Why less communication will be worth more in 2016

Introduction

Head of Project Management at MBA Group, Tony Lynas, provides his professional viewpoint for the communications marketplace in 2016 and explains why “less” could actually be worth more for you and your customers this year.

From setting the scene with the importance of maintaining robust supply-chains in light of growing economic pressures and environmental concerns, through to the modern drive towards digitisation – Tony provides multiple real-world snapshots to illustrate the importance of maintaining market reach across all demographics, the risk of disenfranchising customers, the apparent industry commoditisation, the not so apparent cost implications and suggestions in which to improve your customers communications while differentiating your business through multichannel delivery.

Blog Article

The recent devastating floods in Scotland and the North of England has highlighted the growing impact of climate changes on all of our lives. There are obvious short-term impacts regarding damage to homes and businesses, and disruption to travel and transport, but ongoing effects such as increases to insurance premiums and greater consumer caution can do more damage to an area’s economic future.  For all businesses, it will mean paying greater attention to Disaster Recovery arrangements and identifying providers throughout their supply and distribution chain that can offer this service effectively.

In the longer term, environmental changes – and the need to reduce our impact to protect the planet for future generations – will force governments to introduce greener legislation. The commitments that major nations made at the Paris Climate Change Conference in November 2015 are not the cause of this, but the symptom. The statements made at COP21 were pre-warning businesses and consumers alike that change is coming. The UK Government already uses taxation to encourage greener behaviour, through road tax banding dependent upon car emissions and fuel and air passenger duties etc.  The recent introduction of charges for carrier bags is further evidence of laws being introduced to enforce more environmentally friendly behaviour by us all. It is therefore, not inconceivable that other items that could be perceived as "wasteful", such as free newspapers and non-personalised marketing leaflets, could suffer similar charges in the future.

It seems fairly obvious, then, that, if you’re a significant user of print and mail, an easy way to both mitigate against distribution risks and to reduce your environmental impact is to switch from paper to digital output. Add in the apparent cost reduction – after all, you don’t need to worry about rising postal costs once you’ve pushed everything electronic – and it surely becomes the easiest decision you’ll ever make?

Well, not quite.

The first problem is that you risk disenfranchising a significant – and growing – sector of your customer base. Age UK’s Digital Inclusion survey in 2013 found that around 50% of over 65’s had not used the Internet in the prior 3 months (if at all) versus less than 2% for 16 to 34 year olds. Even though that 50% is falling, a growing senior population means that older demographics are rising in our society and represent a significant risk to your market reach if they are not catered for as part of your communications strategy.

There are also hidden environmental impacts of society’s digital migration to consider. The CO2 footprint of an iPad – in terms of manufacture and 1 years’ usage – is equivalent to the production and distribution of 3 years’ worth of daily broadsheet newspapers, and iPads haven’t yet completely wiped out the need for those.


(Also read MBA news story: MBA Group provides industry insight for World Finance magazine)

The metals used in the manufacture of smart devices are often taken at huge cost to important eco-systems. Tin is strip-mined from rain forests in Indonesia; cobalt mines leave ugly scars in the Congo; and rare earth metals like dysprosium, whose mining leaves long-term toxic waste for local residents to deal with, are predicted to run out entirely in the next 20 years.
 
The print industry, however, has matured and worked to reduce its impacts. Paper comes from renewable resources. Young trees are heavily positive in the Carbon cycle, helping to at least partially offset the CO2 cost of paper manufacture and transportation. In the main, paper production occurs in stable economies and in environmentally controlled zones and the resulting forests provide habitats for wildlife. Inks are increasingly manufactured from vegetable oils, also drawn from within the Carbon cycle, rather than using up non-renewable resources.

There’s another symptom of moving to low-cost digital delivery methods that is becoming increasingly apparent. Digitisation and commoditisation often go hand-in-hand. Reducing delivery costs can seemingly increase output volume and ease of access but it can dramatically reduce value.  The music industry is a key example. In 1999, US music sales, exclusively physical, were worth $14 billion; by 2014, sales had shrunk to just $6 billion. That’s a 57% decrease in industry valuation in just 15 years! In an age of Spotify and Apple Music, when anybody can listen to anything, why would anyone want anything new? An industry that was once vibrant and creative (even beyond the music itself) has seemingly lost its revenue to its distribution chain.

