How does business and environmental sustainability relate to direct marketing?
That was the question at last week’s New England Mail Order Association fall conference. The topic was "growing green – business and environmental sustainability in today’s market." Ideally, environmental sustainability and profitability go hand in hand.
Efficient lighting is a great example of a sustainable and profitable "no-brainer."
King Arthur Flour, Timberland, and other firms are saving energy and increasing profits by swapping out the lights in their warehouses and stores. Some minimize lighting requirements by maximizing natural lighting. Switching to new lights also has the dual effect of reducing cooling costs. All the heat generated from lights is wasted energy, so improving the efficiency of lights has the by-product of reduces cooling requirements. Some have gone as far as to build LEED certified buildings, which is among the highest standards for efficient and green buildings. Even with the up front capital costs of these programs, the payback is so quick and long lasting that it’s a relatively easy decision to implement.
Unfortunately, many sustainability decisions are much more difficult because they are at odds with profitability. Studies have shown that consumers like doing business with companies that are "green" but this is not high in the decision-making process and they are not willing to pay more for "green" products.
A great example of this dilemma came from Brian McGovern at Timberland who described his problem of sourcing rubber for their boots: (1) Timberland is very committed to environmental sustainability (2) traditional rubber for boots is not good for the environment (3) eco-friendly rubber generally does not perform as well as traditional rubber (4) eco-friendly rubber costs more than traditional rubber.
Consumers are not willing to pay more for an inferior product to save the environment. So, Timberland is investing research into increasing the quality and reducing the cost of eco-friendly rubber. In the meantime, what should Timberland do? That’s the challenge with many sustainability decisions.
But the "elephant in the room" was junk mail.
With so many catalogers, printers, and paper suppliers at the conference, I’m not surprised this topic was treated lightly. If we had a group of environmental activists in the room, I am sure their number one issue would be the amount of paper being wasted by the industry.
How do catalogers like junk mail? They hate it, too. By definition, junk mail is mail that you don’t want to get. It’s recycled before being read. That’s bad for the environment and bad for business because those catalogs are not cheap.
Some catalogers are are addressing this problem by reducing paper resource requirements and by using eco-friendly paper. Reducing paper weight saves paper and delivery costs, but has a negative impact on sales because the recipient of the "flimsy" catalog assumes the products and services are also flimsy. Eco-friendly paper alternatives cost more, such as FSC certified paper, and may also have a negative effect on sales — a double whammy of increasing costs and decreasing revenue. Although helpful, optimizing paper is no "silver bullet" for business and environmental sustainability.
There’s a better way to reduce junk mail… only send catalogs to people who want to get them!
That’s a lot easier said than done. But it’s worth the effort because studies show that 40% of the success of every direct marketing campaign is contingent on the mailing list.
Some forward-thinking catalogers are enabling their current customers to choose how they receive mail: what catalogs they get and how often they get them. It’s a challenge to implement, but the result is happier (more loyal?) customers and less waste.
This helps to solve the problem with current customers, but what about prospective customers? Prospecting campaigns typically have a much lower response rate than house file mailings. So, there’s a lot more paper wasted in prospecting.
Catalogers typically rent mailing lists for prospecting. The old school approach is to "carpet bomb" the market by sending catalogs to anybody who remotely resembles a customer. But with rising costs and waning tolerance of junk mail, that’s a certain recipe for failure.
The new school approach is to be smarter about who to mail. List brokers can make a tremendous difference in choosing lists that will work well. Also, there are new mailing list research tools that make finding targeted lists a lot easier. You can make a huge difference in response by making the effort to get better lists.
Like efficient lighting, efficient mailing through better targeting is great for business and environmental sustainability. But unlike efficient lighting, efficient mailing has no big up front costs and you don’t have to wait a long time for payback. Now, that’s a real "no brainer."