By: Gerry Brown, Analyst - Digital Marketing & CRM, Bloor Research (Moved)
Published: 7th November 2012
Copyright Bloor Research © 2012
Pitney Bowes is a brand name often associated with the 1980s when Xerox, Kodak, and Gestetner ruled the printing world. Those halcyon days of the printing industry are gone. Kodak went bust, Gestetner was absorbed into Ricoh, and Xerox struggled (including a spell in Chapter 11) to re-invent itself as The Document Company. Not that life has been easy for Pitney Bowes. During the downturn between 2008 and 2011 revenues have slipped by $1Bn to $5.3Bn as its key markets, the US and Europe, have faltered.
Pitney Bowes is repositioning itself and forging a new identity in the digital world as its core printing market is declining at the fast rate of -5% per annum. Rather than adopt the radical approach of Xerox, Pitney Bowes has chosen evolution over revolution. Pitney Bowes still continues to innovate in the print industry. For example, its 'white paper factory' enables large enterprises to reduce expensive stocks of pre-printed stationery to virtually zero. Personalised direct mail letters, brochures, even envelopes can be created and printed on demand by these amazing machines from a single roll of white paper. A partnership with HP provides the colour printing technology.
Pitney Bowes' strategy is to move more substantially into online marketing communications (primarily email, social and mobile marketing) which are the digital substitutes for direct hard copy mailings. Online communications such as email marketing provide businesses with customized and targeted efforts at a much lower cost than direct mailings. To this end Pitney Bowes acquired Portrait Software for customer analytics and coordinating multi-channel marketing campaign management. MapInfo was acquired for location-based intelligence and Group 1 Software for customer communications across multiple channels (such as print, email, web, SMS and social). Half a dozen other small 'tuck-in' acquisitions were also enacted. The product integration is now largely complete and forms an integral part of the Pitney Bowes modular 'customer communications management' suite.
The key elements of the suite are (i) customer segmentation and profiling, (ii) communications delivery and (iii) predictive analytics functions i.e. the ability to target an individual customer with the highest propensity to convert to purchase, and / or who is likely to be attracted to up-sell and X-sell offers. Sounding rather like a Mad Men TV series follow-up, these are 'the persuadables', who can then be targeted using Pitney Bowes' multi-channel marketing campaign management solutions.
Currently only 8% ($425m) of Pitney Bowes' revenues are associated with software; 71% of revenues are associated with mail. This ratio needs to change fast to keep pace with the worldwide shift of print to digital communications. Some commentators have indeed forecast the end of the print industry, but this is premature. In the advertising industry, the seemingly inexorable move towards digital adverts has slowed, as consumers show a renewed appetite for consuming traditional TV and press advertising.
Consumers like variety, and a balanced portfolio of online display and offline print will be preferred to a staple diet of digital. This trend plays to Pitney Bowes' strengths as they seek to harmonise, integrate and orchestrate both physical and digital communication channels for their clients, and complement their traditional strengths in print with digital marketing capability.
The key digital marketing software markets for Pitney Bowes are the B2C enterprise companies in Banking and Finance, and Telcos. Hence Lloyds Bank, Nationwide, T-Mobile and Verizon are customers. The primary focus for Pitney Bowes' digital marketing offerings will be their many enterprise customers for print services within these industry segments. With over 2m customers, the key issue will be account focus and their ability to leverage their customer contacts.
Arthur Pitney and Walter Bowes, who formed Pitney Bowes 92 years ago, must be looking down with trepidation. Business moved slowly in those days. Nowadays we all need to run like Usain Bolt to keep up. Pitney Bowes needs to get its spikes on and up its game to achieve the velocity and operational execution needed to succeed in the highly competitive digital marketing business. Its ability to attract Facebook as a new customer for its location-based intelligence software bodes well however. Game on.
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