking up to the value of customer data in the context of direct mail waste reduction, which is fast becoming not only an environmental imperative but also an economic imperative.

One need only consider the rising chorus of demands from consumers, as well as from employees, partners, shareholders, policymakers and now even the Direct Marketing Association mandating that companies engage in environmentally friendly business practices.

"Customers really want to believe that you're targeting and not wasting," says Steve Fuller, senior vice president of corporate marketing at L.L.Bean, the US$1.5 billion catalog mail order and retail store merchant that for nearly a hundred years has sold clothing designed for the great outdoors. "They trust that you're doing the right thing. And companies have that responsibility to their customers."

Gearing Up for the 'Green 15'

That responsibility, combined with the threat of government regulation of the entire industry, spurred the Direct Marketing Association to pass a resolution last May focused on sustainability issues. Called the "Green 15," the aim of the resolution is, according to DMA President John Greco Jr., "to move member companies along a path of continuous environmental improvement."

The DMA also announced that in June of this year it will establish target goals in key areas addressed in the resolution and set timetables for measuring success .

One key area, labeled "List Hygiene and Data Management," accounts for nearly half of the "Green 15" requirements to which member companies are expected to adhere. Specific requirements include mechanisms that allow recipients to modify or eliminate direct mail, the maintenance of "clean" mailing lists and predictive models and segmentation.

Some Companies Already There

The good news, according to the new Aberdeen report, Green Marketing: Leveraging Customer Data to Reduce Direct Mail Waste, is that many companies are already cleansing, integrating and analyzing customer data to not only drive cross-sell and up-sell effectiveness and save printing and postage costs but to also set an example of environmental stewardship.

Freeport, Maine-based L.L.Bean is a good example. "We literally have a whole department dedicated to data hygiene," says Fuller. "We actively look for ways to combine households to reduce duplicates and avoid mailing to non-responders."

Fifty percent of Best-in-Class companies, compared with 40 percent of Laggards, currently merge/purge customer data "thoroughly," according to Aberdeen research. Nearly twice as many Best-in-Class companies as Laggards plan to start doing so in the future.

The Aberdeen report, which is available to readers for complimentary download, also explains that 54 percent of companies use segmentation and modeling to "select with care" which customer names to be mailed. However, only 47 percent of Laggards indicated that they do it "very well," compared with 83 percent of Best-in-Class companies.

The research, conducted to gauge industry readiness with respect to "Green 15" resolution, speaks to the fact that companies need to recognize the dual benefit of helping shareholders achieve their financial objectives while mitigating their impact of their direct mail activities on the environment.

Clearly, companies need not look at this particular aspect of green marketing as merely "a feel-good thing" or "a PR thing." Instead, direct mail waste reduction is an area where environmental concerns and shareholder interests coincide.

If done right, everybody wins. The shareholder wins. The customer wins. And the environment wins.