Digital, then, at least as far as music is concerned, isn’t good at generating new sales. This trend follows for marketing and advertising communications too. In general, Direct Mail response rates are many times higher than Email – 4% versus 0.12%. And whilst physical mail is almost certain to be read, read rates for email and social media advertising are also low:

In real terms, the digital marketplace has the potential to increase costs to companies – particularly those who have to maintain paper output for regulatory reasons or because of the demographics of their customer base – with minimal reward for the effort and expense applied to it. Increased support costs, duplication of effort across delivery channels, introduction of more subject matter experts, reduced response rates…. What at first appears to be a best value route to communicating with all of your customers can end up diluting your message and eating into your profits instead.

Clearly, the digital route cannot be ignored. More people on planet Earth own a mobile phone than own a toothbrush. It’s as important in this day and age, and probably even more so in this economic environment, to stand out from the crowd, to do something different, to give value to the user and the consumer.

There is evidence elsewhere that taking care of your offering and making it unique and exclusive really works. In a struggling retail market, both Apple and Hollister manage to have queues forming outside their stores because people want to experience the service and environment that they offer. And back in the fading music industry, vinyl is resurgent. US sales have grown from just $54 million in 2000 to $320 million in 2014, and are now overtaking some sectors of the digital market, as consumers look for something with perceived value in an increasingly commoditised space.

The challenge then, especially for financial services and utility companies whose products cannot be physically differentiated, is how to make their service offering unique and add enough value so that their customers feel appreciated and, if required, act. This isn’t just about enhancing the digital experience. It’s about using the right channel at the right time for the right communication; it’s about using the available data and media to connect with the way your customers now live.

In other words, the challenge for the communications industry and its clients is the same – how can we successfully migrate to using the new communication channels whilst at least retaining the value and impact paper alone once had – and all the time against a backdrop of a marketplace that is increasingly disparate in its expectations.

Ultimately, the right way to leverage multiple communication channels is the same as the right way to reduce environmental impact – do less but increase the value of what you do.

The first challenge for organisations is to understand which communication channels add the most value for their customers at each stage of their lifecycle. Do certain customer groups, for example, feel reassured by physical packs being delivered at the beginning of their relationship with your firm? And, if they do, do they also need an immediate recognition via email or text message while they wait for that delivery? Does your customer want a detailed financial statement but still want access to it 24/7 online or need it explaining clearly with an interactive online guide or a personalised video? Is your customer base sophisticated enough to understand when you have given time and effort to provide them with a more bespoke and personalised experience, and will that drive loyalty?

Client communication is becoming more complex – both in its blended multichannel nature and through increased technological complexity in individual spheres. Web and email has to be responsive to different devices, has to track and support customer interaction and has to predict and respond to customer behaviour. Print has to leverage the best digital full colour technology and provide increased personalisation through detailed data analysis. New media offerings like personalised video also have to be considered.

For companies to take full advantage of this world, they would need experts in every field. Regardless of the expense, how many single points of failure would this introduce to your communication strategy? And how would your organisation ensure the skill-set of your specialists remains broad enough to conduct channel campaigns in full comprehension of the wider communications activity and business/marketing objectives, and so that you can continue to take advantage of future innovations?

For communication service providers, the challenge is to build expertise in these areas too, giving their clients access to professional advice, to consultancy and to creative delivery resources that can help guide them through the ever-changing landscapes.  Identifying suppliers who can reduce the amount of wasted communication and who can support a vibrant multichannel offering will become a key activity; creating communication partnerships means finding a supplier who can understand and help to deliver large parts (or the whole) of your strategy rather than requiring you to manage many different elements individually.

This approach, too, feeds back to reducing waste and risk in the changing environment. Reducing the scale of your supply chain reduces the cost of servicing meetings and managing multiple suppliers, and helps remove the risk of unforeseen events disabling critical elements of your communication strategy. At the same time, a supplier who understands your business fully can help bring many unforeseen benefits to your organisation by sharing their learning and skills with you.
 
Less, as they say, is more, for you and your customers.

 

References / Information Sources:


 

Written by

Tony Lynas, Head of Project Management

Have a question? You can email me

of media pros use mail to drive consumers online

Source: Offline in an online world: making mailwork, The DMA, 2015