Thursday April 14 2011 
 

The Power of Direct Mail

 
You don’t how Murray Martin (CEO, Pitney Bowes) but he knows you. Or at least he knows where you live. He’s got a pretty good idea what you like spending you money on, how long it will take you to drive to you nearest shopping centre and what it will take to get you to get there.

As chief executive of Pitney Bowes, Mr Martin has helped to transform the 91-year-old company that invented the mechanical postage franking machine into a marketing and direct mailing powerhouse. Primed with massive and details databases of customer spending habits, the company’s advanced mailing technology enables clients to target their direct mail campaigns and locate their businesses more precisely.

The Connecticut-base company recently landed a contract with Dixons to help their British electrical chain to identify exactly which type of store from its portfolio needs to be in which location, based on analysis of consumer habits as well as the amount of time it is likely to take customers to travel to their nearest store by road. It has also worked, which Marks & Sparks on store location, although most of its customers around the world are medium-sized enterprises.

“We have come from zero to the be 113th- biggest software company in the world by revenue”, Mr Martin, a university drop-out with a striking gold-capped front tooth, the result of an ice hockey accident in his youth, said.

You’d be forgiven for not noticing any of this, however, as the company has achieved its transformation almost by stealth, quietly selling off non-core businesses and acquiring more than 80 companies in the past decade. Key acquisition include MapInfo, a provider of location intelligence systems used for online mapping services such as Mapquest, bought in 2007, and the British-based Portrait Software, which specialises in customer analytics, added last year.
The transition from mechanical franking machines to digital analytics has been a relatively smooth one, Mr Martin said, adding that Putney Bowes invited the iTunes concept decades before Apple did by networking its franking machines over telephone lines in the 1960s to allow the collection and disbursement micropayments for postage.

The company’s role in location intelligence has its roots in the postal business, too. After all, if there is one thing that Pitney Bowes understands, it is postal addresses. Translating these into information that can be used to power mapping services is a fairly location step.

New ventures include a bull payment app for consumers that group all your household statements on one platform, and business-to-business pre-payment cards.
That’s not to say that the company has given up its traditional business- it still managed three quarters of all transaction mail, mainly utility and credit card bills, in the United States and 60 per cent in the UK.

Declining mail volume during the recession hit revenues, but cash from repeat business helped to get the company through until business started to pick up again, enabling it to continue its 29-year streak of increases dividends. Last year it has free cashflow of $961 million (£591 million); this year it expects between $750 million and $850 million.

At present 30 over cent of revenues are generated outside the US, but Mr Martin is hoping to take that figure up to 50 per cent in five years by expanding in established marketing. “We are fairly well equipped and have a very strong cashflow,” he said.

Expect more acquisitions.